Storm Clouds on the Horizon:

Longshoremen’s union ‘unloads’ on port operators over automation plans.

With N.Y.-N.J. port operations humming, union officials signaled their displeasure with operators’ labor-saving measures.

Volume rose 5.2 percent for imports through the Port of New York and New Jersey in November, reported the Journal of Commerce on January 6. Container traffic in the first 11 months of 2011 rose 5 percent year-over-year. Imports rose 4 percent and exports jumped 6.7 percent in the same period.

Monthly container traffic at the largest port on the U.S. East Coast expanded in nine of the first 11 months of 2011, according to port statistics. Import volume, which makes up about two-thirds of the port's traffic, has expanded in eight of the first 11 months in of the year.

Also on Friday, Jan. 6, the International Longshoreman’s Association (ILA) protested a New York-New Jersey container terminal’s labor-saving technology plan. More than 200 ILA members picketed, with signs reading “Build Jobs, Not Automated Terminals,” and “Stop Funding Unemployment.” Union officials said they were concerned that rail-mounted gantries and truck gates with OCR scanners to be used when the Global Terminal in Bayonne, N.J. is expanded would eliminate ILA jobs.

ILA president Harold Daggett has criticized automation, and said he will demand job guarantees for workers displaced by technology at Global and other ports. The ILA’s contract covering East Coast and Gulf of Mexico ports will expire Sept. 30, with the automation issue front and center, foreshadowing a heated battle over contract negotiations.

Should the dispute lead to interruptions in port operations, the stoppage would come just as the 2012 holiday season heats up.

Kirk Shearer
President
TOTALogistix
www.totalogistix.com
1-800-989-0054 x103

Bank On It:

Morgan Stanley 2012 Transportation Conference guardedly optimistic.

At their annual Transportation Conference last week, financial services giant Morgan Stanley Co. LLC hosted freight company management teams, to take the pulse of the cargo moving biz.

While the forecasts are couched in bankerese, overall they strike a note of cautious optimism as the outlook for the coming year. If no one was popping the Champagne corks, at least the industry leaders didn’t see the transportation sector driving off a cliff.

“Regarding demand, companies across all surface transport verticals reiterated current stability in volume trends with expectations for demand growth to remain moderate through 2012,” said Morgan Stanley’s William Greene, summarizing the conference’s findings. “Rails, brokers and LTL carriers alike reiterated expectations for repricing opportunities, tight capacity and continued pricing discipline to continue supporting pricing strength in 2012.” Or in other words, the carriers think they can make their rates stick.

The transport execs didn’t see the threatened rail strike as likely to become a reality, but did expect a continued driver shortage for big rigs to squeeze capacity in trucking, exacerbated by implementation of new HOS, or hours of service regulations.

Overall, “freight surface transportation companies generally see little evidence of a double-dip, a view we agree with,” said Morgan Stanley in the report’s key takeaways.

Kirk Shearer
President
TOTALogistix
www.totalogistix.com
800-989-0054 x103

And Like It:

Customers happy with rate increase, says UPS.
When UPS announced their price annual increase, they added a helpful piece of information: their customers don’t mind.

"Our customers are willing to accept adjustments like this because overall they still recognize the value UPS brings to the table," said Norman Black, Director of Global Media Services for UPS. The carrier, he explained, is “using technology and new products and services that help them reduce their overall transportation expense over and beyond whatever they may be spending on a specific package."

Like all of the parcel carrier’s “adjustments,” this one adjusted rates upward. The increases, virtually identical to those UPS has announced in each of the last five years, include an average 5.9 percent rate hike for UPS Ground shipments, less a single percentage point reduction in the fuel surcharge. Over the past five years, UPS rate increases total over 27 percent.

Can your business raise prices, year after year, in the teeth of an unprecedented economic downturn and almost nonexistent inflation? We’d love to hear from you, with your experience on how customers react to increases in rates.

So when UPS says, “Our customers are willing to accept adjustments like this because they still recognize the value UPS brings to the table." Do you agree?

Yes, I agree.               No, I disagree.

Thanks for your feedback!

Kirk Shearer
President
TOTALogistix
www.totalogistix.com
800-989-0054 x103

Dead in the Water?

‘Occupy’ protesters call for shutdown of West Coast ports.

In another illustration of the enormous variety of events that can threaten companies’ supply chains, the “Occupy Movement” is calling for a shutdown of all West Coast ports on Dec. 12. The movement's declaration came about three weeks after thousands of Occupy Oakland protestors halted nighttime operations at the Port of Oakland on Nov 2.

Of course, coming from the leaders of a famously leaderless coalition known mostly for its lack of organization, the call to action could well produce no action in the end. It has had one affect already, causing a rift between the Occupy Movement and the powerful International Longshore and Warehouse Union. The ILWU voiced support for the Oakland protest, but a letter from the ILWU Coast Committee in San Francisco to their West Coast locals warned that groups outside of the union “intent on driving their own agendas” are using ILWU issues to pursue their own goals. Furthermore, the committee reminded the longshoremen that public demonstrations are not picket lines under the waterfront contract.

In order to effectively shut down West Coast ports, the Occupy Movement would have to position so many demonstrators at the entrances to the ports that they would present a safety threat to longshoremen attempting to report to their jobs. An arbitrator ruled that such a condition existed in the Occupy Oakland demonstration.

On land or sea, there are always risks to your goods. The container ship that broke up on a reef off of New Zealand, and the “reefer” containers that exploded upon handling in port, causing longshoremen to refuse to unload refrigerated containers, are two more recent examples. Just be sure your contingency planning isn’t “dead in the water.”

Kirk Shearer
TOTALogistix
www.totalogistix.com
800-989-0054 x103

A Bite of the Apple

Supply chain management can mean difference between success and…

How important is your supply chain? Recent examples show it can literally be the difference between life and death for a company. Efficient supply chain management can catapult a firm to spectacular profitability, or drive a competitor out of business.

One point that came out about Apple Corp. in the aftermath of Steve Job’s death was the extent to which the company has used control of critical components and their sources of supply to give itself an advantage in the marketplace. The New York Times said it was “clear that Apple’s management of its supply chain had become a ‘strategic weapon.’ ”

The Gartner Group has ranked Apple as the world’s number one supply chain for the last four years. Apple uses their clout and cash to lock up production, and relies on hour-by-hour feedback from their network of company-owned retail stores to gauge consumer demand, constantly monitoring each step in the process from production to sale.

On the other hand, and the other coast, discount retailer Syms, owner of Filene’s Basement, announced it will liquidate its stores. CEO Marcy Syms cited stepped-up competition from department stores and "a decline in buying opportunities as brand name labels have reduced overruns by improving their supply chain management." The company plans to cease operations in January.

Which model fits you? Get out of the basement, and take a bite of the apple.

Kirk Shearer
President
TOTALogistix
www.totalogistix.com
800-989-0054 x103