Eric Joiner's Freightdawg.com - The Logistics and Supply Chain Blog!

Japan Radiation Threat Causes Cargo Screening and altered Operations

Everyone is watching and reading the News about the terrible after effects of the earthquake and Tsunami that hit Northern Japan and the subsequent explosive impact on several Japanese nuclear power reactors.  

As the Japanese struggle with the health and safety of their own people,  foreign governments including the United States are carefully watching cargoes and people transiting or originating from Japan.   So far, the US Customs and Border Protection (CBP) department issued the following statement on March 16th, 2011. 

"U.S. Customs and Border Protection (CBP) is monitoring developments in Japan carefully and is specifically assessing the potential for radiological contamination associated with the ongoing impact of the earthquake and tsunami to Japan's nuclear facilities. Out of an abundance of caution, CBP has issued field guidance reiterating its operational protocols and directing field personnel to specifically monitor maritime and air traffic from Japan. 

No aircraft entering the United States today tested positive for radiation at harmful levels.

To address radiological and nuclear risks, CBP employs several types of radiation detection equipment in its operations at both air and sea ports, and uses this equipment, along with specific operational protocols, to resolve any security or safety risks that are identified with inbound travelers and cargo.  In the air environment, CBP frontline personnel are equipped with Personal Radiation Detectors (PRDs) that can detect the presence of radiological materials, and all airports have more sensitive Radiation Isotope Identification Devices (RIIDs) to determine both the presence and type of radiation encountered. Travelers who manifest signs of radiation sickness are referred to health authorities and provided appropriate treatment.

At seaports, and in its international mail and express consignment facilities, CBP continues to use sensitive, large-scale Radiation Portal Monitors (RPM) and scans all maritime cargo and express consignment and mail arriving from Japan. CBP maintains similar protocols for identifying and resolving radiation alarms in these operations and will deny entry to contaminated cargo and mail. 

CBP will continue to evaluate the potential risks posed by radiation contamination on inbound travelers and cargo and will adjust its detection and response protocols, in coordination with its interagency partners, as developments warrant."

While the US government has discouraged citizens from visiting Japan, so far no passengers or luggage have shown signs of radioactive contamination.   Airlines are taking a wait and see attitude toward servicing Japanese airports.  Delta Airlines as an example is still servicing Narita airport but at present has ceased flights to Haneda.    Lufthansa however has not resumed flights to Narita so far.   Express carriers are continuing to serve Japan at varying levels with FedEx, DHL and UPS all making service announcements on their web sites.

Major container terminals are presently working at normal capacity, however port closures over the past weekend have caused congestion and backlogs.  It remains to be seen if the ports are impacted as days go on by lack of diesel fuel and gasoline, as well as inability of workers to get to work due to power and public transport disruptions.  Services to Sendai, Hachinohe, and Onahama have been suspended by some carriers including Maersk.   NYK Line, a leading Japanese flag carrier meanwhile has offered its services to the Japanese government not only in moving relief supplies, but in providing service vessels to serve as offshore staging platforms for helicopters and relief supplies. 

Maritime Risk Management

My old colleague from APL,  Don McKay presents an informative talk on maritime risk management in association with the American Public University.   Don's talk focuses on port and cargo security.  He also discusses ways to learn from previous incidents in order to mitigate cargo and safety risk in the future.   It's an interesting talk but I wish it were video instead of just voice over PowerPoint.

Maritime Risk Webcast from American Public University on Vimeo.

Holy Containership Batman!! Maersk Triple-E vessels Announced.

Maersk Line is once again leading the container industry with the order of 10 18,000 TEU vessels designed as Triple-E class ships.  Triple-E stands for Energy efficiency, Economy of scale and the Environment.   These ships will be built in Korea and set for delivery between 2013 and 2015.   They will ply the Asia - Europe trades.   Only Rotterdam, Felixstowe and Bremerhaven have ports deep enough to accommodate ships of this size, which will be bigger than an aircraft carrier.   At well over a billion dollars, its the worlds biggest container ship order ever.  

Maersk used to build all their ships in their own shipyards in Odense, Denmark.  No more,  The Danes finally threw in the flag in 2009 realizing that vessels could be built cheaper in Asia.  Daewoo Shipbuilding will construct the 3E ships.  

