Quake Hits Japanese Auto Industry Hard

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Assembly plants shut down; global supply chains disrupted

 

The earthquake and tsunami that killed thousands of people in Japan also disrupted the nation’s automobile industry and will affect supply chains worldwide, IHS Automotive said.

 

“Although the human cost is of paramount concern, the ripple effect of the stoppages to supply and production in Japan will be felt in many parts of the world, including the United States, China and Europe, as many key parts and technology are exported to global operations from Japan,” the report said.

 

Auto assembly plants and suppliers’ factories were damaged or have had to suspend operations because of power shortages. Transportation infrastructure also has been affected, along with communities where automotive workers live.

 

Regards, 

Leslie G. Brand III | Chief Executive Officer|  

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Phone: 616.554.8900 Ext: 106 | Cell: 616.836.7074 | Toll Free: 877.554.8900 | scsolutionsinc.com |Skype:lgbrand 

 

 

Air Canada suspends cargo shipments to US

US Transport Security Administration security amendment forces embargo

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TORONTO, ON: Air Canada Cargo has issued a bulletin to all customers on March 9th informing them that an emergency change to US security measures means they will not be able to ship any air cargo to the US until they can ensure compliance.

The text of their bulletin follows: “The US Transport Security Administration (TSA) has issued an emergency amendment to security measures which will take effect March 10, 2011. Given the short notice, it will not be possible for us to implement the necessary measures to ensure compliance and as a result, we are required to embargo all cargo flown to the US effective March 10, 2011 until further notice. Shipments already accepted prior to this date will be carried to destination. Discussions continue with TSA as well as other country security agencies to find ways to mitigate this situation as quickly as possible. Additional updates will be provided as they become available. In the meantime, should you have any questions, your local Sales team will be glad to assist you.

We are doing our best to minimize disruptions to our operations and thank you for your understanding during this time.” Air Canada spokesperson Peter Fitzpatrick would not clarify the issue, however the company has since removed the bulletin from its website. James Anderson, FedEx senior communications specialist, confirmed that the TSA had put amendments in place, but wouldn’t comment further on the issue, saying only that FedEx operations had not been impacted.

“In spite of everything, it’s business as usual,” he said.

The TSA would not go into the specifics of its security directives, however, it released a formal statement saying it has tightened existing air cargo security for flights to the US due to last year’s terrorist attempt to ship explosives aboard an aircraft.

“We are working closely with the air cargo industry and intelligence community to institute measures to keep the traveling public safe,” the statement said.

More to come…

 

 

Regards,

Leslie G. Brand III | Chief Executive Officer|  

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Phone: 616.554.8900 Ext: 106 | Cell: 616.836.7074 | Toll Free: 877.554.8900 | scsolutionsinc.com |Skype:lgbrand

 

 

Morgan Stanley's dry van truckload freight index continues tosoften

Morgan Stanley's dry van truckload freight index has fallen off somewhat from the pace of Q2 2010 indicating more readily available capacity at this time compared to Q2 but certainly a much tighter capacity environment than 2009. The index measures incremental demand for dry-van truckload services compared to incremental supply. The higher the index the tighter is capacity relative to demand when compared to a prior period. In Q2 it was starting to look like we may see a repeat of the TL capacity shortages of 2004 and 2005, but at this point the graph is tracking very closely to 2006 and 2008 which were strong through Q2 and then plunged toward the end of the year.

 

Regards, 

Leslie G. Brand III | Chief Executive Officer|  

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Phone: 616.554.8900 Ext: 106 | Cell: 616.836.7074 | Toll Free: 877.554.8900 | scsolutionsinc.com |Skype:lgbrand 

 

 

Cheers and jeers for Mexico truck pact

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The United States and Mexico have "found a clear path to resolving the dispute over trucking between our two countries," President Obama said Thursday at a joint press conference with Mexican President Felipe Calderon.

Under the proposal announced Thursday, passenger and hazardous materials carriers would be excluded from the program, and, "subject to negotiation with Mexico, the number of carrier and truck participants in first phase of program will be managed to ensure adequate oversight," DOT said. Carriers and cross-border driver information would be vetted by the U.S. Homeland Security and Justice departments, and there would be carrier safety management programs covering areas such as vehicle maintenance, drug and alcohol testing programs, and driver qualification files, DOT said.
Drivers would have to pass an English language proficiency and U.S. traffic law test, and for an agreed upon period of time a carrier’s long-haul operations, vehicles and drivers would be inspected by the Federal Motor Carrier Safety Administration each time one of its vehicles crosses the northbound border.

DOT said it would use electronic systems for "redundant monitoring of program’s trucks, drivers and carriers." After passing two reviews, participating carrier would be eligible for full operating authority.

