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Latest News – April 16, 2013

Energy & Diesel Fuel & Other Commodities

Manufacturing Sector Improves Energy Consumption in United States

Procurement Leaders | April 16, 2013

Energy consumption in the U.S. manufacturing sector decreased by 17 percent from 2002 to 2010, according to the U.S. Energy Information Administration. It notes that manufacturing gross output decreased by only three percent over the same period.

Taken together, these statistics indicate a “significant decline” in the amount of energy used per unit of gross manufacturing output. The significant decline in energy intensity reflects both improvements in energy efficiency and changes in the manufacturing output mix. Consumption of every fuel used for manufacturing declined over this period, according to the agency.

TODAY IN ENERGY: Wednesday, April 10, 2013 EIA

Average summer gasoline prices expected to be slightly lower than in 2012. The retail price for regular gasoline is expected to average $3.63 per gallon during this summer driving season, slightly below average prices over the last two summers, according to the U.S. Energy Information Administration’s Short-Term Energy Outlook. The forecast reflects a small decline in crude oil prices and expected gasoline consumption, as well as higher gasoline inventory levels.

TODAY IN ENERGY: Monday, April 8, 2013 EIA

Foreign investors play large role in U.S. shale industry. In early 2013, Sinochem, a Chinese company, entered into a $1.7 billion joint venture with Pioneer Natural Resources to acquire a stake in the Wolfcamp Shale play in West Texas. This investment highlights a renewed trend toward foreign joint ventures. Since 2008, foreign companies have entered into 21 joint ventures with U.S. acreage holders and operators, investing more than $26 billion in tight oil and shale gas plays.

Commerce – Regulatory & Compliance

Airfreight Supply Chain Process ‘Simplified’ by New Technology

Handy Shipping Guide | April 09, 2013

The International Federation of Freight Forwarders Associations (FIATA) and the International Air Transport Association (IATA) have announced that the Multilateral Electronic Air Waybill (e-AWB) standard has been approved, removing the need for bilateral e-AWB agreements between airlines and freight forwarders and thus simplifying the air freight supply chain process. Airlines will have a single agreement with IATA that enables them to accept e-AWBs from all participating freight forwarders, while freight forwarders will have a similar agreement that will allow them to tender e-AWB shipments to multiple airlines at numerous airports worldwide. examines the effects the increase broker bond from $10,000 to $75,000 will play in moving hopper, dump, and other bulk freight.

Nixa, MO (PRWEB) March 31, 2013

With the signing in of the new highway bill, Moving Ahead for Progress in the 21st Century Act, many changes to the transportation industry will go into effect. Of these, most are concerned with maintaining and improving our highway infrastructure and adding visibility to the industry from motor carriers, freight forwarders and brokers. One of the provisions, however, increases the broker bond from $10,000 to a staggering $75,000. The real question is not whether nor not it will affect the freight industry, but by how much?

Both the Owner-Operator Independent Drivers Association (OOIDA) and the Transportation Intermediaries Association (TIA) have been arguing for the bill’s signing. The provisions enacted will protect owner operators in several ways. It will provide protection from fraud simply by raising the bond to $75,000 and will increase speed and transparency between shippers, brokers and carriers. Carriers will also be affected by the new bill. They will be required to put themselves in the national registry, install logging devices in their vehicles and prove their training standards have been met.

“Brokers play a vital role in the truck freight industry”, says Jared Flinn, Operating Partner at “Many shippers rely on brokers to assist them in sourcing carriers and carriers equally rely on brokers to supply them with loads they might have never found.” Brokers make up between 30%-40% of loads posted and moved on While shippers and carriers see this as a positive change for the industry, many brokers

Labor, Staffing & Issues

Labor peace arrives for East and Gulf Coast ports

Logistics Management | April 10, 2013

ILA membership signs off on six-year Master Contract with USMX. After more than a year of contentious negotiations, the United States Maritime Alliance (USMX), an alliance of container carriers, direct employers, and port associations serving United States-based East and Gulf Coasts, and the International Longshoremen’s Association (ILA), the largest union of maritime workers in North America, have finally arrived to a state of labor peace.

