Material of more lasting interest may be found here.
Trucking is generally a leading indicator for the economy. Trucking stocks are doing poorly, while, strangely, other stocks of other transport companies, such as shippers, railroads, and airlines, are doing better. One of the explanations offered is gift cards.
“Just as the computer revolutionized the flow of information, the shipping container revolutionized the flow of goods. As generic as the 1's and 0's of computer code, a container can hold just about anything, from coffee beans to cellphone components. By sharply cutting costs and enhancing reliability, container-based shipping enormously increased the volume of international trade and made complex supply chains possible.”
“The trouble [with security] is not focused at the end of the line—the port terminal at the American shore. It is spread up and down the supply chain at critical points across the globe…”
“Over the next few weeks, the latest generation of big-screen televisions, digital cameras, MP3 players and other consumer electronics are heading into the stores.”
“In years past, that meant retailers would give last year's technology one final drastic price cut as they tried to make room for the new sstuff. Consumers whose identities aren't wrapped up in having the latest and greatest gadgets could pick up some bargains.”
“That won't happen much this year. Because retailers share more sales and inventory information with manufacturers and vice versa via sophisticated software, inventories are kept lean.”
“China has opened the first phase of what could eventually become the world's largest container shipping port, a deep-water facility on an island about 20 miles out to sea.”
“The Yangshan Deep Water port is theis city's effort to keep up with the explosive growth of exports in the Yangtze [Changjiang] River Delta region, which has grown into a strong rival to China's long-dominant Pearl River Delta area.”
“The Yangshan Deep Water port is another one of China's large infrastructure projects, which are meant to ensure that the country's soaring economic growth does not stall because of energy shortages, transportation bottlenecks or land and labor restrictions.”
The port will eventually have five berths and be capable of handling millions of TEU's; it is 49 feet deep; and to get cargo to and from the mainland, the government built a six-lane bridge 20 miles out to the island.
“Wal-Mart and the private sector in general are getting way too much credit for their intermittently impressive relief efforts. In fact, the economic and management trends that Wal-Mart and FedEx typify may have been responsible for some of the post-Katrina suffering.”
“Two days after one of the worst storms ever ravaged the Gulf Coast, large parts of the nation's distribution system were feeling the effects. Major transportation artieries were clogged, and imports and exports had slowed to a crawl. The logistical logjam could delay the production of hundreds of everyday products. The result is that consumers, even those far from the storm's epicenter, might have to pay more fore everything from coffee and bananas to paint and tires. ”
Trade through the Port of New York has increased by 65 percent since 1998 “That new bustle signals a startling change in global shipping. Vessels like the Hyundai Glory, one of eight floating warehouses that form a shuttle called NYX or New York Express, are sailing directly from Asia, taking what used to be a prohibitively time-consuming route across the Pacific and through the Panama Canal to the Atlanta Coast.”
“These so-called All Water Route services to New York have cut traveling times so drastically that many goods once unloaded in California and carried across the country by train are now shipped straight to New York; there are nearly 20 lines today, most of them started in the last five years. …New York… is effectively becoming a satellite of the Pacific Rim.”
“Far beyond the harbor, immense warehouses and distribution centers are under construction in New Jersey and Pennsylvania. Railyards are being expanded and barge links are being created to carry the cargo to distant markets. And all of this activity is stoking the region's economy.”
Business in the maquiladoras is increasing rapidly after the downturn in the US economy. This time the manufacturers are not trying to compete on cheap labor, but on delivery, proximity and ease of control. “Tijuana and other border cities have another advantage. Some of the big items that are manufactuered in their new plants—refrigerators and water heaters for example—cost more to ship from Asia. And to avoid holding expensive inventory, American retailers like Home Depot demand that factories supply them continuously, which is easier to do by land.”
“Freight congestion has spread across the Union Pacific railroad system, especially in Southern California and the Southwest, raising concerns about delays in agricultural shipments and international trade if a solution is not found before the rail freight rush begins in late summer and fall.”
“In Southern California, some railroad people are calling the situation a small-scale meltdown… . Dozens of trains daily are parked on sidings because they cannot get into or out of the Los Angeles Basin.”
“So far, the slowdown has not affected international trade through the ports of Los Angeles and Long Beach, according to railroad officials and analysts, but the analysts are keeping a wary eye on the situation.”
“The severity of the problem can be traced partly to Union Pacific's effort to provide premium service to one of the largest American carriers by rail, United Parcel Service.”
“U.P.S. has begun a new coast-to-coast premium service that requires high-speed train shipment to Dallas, Atlanta and New York. The New York train dispatched from Los Angeles on Tuesday is particularly time-sensitive because it is scheduled to arrive in time for package delivery on Friday rather than the following Monday.”
“To keep the train on time on the busy, largely single-track segment between Los Angeles and El Paso, called the Sunset Route, railroad dispatchers clear other trains onto sidings far ahead of the U.P.S. train, sometimes hours ahead. At times, trains are stalled because their crews have reached the maximum tour of duty under federal law of 12 hours, and no rested crews are available. It can take a week to sort out such situations.”
