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Latest News — Jan 18, 2013

NEWSFLASH: Federal mediator reports progress in longshore union talks

American Shipper | January 18, 2013

U.S. Federal Mediation and Conciliation Service Director George H. Cohen said in a statement today that the U.S. Maritime Alliance and the International Longshoremen’s Association “made progress” during the past three days of contract negotiations held in Galloway Township, N.J. He said both sides “agreed that the negotiations will continue under our auspices.” USMX and the ILA are trying to negotiate a master contract for container cargo handled at 14 U.S. East and Gulf coast ports.

Drewry forecasting higher freight rates

Thursday, January 10, 2013

Drewry Shipping Consultants is predicting that this year contract rates negotiated with shippers on the key East-West trade lanes will be higher when compared to the low levels of 2012. Referencing its latest quarter Container Forecaster report, London-based Drewry forecasts global container demand to increase by 4.6 percent this year, but says “Considerably faster capacity growth at the trade route level will severely challenge carriers and even the ability of the fast growing North-South trades (such as Asia to Latin America) to prop up the deficiencies elsewhere.”It cannot be ignored that the headhaul compound annual growth rate of the three core East-West trade lanes in the 2008-12 period has been only 0.4 percent,” the firm added.

Drewry said “despite attempts by carriers to pull capacity from East-West trade routes, significantly weaker cargo volumes have limited the success of their attempts to lift freight rates for any sustainable periods.” To illustrate this, Drewry pointed to what has happened on the Asia-Europe trade during the past year. “Since the huge overnight success of the March 2012 GRIs implemented by shipping lines to bring rate levels back above break-even, there have been a further seven attempts to lift rates – equating to a total of around $2,800-$3,000 per FEU on the Asia-to-North Europe trade. During this period, average headhaul freight rates have actually declined from about $2,700 in early March to $2,400 as of early January 2013,” Drewry said.

“While this is not a disaster for the carriers, it proves that there is a fundamental weakness in the market compounded by low volumes on the back of a non-existent peak season last year. “With another 40 ships of at least 10,000 TEUs due for delivery this year, carriers will have a very difficult time deploying them without doing further damage to the supply/demand balance,” it said.

Mixed results for spot road freight volume

American Shipper – Jon Ross | January 17, 2013

In December, truck freight volumes in the spot market rose 5 percent, year over year, according to the DAT North American Freight Index. Even though the result made for the busiest December since the index’s inception in 1996, it still came on a month-to-month decline of 18.4 percent. This follows a typical seasonal pattern, according to a press release, and the decrease is especially severe because of a robust November. Volume has dropped from November to December by an average of 13 percent over the past 10 years. Van freight in December, year over year, increased by 13.1 percent, refrigerated levels stayed flat and flatbed volume fell by 7.3 percent. Compared with November on a month-over-month basis, all three of these equipment types showed declines. Overall, rates stayed mostly flat or dropped, with van, reefer and flatbed rates showing year-over-year growth of 0.8 percent, -2 percent and -7.3 percent, respectively.

TODAY IN ENERGY: Wednesday, January 16, 2013

Large mergers drove changes in ownership of electric generating capacity in 2012

Electric power companies add physical capacity to their fleets in two primary ways: building new generators or buying existing generators from another company. The purchase and sale of power plants is a key business activity in the electric power sector.

US Diesel Fuel Pricing Shows Downward Trend

EIA | January 14, 2013

Sanchez says Obama administration committed to export goal

The Obama administration remains “very committed” to reaching the president’s goal of doubling exports by the end of 2015, said Francisco Sanchez, undersecretary of international trade at the U.S. Commerce Department.

The State of the Healthcare Supply Chain

SupplyChainBrain | January 18, 2013

Eric O’Daffer, research director with Gartner … the potential impact of healthcare reform.

“More of the same – just more aggressive.” That’s the picture O’Daffer paints of the healthcare sector today, versus the previous year. Healthcare systems are under increasing pressure to take cost out of their systems. Legislative reform is forcing them to prepare for changing or shrinking reimbursements. It’s all about cost, O’Daffer says. Traditional methods of pricing no longer apply. Different economic models are coming into play, with the old fee-for-service setup headed for extinction. At the same time, he says, healthcare systems and hospitals are consolidating at a faster rate. The combined entities are demanding more visibility into end-to-end costs.

On the manufacturing side, there is a significant amount of global expansion. In terms of growth, the North American market is less of a factor than new and emerging parts of the world. For providers, the challenge lies in figuring how to serve those new markets efficiently.

Also due for a change is the way in which providers work with suppliers. In this case, cost isn’t the only issue. “There’s a move afoot at the strongest sourcing supply chains to work with suppliers more strategically,” says O’Daffer.