Business groups such as the U.S. Chamber of Commerce, National Foreign Trade Council, and American Trucking Associations applauded Obama's announcement while the Owner-Operator Independent Drivers Association (OOIDA) and Teamsters expressed outrage over the agreement.
"This is an important step to promote job growth on both sides of the border and shore up our bilateral relationship," said Thomas Donohue, the chamber's president and chief executive officer. "It is long past time for the United States to live up to its trade commitment and allow cross-border trucking services. This delay put more than 25,000 American jobs at risk, and retaliatory tariffs have been in place for two years on many U.S. products entering Mexico."
ATA President and CEO Bill P. Graves said, "We hope this agreement will be a first step to increasing trade between our two countries, more than 70 percent of which crosses the border by truck."
Teamsters General President Jim Hoffa said the deal "puts Americans at risk,” and "caves in to business interests at the expense of the traveling public and American workers.”
Hoffa questioned the rationale behind the decision at a time of persistent high U.S. unemployment, budget deficits and unrelenting drug violence in Mexico. He said the proposal would “threaten the traveling public in the U.S. and open our southern border to increased drug trafficking.”
Todd Spencer, executive vice president of OOIDA, said the agreement was "simply unbelievable. For all the president’s talk of helping small businesses survive, his administration is sure doing their best to destroy small trucking companies and the drivers they employ.
"Small business truckers are in the midst of dealing with an avalanche of regulatory rulemakings from the administration," he said. "They are also struggling to survive in a very difficult economy. This announcement is tantamount to rubbing salt in wounds already inflicted.”

 

Regards, 

Leslie G. Brand III | Chief Executive Officer|  

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Phone: 616.554.8900 Ext: 106 | Cell: 616.836.7074 | Toll Free: 877.554.8900 | scsolutionsinc.com |Skype:lgbrand 

 

 

Please join us for our 8th Annual Midwest Supply Chain Management Conference

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Please join CSCMP and supply chain professionals from around the region at the 8th Annual Midwest Supply Chain Management Conference.  The event will be held March 16th and the Eberhard Center at Grand Valley State University.

The Midwest Supply Chain Management Conference is a comprehensive supply chain management education and networking event. This year's conference will include leaders from industry, consulting and academia who will share practical experiences in:

  • Economics
  • Growth & Innovation
  • Global Perspective
  • Leadership & Development

Emergence from the global economic recession has created new opportunities for supply chain
professionals. Future success will be heavily influenced by the strategies, practices and processes that organizations put in place to facilitate new growth and innovation. As an individual or as an
organization, you will walk away from this conference with positive energy and new ideas for the future.

Register using the following link:

http://www.regonline.com/Register/Checkin.aspx?EventID=939088

Registration Fees:


$225 regular registration
$175 group registration (3 or more people from same company)
$30 student fee

Please join CSCMP, APICS, ISM, and The Right Place for this outstanding event!

Regards, 

Leslie G. Brand III | Chief Executive Officer|  

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Phone: 616.554.8900 Ext: 106 | Cell: 616.836.7074 | Toll Free: 877.554.8900 | scsolutionsinc.com |Skype:lgbrand 

 

 

FREIGHT RATES - A NIGHTMARE TO MANAGE?

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Several years ago, shippers were involved in hundreds of lawsuits with motor carriers that promised huge discounts to shippers, but never actually filed those discount rates with federal regulators.  The problem began when those same motor carriers went out of business, which was a common occurrence in the early days of deregulation.  The bankruptcy trustees would then file lawsuits against the shippers to collect the difference between the discounted rates offered, (but never properly published and filed), and the higher rates they said should be applicable.  To add insult to injury, the bankruptcy trustees sought these balance due charges going back a minimum of three years.  The sad fact is that shippers paid back hundreds of millions of dollars to motor carrier bankruptcy trustees over the years.    

 Well, the good news today is that there is no longer a requirement for most motor carriers to file their rates, charges and discounts with federal or state regulators.  The bad news however is that many shippers still believe the Federal Government sets motor carrier rate levels, (especially fuel surcharges), and that all motor carrier rates are standard.  That’s why shippers will usually select a motor carrier to transport their shipments based solely on the discounts the carriers offer.  We are here to tell you there is no such thing as a “standard” when it comes to motor carrier rates and charges. 

 Today we have a proliferation of independently published freight rate structures.  These rates and charges vary carrier by carrier and so do their charges for accessorial fees, (including fuel surcharges) as well as their discount percentages.  In addition, many motor carriers limit their liability for claims when merchandise is lost or damaged.  But, those limitations usually are not known until the shipper has to file a claim.  At that point it’s too late to do anything about it. 

 These factors place a great burden on shippers as they must have a complete understanding of the carriers’ rates, rules, regulations and liability limitations BEFORE they tender any freight to the carriers; Perhaps its time for a “truth in rates” document to be offered by the freight carriers.  Don’t hold your breath! 