These ships are said to be quite green ecologically.  Maersk says the Triple-E class vessels will reduce CO₂ emissions by more than 50% per container moved, compared to the industry average. 

 

The size of these ships to an old steamboater like me is mind blowing.   I started at United States Lines in 1983 back when USL was touting their then new 4400 TEU "Econoships" which were built to travel around the world in an eastbound direction.  

Those vessels failed for a variety of reasons, not the least of which was container repositioning back to westbound origins, USL's newcomer status in the Europe-Asia market, old closed FEFC conference system, limited port calls in Europe and the advent of cheap oil in the early 80's.  It was the cheap oil that killed the deal in reality though.  These were ships that were ahead of their time, being built for slow steaming and economical container movement.   While considered small by today's standards, the USL ships would have been right at home in today's economic environment.

The Maersk Triple E ships are the USL Econoships idea writ large.   Designed for massive container movement, Maersk claims these ships will move a load from Asia to Europe at 30% less cost than current vessels, which are already massive in scale.   I remember when I thought Emma Maersk was huge...at a mere 11000 TEU.    What will be interesting will be to see what the load factors are on the eastbound voyages back to Asia.   I suspect a lot of empty containers will be the main business and a very cheap rate on a revenue load.   NVOCC's will love these ships because there is NO way Maersk is filling these ships up without help from the major NVOCC's. 

The ships this class of vessels will replace won't be going away.  The classes represented by Regina Maersk and Emma Maersk at 7000 and 11000 TEU's will have to go somewhere. The Triple-E's will have swallowed one of each.   I suspect that will be the eastbound transpacific trades.   This could easily bring major new capacity and rate compression to this and other global markets as the big ships cascade to the lesser trades unless Maersk takes a new view about vessel sharing.

Check out Maersk's web site specifically made for the Triple-E Class.   

worldslargestship.com.

Eric

Obama 2012 budget lacks Infrastructure for US Ports

Check out this excellent analysis from Maritime Professional, on the Obama administrations 2012 budget as it regards US maritime port and logistics infrastructure.  

Beltway Blunder(s) - and what to do about them...

Joseph Keefe

Feb 16, 2011, 10:01AM EST

The six-year surface transportation spending plan, as a part of the President’s Fiscal 2012 budget request, focuses largely on roads, air and rail improvements. Federal efforts to improve transportation infrastructure continue to ignore the key maritime part of the equation and crime on the docks also takes center stage. If you work on the waterfront, this is your cue to sit up and take notice.

No Ports: No Commerce
As President Obama asks Congress to approve his $556 billion, six-year surface transportation spending plan, he argues that transportation spending will create jobs and thereby strengthen the economy. A key facet of the proposal calls for $8 billion to be spent in the coming year for Obama's intercity passenger rail program and a total of $53 billion over six years. Monday’s U.S. Department of Transportation press release also fleshes out the massive initiative, calling it “targeted investments in safe, efficient transportation that will spur growth. Nowhere in the statement is there any reference to the ports that carry and handle virtually 99 percent of the supply chain’s output.

U.S. Transportation Secretary Ray LaHood, in a prepared statement, said President Obama’s $129 billion budget for the U.S. Department of Transportation, the first year of a comprehensive six-year transportation plan, will lay a new foundation for economic growth and competitiveness by rebuilding the nation’s transportation systems, enabling innovative solutions to transportation challenges and ensuring the highest level of safety for all Americans. The press release also mentions “moving people, goods, and information more quickly and reliably than ever before.”  He then goes on to talks about rebuilding our crumbling roadways and runways, modernizing railways and bus systems, the “high-speed rail lines of America’s future,” repairing bridges and more than 55 separate highway programs. Conspicuously absent from any of that dialogue is any mention of the waterfront.

Maritime Professional - Beltway Blunder(s) - and what to do about them...

Home from Europe. An Old Friend Revisited.

Yes, boys and girls, Freightdawg is still an active blog, for those of you who have written me.   I took on some newly increased job responsibilities in December and those have kept me running all over the place, including Latin America, Europe and China (next week). I got home from Europe on Friday, having spent the week on planes, trains and automobiles all over the Netherlands and Budapest, Hungary.   I had not been to Budapest before, but this is one beautiful city that I look forward to visiting again once the snow stops flying. 

