Logistics News Briefs
David Hannon, Logistics Editor -- Purchasing, 4/8/2002 2:00:00 AM
IATA: Cargo comes back in 2003
International air cargo traffic is likely to rebound in 2003 according to a recent report from the International Air Transport Association. But in the revised version of its annual five-year Freight Forecast, IATA says average annual growth from 2001 to 2005 would be around 2% rather than the 3.9% it predicted last summer. Recovery is expected to start this year, peak in 2003 and then stabilize. IATA says 2001 air cargo levels dropped 7.7% but prior to Sept. 11, it was still predicting a flat year for 2001 vs. 2000.
More funding in highway budget
An additional $4.4 billion in highway funding has been restored to the fiscal 2003 budget, restoring more than half of the $8.5 billion cut by the Bush administration in its originally proposed budget. The additional $4.4 billion will increase the total highway funding level in Fiscal Year 2003 Budget Resolution to $27.7 billion.
Mexican carriers face new restrictions
Under new requirements from the U.S. Department of Transportation, all Mexican freight carriers applying to operate in the U.S. will need to have a distinctive DOT number, pass a safety inspection, undergo an 18-month safety monitoring period, and provide supplemental safety certifications. Mexican commercial vehicles will be permitted to enter the United States only at commercial border crossings and only when a certified motor carrier safety inspector is on duty. The regulations also will require Mexican carriers operating in the United States to have a drug and alcohol testing program, a system of compliance with U.S. federal hours-of-service requirements, adequate data and safety management systems, and valid insurance with a. registered U.S. insurance company.
UPS charges against DHL buy rejected
The European Court of Justice recently rejected charges by UPS that Deutsche Post’s purchase of DHL International violated European Union fair trade legislation. UPS argued the purchase of DHL gave Deutsche Post a dominant position in the express mail delivery market. “UPS has not proved any abusive practice on the part of Deutsche Post on the reserved letter market,” the court said. The court also ruled that the German company did not use profits made from its national postal monopoly to fund the DHL purchase. UPS has two months to decide on an appeal of the decision.
USCO integrates businesses
USCO Logistics recently announced the integration of its two warehouse management businesses, highlighting the company’s intention to accelerate sharing of core competencies across its nationwide distribution network. The realignment combines the company’s shared and dedicated logistics business units into a Warehousing Solutions unit.
Yellow to spin off Saia and Jevic
Yellow Corp. has approved the spin-off of SCS Transportation, the holding company which includes Saia Motor Freight and Jevic Transportation. The spin-off would be accomplished by distributing all the stock of SCS Transportation to shareholders and is expected to be complete before the end of 2002. “With the anticipated improvements in the economy, the timing is right to spin-off the regional business from Yellow Corp. so that both entities can pursue independent growth strategies that will increase shareholder value,” said Bill Zollars, president, chairman and CEO of Yellow.
Coal slump hits railroads hard
The plummeting demand for coal this winter has left the railroad industry with a major hole in its business. Railroads rely on coal for 25% of its freight but warm weather, low industrial demand and a resurgence in natural gas use have led coal companies to cut production and lower their earnings forecasts. Coal transport volumes are already down 4% for the year, according to Tom White, spokesman at the Association of American Railroads.
| Coal Freight Declines | |
| Week Ending | Volume decline vs. 2001 |
| March 16, 2002 | -12% |
| March 9, 2002 | -10.8% |
| March 2, 2002 | -8.5% |
| Feb. 23, 2002 | -0.5% |
| Feb. 16, 2002 | -2.2% |
| Source: Association of American Railroads | |
Penn State study: outsource trade management
Outsourcing trade management is saving billions of dollars, according to a recent study led by researchers in Penn State’s Smeal College of Business. The study shows savings from outsourcing range from $1.2 billion for consumer product goods to a high of $10.6 billion for the auto/industrial sector. Total savings for all global companies in 2002 were conservatively estimated in this study to be about $30 billion annually. “In addition to the savings, third parties providing global trade management services can provide many skills, expertise, and technology to help reduce the complexity of global operations,” says John Coyle, professor of business logistics at Penn State. The study also estimates the market size for global trade management services to be over $15 billion annually.
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