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Management Update.

Staff

An executive summary of industry news

Box scanning stalled . Last month's news that the U.S. Department for Homeland Security (DHS) would not be able to meet its 2012 deadline to implement its goal of 100 percent inbound container scanning was greeted with enthusiasm by the British International Freight Association (BIFA). "The DHS has consistently underestimated the enormity of the task at hand relative to the costs both to the United States government and those of foreign governments," said BIFA director John O'Connell. He added that the DHS also overestimated the limited ability of screening technology to penetrate dense cargo or large quantities of cargo in shipping containers. By the DHS' own calculations, most cargo shipped to the United States originates from only 58 major global ocean gateways. Security analysts suggest that scanning would best be done at these mega-ports rather than hundreds of other niche seaports.

Ground handling procedures to tighten up? While recent headlines focus on the lack of international ocean container scanning standards, a similar crisis was taking off in the air cargo arena. The Department of Homeland Security Office of Inspector General (IG) report issued last month said that the Transportation Security Administration (TSA)--a DHS agency arm responsible for aviation security--could significantly enhance ground-handling procedures. TSA analysts added that given that more than 10 million pounds of cargo is loaded into the bellies of passenger aircraft daily, the issue is becoming more urgent. TSA had performed more than 7,000 cargo security inspections last year, yet recently discovered numerous holes in their operations. The IG's report contained six recommendations for TSA to implement in order to improve cargo security before it's loaded onto passenger aircraft. Stay tuned.

Slow freight recovery heading our way . Fitch Ratings says truck and rail freight demand bottomed out in the second quarter of 2009 and it expects increasing demand to continue steadily in 2010. But the ratings agency noted "overall freight demand is not expected to return to pre-recession levels until sometime in 2011 at the earliest" and rates will remain under pressure. Fitch added that railroad rates will see a slightly lower increase range in 2010, closer to 3 percent on average, as demand is expected to be relatively mild at least in the first half, with export volumes likely to outpace domestic demand. The agency added that trucking industry volumes will continue growing mildly in 2010 as U.S economic conditions improve. However Fitch said rates in trucking will remain under pressure, particularly in less-than-truckload, "where the slow rate of volume growth will continue to leave the sector with overcapacity."

Trucking capacity is still imbalanced . Following the second quarter in which Avondale Partners estimated that less than 0.4 percent of the nation's over-the-road, heavy-duty truck capacity was pulled from the road, the firm said that less than 0.7 percent of the overall capacity exited in the third quarter. While the figures were described by Avondale as "promising," the research firm noted that it's still not enough to cure the current imbalance between capacity and demand. While the number of companies cited in the report that pulled trucks from the road only rose from 370 to 405 from the second quarter to the third quarter, the number of trucks--6,725 in the second quarter and 14,135 in the third quarter--more than doubled sequentially.

Cold ironing for cleaner air . APL may no longer be headquartered in Oakland, but it used the port as a backdrop to usher in news that it had teamed with the Bay Area Air Quality Management District on a "landmark" $11 million project to cut vessel emissions and improve this city's air quality starting in 2010. Armed with $4.8 million in air quality grants, the world's fifth-largest container carrier said it will retrofit its terminal and vessels to begin cold-ironing next December at the Port of Oakland. "Cold-ironing," which means turning off a ship's 2,000-horsepower diesel generators at berth and connecting instead to electrical sources ashore, enables vessels to maintain power in port while eliminating exhaust emissions.

Port of LA relents . A second set of modifications to the Port of Los Angeles' tariff to allow truckers to continue operating their existing rigs past the January 1 ban date has been approved--and not a moment too soon. Inbound container volumes continue to decline, and the port is at risk of losing share to other ocean cargo gateways if shippers perceive drayage complications in the future. The tariff modifications are designed to be consistent with a Drayage Truck Rule Advisory issued by the California Air Resources Board in December. The advisory will allow truckers that have purchased a new truck or retrofit with private funds to continue to operate their existing vehicle until April 30, 2010 while waiting for the new truck to be delivered or the retrofit to be installed.

Is the worst over? Shippers listening to last month's economic forecast event hosted by IHS Global Insight are certainly hoping that the analysts are on target with their prediction that "the worst is over." Billed as "The Top 10 Economic Predictions for 2010," the webcast began with a quick recap by Nigel Gault, the firm's chief U.S. economist, of last year's predictions: "At the time we said that the U.S. recession would be one of the deepest--if not the deepest--in the postwar period." Well, Gault was right. "The single-biggest risk facing the U.S. and world economies at that time was a timid response to the crisis," he said. Fortunately, that did not occur, and this year's IHS forecast suggests that the U.S. recovery will start slowly and then be stuck in the 2-percent to 2.5-percent range.

IMO warms to this subject. Last month's Copenhagen Climate Summit became a forum for the London-based International Maritime Organization (IMO) to lobby for more oversight with regard to safety, security, facilitation of traffic and protection of the environment. "Since its creation, IMO has developed these skills and is uniquely placed to continue to service the world community from all its perspectives, including those within the objectives of the Copenhagen Conference," said spokesmen at the conference. Spokesmen added that 23 out of the 51 IMO treaty instruments directly address the prevention and control of pollution.

2009's Railroad Facts is on the tracks. The Association of American Railroads (AAR) annual reference book is filled with facts and statistics on a wide range of topics, including railroad finance, traffic, operations, and equipment, among others. It also includes profiles of Class I railroads, Amtrak, Canadian, and Mexican carriers. This edition is also packed with information on industry revenues, capital investments, and accident rates. Single copies are $20 and discounts are available for larger quantities. Order online at aar.org .

LM 's 2010 Salary Survey and Outlook Webcasts are right around the corner! Be sure to watch your inbox now that you are back to work in the New Year. During mid-January we'll be sending out the 2010 Salary Survey questionnaires via e-mail. Last year nearly 1,400 readers participated in this highly anticipated study, giving the market the clearest picture available of average logistics salaries around the country--as well as a listing of the titles that rake in the biggest bucks. And don't forget that on Jan. 28 at 2:00 p.m. ET, the 2010 Logistics Outlook Webcast will be presented live. This popular event offers shippers a snapshot of where the U.S. economy is headed and, more importantly, where transportation rates are headed in the coming year. During this interactive event, attendees can ask industry experts questions in real time. Visit logisticsmgmt.com/2010outlook to register.
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Publication:Logistics Management (Highlands Ranch, Co.)
Date:Jan 1, 2010
Words:1275
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