I've been to Europe many times, but I am always amazed at the efficiency and low cost of the Dutch railways.   I commuted over several days between Amsterdam, Maastricht, Rotterdam, Utrecht and back to Amsterdam Schiphol throughout the week.   Quick, on time and very efficient.   I wish we had these kinds of trains even regionally in the US.  Granted, Holland is a small country with short distances between metropolitan areas.   The citizens are also motivated by very high fuel prices, which push them to seek public transport as well as old fashioned means of commuting, included bicycles.  Of course, it doesn't hurt that the whole country is flat, making biking an easy business.

While I have been an international traveler for years,  for the past 3-4 years my job has put me mostly in the Americas.   I spent my time in North and South America.   I had not been back to Europe since 2003.  On that basis, returning was like visiting an old friend.   When I was with P&O and later P&O Nedlloyd, I spent considerable time in the UK and on the continent.  At one point I had more friends in England than I did in Atlanta.  In fact I once took a weeks vacation in the UK where I had drinks or a meal with different former colleagues daily.

From a logistics point of view, Europe has always been complex.  Historically, you had different countries, different currencies, different customs regulations and different market constituencies based on geographical location within the European continent.  Today, much of the same complexity remains, but now with different twists.  These include a common currency and customs regulations within most of the EU, but still geographical market pressure based on location, whether eastern or western Europe.

New security regulations governing the EU's Import Control System (ICS) are now burdening shippers whose freight is either destined for European consumption or transiting through Europe to other markets.   Following the US lead,  the EU is now requiring additional information on European shipments.   Both air and ocean carriers are putting surcharges on these shipments in order to cover the administrative cost of governmental reporting.

Russia is continuing to grow as a major market in Europe, but also remains complex due to factors that include high inflation, changing tax and customs codes, and security around product transportation.  One area I am now just learning about is the Pan-European trucking market, whether FTL, LTL or Part load shipments.   This business is somewhat different from the US version.  I have little knowledge of that trade, but one of the nice things about working for a major European logistics player is that we have an extensive network and lots of product expertise to draw from.

I look forward discussing some of these Euro focused topics in more detail soon.  Living in a global economy, its a good idea to understand that regional differences and nuances still exist.  Understanding those differences is critical to understanding and designing global supply chains that work, both physically and culturally.   The goal is still satisfying the end customer, whether he lives in Moscow, Russia or Moscow, Idaho.

I'm off to Beijing on the 27th of February.  I'll have more to post from that trip and more in between. 

Eric

Auburn Tigers: 2011 NATIONAL CHAMPIONS!!!

Ok this is a logistics blog, but not tonight.

 Tonight something incredibly special happened. Auburn University and their football team won the BCS National Championship 22-19.

I am 49 years old and an Auburn grad. We never saw this season coming.  We knew the football team would be good and that recruiting was going well. However, we had not heard of this guy named Cameron Newton.  Same guy who won the Heisman Trophy and lead AU to the SEC Championship and the National Championship. 

   So BIG UPS to Auburn.  And BIG UPS to all Auburn Fans.    Nobody can deny the fact that Auburn can handle the big show.  

I graduated from Auburn in 1984,   I am so proud of our kids.  WAR EAGLE!!!

Eric

 

Capacity Still hurting Rates in Bulk Ocean Markets

While container freight rates are rebounding nicely, to the chagrin of ocean shippers,  pressure remains on bulk and dry bulk carriers.  

It's not the global economy that is hurting this shipping sector. it's the overcapacity created by too many new ships that were ordered 3 years ago.  

Such is the nature of the shipping business. Liner companies order ships when times are good, but due to the length of time needed to build the ships, deliveries often occur when the market is soft.

Freight Rates Tumbling as 35 Miles of Ships Passes Ore Demand - Bloomberg

Freight Rates Tumbling as 35 Miles of Ships Passes Ore Demand

By Alistair Holloway - Jan 9, 2011 7:00 PM ET

At a time when analysts anticipate record profits for the biggest mining companies and a third year of gains in commodity prices, shipping lines carrying raw materials are set for the lowest freight rates since 2002.

Leasing costs for capesize vessels, 1,000-foot-long ships hauling iron ore and coal, will drop 34 percent to average $22,000 a day this year, according to the median in a Bloomberg survey of eight fund managers and analysts. The last time that happened, China’s economy, the biggest consumer of the minerals used in steel and power, was 75 percent smaller and the benchmark Standard & Poor’s GSCI commodity index 67 percent lower.

