16 Mar 2010 at 6:28am
APM Terminals is the preferred bidder to operate the 25-year concession at the Port of Monrovia in Liberia.
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16 Mar 2010 at 6:27am
Vectura, supplier of logistics services for producers, agents and importers of wine and spirits in Norway, has signed a three-year agreement to outsource warehousing and distribution activities at its Trondheim site to Kuehne + Nagel.
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16 Mar 2010 at 6:26am
DB Schenker has been appointed the official logistics provider for CeBIT Australia. Schenker has also committed to provide logistics services for the Paralympic Games in Vancouver and London.
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16 Mar 2010 at 6:25am
TDG has secured long-term business with food ingredient specialist, Givaudan Nederland.
15 Mar 2010 at 7:14am
According to the Ministry of Commerce of the People's Republic of China, China Eastern Airlines has acquired a 51% stake in Great Wall Airline.
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15 Mar 2010 at 7:13am
TNT Express has announced the worldwide launch of its new Express Import system, which gives customers complete control over their import shipments.
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15 Mar 2010 at 7:11am
Qantas Freight has announced that it will join Cargo 2000, the air freight industry's premier quality management program as an associate member.
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15 Mar 2010 at 7:11am
Kansas City Southern (KCS) has acquired the Puerta Mexico intermodal facility at Toluca in the State of Mexico.
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12 Mar 2010 at 5:11am
The Grand Alliance will launch a new Asia-Europe loop on March 22nd; MOL will revise coverage on its Asia East Coast - South America service on March 25th; and CCNI, Hanjin Shipping, Hapag-Lloyd, Wanhai and Zim will cooperate on an Asia - South America East Coast service from April.
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12 Mar 2010 at 5:10am
A third new generation IL-76TD-90VD freighter will join Volga-Dnepr Airlines' commercial fleet in April, taking Volga-Dnepr Group's investment in the modernised aircraft to more than US$90 million.
16 Mar 2010 at 8:55pm
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16 Mar 2010 at 10:44am
The Teamsters Union said yesterday that it is looking into establishing dialogue with ABF...
15 Mar 2010 at 2:39pm
A report released today by the Environmental Defense Fund calls for Congress to include...
15 Mar 2010 at 11:11am
While HSR can make an imprint in the U.S., there are subsequently myriad benefits of future HSR...
12 Mar 2010 at 12:13pm
Even though a full economic recovery is not underway, data released today by the United States...
12 Mar 2010 at 9:32am
Harsh weather conditions in February had a negative impact on economic growth, according to the...
11 Mar 2010 at 2:07pm
The week ending March 6 saw continued momentum on United States railroads, according to data...
10 Mar 2010 at 11:19am
The United States Department of Transportation's Bureau of Transportation Statistics (BTS)...
9 Mar 2010 at 12:24pm
Survey of trucking executives finds optimism in the...
5 Mar 2010 at 12:59pm
A group of 56 members of Congress this week penned a letter to United States Trade...
5 Mar 2010 at 10:20am
Vote is similar to Senate one earlier this week, with some differences regarding how...
12 Mar 2010 at 5:52pm
Various published reports appear to signal an end to the recession and to some upswing in freight volumes. The Baird freight index showed year/year growth of 1.4% in January. Truckload, intermodal and carload volumes appear to be firming up. This is not to suggest that we are now in boom times. As reported in an earlier blog, the LTL sector still remains significantly challenged due to the oversupply of capacity and carriers. These reports should be viewed as a signal of a change of direction that will take time to unfold.
In 2009 weak demand and cost reduction pressures from higher management caused many shippers to conduct freight sourcing initiatives. One recent study reported two interesting findings. First, the average rate reduction achieved, across all modes, resulting from freight RFP exercises was 16 percent. Another significant finding was that most shippers intentionally left 40 to 50 percent of their implementable savings on the table. Despite what some have characterized as 'frenzied bidding,' many shippers made the conscious decision to not take a significant portion of the potential savings. This strategy was reinforced by some of the shipper representatives who spoke at last year's Shipper Freight Management Conference, co-sponsored by my company and Canadian Transportation & Logistics magazine.
