Global economics: IMF forecasts leadership role for Asian nations - Article from Supply Chain Management Review

Global economics: IMF forecasts leadership role for Asian nations - Article from Supply Chain Management Review

Ocean cargo/global logistics: FMC Scrutinizes Carrier Rates and Capacity

By Patrick Burnson, Executive Editor
June 01, 2010
As the Federal Maritime Commission ramps up its investigation of ocean carrier price-fixing, it is also keeping a vigilant watch on capacity and equipment shortages.
In a speech given before the Virginia Maritime Association last month, FMC commissioner Michael Khouri noted that U.S. exporters of agricultural products are particularly exercised about the impact of capacity limitation, equipment unavailability and rate increases on their ability to compete internationally.

“The capacity, equipment availability and rate increase issues and their impact on U.S. shippers are of great concern to the FMC,” said Khouri. “Last March, the Commissioners voted to initiate a Non-Adjudicatory Fact Finding Investigation into the current conditions concerning vessel and equipment availability in the U.S. export and import liner trades.”

Meanwhile, Khouri and his colleagues are concentrating on rate inflation too.

“Recent reports of increases in annual transpacific contract rates have heightened shipper concerns that these rate hikes are facilitated by carriers using, first, their legal authority to discuss voluntary general rate guidelines with, second, discussions to agree on capacity restriction,” he said. “The first discussion would be legal under the Shipping Act. The second discussions — if they occurred — would be outside of the Shipping Act purview and would therefore be a violation of the Sherman Act.”
While the FMC’s Fact Finding is not focused on the vessel operator’s antitrust immunity, the Commission is mindful of these concerns and plans to closely monitor the carriers’ collective activities. If there is any indication that capacity issues and higher freight rates are credibly linked to any improper use of antitrust immunity by foreign-flag or U.S. flag liner carriers, the Commission will take action, said Khouri. He said shippers may also see renewed attention by Congress and the Administration.

Green logistics/trucking news: President Obama and trucking industry agree on new fuel standards - Article from Logistics Management

Green logistics/trucking news: President Obama and trucking industry agree on new fuel standards - Article from Logistics Management

Green logistics/trucking news: President Obama and trucking industry agree on new fuel standards
By John D. Schulz, Contributing Editor
May 25, 2010
A fully loaded 80,000-pound tractor-trailer gets perhaps five miles per gallon of costly diesel fuel. If the truck is properly maintained. Going downhill. With a tailwind. Maybe.

President Barack Obama wants to change that. And, somewhat surprisingly, the American trucking industry largely agrees.

In a Rose Garden ceremony on May 21 with a handful of top U.S. trucking industry and heavy truck manufacturers on hand, President Obama signed a presidential memorandum that for the first time would set mileage and pollution limits for big trucks. The rules are set to take effect with the 2014 model year.

Although heavy trucks comprise just 4 percent of vehicles, they account for perhaps as much as 21 percent of air pollution from mobile sources. Heavy trucks consume 16 percent to 22 percent of this nation’s fuel, or about 54 billion gallons of fuel annually. When diesel reached its peak in 2008, the U.S. trucking industry had a fuel tab that exceeded $150 billion. Although this year’s figure cannot be determined precisely, the tab will approach that again.

After labor and equipment, fuel is the third-highest cost for a motor carrier. The average truckload carrier spends about 12 to 14 percent of its revenue on fuel, with the average LTL carrier spending perhaps 6 percent (The difference is because of the longer lengths of haul of a TL carrier, typically over 1,000 miles).

With the White House under pressure from environmentalists after the catastrophic BP oil spill in the Gulf of Mexico, the president chose to go the executive order route on truck mileage standards. That was an end-run around Congress, which could have been expected to dither for years (if not decades) on the issue. Instead, the presidential memorandum directs the U.S. Department of Transportation and the Environmental Protection Agency to develop national standards for fuel economy and greenhouse gas emissions for heavy- and medium-duty trucks.

“The nation that leads in the clean energy economy will lead the global economy,” Obama declared on May 18. “I want America to be that nation.”

Although a Class 8 truck is cleaner now that it has ever been, the nation’s 7 million commercial trucks are hardly pristine. According to the EPA, commercial trucks account for 21 percent of all greenhouse gas emissions in the transport sector even though they are roughly 4 percent of all vehicles.

“This is a small but commendable step,” Michael Levi, an energy and climate change expert with the Council of Foreign Relations, told the New York Times. “The oil spill can help focus people’s attention, but it will take something else to close the deal.”

That “something else” could be the surprising support of the organized trucking lobby. For an industry that fought deregulation, anti-lock brakes and other initiatives when they were first proposed, the trucking industry seems unusually sanguine and even supportive of the president’s proposal.