Terms of the new contract, according to the ILA, include: wage increases totaling $3 per hour spread out over the life of the agreement that will bring the hourly pay rate to $35.00 by the final year of the contract; contract language that protects ILA workers that have been displaced due to new technology and automation, coupled with a joint management-ILA committee that will continually examine the impact of automation on ILA’s workforce; and terms that will restrict the outsourcing or subcontracting of ILA jobs to non-ILA employers, with the ILA preserving its chassis maintenance and repair jurisdiction and expand major damage criteria to protect jobs.

Other terms of the contract, include:
-guaranteed payments of $211 million in container royalties each year for the life of the contract; and
-a continuation of the national healthcare program for ILA members with no change in deductibles, coverage, or co-pays

Logistics: Carriers, All Transportation Modes & International

Cass Freight Index shows positive gains in March

Logistics Management | April 7, 2013

Freight shipments in March, like February, were up both sequentially and annually in contrast to January, which was down on both fronts, with volumes up for the second time in four months. Shipments—at 1.114—were up 5.8 percent compared to February and up 4.2 percent compared to March 2012, marking the largest annual gain in shipments since October 2012. February marks the 32nd consecutive month shipments were above the 1.0 mark since May 2010, when shipments moved above the 1.0 mark for the first time since November 2008.

Driving the increase in shipments, according to the report, were signs of spring to a certain extent, which it said “should lead to some strengthening in the freight sector in the coming months.” But it cautioned that does not mean that things are smooth on the economic front, with ongoing headwinds in both the national and global economies. As an example, Cass pointed out that in each year since 2010 freight shipments and expenses have trended up from February to June but ended up stagnating or fully eroding in the second half of each year. As an example, Cass pointed out that in each year since 2010 freight shipments and expenses have trended up from February to June but ended up stagnating or fully eroding in the second half of each year. And shipments since the end of 2012 to now are up 6.4 percent compared to the same period a year ago, according to the report.
Should demand hold, Cass said that increased trucking costs resulting from Hours-of-Service changes could further push up rates, and on the rail side the report explained that total rail freight costs are up while rates are not, due to a shift from lower-rated commodities like coal and grain and bulk chemicals to higher-rated commodities like petroleum

The Association of American Railroads (AAR) reported that carload and intermodal volumes were mixed in March.

Logistics Management | April 05, 2013

March carloads—at 1,117,427—were down 5,969 carloads or 0.5 percent annually. Intermodal—at 933,028 trailers and containers—was up 4,859 units or 0.5 percent compared to March 2012.

Of the 10 commodities tracked by the AAR, seven saw annual gains in March. Petroleum and petroleum products were up 54.3 percent or 19,295 carloads, and crushed stone, sand, and gravel were up 11.9 percent or 8,380 carloads. Grain was down 20.1 percent or 16,971 carloads, and coal was down 2 percent or 8,963 carloads.

“U.S. rail traffic continues to mirror the overall economy: not great, not terrible, anticipating a better future,” said AAR Senior Vice President John T. Gray in a statement. “Petroleum and petroleum products continue to lead traffic gains, while coal and grain have seen better days. Intermodal volume in March was up just 0.5 percent over last year, but it was still the highest-volume March in history and built on even stronger gains earlier in the quarter.”

For the week ending March 30, the AAR reported that carloads—at 281,367—were down 1.9 percent annually. This outpaced the previous three weeks at 278,738, 280,624, and 276,698, respectively.
Intermodal for the week ending March 30 came in at 233,587 and was down 3.8 percent annually. This was slightly below the 235,641 from the week ending March 23, ahead of the 228,806 recorded during the week of March 16 and ahead of the 235,174 from the week ending March 9.

Class 8 Truck Orders in March Top 21,000 Units

Journal of Commerce | 4/3/13

North America’s Class 8 truck net orders in March totaled 21,817 units, dropping 4 percent compared to the previous month, but increasing 11 percent year-over-year, according to FTR Associates’ preliminary data.

“The March orders came in above 21,000 units, which is a good sign for the near-term,” said Eric Starks, FTR’s president, in a written statement. “We didn’t expect orders to fall from recent levels, however, it is good to see actual data suggesting the market has stabilized with more upside potential for the second half of the year.”

