Magazine

Heavy equipment maker sharpens view on cargo in transit. By Chris Gillis  Is it actually possible to lose sight of a 15-foot-tall, 60-ton bulldozer?  It happens to big equipment shippers in their supply chains more often than most would admit, and until several years ago, Caterpillar, a manufacturer of some of the world’s largest earth moving equipment, was no exception. The Peoria, Ill.-based company often lost visibility of oversized shipments in its supply chain, frustrating equipment deale...

  When it comes to shipping, Caterpillar thinks big.   One of its largest and most challenging shipments in its product portfolio is the 797 mining truck.   The truck chassis and engines are sourced from a plant in Decatur, Ill., while the massive buckets are made in Monterrey, Mexico. When fully assembled, these trucks weigh as much as two fully loaded and fueled Boeing 747s, or 1.3 million pounds.   Due to their massive size, the trucks are shipped in pieces. It requires seven to ni...

   In March, Caterpillar began considering its “strategic options” for its third-party logistics operation, including a potential sale or structuring it as an independent business within Cat Logistics.    “The third-party logistics business has been a high performing operation within Caterpillar, serving more than 50 customers worldwide in a number of different industries,” said Steve Larson, vice president of Caterpillar and chairman and president of Cat Logistics, at the time of the...

Competition, strengthening relationships and enhancing port finances are priorities. By Eric Kulisch  The new strategic plan for the Port of Los Angeles being fleshed out by Port Director Geraldine Knatz and her staff focuses on three priorities: competition, strengthening relationships with stakeholders and enhancing the port’s financial wherewithal.  Knatz told the Board of Harbor Commissioners at its September meeting that she hopes to have the five-year plan completed for their review by t...

(partial list):  Southern California International Gateway - the Port of Los Angeles released its draft environmental impact report (EIR) for the BNSF near-dock intermodal facility in September and will hold public meetings on the project Nov. 10 and 16. Union Pacific International Container Transfer Facility — the railroad is expanding the facility’s capacity and installing green locomotives and other technology. A joint powers authority of the two cities is expected to publish a draft EIR next yea...

Five-year-old Clean Air Action Plan reduced emissions from cargo-handling operations. By Eric Kulisch  November marked the fifth anniversary of the San Pedro Bay ports’ adoption of a landmark Clean Air Action Plan, a comprehensive strategy to reduce air pollution and associated health risks.  Under the plan, the ports pledged not only to reduce overall emissions but to make sure that each ton of cargo would be moved with fewer emissions in the coming years.  The ports have almost finished...

Port of L.A. protects property from encroachment by non-maritime uses. By Eric Kulisch  The Port of Los Angeles is in the process of formulating a development plan for interior sections of Terminal Island to protect it from encroachment by non-maritime uses that don’t depend on water transportation.  In the past five years the port has created land-use plans for the San Pedro and Wilmington sections of its property. Terminal Island, which houses four of the port’s busiest container terminals, ...

FMC study riles Canadian industry and government leaders. By Chris Dupin   A long-expected decision last month by the U.S. Federal Maritime Commission to begin an investigation into diversion of U.S. imports and exports through Canadian ports has ruffled the feathers of some Canadian business and government leaders.   FMC Chairman Richard A. Lidinsky Jr. has said for months he was considering such a study because of concerns expressed by West Coast port interests.   This fa...

CESAC’s regulatory-tech focus keeps manifest system up to date and relevant. By Chris Gillis    For 25 years, carriers bringing cargo into the U.S. commerce have had access to an automated system to file their manifests with Customs.    Yet driving the success of the Automated Manifest System (AMS) has been an enduring partnership of shipping industry documentation specialists, freight traffic managers, and programmers and government technologists, program officers and data specialis...

  If the Commerce Department finds an exporter to the United States is “dumping” product, or selling it below the normal value in the origin country, it imposes an antidumping duty equivalent to the percentage difference between the normal price in the home market and the lower price at which it is being exported to the United States.      If the product is being exported from a market economy, say Germany, determining that normal value is fairly straight forward. But if it...

