JOC_EM

CIT's Signals

COUNTLESS RETAILERS AVERTED disaster last week when CIT Group sidestepped a filing for bankruptcy protection, but the window on the economy the lending firm's problems provided was hardly reassuring.

CIT is an important provider of letters of credit, financing and the basic provision of upfront cash -the business called factoring -- for many small and midsize companies, providing the financia

Yards Delay Deliveries As Ship Orders Sink

AFTER TRYING FOR months to stave off the impact of the downturn on ship construction, ocean carriers and shipyards are giving in to reality. Shipyards are delaying deliveries on hundreds of large container ships as carriers struggle with burgeoning capacit y and plunging demand.
Paris-based ship broker and consultant AXS-Alphaliner reported last week 1.8 million TEUs of capacity -- about onethi

Atlantic, Pacific Rates on the Rise

OCEAN CARRIERS, ENCOURAGED by an uptick in seasonal cargo after months of recessiondriven declines in volume and rates, are announcing a parade of price increases on major U.S. trade lanes. A week after the Transpacific Stabilization Agreement, the discussion group of 14 carriers in the eastbound trans-Pacific, stunned the container shipping world when it advised its 14 members to seek 50 percent

Zollars to Hoffa: `I Apologize'

WILLIAM D. ZOLLARS, chairman, president and CEO of YRC Worldwide, apologized not once but twice to Teamsters General President James P. Hoffa and union employees. He fi rst said sorry after the Kansas City Business Journal reported Zollars as saying YRC's nonunion workers probably won't take further cuts in pay proposed for union workers. "YRC is committed to the principle of `equal sacrifice' and

`Pay-to-Play' Scheme Embroils FedEx, UPS

A LETTER SENT recently from an array of conservative groups criticizing FedEx over the carrier's battle with UPS over labor law was filled with that Washington standby of strange political bedfellows. After all, in taking UPS's side, the groups including the American Conservative Union were taking sides with the Teamsters union and supporting a measure that would make one of the country's most rec

Cargo Thieves Target Higher-End Goods

CARGO THIEVES ARE getting better at stealing prime consumer electronics merchandise, even though there was an overall drop in the number of reported incidents in the first half of 2009 vs. a year earlier, according to FreightWatch International.
In its latest bi-annual report, Austin, Texas-based FreightWatch said the average loss for cell phones went from $1.1 million in the January-June 2008

Second-Quarter Profits Slip, But They're Profits

MIDTERM REPORT CARDS are starting to roll in for transportation and logistics companies, and the grades are decidedly incomplete.
After getting off to a horrid start at the depths of the recession in the first quarter, companies such as Canadian National Railway managed some improvement as the first half came to a close -- and are actually upbeat about the landscape in the second half of the ye

that several markets are stabilizing" with hopes of second-half improvement. The road was more bumpy for trucking companies. Less-than-truckload carrier Old Dominion Freight Line posted a 55 percent decline in profit, to $10.7 million on revenue that fell 24 percent. Truckload carrier Werner Enterprises' second-quarter profit dived 30 percent to $12.7 million on $403.1 million in revenue, which wa

South Korean Customs Unleashes Cloned Dogs

IF YOU THINK you're seeing double when trying to clear customs at South Korea's Incheon International Airport, you're not far off.
Actually, you may be seeing triple. The Associated Press reported last week South Korean authorities have turned a group of cloned Labrador retrievers into world-class sniffer dogs.
The seven puppies, three of them deployed at Incheon, were born after a team of S

ELAA Highlights Depths of European Liner Trade

IN ITS INAUGURAL newsletter this month, the European Liner Affairs Association published data that vividly illustrate just how steeply containerized trade volume and freight rates declined on Europe's seven trade lanes at the start of this year. The ELAA data, drawn from historical information by Dublin-based third-party warehouse P3, show Europe's total containerized import volumes fell 20.6 perc

By Joseph Bonney

HILE MANY ARE looking out for a recovery in manufacturing and trade, the economic strain spreading through the shipping world is moving into a new phase, triggering changes in operations that may last long after the downturn has ended.