This begs the obvious question. In a year when the economy was so weak and cost reduction pressures were so strong, why did so many shippers display a reluctance to switch carriers to reduce costs' The answer lies in one important word, relationships. Even in tough times, when the temptation is there to throw valued suppliers 'under the bus,' knowledgeable and enlightened shippers took the time to reflect on the value they have received to date, the performance they are currently receiving and took a long look at the road ahead. This is what they saw.
During busier times, the top carriers maintained their performance. They priced their services fairly and did not take advantage of the leverage they had to gouge their clients. They provided their good customers with the extras (e.g. additional trailers, late pickups, visibility, and superior customer service) that helped maintain carrier loyalty. These carriers provided high quality service with the understanding that the pendulum can and did swing. Now shippers have expectations that as the economic fortunes of North America change, their carriers will treat them fairly again. Shippers now expect their core carriers to reciprocate, the essence of healthy, balanced relationships.
Enlightened shippers know that capacity will tighten. It will take time for trucking companies to hire and train drivers to replace those who left the industry. There are signs that this is already happening. As the economy improves and the market for used trucks increases, this may drive some truckers out of the industry.
Harvey S. Firestone, the founder of Firestone Tire & Rubber once stated, 'A man with a surplus can control circumstances but a man without surplus is controlled by them, and often has no opportunity to exercise judgement.' Another wise person has said that 'knowledge is power.'
As a result shippers should continue to seek out alternative providers that can meet or exceed expectations. They should also take a keen interest in the dynamics of the freight market. There is still great value in performing strategic sourcing exercises, on a scheduled basis. However, shippers should share their plans and data with their key suppliers. They should continue to expect suggestions on how to upgrade or introduce best practices into shipping processes. Based on a combination of performance, trust, and communication, shippers and carriers should seek to build upon the relationships that have been established over time. This will provide both parties with a competitive advantage.
6 Mar 2010 at 6:25am
The Intermodal sector faced many of the same challenges as other segments of the transportation industry during the recession and suffered some decreases in business in 2009. Toby Kolstad, President of Rail Theory Forecasts in Portland, Oregon attributed the volume declines to two factors. 'About 70 percent of the downturn in business is attributed to the drop in imports and the other 30 percent is due to the drop in domestic sales. I don't see the traffic picking up substantially in the future because I think retail sales of goods will continue to lag. There is just too much unemployment, debt and an overall feeling of loss of wealth.' He forecasts that intermodal volumes will return to pre-recession levels by 2014.
Against this backdrop of discouraging news, the rails are not standing still. In fact, there has been a flurry of developments over the past several months that demonstrate that the industry is still vibrant and poised for growth.
Major Truckers and IMC's restructure their Partnerships with the Rails
J.B. Hunt, once America's largest truckload carriers now generates significantly more business from its intermodal business. For the past 20 years, Hunt has had an alliance with BNSF Railway, the largest intermodal railway. With the largest fleet of domestic 53-foot intermodal containers, estimated at 41,000 boxes, Hunt has been achieving consistent growth in its western USA intermodal business. Late last year it signed an agreement with Norfolk Southern Railway to grow its eastern USA business.
Schneider National, one of its major competitors, has partnered with CSX, NS's leading competitor in the east. Schneider is focusing on the Chicago-Florida, Chicago-Northeast and St. Louis-Northeast routes.
UP last year renegotiated a long-term space and pricing contract with Pacer International, a large freight management company that allowed the railroad to directly take over more domestic business. Before that it lured Hub Group, another large IMC, to shift much of its western-U.S. traffic onto UP from rival BNSF Railway.
Expanded Rail Corridors to Take Advantage of the Widening of the Panama Canal
The western rails have served as the land bridge for Panama Canal traffic. CSX and Norfolk Southern are positioning themselves to capitalize on what they hope will be a shift of customers to east coast ports as the Panama Canal is widened by 2015. This is resulting in a set of upgrades and intermodal expansion to facilitate the movement of containers through east coast ports. This eastern development is expected to pave the way for double-stack trains along these corridors.
The Heartland Corridor is being implemented to increase double-stack intermodal traffic from the port of Virginia, the deepest east coast port, into the Midwest, primarily Columbus and Chicago. Several railroads have plans to invest in intermodal facilities in Memphis to facilitate traffic along the Norfolk Southern Crescent Corridor, a high-speed route between the South and Northeast which boasts the ability to take 880,000 long-haul trucks off the busy commercial corridor annually.