“The next few months’ orders will be critical in understanding the demand pressure as move into the summer,” Starks continued. “If orders come in nearer to 25,000 units for the next three months, it would make us feel more comfortable about moving our forecast higher for the second half of the year.”

Global air cargo markets see uptick in demand

Logistics Management – April 02, 2013

The International Air Transport Association (IATA) released February data showing that air cargo maintained the modest improvement in demand that began in the fourth quarter of 2012.

The 3PL & 4PL World

Widespread Adoption of Web-based TMS ‘Only a Matter of Time’

SupplyChainBrain | April 11, 2013

While it can’t be said that every company has tapped into web-based transportation management systems, such applications have been around long enough to no longer qualify as new – and their presence in the enterprise is growing. Is it fair to say that traditional TMS software has been overtaken by web TMS? Perhaps not, but such online, hosted or on-demand systems are proliferating. They are quick to deploy in most cases, they are highly scalable and the faster-time-to-ROI argument hasn’t hurt web-based TMS adoption either.

Supply Chain News

March Madness? U.S. Imports Drop 15 Percent in One Month – Biggest Dip Since 2009

Zepol Corp. | April 16, 2013

U.S. import shipment volume for March, measured in TEUs, decreased by 15 percent from February and by 12.5 percent from March of 2012. While February imports were unusually high, March imports were unusually low. In fact, imports for the month of March have not been this low since 2009.
The reason for this abnormal trend is largely due to the Chinese New Year falling later this year compared to last year, thus the lull in imports was seen a month late this year. Even with March’s low import volume, overall imports for quarter one surpassed 2012 by a slight 0.11 percent.

Drewry: Near sourcing trend more hype than reality

April 1, 2013

The buzz about near sourcing, the process of transferring manufacturing from Asian countries to those nearer Western markets, is more hyperbole than truth, according to an article in the latest issue of Container Insight published by Drewry Maritime Research. Although many importers say near sourcing is on the rise, it is unlikely to affect seaborne container cargo volume anytime soon, Drewry said.

The case for near sourcing is increasing, as retailers increasingly have a demand for custom goods that can be delivered to market faster than from Asia. For example, a car or computer that can be sourced closer to home with a wider range of cheap extras is obviously preferable to a car or computer from Asia with limited options. And container carriers are slowing down ships, and thus shipping times, on routes from Asia to save fuel.

Additionally, there have been proportionately less imports from Asia to North Europe and the U.S. over the past two years, indicating importers are rethinking the benefits of off shoring. However, Drewry says, that in itself doesn’t mean the return of manufacturing to Europe and the U.S. – it could just mean that there are less factories there to close.

For example, Mexico can respond to U.S. retailers’ needs more quickly than Asia, and yet that country’s container export growth to the U.S. has only been slightly higher than the growth of China and other Asian countries over the past few years, Drewry reports.

In conclusion, Drewry predicts near sourcing will increase, but off a very low base, so its effect on ocean carriers probably won’t be significant in the short-term. Since these are hard economic times for consumers, cheap prices from Asia will remain attractive. Predicting the situation long-term is difficult due to the uncertain growth rate of online shopping, Drewry says, which will soon demand same-day delivery. This is a more immediate issue confronting retailers, with up to 10 percent of all retail sales in Europe likely to be conducted over the Internet by 2016, according to Jones Lang LaSalle.

Another more immediate trend will be the transfer of production away from China to cheaper Asian countries, Drewry said.

Same-Day Delivery Is Back. Will It Succeed This Time?

SuppyChainBrain | April 2013

Same-day delivery, a concept that bombed during the dot-com era of the late 1990s, is back on the loading dock. Major retailers such as Wal-Mart, Nordstrom, eBay, and are all offering same-day delivery in a limited number of locations.

Google Tests Same-Day Delivery Service in San Francisco Area

CRM Daily | April 05, 2013

Given Google’s central role in driving e-commerce traffic through its huge user base, its move into real-world commerce could be a major game changer. An online shopping service that provides same-day delivery of food and other products – that’s the basic idea behind a new service now being tested by the company.

The service, called Google Shopping Express, is being tested among a small group of consumers in the San Francisco Bay area. Google has declined to say how many customers are involved in the trial or what the membership pricing might be. If the test is successful, the company plans to roll out the service to other markets.