“When Wal-Mart Stores surprised its suppliers last summer by announcing an aggressive timetable for them to put radio frequency tags on their shipments, it put manufacturers of the most tightly controlled prescription drugs on the fastest track of all. They were supposed to send bulk shipments of such drugs in radio tag containers to a distribution center near the company's headquarters in Bentonville, Ark., by the end of March.”
“With that deadline just days away, Wal-Mart is now admitting that it will not be met.”
“ ‘Wal-Mart keeps cutting back on its requirements,’ said Michael J. Liard, the senior analyst following radio tag technology at the Venture Development Corporation, a market research company in Natick, Mass. ‘They're not ready; the industry's not ready; and the technology is not ready.’ ”
“ ‘Their ultimate goal is attacking our economy,’ said Adm. James M. Loy, deputy secretary of homeland security and retired commandant of the Coast Guard. ‘Our link to the global economy is by water—95 percent of what comes and goes to this country comes and goes by ships.’ ”
“The response to this threat is a new law of the sea, spurred by Admiral Loy, passed by Congress and signed by President Bush 16 months ago. A parallel global code was adopted days later under American pressure by the United Nations's International Maritime Organization.
“The law and the code set a July 1 deadline for all of the world's ships and ports to create counterterrorism systems—computers, communications gear, surveillance cameras, security patrols—to help secure America against an attack.”
“ The cost of compliance at home and abroad will be many billions of dollars. Many American and foreign ports lack the funds to comply. But the cost of not complying could be steeper still. The law's demands create a stark confrontation between world trade and national security.”
“Factories in Mexico long were winners in the flow of labor around the world, as many U.S. companies relocated there to take advantage of lower wage costs. Now rivals in China can match the quality and productivity of Mexicon factories, but at far lower costs.”
“So [Mexican] managers are moving their factories up the manufacturing food chain, retooling to make more advanced products. Now they are competing against factories in developed economies such as the U.S. that earlier thought they were safe from foreign competition.”
“A new crackdown in trade between the U.S. and China has stranded an unusual cargo: 16,000 metric tons of chicken feet.”
“Chicken feet are a popular dish in China, and with no significant demand for such morsels in the U.S., American poultry producers shipped an estimated four billion pairs to the People's Republic last year. But on Feb. 10, China banned U.S. poultry products after some chickens came down with bird flu in Delaware. That left vessels plying the Pacific Ocean and elsewhere with nowhere to off-load millions of chicken feet, sending importers scrambling to find cold storage facilities, lest they spoil before China lifts the ban.”
“Strained by rapid economic growth, China's transportation system has bogged down, especially in the last six weeks, causing delays in deliveries of raw materials and raising a serious risk of higher inflation.”
“Railroads are so overburdened that power plants in southern China are having trouble getting coal from the north. That and shortages of generating capacity have contributed to brownouts that have forced factories to operate on limited schedules or in the middle of the night.”
“Heavy-duty trucks have also become an impediment, as Beijing, alarmed at road damage caused by overloaded trucks, has suddenly clamped down on enforcing cargo weight limits. This forces each truck to make more trips to carry the same amount of cargo.”
“The logjam appears to be most acute in China's ports, where shortages of trucks and railcars are preventing the distribution of shipments arriving from overseas. Mountains of imported iron ore and steel now clog the docks in many of China's biggest ports, forcing ships to wait at anchor as long as a month to make deliveries, at a cost of up to $100,000 a day per vessel just in ship charter fees.”
“Notably, even as China seems to be choking on imported commodities like iron ore, steel, coal, aluminum and soybeans, its exports of everything from shoes to furniture to the United States and other foreign markets have been remarkably little affected. That is because such goods move mostly in steel containers on different kinds of trucks, and they pass through special ports that have received considerable investment in recent years.”
“Rising freight rates have hurt the competitiveness of some American exports to China, especially agricultural commodities. Shipping rates for grain moving from the Gulf Coast of the United States to China, for example, have climbed to $70 a ton from $18 in the last two years.”
“China's boom has also pushed up global commodity prices and freight rates all over the world, including those for American imports —a combination that economists expect to increase inflation slightly in the United States, but not as much as in China because the American economy is more dependent on services.”
“Seattle—Huge container ships steam into this port every day loaded with clothes and shoes, furniture and video games, electronics and aircraft parts made in Asia.”
“On their return trip, those same ships often cross the Pacific half empty, bearing chemicals, meat, grain and engines and routinely stuffed with hay or scrap paper.”
“ ‘This is what the nation's trade imbalance really looks like,’ said Mark Knudsen, the deputy director of the Port of Seattle. ‘We've got so much empty cargo space, it pays to ship over hey for Chinese animals, or scrap paper to be recycled into packaging for Barbie dolls.’ ”
“The technology [RFID] got a push—some say a kick in the rear—this summer when Wal-Mart Stores told its top 100 suppliers to deliver RFID-tagged products by Jan. 1, 2005. With nearly $700 million in sales per day in 2002, Wal-Mart had the clout to give orders, and the announcement sent suppliers scrambling to respond.”