That's especially true in the world of harbor trucking, which is going through a transformation in areas such as labor and environmental rules, and now faces an

MAERSK'S DRIVING CHANGE

For the world's largest container carrier, an economic downturn is the right time for big changes in business

Although Maersk touts its plan as an environmental initiative, the carrier, like other ocean operators and carriers in other modes, is seeking operating efficiencies. Ship lines have been staggered by the first drop in global container volume in the industry's history, and financial losses that could pile up to $20 billion this year.

Carriers are responding by slashing costs in ways they avoi

customers' warehouses. The daily fee will apply only to chassis used in so-called merchant haulage, in which trucking is handled separately from the ocean rate.

Some truckers worry they'll be unable to pass along these costs in a highly competitive port drayage market. They also say if Maersk's model takes hold across the industry, carriers eventually could force truckers to absorb costs of

THE GREAT DIVIDE

By R.G. Edmonson

House, Senate are on opposite sides in addressing new transportation bill, Highway Trust Fund THE HOUSE AND Senate appear to be on a collision course over transportation unless they can bridge a chasm of fundamental differences in approach.

House transportation leaders want change now, and are determined to have a six-year "transformational" bill in place by Sept. 30. The Senate, with the Whi

through March 2011, but did not identify a source.

How to raise the revenue is a question the congressional tax-writing committees are only beginning to address. Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, and Rep. Charles Rangel, D-N.Y., chairman of the House Ways and Means Committee, reportedly have met on the question. A Ways and Means subcommittee was scheduled to

DEFAZIO TAKES THE WHEEL

By R.G. Edmonson

Responsibility for funding House transportation bill falls to Oregon Democrat IN HIS WORDS, the "thankless" job of fi nding new ways to raise $500 billion for the Surface Transportation Authorization Act of 2009 rests with Rep. Peter DeFazio, D-Ore., chairman of the House Transportation and Infrastructure subcommittee on highways and transit.

T&I committee Chairman James L.
Oberstar, D-Mi

CHINA - PAVES THE WAY

By Ian Putzger

FOR FAIRCHILD SEMICONDUCTOR, the 1,500-mile road from Suzhou, China, to Hong Kong always went through Shanghai. Since the electronics manufacturer opened its production plant in Suzhou six years ago, it trucked its products the 65 miles to Shanghai for onward transportation by air to Hong Kong. As roads improve in China and infrastructure improves across Southeast Asia, trucking's role in the su

"DEMAND IN INTRA-ASIA IS QUITE STRONG."

This spring, however, the San Jose, Calif.-based company began to shift the Hong Kong-bound cargo to the highway.
Although that increased transit times by about eight hours, it also produced significant cost savings, said Bob Scribner, director of global logistics and trade compliance.

The move highlights the dramatic inland infrastructure improvements China has made in recent years, and w

and Fairchield closely vets its partners' security arrangements. Only previously inspected trucks and drivers are admitted to its facilities. All trucks must be equipped with GPS. Drivers work in pairs and must contact their control center at regular intervals. They may only stop at designated points, including for bathroom breaks.

If a truck has a mechanical problem and requires service, it

READING LOGISTICS TEA LEAVES

ew dem By Alan M. Field

MULTINATIONAL THIRD-PARTY LOGISTICS providers long salivated at opportunities to claim a share of China's rapidly growing market -- until the economy collapsed.

After all, although the Chinese logistics market reached $52.2 billion in 2008, there was plenty of room for growth.
And China's 3PL sector was highly fragmented, inefficient and in need of global technology and business experience

"CHINA WON'T HAVE A RECOVERY TILL WE HAVE A RECOVERY."

Although it is too early to calculate the impact with precision, Armstrong said he expects China's 3PL market to decline this year, perhaps by about 12 percent on the international side and 4 percent in the domestic market.

Compared with most other countries, "China is still a bright spot, but expeditors and NVOCCs in China are suffering like everyone else," Armstrong said. Air freight and oc

"YOU MAY SEE SOME CHINESE 3PLS BUY SOME GLOBAL COMPANIES."

distribution, also operates four major China transportation hubs in Beijing, Guangzhou, Tianjin and Wuhan.

