Supply Chain / Logistics / Transportation

Logistics Humor - Coast to Coast Overnight Rail Service!!

Another dose of Logistics Humor. You may have heard this before but it is still good for another laugh. Besides it will give you a break from those meteoric fuel prices!

YRC says restructuring plan now going well - Today's Trucking, the truck news site.

KANSAS CITY – A few weeks following its announcement that a "milestone failure occurred" in the next phase of creditor and labor restructuring, YRC Worldwide now says it is making "significant progress" negotiating terms of key agreements.

According to the Kansas City Star, the embattled company must comply with its financial restructuring plan by the end of July. Its next deadline for which documents must be “in final form" is this Friday.

Chief Restructuring Officer John Lamar now says the company is "very pleased" by the latest progress in its discussions with J.P. Morgan Chase & Co. (JPM) and a steering committee of the Teamsters union and senior secured lenders.

In its latest quarterly statement, YRC's revenue rose more than expected, bolstered by its regional arm.

Although lenders didn't declare the company in default, YRC cited it as a possibility last month given its failure to satisfy the Pension Fund Condition with the Teamsters union.

via www.todaystrucking.com

Skipped sailings the flavor of the season :: www.americanshipper.com

  If the liner carrier industry were like the fashion industry, then the strategy of “skipped sailings” would be anointed the color of the season.
   More appropriate would be to say that lines in the past few months have augmented their wholehearted embrace of slow steaming (last season’s de rigeur strategic tool) with skipped sailings.
   Like slow steaming, the concept of omitting a sailing is nothing new to the industry. But the fact that so many carriers and alliances have chosen to use it in the last quarter to hedge against weak demand is new.
   A quick search of American Shipper’s news database reveals a handful of instances of skipped or omitted sailings since fall -- either those announced outright by carriers or alliances, or those discovered by the schedule researchers at American Shipper affiliate ComPair Data.
   Most notable are omitted sailings on a New World Alliance transpacific service and dropped Asia/Europe sailings from the CKYH and Grand alliances, as well as Maersk Line and CMA CGM.
   There are essentially three ways a line can reduce effective capacity without suspending a service:
   • Slow steaming (meaning introducing more ships into a string and slowing it down).
   • Reducing the average vessel size deployed (i.e. moving from 8,000-TEU ships to 6,000-TEU vessels).
   • Selectively skipping sailings.
   All three correlate with minimizing capacity available to shippers. But for carriers, a skipped sailing has inherent operational advantages over the other two measures. There is much less disruption to a line’s schedule and no redirection of vessels required from other services or from layup.
   In fact, a better comparison for skipped sailings is the so-called peak loader services -- ad hoc extra sailings carriers run when demand is higher than anticipated. Carriers ran these peak loaders quite a bit in the first half of 2010 as they encountered what they called an unanticipated demand spike on virtually all the major global trades.
   For shippers, carriers’ increasing reliance on selective skipping or adding of sailings could come as a comfort, particularly if lines and alliances are upfront with their customers about which sailings they plan to omit. That’s because the alternatives to omitted sailings, such as service suspensions, are far from desirable.
   But where shippers will bristle is when the skipped sailings come in concert with slow steaming and other measures that slow down supply chains and force them to carry extra inventory.
   But let’s face it: isn’t it preferable, from a shipper’s standpoint, to be talking about services running every other week on a fixed schedule than to see massive amounts of capacity pulled through service suspensions?
   The fact that we are nearly at the end of January -- just a few days away from the Chinese New Year -- and nary a single major transpacific or Asia/Europe loop has been pulled suggests that service suspensions aren’t in the interest of carriers either. And the skipped sailings have, for the most part, been confined to a few services out of a range of options on those trades.
   Perhaps one positive for shippers from slow steaming is that it has allowed carriers to use their fleets in such a way that a planned omitted sailing here and there will do. — Eric Johnson

via www.americanshipper.com

Proposed HOS changes will harm truckers and shippers, executive warns – DC Velocity

Dan England, chairman and president of large refrigerated truckload carrier C.R. England and first vice chairman of the American Trucking Associations, said today that proposed changes in the regulations governing truck drivers' hours of service will do great harm to the trucking industry and could have a detrimental effect on highway safety.