Thomas Timlen Asia liason officer, BIMCO tt@bimco.org On Second Thought…    With the U.S. presidential campaign under way, we see candidates face the usual questions, yet it’s not always easy to get clear answers that would indicate their plans or priorities once elected.    Global shipping has far more organizations and associations acting as industry advocates than the GOP has presidential candidates. There are hundreds of national associations, dozens of international associations...

   What duty does the federal government owe an insurance company that underwrites a surety bond to guarantee the obligations of an importer?    That’s the issue at the heart of a case that was remanded to the U.S. Court of International Trade by the U.S. Court of Appeals in Washington to in a 2-1 decision. ( Hartford Fire Insurance Co. v. United States , Fed. Cir. No. 10-1198. Aug. 11)    The case involved shipments of frozen cooked crawfish imported from China in summer 2...

Analyzing 10 years of profit, revenues reveals major changes among top publicly traded lines. By Eric Johnson   The container-shipping industry’s economic roller-coaster ride the past four years has obscured the relative tranquility of the merger and acquisition scene in that time.    Since 2005 — when the A.P. Moller - Maersk Group acquired P&O Nedlloyd and Hapag-Lloyd acquired CP Ships — there has been a dearth of major acquisitions, seemingly lending an air of stability to the indu...

   In late August, two influential shipping voices independently conveyed a similar idea to American Shipper : that vessels transiting the widened Panama Canal to serve U.S. East Coast ports would want to avoid transshipment.    “If you take your big-ship economics and wipe it out with transshipment you haven’t accomplished anything,” Jim Newsome president and chief executive officer of the South Carolina State Ports Authority and a former liner executive with Hapag-Lloyd, told Ameri...

Carriers, and forwarders hope for, but don’t expect a bullish peak season for air cargo. By Eric Johnson    Sluggish. Weakened. Lethargic.    The words used of late to paint the air freight demand picture from Asia to North America could easily describe the effects of the flu.    And air freight could be diagnosed as suffering from the same malaise as ocean freight — overcapacity coupled with sluggish, weakened and lethargic demand.    That’s led most in the indus...

   The U.S. Federal Aviation Administration said Sept. 2 it plans to issue a $175,000 civil penalty against the Massachusetts Institute of Technology for alleged violations of Department of Transportation hazardous materials regulations.    The FAA claims MIT offered a fiberboard box containing 33 electronic devices to FedEx Express for transportation by air from Cambridge, Mass., to Seattle on Aug. 25, 2009. Each electronic device consisted of a lithium battery attached to a circuit...

European logistics giant expands in the Americas, Asia. By Chris Dupin    European logistics giant Geodis Group has been expanding in the United States and elsewhere in the Americas through acquisitions and organic growth.    In June, Geodis Wilson, its freight management unit, acquired Minneapolis-based One Source Logistics and announced plans to double its freight forwarding business in the coming five years.    It’s the latest move by a company that also was in the spotl...

   Third-party logistics services provider Century Distribution Systems has recently started a non-vessel-operating common carrier service to serve shippers in the U.S. trades.    Century Express, the U.S. licensed ocean transportation intermediary, is an outgrowth of the company’s NVO division Century Shipping, which was started in 2005. Century Shipping has operated in several trade lanes, predominantly Asia/Europe and Asia/Australia, but did not hold licenses from the U.S. Federal ...

   More than 30 years ago FedEx founder and Chief Executive Officer Fred Smith famously said, “the information about the package is just as important as the package itself.”    Today FedEx alone handles millions of packages per day, each of them generating hundreds of pieces of data as the shipments move through the company’s network.    That’s a lot of data to manage, but FedEx — true to Smith’s vision from 1978 — has become a master of not only capturing this data, but al...

USA Bouquet has logistics ‘down cold’ for moving blooms from grower to U.S. retailer. By Chris Dupin    The flexibility to source flowers globally and a cold supply chain to keep them in top condition until they can be delivered to stores around the country have helped USA Bouquet Co. blossom.    Ricardo Nieto, director of operations at the Miami-based company and its Consolidated Fresh Solutions affiliate, said the company’s model is unique when compared to its competitors.   &...