 It is not our intention to imply that freight carriers are trying to deceive shippers about their rates and liability standards, but rather that it’s the responsibility of the SHIPPER to have a complete understanding of the carriers rates and liability limitations BEFORE they tender any freight to the carriers. 

 To show the potential negative impact shippers can be subject to, the following is an actual case study and points out the pitfalls that can financially harm a company if it is working in the dark.    

 One of our clients negotiated discounts with five different motor carriers transporting its products from their Midwest distribution center in Chicago.  It was their intention to enter into contract agreements with all five carriers since the discount percentages offered by the carriers were within a few percentage points of each other.   Our advice to our client….. Allow us to perform a Benchmark Analysis of all of the carriers’ “net” freight charges to see how they really stack up before signing any long term carrier contracts. 

 Needless to say our client was extremely happy with our advice and here’s why.  Our Benchmark Analysis was quite revealing, (as we knew it would be).  Once we created the benchmark rates we believed the client should be paying based on their shipping activity, we measured each carrier’s proposed rates, discounts and fuel surcharges to see just how close, or far apart they would be in comparison to the benchmark.  The results of our analysis indicated the following variances: 

 Carrier #1                20% higher than the benchmark

Carrier #2                42% higher than the benchmark

Carrier #3                  1% higher than the benchmark

Carrier #4                10% higher than the benchmark

Carrier #5                  3% LOWER than the benchmark

 The analysis proved our suspicions that the proposed rates, discounts and fuel surcharges offered by the five different motor carriers were meaningless unless they were properly evaluated.  The shipper and certainly the motor carriers had not clearly established where the shipper’s rates should be set based on our clients shipping characteristics, lanes of traffic, volume and regularity of shipments, loading and unloading requirements, freight claims susceptibility, freight payment timeframes, etc. 

So while shippers have a wide range of motor carriers to choose from these days, it is quite clear that many shippers will be lulled into a false sense of security if they merely select carriers based on the discounts being offered.  As anyone can see, true savings are possible when the transportation to be offered is properly analyzed, benchmarked and properly presented to the carriers.  These benchmark analyses by the way, are heavily valued by the motor carriers as they tell the true story of a shippers business.  They provide the necessary tools the carriers need to clearly establish the level of rates they can and should offer.

 By the way, the same circumstances apply for parcel carriers, as well as ocean and air carriers.  No company should go into any carrier rate negotiation process with blinders on.  Seek the advice of “experts” to help you better understand where your freight rates should be set, rather than blindly accepting freight rate levels offered by the freight carriers.   

 

Regards, 

Leslie G. Brand III | Chief Executive Officer|  

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Phone: 616.554.8900 Ext: 106 | Cell: 616.836.7074 | Toll Free: 877.554.8900 | scsolutionsinc.com |Skype:lgbrand 

 

 

Relief for Air Forwarders

INDUSTRY BULLETIN ALERT

HISTORIC DECISION - RELIEF FOR AIR FORWARDERS

Case No. 08-55281 (9th Cir. 2011)

Dear friends and colleagues,

On 10 February 2011, the United States Court of Appeals for the Ninth Circuit issued a historic decision adopting the view of air forwarders that when sued for cargo loss or damage, an international air forwarder shall be guaranteed a right of indemnity against the ultimately responsible custodial airline.

Regards,

Leslie G. Brand III | Chief Executive Officer|  

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Phone: 616.554.8900 Ext: 106 | Cell: 616.836.7074 | Toll Free: 877.554.8900 | scsolutionsinc.com |Skype:lgbrand

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Keeping an eye on Fuel: Diesel tops $3.50 per gallon

 

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Weekly retail on-highway U.S. diesel prices continued to climb, rising to $3.513 per gallon, a 7.5 cent increase over the prior week. Diesel prices have risen 74% since bottoming out at $2.023 on March 16, 2009. More recently, diesel is up 19% since late September, when the price was $2.951 per gallon. A view of weekly prices over the last 3 years in ominous, as 2011 is starting off with much higher prices than seen in 2009 or 2010 (second graph). With the economy showing glimmers of hope and the Fed intent on a weak dollar to support exports, a return to 2008 diesel fuel prices is certainly not out of the question. Prices are at the highest level since October 2008, when prices were rapidly falling. Diesel prices peaked at $4.764 per gallon in July of 2008 and were above $3 per gallon from September 24, 2007 to November 3, 2008.

 

 

Regards,

Leslie G. Brand III | Chief Executive Officer|  

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Phone: 616.554.8900 Ext: 106 | Cell: 616.836.7074 | Toll Free: 877.554.8900 | scsolutionsinc.com |Skype:lgbrand