Speaking at the NASSTRAC conference in Orlando, Fla., England charged that the Federal Motor Carrier Safety Administration (FMCSA) is bowing to political pressure and ignores evidence in the government's own statistics that the current rule is working well. To buttress his argument, he told the group that Sen. Frank Lautenberg (D-N.J.) last year held up the nomination of Anne M. Ferro as head of the FMCSA until the agency announced that it would revisit the rule.

He said ATA would challenge the regulations in court if they are adopted. John Cutler, legal counsel for NASSTRAC, the shippers' organization, said the group will join ATA in any such challenge. Under a court-ordered settlement, FMCSA must publish a final rule by July 26.

The proposed changes in the hours of service (HOS) regulations would limit drivers to 10 hours on the road a day, down from the current 11, and change the rules regarding mandated time off for drivers, which truckers contend would push more trucks onto roads during rush hour. The proposal's many critics argue that the new regulations would severely disrupt supply chains designed around current driver scheduling rules.

England said the proposed changes, if adopted, would force carriers to put more trucks on the road to compensate for lost hours, boost driver pay to offset the loss of driving time, and add more inexperienced drivers to fleets. The net result, he said, would be lower productivity per truck, increased transportation costs and congestion, and more headaches for state regulators and law enforcement.

England said that recent statistics from the Department of Transportation show that the truck-related fatality rate in 2009 was 1.17 per 100 million miles driven, the lowest rate on record. The rate has fallen by more than 36 percent since the current rule was adopted in 2004, he said.

via www.dcvelocity.com

TransCore Carrier News - TL Rates Trend Upward; No End in Sight

Demand is up, capacity is tight. Result? Continued pressure on truckload rates. The rate increases are being felt first and fastest on the spot market, compared to shippers' contract rates.

Although capacity shortfalls in the flatbed segment have been well reported, the van segment has actually been the one where rates have risen faster than any other over the past 15 months: van rates rose 10% in 2010 compared to 2009, while flatbed rates increased 4.4%. During that same period, reefer rates were up 6%. In the first quarter of 2011, van rates jumped 13%, while flatbeds increased by 11%. By comparison, in Q1 2011, reefer rates increased only 4% in advance of the peak season.

Costs are trending up, too, with fuel prices above $4.00 per gallon at the pump. Carriers will be most successful when they manage costs carefully and choose high-paying freight from reliable business partners.

VAN - Spot market rates for vans were up by 4% in March, compared to February, and by 15% compared to March 2010. Van rates trended up across the country, led by Denver as well as two major California cities, Los Angeles and Stockton, which lagged in previous months due to severe weather that delayed the start of the spring produce season.

FLATBED - Rising rates in the flatbed segment were led in March by the Los Angeles market, with a 4.3% uptick. This did not include transcontinental lanes.

REEFER - Reefer rates increased by 2.2% for the month of March on the spot market, reversing a three-month decline. Outbound lanes from Dallas showed the most improvement, including lanes to Denver and Atlanta.

More information on spot market rates can be found on the Rate Trend of the Week feature of www.TransCoreFreightSolutions.com and on TransCore's Freight Talk Blog. Join the discussion!

via view.exacttarget.com

180,000 Truck Shortfall Predicted for 2012 | Journal of Commerce

Soaring truck orders won't match deep capacity cuts, ACT Research says

The surge in orders for heavy trucks isn't big enough to prevent a shortfall in available truck capacity in 2011 and 2012, according to ACT Research.

"We are starting to accumulate a shortage of freight-hauling capacity," said Steve Tam, vice president of the commercial vehicle sector at ACT Research.

Tam said truck capacity reached "equilibrium" last year after the second quarter surge in inventory restocking and has tightened since.