While Clarkson Plc, the world’s biggest shipbroker, expects seaborne trade in the two cargoes to exceed 2 billion metric tons for the first time this year, the 7 percent increase won’t be enough to eliminate a glut. About 200 capesizes, spanning some 35 miles end-to-end, will leave shipyards this year, expanding the fleet by 18 percent, the Bloomberg survey showed.

“The market was able to take a punch in the face in the form of 200 capesizes and loads of smaller vessels last year but I doubt it will manage another punch without having to hit the deck,” said Erik Nikolai Stavseth, an analyst at Arctic Securities ASA in Oslo who correctly forecast in July that rental costs would more than triple by the fourth quarter.

Rates averaged $34,913 a day in the final three months of 2010, 33 percent more than in the previous quarter. Tariffs are already plunging, dropping 36 percent last week to $12,897, as ships leave yards in China, Japan, the Philippines and South Korea, according to data from the London-based Baltic Exchange, which publishes assessments for more than 50 shipping routes.

Freight Rates Tumbling as 35 Miles of Ships Passes Ore Demand - Bloomberg

An Old Dawg Talks about New Tricks. 2011 awaits.

My friend and former colleague Jerry Hempstead spent 32 years in the parcel business.  He "retired"...and I use that term loosely... in 2006.  In the meantime Jerry and his consultancy practice have been busier than most non-retired people I know.   Jerry possesses a passion for people, intellect for our business and street savvy that make him simply fun to be around if you are a freightdawg like me.  

I've been working in this field for 25 years and I learn every time I talk with Jerry.   Below he shares his thoughts for 2011.  This will be a challenging year in rebuilding the global economy.  Logistics players will be challenged across the board, ranging from carriers to 3PL's and forwarders to the integrators.   Nothing is as it was.

_____________________________________________________

I get a lot of what I would call "negative mail". Items that complain about the decisions being made by politicians. The state of the economy, the housing crisis, the dollar, our taxes and so on. Taken without context, its enough to make one depressed.

Today we are on the verge of entering a brand new year. Most who know me, realize right away that I'm an optimist. Just ask me how I'm doing when you call me... you'll know immediately.  I believe that no matter how bad things are,  I have a daily obligation to determine how I will relate to you. I choose to do so positively.

My life's passion is Logistics.   When I think about it and the future, I get excited.   I've been doing this for years, and I remain motivated about our field of endeavor. While I am retired from the firm I served for many years, I remain active in the industry I love as a consultant, enthusiast and confidant of supply chain professionals worldwide.

I'm a parcel guy first and I remain amazed at our postal system. We in the United States have the greatest postal service on the planet. I have lived overseas and can attest that our service is second to none, when you consider that every citizen has the right to home delivery six days a week. The Postal Service is actually one of the few things our Constitution says the government must provide.

The United States Postal Service employs over 500,000 people. Relative to any other postal service, ours is a bargain. $.44 for one to three day service just about anywhere in the USA is amazing. I think its the most complex logistics provider on the planet when you consider all the classes of mail, the number of pieces they handle and the myriad of sizes and shapes they transport.

As weird as it sounds, the USPS is one of the biggest customers of FedEx and UPS. Conversely two of the largest customers of the USPS are FedEx and UPS. I suspect that FedEx Smartpost gives the USPS more parcels today than any other mailer, and Smartpost has been the fastest growing FedEx service.

Two of the largest logistics players in the parcel world are U.S. companies FedEx and UPS. Take a look at how these two firms performed financially in 2010.  Fedex stock rose by 11% year to date and UPS is up 26%. I think between the two there are over 600,000 people employed globally. We can be proud of both these companies and be thankful they are American flag carriers.

I thought about our road system after seeing a television program on how our infrastructure is crumbling and that we are in crisis. I spend a lot of time "on the road", both here and abroad, and I can share with you that with all its faults our interstate and local road systems are the best there is in the world.

I have been on every continent except Antarctica and I can say that we are blessed to have the network we have today. No other country has invested like we have in our roads, with the possible exception of Germany. We have the most available and largest domestic trucking industry in the world and a workforce that for all its issues generally cares for the customer and about their mission in the transport and delivery process.