CSX Corp. recently received $98 million in federal stimulus funds toward its goal of increasing the use of double-stack trains to move freight from mid-Atlantic ports to Midwestern markets. The $842 million public-private partnership, known as National Gateway, involves upgrading existing track, modifying bridges and raising tunnel clearances along three major CSX routes -- the I-95 corridor between North Carolina and Baltimore, I-70/I-76 between Washington and northwest Ohio via Pittsburgh, and the company's Carolina Corridor between Wilmington, N.C., and Charlotte, N.C. -- to accommodate the taller freight cars. One such train can carry the load of more than 280 trucks. In Virginia, the project would take an estimated 1 million trucks off I-81 in its first 10 years -- far less than Norfolk Sothern's Crescent Corridor plan.
Prince Rupert offers Shortest Transit Times from the Far East
Much has been written about the Port of Prince Rupert on the west coast of British Columbia. The port that in conjunction with CN Rail links the Far East to the heartland of the United States remains a key component of NASCO (North American Super Corridor). Container volumes are projected to grow from 500,000 TEU's to 2 million per annum.
The Move to Jumbo Containers
CSX Transportation in the eastern United States and Union Pacific Railroad in the West will soon be jointly marketing a domestic intermodal service in jumbo-sized containers. Dubbed UMAX, the service will give customers single-bill interline routing on more than 600 traffic lanes, and the railroads are backing it up with 20,000 of the big 53-foot boxes. The carriers said UMAX begins operating March 29, with door-to-door service that will be competitive with trucks by combining short-haul trucking with long-distance rail.
The Warren Buffet Factor
Warren Buffet has a reputation as a benevolent investor who allows the leadership teams in his companies to run their businesses, unless they falter. Some experts believe that he will maintain this 'hands off' approach while others foresee him trying to move BNSF, his largest investment ever, in some new directions. Specifically, there are those who believe that by removing the focus on quarterly returns, this may allow the company to change its large network in ways that produce faster growth (e.g. take more freight off the road, sign contracts with ocean carriers). He may also look at a merger with Norfolk Southern in which he already has a stake and invest in dual power locomotive cars that are not currently used in the United States. Certainly if fuel costs begin to rise significantly over time, the BNSF would be uniquely positioned to divert business from road to rail.
Don't Forget About Mexico
The Kansas City Southern Railway is focusing on the Kansas City to Mexico corridor and the Rosenberg (Houston) to Mexico City corridor. New intermodal terminals are planned for Toluca, Mexico and Rosenberg, Texas. Mexico is also looking for significant container growth at the ports of Lazaro Cardenas and Manzanillo.
Transloading
This continues to be an option in certain situations where it becomes economically viable to utilize the domestic intermodal rail network and take advantage of opportunities to pool freight to specific destinations.
If they build It, will they come'
Taken collectively, these activities paint a picture of a mature industry that is in the process of revitalization. One would think that these new offerings would be warmly received by shippers. However, customers of Canada largest railways have issued a damning review of the quality of service they have received in recent years. The findings are part of the federal government's ongoing Rail Freight Service Review process which could potentially lead to greater regulation of the rail industry in Canada after the recommendations of the commission are given to Parliament in the fall.
Some of the initial findings contained in a survey of 269 shippers across the country chastise Canadian National Railway Co. and Canadian Pacific Railway Ltd. for unsatisfactory service. Only about 17% of those surveyed said they have a high level of satisfaction in the service they have received from either CN or CP. Typically, such customer satisfaction surveys elicit a response in the 50% to 70% range, said Andrew Ennis, who conducted the survey by NRG Research Group on behalf of the federal government. Moreover, 62% of those surveyed said they had suffered significant financial losses sometimes in the millions, as a result, Mr. Ennis added. Terminal operators, port authorities and shipping lines have also reported concerns about the level of service they have received from the rails.
Most shippers in North America are captive to one or two railways in their market areas so there are not a lot of options. While shippers do not want to see the government take over the railways again or heavily regulate them, they would like some measures implemented to balance the playing field, said Bob Ballantyne, President of the Canadian Industrial Transportation Association, the main shipper lobby group. Shippers would like to see some sort of financial penalties made available if rail cars show up late, like the demurrage fees the railways charge shippers. With all the exciting changes taking place in the intermodal transportation arena, the railways would be advised to upgrade their customer service to reap the full rewards from their new intermodal products and services.
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