Hours after the president’s announcement where he was flanked by top executives of the trucking industry and its suppliers, the American Trucking Associations issued a press release trumpeting the announcement that the President “effectively endorses the ATA Sustainability Task Force recommendation” of 2008 that called for national fuel economy standards for trucks to reduce greenhouse gas emissions.

ATA Chairman Tommy Hodges, who also is chairman of Titan Transfer, Shelbyville, Tenn., attended the Rose Garden ceremony along with the heads of Daimler Trucks North America, Volvo North American Trucks, Cummins and Navistar International.

The trucking industry is determined “to be at the front of the fuel economy issue,” Hodges said. He said ATA would have “significant input” on the final rule to develop what the industry hopes will be beneficial and affordable fuel efficiency standards

SaaS and Outsourced TMS Strategies

The trend is up for Software as a Service and Outsourced TMS Strategies according to data from a recent Aberdeen Group White paper. With 69% of their respondents stating that they prefer to seek assistance through consulting on "best practice implementation".

We can break down the graph into three distinct groups:

1. Thought Leadership(69%) – Companies prefer to seek assistance on thought leadership with 69% considering consulting on "best practice implementation"
2. Optimization (40% range) – Companies prefer to seek assistance beginning with planning, shipment monitoring and problem resolution, and freight audit and settlement assistance
3. Execution (30% range) – Assistance in managed services for backhaul, inter-company coordinators, transportation execution and procurement / RFO management

The numbers of companies exploring release of control over execution-side capabilities is on the upswing. The aversions of the past to releasing control of execution-related areas is beginning to subside as SaaS hosted sites, B2B data exchange platforms and providers become more robust and secure, and 3PL options for managed systems and execution become more commonplace and expand their service offerings.
Source: Aberdeen Group

ISM: Manufacturing jumps, inventories leap up

The Institute for Supply Management's latest monthly report shows another month of growth, fueled in part by an unusually big leap up in inventory levels.

Sean Murphy -- Supply Chain Management Review, 4/1/2010

A surge in inventories fueled a high growth rate in the manufacturing sector in March, ending the first quarter with a bang, according to the latest monthly report from the Institute for Supply Management (ISM).



According to Norbert Ore, chair of ISM's Manufacturing Business Survey Committee. The index the ISM uses to measure the sector, or PMI, hit 59.6 percent, up 3.1 points from February. This marks eight straight months of increase for the PMI, Ore said, placing the sector's overall health well into "growth" territory. Ore also said the current growth rate is the fastest since 2004.



Ore said the current PMI is impressive, considering the same index registered at 40.4, in contracting territory, at this time last year.



"That's a remarkable story of what's been happening over the past year," Ore said.



In addition, similar indices in Europe and other parts of the world also indicate growth, a sign, Ore said, that the recovery isn't just happening here at home.



"We have basically a reasonably good recovery in global manufacturing going," he said.



Ore said he expected to see the PMI going up, since the New Orders and Production indices got into the 60s in March, but what really surprised him, he said, was the Inventories index. After a 46-month period of liquidation, Ore said the index made a "most unusual" leap upward in March, going up 8 points to 55.3 percent.



"I think it's an indication that we really hit bottom in inventories," Ore said.



Not all the news was positive, but even the bad news, Ore said, wasn't all bad. Prices went up as much as inventories in March, rising eight points to 75 percent. Ore's report said that prices have remained above 50 percent, indicating growth, for the past nine months.



Still, Ore said the numbers are misleading, and not an indication of pending inflation. Many of the goods which have gone up in price the most, he said, were metals.



"I don't think it's a problem yet," he said.



The employment index dropped by a single point to 55.1 percent. Ore called that "noise in the data," and said it didn't mean that employment was about to take a dive. The index, he said, went up 6 points between January and February, and still remains in "growth" territory, despite losing a point in March.

Non-Manufacturing keeps on growing, but employment still lags behind

The Institute for Supply Management (ISM)'s February report on the non-manufacturing sector promises more growth in the future, but the real proof will be when employment begins to grow again.
Sean Murphy -- Supply Chain Management Review, 3/3/2010

Non-Manufacturing keeps on growing, but employment still lags behind:

Trucking news: ATA reports January tonnage is up 5.7 percent year-over-year

The trucking industry has long been the barometer for real econimic data. For one ton of cargo to move someone really placed an order and purchased sometinig. It usually takes 6 months of good tonnage reports to hear the economy is back on track. This report reflects positive year over year results.

Trucking news: ATA reports January tonnage is up 5.7 percent year-over-year: "ARLINGTON, Va.-At a time when freight volumes remain low, the American Tr..."