The Cass Freight Index indicates North American shipment volume increased 6.9 percent in March 2011, a gain of 13.8 percent from March 2010. The year-over-year change in expenditures was 33.6 percent.

The shortfall is "fairly benign at this point," about 10,000 trucks, he said, "but we expect it to continue to grow" to 75,000 trucks by the first quarter of 2012. The shortfall will reach 180,000 trucks by the end of 2012, Tam said.

Truck manufacturers received more than 134,000 Class 8 tractor orders in the last five months alone, receiving 29,200 net orders in March, ACT Research said.

The annualized truck production rate is now at 300,000 units a year. Truck makers built 154,290 Class 8 tractors in 2010, a 30 percent increase over 2009.

But many of those orders are for tractors that will replace aging rigs, not expand truck fleets that reduced their tractor counts deeply over the past three years.

"We can't forget about the contraction that took place" in the recession, Tam said. "Even those who are adding capacity aren't going back to where they were."

Investment research firm Avondale Partners estimates truckload capacity dropped a net 16 percent from 2008 through the first two quarters of 2010.

OEMs reported a nearly 100,000-truck production backlog in February, ACT said. That production backlog probably grew by 8,000 to 10,000 tractors in March.

Truck makers are struggling with their own capacity issues, Tam said.

"We believe the industry is constrained by (tight) manufacturing capacity," he said, not so much at truck plants as among manufacturers supplying truck parts.

-- Contact William B. Cassidy at wcassidy@joc.com.

via www.joc.com

Federal Government Lifts Cargo Insurance Requirement for Truckers

The federal government is no longer requiring that about 76,000 of the nation’s for-hire truckers carry cargo liability insurance.

Over the objections of shippers and transportation brokers, the Federal Motor Carrier Safety Administration (FMCSA) issued a rule effective March 21 that lifts the requirement for these for-hire motor common carriers that represent about 30 percent of the nation’s truckers.

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Household goods motor carriers and household goods freight forwarders will continue to be subject to the FMCSA’s cargo insurance requirement.

 

The agency said it does not believe it is necessary for it to mandate cargo insurance that benefits commercial shippers. “Commercial shippers should be able to protect their own property loss and damage interests in the marketplace without continued FMCSA intervention,” the agency said.

The agency said it found enforcement of the rule is not necessary because most truckers carry insurance beyond the mandatory limits. It also said the requirement falls outside its primary responsibility, which is safety.

The government had required property and freight forwarders to maintain a minimum amount of cargo insurance and file evidence of this insurance with FMCSA. The requirement has been bodily injury and property damage liability in the minimum amount of $750,000 to $5 million depending on the nature of the cargo being transported; and cargo liability in the minimum amount of $5,000 per vehicle and $10,000 per incident.

There are another more than 150,000 motor carriers that are already exempt from the government insurance mandate for various reasons.

The federal government has required some carriers to buy cargo liability coverage since 1935. But federal law actually gives regulators the discretion whether to mandate the insurance. Jurisdiction over motor carrier and freight forwarder cargo insurance was transferred to FMCSA from the Interstate Commerce Commission (ICC) in 1999 and regulatory proposals to eliminate the requirement have been under consideration since at least 2005.

The change means that insurance companies no longer have to attach an endorsement (Form BMC-32, Endorsement for Motor Common Carrier Policies of Insurance for Cargo Liability) to cargo insurance policies.

The federal agency said it found that motor carriers typically have cargo insurance well in excess of the regulatory requirements, in part because many shippers require such insurance as a condition of doing business. Also, it said some common carriers offer shippers the opportunity to purchase additional cargo insurance and shippers have always had the opportunity to purchase cargo or inland- marine insurance directly from insurance providers rather than rely on motor carriers and freight forwarders to provide coverage for loss and damage risks.

via www.insurancejournal.com

Senate Bill Would Lift Truck Weight Limit | Journal of Commerce

States would decide whether to allow 97,000-pound trucks on highways

A bill introduced in the Senate Thursday would raise the heavy truck weight limit to 97,000 pounds, breaking a 20-year federal freeze on truck sizes and weights.