Automated freight payment pioneer starts new venture to further refine process. By Chris Gillis    With today’s available automation, it would appear that paying the right carrier the right amount at the right time should be a straightforward process for shippers, but that’s still far from reality.    “Unfortunately, transportation payments are very complicated when one considers the number of potential exceptions that can occur,” said Richard G. Langer, managing partner of newly for...

Strategy of former YRC Worldwide 3PL mixes global capabilities with local touch. By Eric Kulisch    MIQ Logistics, formed after troubled freight transportation conglomerate YRC Worldwide sold off its logistics division to private investors one year ago, is thriving as a standalone company.    The logistics service provider is on track to close its fiscal year with gross revenue above $700 million — about $100 million more than its final year as YRC Logistics, said Joey Carnes, MIQ Lo...

Port of Charleston gears up for big ships, export growth. By Eric Kulisch    Get ready U.S. East Coast ports, the big ships are coming, warns James Newsome, president and chief executive officer of the South Carolina State Ports Authority.    Terminals with the right infrastructure and market attributes need to prepare for the arrival of super-sized containerships, because the Panama Canal’s expansion in 2014 will not lead, as many port experts predict, to the proliferation of transs...

BIS releases new best practices to help U.S. exporters prevent illicit shipment diversions. By Chris Gillis    Transshipment, or the practice of routing cargo through a regional hub port en route to the country of ultimate destination, is a common means for efficiently moving international commerce.    But it has also been used to divert some shipments into the wrong hands.    U.S. Commerce Department’s Bureau of Industry and Security recently published a new set of best pr...

   Shippers may sing the blues about the tediousness of import compliance, but the reality is that the rules — no matter how obscure — must be followed to avoid enforcement action and the possibility of a public relations nightmare.    Gibson Guitars certainly learned this the hard way with the Lacey Act, a law amended by Congress in 2008 to curtail trafficking of goods made from illegally harvested wildlife and plants.    On Aug. 24, Fish and Wildlife Service and Homeland ...

Riding China’s rising consumerism while avoiding a supply chain wipeout. Eric Johnson     One Billion Customers is how former Beijing Wall Street Journal bureau chief James McGregor described China in his 2005 book on doing business in the rapidly rising Asian power.   The lure of a population base three times that of the United States is a powerful one for retailers who increasingly see China as a destination and not just a production point for goods.   American Shipper last fall ex...

Shipping industry warns of dire consequences if ballast discharge laws are not uniform, attainable. By Chris Dupin    Shipping industry advocates are raising the alarm about state regulation of ballast water discharge, saying proposed standards in New York and California are unattainable using available technology.    Rep. Steven C. LaTourette, R-Ohio, said he has been an advocate for preventing the spread of invasive species through ballast water since sponsoring the National Invasi...

CSCMP cultivates university-led research to benefit careers of members. By Chris Gillis    The Council of Supply Chain Management Professionals has long been a gathering point for serious supply chain managers to network and exchange ideas and best practices, and it’s only natural that more academics and researchers specializing in this field have also gravitated to the organization.    CSCMP has increasingly opened its doors to educators and their students, and formed relationships ...

   Imagine a supply chain in which American shippers need not look farther than their next door neighbor for the manufacturing of goods.    Many companies are already considering it. A survey of 80 mostly large firms by consultancy AlixPartners found 9 percent have already relocated from Asia back to the Americas, so-called “near-shoring.” Another 33 percent are thinking of near-shoring production in the next three years.    And why not? With the cost and efficiency of long...

On Second thought… By Beth Peterson    Have you ever been sitting in a corporate meeting trying to explain why global trade compliance is important, and all you get back are blank stares?    Over the years I’ve come to realize that a company’s lack of understanding of the basics of global trade has absolutely nothing to do with the concepts being obscure or difficult to understand.    The issue is everyone is carrying such a huge workload they can’t conceive of taking on ad...