Much of the expansion is happening away from the long-booming eastern coast, where wages and other costs have been growing. "The 3PLs are finding a way to diversify away from the export-driven coast," said Jon Monroe, president of Jon Monroe Consulting.

Monroe, who specializes i

INDIA'S UPWARD MOBILITY

By Peter T. Leach

Massive market, infrastructure investment position Asian giant to recover quickly from recession's impact LIKE THOSE OF many other Asian nations, India's exports have fallen by a third as the global recession sapped demand overseas.
But unlike Asian neighbors dependent on exports for economic growth, India has a large enough consumer market to absorb some of the difference.

"We are no

overall global economy," said Bill Rooney, managing director, North and South America, for Hanjin Shipping.

But in a sign of confidence India will become a much larger player in global supply chains, Rooney added, "We haven't changed our view that India and the subcontinent are going to be a big part of the global economy and global trade."

Until the economy recovers, U.S.-India oce

NEW WORLD ORDER

AS WE WAIT for "green shoots,"
"rays of sunshine," a real peak season, affordable health care or any other positive news, have you considered our business is likely on the precipice of revolutionary change?
That's right, not the usual slow, conservative, "we've always done it this way, we like it and we're sticking with it" methods the shipping business has always followed. We're talking

HEADING SOUTH DOWN UNDER U.S

By Bill Mongelluzzo

THE NORMALLY STEADY liner trade between the U.S. and Australia-New Zealand is expected to be down this year in both directions, hit by the global economic recession.

Ocean carriers in the mature trade have achieved a decent balance between vessel capacity and shipper demand, however, so freight rates will not tumble as much as those in the much larger eastwest trades.

U.S. containe

Hamburg Sud, Maersk Line, HapagLloyd and ANL-USL operate in one such alliance in the West Coast-Australasia trade. The Oceania Vessel Sharing Agreement pulled a vessel string out of the route late last year, which helped stabilize rates.
Pump said there are no plans to return the string to service.

The northbound trade from New Zealand needs all the help it can get. In addition to meat, Ne

BREAKBULK CARRIERS SEE GOLD IN PANAMA

By Peter T. Leach

WHEN THE PANAMA Canal Authority this month awarded its $3.1 billion contract for the design and construction of the canal's third set of locks, there were actually two winners.

The first was Consortium Grupo Unidos por el Canal, the European-Panamanian venture that won the construction contract.
The second, collectively, were the breakbulk and project cargo carriers that will move the heav

INTERSTATE 2.0: - GETTING RAILS ON TRACK

By Gil Carmichael

PRESIDENT OBAMA'S PROPOSED high-speed, intercity passenger rail network is a major step toward creating a sustainable, ethical, 21st century solution to our nation's badly congested, polluted and eroding transportation system.
High-speed intercity passenger rail is a logical and necessary next step forward from President Eisenhower's massive Interstate Highway System of the last century.

TAKING ON PRE-EMPTION

By Bill Mongelluzzo

AFTER RUNNING INTO roadblocks in court, interest groups that support organized labor want to use the surface transportation reauthorization as well as clean-trucks plans at California ports as vehicles to restructure harbor trucking in the U.S.

The Coalition for Clean and Safe Ports, representing 80 environmental, government and labor organizations, including the Teamsters union, and labor-fr

the environmental impact that port commerce has on nearby communities. The representatives suggested an amendment similar to that proposed by the clean-ports coalition.

Industry organizations have responded to these developments by writing letters to Congress and to the Port of Oakland saying they support a national goods movement policy that recognizes the infrastructure needs of West Coast

DEADLINE MET CLEANLY

By Bill Mongelluzzo

HARBOR TRUCKING COMPANIES in Los Angeles and Long Beach should meet the Jan. 1, 2010, deadline for eliminating old, polluting trucks thanks to an aggressive subsidy effort sponsored by the ports.