It's the latest action in a long-running battle over the freeze on federal truck size and weight limits Congress imposed in the surface transportation law of 1991.

The bill would give states the authority to lift the 80,000 pound gross vehicle weight limit, but only for tractor-trailers with six axles instead of the usual five.

The additional axle does not affect truck size, but it does allow shippers to utilize extra cargo space in the trailer, effectively adding capacity without adding trucks.

The Coalition for Transportation Productivity, a group of more than 180 shippers and trucking companies, supports lifting the truck weight limit.

However, the rail industry and many consumer safety groups oppose heavier trucks.

The Senate Safe and Efficient Transportation Act matches an identical bill in the House of Representatives and a Senate bill introduced in the last Congress.

The sponsors of last year's bill, Sens. Mike Crapo, R-Idaho, Herb Kohl, D-Wis., Susan Collins, R-Maine, and Rob Portman, R-Ohio, re-introduced SETA.

Each of the sponsors hails from a state where businesses produce and ship heavy goods such as lumber and paper that would benefit from bigger trucks.

via www.joc.com

Cass freight index shows costs outpacing tonnage – DC Velocity

A widely followed monthly index of U.S. shipping activity hit levels in March that reinforced what shippers and carriers are discovering: that tightening capacity and soaring diesel fuel prices are driving up shipping costs at a much faster rate than volumes.

The index, published by freight audit and payment firm Cass Information Systems, is based on the expenditures and shipments of 400 shippers that use Cass's services. In March, the freight expenditure index—a measure of shipper spend—reached 2.22, a 33.6-percent increase from March 2010, and a 6.3-percent jump from February's numbers.

The survey's index of shipments reached 1.108, a 13.8-percent increase from the year-ago period, and a 6.9-percent increase over February, which is being viewed as a relatively slack month for shipments due to the impact of severe winter weather in parts of the country.

In a statement accompanying the report, Bridgeton, Mo.-based Cass said that "tightening capacity and soaring fuel prices continue to drive rates up, thus accounting for the remarkable difference between spend and volume growth. This trend is expected to continue through the remainder of 2011."

The report added that "increased volumes in shipping, as well as positive news on other economic indicators, continues to provide evidence that the U.S. economic recovery is continuing forward."

Rosalyn Wilson, who now oversees the Cass report and is also the author of the annual State of Logistics Report produced by the Council of Supply Chain Management Professionals, said the dichotomy between the volume and expenditures indices reflects the impact of higher rates, most notably fuel surcharges. By contrast, rates and surcharges were relatively constrained at this time last year, though volumes were growing, Wilson said.

As of April 4, the average price for a gallon of diesel fuel stood at $3.975, up 96 cents from the same period in 2010. In California, average diesel prices stand at $4.32 a gallon.

Thomas R. Wadewitz, lead transport analyst for JPMorgan Chase & Co., said in a research note that the sequential growth in shipments was "meaningfully stronger than the growth during the 2004-2006 period, the last sustained uptrend for motor freight demand. Wadewitz added as a caveat that the sequential growth was likely skewed by weather-related traffic softness in February.

Wadewitz, who views the index as a valuable barometer of volume trends in the less-than-truckload and truckload markets, said the shipment index is rising at a slightly faster clip than the industry's daily tonnage figures, an indication that the firm's first-quarter industry tonnage forecast ranges from "reasonable to slightly conservative."

Connecting the Cass data with truckload market trends is more difficult due to the fragmented nature of the truckload sector, Wadewitz said. He surmised that demand for truckload transportation is trending in line with or slightly better than normal demand patterns at this point in the truckload cycle.

via www.dcvelocity.com

Forklifts Are Very Dangerous!

Okay....after the forklift humor I posted yesterday I thought a quick look at the risk involved in the operation of one was appropriate. Forklift Safety is a serious business.