   A federal appeals court has ruled the Occupational Safety and Health Administration may regulate so-called “vertical tandem lifts” (VTLs) of containers or flat racks, where more than one container or flat rack is lifted at a time. ( National Maritime Safety Association v. Occupational Safety & Health Administration , D.C. Circuit. No. 09-1050. June 17.)    But the court agreed with the National Maritime Safety Association (NMSA) that some OSHA rules on vertical tandem lifts we...

New UP facility will bring together bulk agriculture grain, empty containers. By Chris Dupin    Union Pacific Railroad will give agriculture exporters another way to tap the plentiful supply of empty containers in Southern California with a facility slated to open late this summer in Yermo, Calif.    The new facility will be able to transload entire unit trains of products, such as distiller’s dried grains with solubles (DDGS), grain, and soybeans, into containers, then move them to ...

   Piracy worldwide costs the international economy $7 billion to $12 billion per year, according to a December study by One Earth Future Foundation, a non-profit organization that seeks to solve global problems through improved governance that incorporates the expertise of the business community and civil organizations.    A more recent and robust study by economic intelligence firm Geopolicity placed the cumulative cost of piracy at $4.9 billion to $8.3 billion, and predicted the co...

   Maersk Line made news in late June when the container line said it will begin assessing a $100-per-container no-show fee on bookings that fail to materialize.    Unlike simple no-show penalties of the past, the new initiative is an attempt at quid pro quo. If Maersk has overbooked on a sailing and has to hold back a box, it will compensate the shipper by the same $100 per container.    The measure is in sync with Maersk Chief Executive Officer Eivind Kolding’s recent man...

   NATO’s bombardment of Libyan government facilities in an effort to drive Col. Muammar Qaddafi from power continues.    Libya is a small country and the loss of trade opportunities due to hostilities is having minimal impact on the global economy, although individual companies in Europe and elsewhere are certainly suffering from the loss of business.    But the conflict indirectly impacts international trade because Libyan oil production has been sharply curtailed. The lo...

Education key to NVO’s plan to complement Obama’s export call. By Chris Dupin    If President Obama wants to double exports in the next five years, he could do worse than find more businessmen who think like Daniel L. Gardner.    Named chief executive officer of Ocean World Lines (OWL) in January, Gardner notes that it took the non-vessel-operating common carrier 22 years to achieve annual revenues of $300 million.    He has set his company a goal not unlike Obama’s — a dou...

  For the better part of the past decade transportation management systems (TMS) vendors and consumers have complained about SAP’s ability to “freeze” their market with promises of a new release that never seemed to materialize.    In June, SAP, the German business software giant, made good on its promise with the long-awaited release of Transportation Management 8.0.    “SAP TM 8.0 is a full end-to-end solution for transportation management,” said Timothy Motter, solution direc...

Experts say it’s better to report attempted wrongdoing to federal regulators. By Chris Gillis    If a buyer makes a questionable export request, the smart company would turn down the business.    However, the more diligent company would take the matter a step further by reporting the suspicious activity to federal authorities in charge of overseeing the country’s enforcement of export regulations.    Industry experts specializing in U.S. export regulatory compliance say it’...

2010 logistics costs go up despite better inventory management, study says. By Eric Kulisch    U.S. logistics costs increased 10.4 percent, or $114 billion, to $1.2 trillion in 2010 because there were more shipments as the economy recovered from the recession and indirect costs for storing inventory increased, according to the 22nd annual State of Logistics report authored by Rosalyn Wilson. Wilson    Logistics costs as a percent of gross domestic product — a barometer of the logisti...

2011 was not expected to see strong economic growth. Walter Kemmsies chief economist, Moffatt & Nichol   Given the poor performance of the U.S. economy year to date, it is worth reviewing the 2011 outlook published last December (“ Better, not great,” pages 14-17 ).    The key points were:    • “For 2011 a 2.4 percent (real gross domestic product) growth rate looks likely. This would be less than the 2.7 percent growth rate that 2010 is likely to finish with, but the lower a...