The ports expect to disburse more than $70 million in subsidies from local, state and federal sources to help motor carriers purchase clean new trucks. The vehicles must comply with the emissions sta

program. Chris Cannon, program manager for the clean-trucks effort in Los Angeles, said the AQMD is experienced in managing subsidy programs, so the ports are happy to relinquish administrative responsibilities to the local clean-air agency. The AQMD, like the ports, also favors LNG trucks, while CARB is fuel-neutral.

Long Beach this month awarded subsidies for 100 new trucks, 98 of them LNG

THE WIND - BENEATH THEIR WHEELS

By William B. Cassidy

Alliances power regional LTL carriers past recession's roadblocks toward recovery THEY MAY SEEM an odd couple at first glance: a southeastern less-than-truckload carrier with a hub-and-spoke network and a New Jersey-based carrier with a hybrid LTLtruckload business model. But Milan Express and New Century Transportation say their differences translate into strengths as partners in a new inter-regi

new freight its alliance with New Century will generate will come from existing customers. "We have focused the entire sales effort so far on current customers," he said.
"We're looking for additional density and pickups -- if we can get three shipments instead of two, that's a good thing."

It's tough to fatten lanes when freight is thin. "Shipment sizes are smaller, freight density is li

CN'S INTEGRATION - INCHES THROUGH CHICAGO

By John D. Boyd

CANADIAN NATIONAL RAILWAY is taking a cautious track toward its goal of speeding up rail service around the congested Chicago Freight hub.

In its fourth monthly report since absorbing Elgin, Joliet and Eastern Railway in January, CN said it is moving slowly to add traffic to the Chicago-area short line it took over early this year, as the recession gives the railroad more time to work out ope

TRUCK STOPS STRIKE DEAL

A MERGER BETWEEN two of the top U.S. truck stop operators could keep an ailing chain from scaling back some sites at a time when cross-country truck drivers are finding fewer places to rest.

Flying J, the Ogden, Utah, travel plaza and fuel supply firm that has been operating under Chapter 11 bankruptcy protection since December, struck a merger deal that would sell its 250 truck stops and

By the Numbers

Data selected and prepared by Journal of Commerce Research Editor Marsha Salisbury.
She can be contacted at MSalisbury@joc.com. U.S. GOODS TRADE January 2007-May 2009, in billions of U.S. dollars The U.S. goods trade* in May declined 32.2 percent over May 2008 and 28.9 percent year to-date through May. U.S. exports this year through May made up 41.2 percent of the trade.

In calendar 2008,

Citing lower core freight rates and lower bunker recovery, APL averaged $2,190 per FEU for period 6, weeks 23-26 in 2009, versus $3,080 last year, a decline of 28.9 percent and a $136-per-FEU loss from period 5. The average APL revenue per FEU in 2009 through June 26 was $2,375 versus $2,972 in 2008, down 20.1 percent.

APL's average revenue per FEU* The average APL revenue per FEU in 2009 thro

By the Numbers

U.S. RAIL CARGO Weekly year-over-year percent change through July 11, 2009.
Intermodal Cargo Trailers put in its lowest performance year to date on July 11, posting a 40.3 percent decline. Containers plum meted to a 19.4 percent decline. Overall intermodal was down 23.7 percent over the same week last year. In the first 27 weeks of the year, intermodal cargo fell 17.1 per cent with trailer

ARE 3PLS, 4PLS REGULATED?

Q: IN YEARS PAST, the definition of a transportation broker was "one who arranged for transportation." The definition of a freight forwarder was one who could behave as a transportation broker, but whose mainstay was to arrange for and consolidate freight.

The third- and fourth-party logistics provider has now come along. I have not been able to find a definition from the Department of Trans

BUNKER FEES SEEP BACK

By Peter Tirschwell

"I think we will see prices bouncing around between $50 and $70 over the next several months, sort of a plateau." A YEAR AGO this month, the container shipping industry was in a frenzy in an attempt to respond as oil prices surged to $147 a barrel.
Carriers could not bear this cost alone; that much was clear. Not much else was. It didn't help that shippers traditionally viewed bunke