Briefs
Staff -- Purchasing, 3/17/2005 2:00:00 AM
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The U.S. Postal Service (USPS) has stopped using American Airlines and US Airways to deliver domestic mail because the carriers failed to meet performance goals, including on-time delivery. The suspension took effect Feb. 12 and covers first-class mail and some small pack-ages shipped priority class. Jim Quirk, a USPS spokesman, said the agency notified the air-lines in December that "we needed a plan from them to meet the goals" for on-time delivery. He said the post office was optimistic that the two airlines could make corrections and soon be carrying mail again. American spokesperson Tim Wagner said, "We are talking with them about aspects of our business relationship and ways to improve our performance." Post office officials estimate that American carries about 10% of domestic mail. US Airways spokesman David Castelveter said US Airways' on-time performance declined due to an "operational meltdown" at its Philadelphia hub over the Christmas holidays that caused flight cancellations. The airline has revamped its schedule and has hired more workers in Philadelphia.
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Rail carrier CSX Corp. sued the District of Columbia recently challenging the city's new law banning hazardous shipments within two miles of the U.S. Capitol. In a U.S. District Court fil-ing, CSX asked that the law be declared unconstitutional on grounds that it impedes interstate commerce. The law is meant to protect the city against a terrorist attack. But CSX spokesman Robert Sullivan said it's most appropriate to coordinate security with federal agencies. "What you're going to end up with otherwise is this sort of patchwork quilt where you have different communities setting different standards," Sullivan said. CSX said in the filing that as a "com-mon carrier" it is required by federal law to transport the banned materials. To comply with the common carrier law and to attempt to comply with the Washington, D.C. ordinance would not only impose an unreasonable burden on interstate commerce, it would increase risk to other communities by dramatically adding to the miles and the hours these materials spend in other communities. CSX had already filed an appeal with the Transportation Department's Surface Transportation Board, but the board has yet not issued a decision. The company is also ex-pecting to seek a temporary restraining order and preliminary injunction in federal court to stop the measure, Sullivan said.
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DHL recently unveiled plans to locate a new, state-of-the-art East Coast distribution facility in Allentown, Pa. DHL expects to invest $107 million in the development of the new facility, which will serve as a key distribution center for DHL's network in the Northeast and Mid-Atlantic. Planned as the principal DHL distribution center on the East Coast, the new Allen-town facility will serve all major metropolitan areas in the region, including Philadelphia, New York City and Washington, D.C. The facility will also provide additional capacity to serve the needs of DHL's growing customer base in the U.S. and enhance service levels for DHL cus-tomers across the country and around the world.
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Japanese shipbuilders received 58% fewer orders in January, when compared with the previous month, as freight rates fell from last year's record highs. Orders for 21 vessels, total-ing 1.1 million gross metric tons were placed in January. That was down from 50 vessels total-ing 3.2 million gross tons in December, the Japan Ship Exporters Association said. Eight oil tankers, seven vessels that carry commodities such as coal and grain, and six car carriers were ordered. Yards received 275 orders totaling 16.4 million gross tons in the 10 months through to January, the association said.
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Nippon Yusen K.K., Japan's largest shipping line, said its third-quarter profit rose 74% as growth in the Chinese economy fueled demand for cargo space and boosted freight rates. The company said higher port costs in the U.S. may shave about $94.6 million off its earnings in the fiscal year beginning April 1. Shipping lines including Kawasaki Kishen Kaisha Ltd. and Nippon Yusen have said they plan to raise freight rates to the U.S. for a third straight year to cover the increased costs as vessels are forced to spend more time loading and unloading in Californian ports.
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Arch Coal is blaming poor rail and barge service for its weak first quarter. Arch said in a re-cent report that rail bottlenecks and barge delays have hampered deliveries, offsetting the benefits of high coal prices. Led by record steel production, global demand for metallurgical coal-which is used to make steel-continues to exceed supply. "The first quarter will be weaker," Arch chief executive officer Steven Leer told analysts on a recent conference call. "Rail service is part of the challenge. Our (earnings) guidance includes continued weakness in railroad performance. It's a day-to-day adventure. January was bad, mostly weather-related, with lots of storms and mud slides." Arch is in almost daily contact with rail companies. "There is some optimism, and I can assure you they are making investments to improve things."
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Lufthansa's cargo division expects the amount of air freight volumes to jump between 6% and 9%, compared with 2004. As a result, the company will raise rates in 2005 for the first time in two years after stemming its loss of market share. "We've been able to stabilize the market share, and now we're working on yields," or average prices, Andreas Otto, Lufthansa Cargo's board member in charge of sales, said in a news report recently. Lufthansa Cargo, based in Frankfurt, hasn't yet decided on the magnitude of the increased prices, which will dif-fer by region and product. The company expects a new focus on improved customer service this year should increase acceptance of higher rates. About 96% of Lufthansa Cargo's cus-tomers are freight forwarders.
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Power2Ship, a marketplace for freight transportation and trucking industry, has acquired GFC, a container carrier company. Through this acquisition Power2Ship will have the ability to conduct a Container Beta Testing program with defense companies while establishing bench-marks for additional government opportunities.
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During a recent analyst conference, several trucking operator executives recently affirmed their 2005 earnings outlooks and said pricing has remained firm as capacity in the shared-loads sector remains tight. LTL carrier USF expects to spend $175 million to $200 million in capital expenditures this year-up from $145 million in 2004, company officials said. Some 75% of that capital expenditure budget will go toward replacement equipment, making up for recent under-investment. The other 25% will be earmarked for new tractors and trailers to make sure that USF has enough equipment available for customers in a tight capacity climate and to improve the age of its fleet. Yellow Roadway Corp. chief executive officer Bill Zollars expects the company can reduce costs by another $100 million on top of the $100 million ex-pected this year as it continues to integrate the merger of Yellow and Roadway. The company plans to spend about $235 million to $245 million in capital spending, a bit higher than a year ago, with most of that going toward technology, Zollars said. But he added that the company does not, however, plan to add capacity to the business anytime and that it will instead use technology to work around bottlenecks in the system. "I think we have plenty of capacity avail-able to grow business for our goals this year. We will get more aggressive with our customer mix when we approach full capacity" later in the year. CNF said its price increases are sticking.
Dry bulk freight rates trend up
02/09/2009Lufthansa looks to boost freight rates
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