Pirates demonstrate coordinated logistics approach in spreading mayhem. By Eric Kulisch    In the last year, pirates have quadrupled their zone of operation in the Indian Ocean, from 600 nautical miles off the coast of East Africa to the tip of India, and have become more violent.    A multinational military presence has reduced the rate of successful hijackings, but the number of ship takeovers has increased because pirates launched many more attacks since 2009. And it has pushed th...

Report focuses on vulnerable trade hubs, suggests shippers plan now for how to contend with a major disruption. By Eric Johnson    It’s hard to wrap one’s arms around the idea of supply chain security, and there are a couple of reasons.    For one, no two companies have the same profile, meaning every company is exposed to different sets of risks. Second, it’s frankly hard to visualize all the terrible things that could go wrong, both natural and man-made, much less prepare for those...

CSX, Ports America put Baltimore on container map despite distance from ocean. By Eric Kulisch    The Port of Baltimore, relegated to the lower tier of harbors in the container trade for the better part of 20 years, is poised for significant growth as new wharf and intermodal investments get underway and private sector partners heavily market it as an international gateway for Midwest retailers and manufacturers, according to port officials and industry experts.    The new infrastruc...

   It seems the more the liner carriers near their destination, the more they’re slip, sliding away.    That destination is maintaining a positive bottom line through properly managed assets and sustainable freight rates for container transport. They — the top 15 publicly traded liner carriers — mostly accomplished this in 2010 through tightly controlled vessel capacities and remaining firm with shippers on rate levels, netting them collective operating profits of close to $10 billio...

On Second Thought ... Thomas Nightingale Chief Marketing officer, Con-way Inc. board of directors Transport Marketing and Sales Association nightingale.tom@con-way.com    The Transportation Worker Identification Credential was launched with the best of intentions, spurred by the tragic events of 9/11.    With security measures heightening everywhere, Congress, through the Maritime Transportation Security Act, established what was to be a one-size-fits-all security clearance card — one...

High-tech CSX hub takes intermodal to next level.    Companies like CSX are applying new approaches to increase the density and efficiency of new intermodal terminals.    These include stacking stored containers trackside, using cantilevered, wide-span electric cranes that can cross several tracks at once, employing advanced software to optimize the order of lifts, and automated gate systems that minimize queuing of truck traffic.    Much of the operations concept and techn...

OAKLAND    Matson has ended one of its two U.S./China services a year after it was launched, citing sustained high fuel prices, downward rate pressure and overcapacity in the transpacific trade.    Matson in late August discontinued its expanded China-Long Beach Express service (CLX2), which includes service between Hong Kong, Yantian, Shanghai and Long Beach.    The company emphasized that discontinuing the CLX2 would not affect Matson’s five-year-old CLX1 service, nor the...

Improved demand brings return for German heavy-lift specialist’s westbound service from India to Europe. By Eric Johnson    Here’s a peek into how the recent economic recession affected trade regions differently: through the dark days of the crisis, project cargo and heavy-lift specialist carrier Rickmers-Linie continued to serve India from Europe, but there wasn’t nearly enough demand in the other direction to support a westbound service.    Europe’s floundering economy led the line...

   It’s been said low ocean freight rates can’t induce demand. Consumers either want their extra-large flat-screen TVs or they don’t, and the price of such products relies little on the ocean rate makers like Sony or Samsung can secure at a given time.    So if carriers can’t compel customers to ship more with lower rates, why are they so quick to lower base rates to levels they admit are unsustainable?    The answer may lie in the total revenue picture. And it has a lot to...

   Airlines had a difficult time making a profit during the first half of the year, but industry executives feel more confident about being in the black going forward as concerns about soaring fuel prices have abated in recent weeks, according to a survey on airline business confidence.    The survey, conducted each quarter by the International Air Transport Association, showed a marked improvement in confidence from April, when the index sharply declined. Second quarter profit margi...