“Some estimates put logistical costs at 5 cents on every dollar of goods sold, and analysts have predicted the technology could save Wal-Mart more than $1 billion per year. For a company that depends on selling at discount prices, and which moves 5 billion boxes annually through its distribution centers, the technology is impossible to ignore.”
“Congress is focusing new attention on cargo security because of the recent trip taken by Charles McKinley, the clerk who had himself shipped in a crate on a cargo plane from Newark, N.J., to Dallas.”
“ ‘Despite the progress made in passenger and baggage safety, air cargo flies virtually unchecked in our skies,’ said Sen. Kay Bailey Hutchison, R-Texas, a member of the committee that oversees aviation.”
This article is a follow-on to Man Charged for Shipping Himself As Cargo by The Associated Press, NY Times, 10 September 2003: “Federal prosecutors filed criminal charges Wednesday against a man who climbed into a crate and had himself shipped by air from New York to Dallas to visit his parents.”
“Mexico, long the king of the low-cost plants and exporter to the United States of products from Ford trucks to Tommy Hilfiger shirts to I.B.M. computers, is fast being supplanted by China and its hundreds of millions of low-wage workers.”
“The competition from China is no doubt hitting American manufacturers as well, particularly in textiles. But perhaps nowhere are the effects being felt more keenly than here in Mexico, where the toll in jobs is mounting at a staggering pace.”
“More and more plants like Gicsa, so-called maquiladoras that are allowed to import components duty free so long as they are assembled for export only, are scaling back operations or closing altogether. In all, 500 of Mexico's 3,700 maquiladoras have shut down since 2001, at a cost of 218,000 jobs, the Mexican government says.”
China is exporting huge quantities of finished goods to the rest of the world and is importing the oil, coal, and iron ore to fuel its economic expansion. This has created huge demand for shipping capacity from/to China.
Some interesting quotes:
“Experts estimate industry could save billions of dollars each year in inventory and logistical costs with RFID. Trouble is, privacy advocates see RFID as a massive invasion of privacy. They say the technology would let retailers, marketers, governments or criminals scan people—or even their houses—and ascertain what they own.”
“The Yellow Corporation, the nation's second-largest trucking company, will acquire the industry leader, the Roadway Corporation… . The deal will create the Yellow-Roadway Corporation, a behemoth with more than USD6 billion in annual sales.
Financial analysts hailed the deal as bringing needed consolidation to an industry that has been struggling to stay profitable. The weak economy has reduced the amount of freight carried on trucks even as many shippers have embraced just-in-time inventory practices that let them send smaller loads, often through rail-and-ship combinations and other alternatives.”
The US, like almost every other country, prohibits foreigners from controlling any domestic commercial airline. U.P.S. and FedEx, who together control 80 percent of the domestic shipping market, argue that the planned purchase of Airborne by D.H.L., which is owned through a tower of subsidiaries, by Deutsche Post, which is owned in turn by the German government, would violate this law. D.H.L. claims this is a ploy to stop or slow competition. “U.P.S. and FedEx worry that Deutsche Post will subsidize a combined D.H.L-Airborne, enabling it to price shipping services at a swevere discount. That would clearly jeopardize the U.P.S. and FedEx duopoly, which has dominated domestic shipping for nearly two decades.”
Immediately after they defeated the Detroit Pistons, Jason Kidd and the rest of the New Jersey Nets put on baseball caps with the logo “NJ Nets: Eastern Conference Champions”. How did they get those caps so quickly? Most of these hats are sourced from China, Taiwan, and Korea. This article is about Ho-Seong Koh, a Korean who coordinates the manufacture of hats at factories in Vietnam, Cambodia, and Bangladesh. Before any championship he makes two sets of caps and has them ready to sell on site. At the final buzzer, when the championship has been decided, the appropriate set of hats is released for distribution and a larger order placed by phone. The other set of hats is burned. The caps sell for $30; Mr. Koh charges $3 apiece, making only pennies on each, hoping to make it up on volume.
Sometimes, instead of making two sets of caps, a single run is made of white caps, with all lettering except the identity of the winner. After the game, patches of the winning team may be glued on in US warehouses.
“According to the customs bureau, 7.2 million shipping containers entered the country in the year ended last September, in addition to 11.1 million trucks, 2.4 million railroad cars, 768,000 commercial airline flights and 128,000 private flights.”
“As more than 250,000 American troops lay coiled around Iraq ready to strike, one of the chief worries that preoccupies military planners is that combat forces particularly fast-moving Marine Corps and airborne units will outrun their fuel supply lines.”
“Engineers have tapped into Kuwait's considerable refining and distribution network to move fuel toward the front lines, but logistics officers are struggling to create a network extending deep into Iraq that will supply a force that consumes 15 million gallons of fuel a day.”
“An exodus of factories the last two years, many of them to China, has led to a wave of soul-searching among business leaders and government officials here over Mexico's ability to compete with other low-cost exporters for the United States market.”
“For years, a cheap peso had masked inefficiencies in Mexican manufacturing, including high employee turnover and unwieldy logistics. But since the currency began appreciating in 1999, costs have risen some 30 percent. Now export manufacturers must figure out what Mexico has to offer besides the geographical good fortune of lying next to the rich American consumer market.”