The United States has more technology, more ports, more rail track and more modern and sophisticated aviation infrastructure than any other country.  We are blessed.

I have had the opportunity to work for over three decades with a group of people who have passion for their work and for building enterprises that offer services that delight customers. I've witnessed incredible, exciting changes over those decades that have increased the speed, visibility and the consistency of the services being offered. Most of all I have shared my life with a community that has a tremendous work ethic and a wonderful sense of camaraderie that the logistics industry seems to engender.

I have made lifelong friends as a result.

So as we enter 2011 let's focus not on what the press is saying about how bad things are, and let's get to work making a difference each and ever day to make the situation better. Even if its just the pride at the end of the day, that you did your best and for those tasks to which you were assigned that day, you made a difference.

Do these Eight things in 2011.  They will not only improve your business, but your life.

1. Make every encounter with your peers, your customers, your family, your friends a positive one. Brighten up a room when you enter and not when you leave. 


2. Make an effort every day to improve yourself. don't let time get wasted away without content. Use the commute to listen to a book on tape, read a book or article, for goodness sake, what you are thinking is important, write an article. This will make you more valuable to your employer or when you might be seeking new employment or a promotion.


3. Dress like you care about how you look. People make judgements based on first impressions. Sorry but that's just life. Always look like you are enjoying the experience...over time you will.


4. Everyone wants to be assured that they are important, worthwhile and accepted. This includes your family and your colleagues. Take the time to send an email or better yet call or speak face to face and tell them they did a good job, or that you really appreciate something they did.  You will make friends for life.


5. Focus on doing the right things, doing them right and not having to do them over. Do everything as if your job depends on it. Have a sense of urgency and a sense of pride in what you produce. Be thankful you have meaningful work and know there are 400 people out these that would love to have your job (no matter how bad you think your job might be).


6. Get involved. if you are in the freight/logistics business you are remiss if you are not at least attending the local roundtable events hosted by CSCMP. There are other inexpensive and or free organizations that will expand your circle of contacts and if you pay attention will increase your knowledge of the business. Organizations like Toastmasters will help you in may ways to improve who you are and how you communicate and also make you some great friends.


7. Know what's going on with federal and local issues that impact your employer and your continued employment. Then get involved. You can communicate for free with your elected officials. Believe it or not,they keep track of what constituents are saying. You can be on the bus or under the bus. Your choice.


8. You are bright, intelligent, articulate, and motivated if you got this far in the article. Take that power and create a mission for yourself for 2011 and then put it on an index card and post it on your bathroom mirror. Make a decision that 2011 is going to be the best year of your life. List those things that are important to you and to which you will actually devote some time and create one or more things on your bucket list to accomplish in this coming year. My wife has always wanted to go to Poland, the land of her fathers ancestors. Number 1 on our list for 2011 is to get to Eastern Europe. What do you think my odds are of getting that accomplished?

Happy New Year

Jerry

Incoterms 2011 - Revisions are Coming!

In January, 2011, the international commercial terms (incoterms) will be modified.  These are international trade terms used in determining where title to goods changes hands in a supply chain, amongst other things.  These are defined by the International Chamber of Commerce.  Every few years, these terms are updated to reflect changing trade practices.

Lance Scoular, The Savvy Navigator,  has produced a couple of really nice youtube videos that depict the upcoming changes.   Worth a view.

Part Two is viewable below:

Shipping Line Humor

I was exchanging emails with an old friend from my days at P&O, when he reminded me of a favorite old joke.   What makes it funny is how very close to being true it is.   See below.

A man was sitting in the bar at Felixstowe port. A beautiful woman walks in and sits down at the table next to him. So he decides because she's at the port, she's probably an off-duty shipping Line Customer Service agent.

So he decides to have a go at picking her up by identifying the shipping line she works for, thereby impressing her greatly.

He leans across to her and says the Hapag motto 'Better together?'.

The woman looks at him blankly. He sits back and thinks up another line.

He leans forward again and delivers the Hanjin Line motto 'Your Choice, Your Success' .

Again she just stares at him with a slightly puzzled look on her face.

Undeterred, he tries again, this time saying the OOCL motto "We take it personally".

The woman looks at him sternly and says 'What the f **k do you want?'

'Ah!' he says, sitting back with a smile on his face........ ' MAERSK LINE' !

Still holds water after all these years!