   It seems only natural to think the bigger the customs broker the more import entries they can efficiently process.    However, that’s not actually the case. A recent survey of 140 industry executives by Kewill found productivity, or the number of monthly customs entries per full-time customs employee, peaked with mid-sized broker operations, and dropped off significantly for larger operations.    In its survey, which Kewill discussed in detail during an Aug. 11 American S...

    American Shipper’s International Transportation Management Systems (ITMS) Benchmark Study, published November 2010 (available for free at www.AmericanShipper.com/ITMS ), demonstrated that shippers use an average of about four-and-a-half IT systems to manage international transportation, while best-in-class firms or “winners” actually use more.      More technology isn’t necessarily a good thing. Most likely these shippers have adopted the technology required to get...

APL Logistics rebuilds domestic intermodal business a decade after selling double-stack business to Pacer. By Chris Dupin    It’s back to the future at APL Logistics as the company rebuilds its domestic intermodal business a dozen years after selling it to Pacer International.    APL, as American President Lines, pioneered double-stack intermodal rail and 53-foot domestic containers in the 1980s.    Domestic intermodal was a good business for APL, which was acquired by Sing...

Soviet era-built AN-124s still reign as world’s dominant super-heavy haulers. By Chris Gillis    The world’s biggest commercial cargo planes, the Antonov 124s, didn’t feel the downdraft of the most recent global recession.    The planes’ handful of operators mostly benefited from pre-existing long-term project cargo transport contracts, which often take several years to complete, and the continuous movement of large military and humanitarian equipment loads.    “The market ...

Sputtering recovery translates into fewer shipments. By Eric Kulisch    Growth has been choppy since the U.S. economy pulled out of recession two years ago, alternating between lukewarm and anemic expansion.    Most economists have minimized the likelihood that the U.S. or global economies will fall into decline again, but economic data and shipment volumes at freight carriers in recent weeks have raised worries the economy is stalling.    Some of the initial warning signs ...

   On Feb. 2, 2005, the bulker Cape Flattery , loaded with cement, ran aground on a submerged coral reef off Barbers Point, Oahu, Hawaii.    Cape Flattery Ltd., as the vessel’s owner, was liable for the cost of removing the vessel from the reef, and hired Titan Maritime to salvage it.    Titan succeeded in removing the Cape Flattery from the reef and eliminating the threat of oil discharge, but the reef was damaged at some point in the ship’s grounding or removal.  &nb...

Newly elected ILA President Harold Daggett lays out ambitious agenda for union. By Chris Dupin    The contract between the International Longshoremen’s Association and the terminals and carriers along the East and Gulf coasts that employ its members expires in a year, on Sept. 30, 2012. Negotiations for a new pact could begin this fall with the United States Maritime Alliance (USMX), the group that represents management in master contract talks.    In contrast to the 1960s and 1970s,...

   There’s a big profit lure for freight forwarders to want to manage project shipments, but a general lack of internal expertise — and patience — keeps many of these firms sidelined from the business.    Project shipments in no way, shape or form fit the mold of what most air and ocean forwarders are used to handling, which are discrete cargoes able to be loaded on pallets and into standardized containers. Instead they are often super-sized pieces that require highly specialized logi...

SeaIntel finds carriers, large NVOs mostly uninterested in rate quotes for small transpacific, Asia/Europe shippers. By Eric Johnson    Shippers groups have long bemoaned the treatment that small shippers get from container lines. Now they have a little more ammo.    A report in mid-June from Danish maritime analyst SeaIntel outlined the difficulties new, smaller shippers can face in getting carriers and large non-vessel-operating common carriers to respond to rate requests.  &n...

   The Transportation Security Administration is exploring the viability of authorizing airline representatives in foreign countries to screen cargo on their behalf to help close the gap between screened and unscreened cargo on passenger flights, said a Department of Homeland Security official with close knowledge of the situation.    Under the congressional mandate that went into effect on Aug. 1, airlines, or certified shippers and freight forwarders, must screen all cargo on passen...