Well really it’s the economy AND ever-changing Federal regulations that the trucking industry sees as its biggest challenge as we close out 2010 and look forward to 2011.

The American Transportation Research Institute (ATRI) polled some 4000 trucking executives and asked them to list their top concerns as we move to the end of the year and into next year.  Not surprisingly, the economy topped the list of the respondents.  What else was on their list?

• Where is the economy heading in 2011?
• The Comprehensive Safety Analysis 2010 Initiative, (CSA 2010) which will make it more difficult for trucking companies to find and hire qualified drivers
• The changes to the Hours of Service Rules expected before this year ends
• The overall driver shortage
• Fuel issues- where are fuel prices headed?
• Transportation funding and infrastructure issues
• Onboard truck technology, such as onboard recorders
• Environmental issues and truck size and weight issues

Overall the trucking industry experienced an up-tick in freight demand in 2010, but it was nothing to write home about.  Will 2011 be better or worse?  It’s anyone’s guess.

No one can argue the value technology brings into the world of business and no group is more dedicated to this cause than the Voluntary Interindustry Commerce Solutions (VICS) Group.

Recently, this group along with leading retailers, suppliers, industry associations, technology providers and academia introduced a wide ranging initiative to guide the adoption of Radio Frequency Identification (RFID) Technology for the retail industry.

The initiative is expected to change the way the retail industry does business and could lead to one of the biggest changes in Supply Chain operations since the introduction of the Bar Code.  The initial focus of this initiative is expected to impact the apparel sector of retail businesses.  So what benefits can the retailers and their suppliers expect?

• More speed in processing goods to the selling floor
• Improved business efficiencies and an enhanced consumer shopping experience
• Real time and accurate inventory views
• Improved inventory accuracy rates
• Ability to count 5000 items per hour compared with the current average of 200- a time savings of 96%
• Reducing out-of-stock inventories by up to 50%
• Improved security and coordination throughout the supply chain
• Right product, right store, right time

Look for this technology to take a foot hold in other business sectors beyond the retail industry.  Shippers, their suppliers as well as the transportation service providers will all need to be on the same page and dedicated to moving this technology forward.

I think we can all agree on one thing …Thank goodness the elections are over!  Well there is one company that is very grateful for the outcome of a different vote and that is YRC Worldwide.

The company asked its Teamster employees to modify the current labor agreement in an effort to ensure the company’s long term viability.  The vote we are pleased to report was in favor of the modification of the current agreement.  The positive vote extends the current agreement, slated to expire in 2013, until March 31, 2015.  The new labor agreement addresses the company’s competitiveness, re-entry into multi-employer pension funds and progress towards long term growth.

We believe it is fair to say that had the vote gone in the other direction, it would have signaled the death of YRC Worldwide.  Recently YRC threatened to close its New Penn Motor Express subsidiary and fold it into YRC, had the approval been rejected by the Teamsters.

This is great news for shippers as it will help to keep competition with the LTL industry strong.  It has been a long road for YRC but the actions they have taken over the past few years have all pretty much fallen into place.  Now we need the economy to improve so that all LTL carriers can benefit from the increased demand.

In YRC’s official press release, Mike Smid President of YRC Inc and Chief Operations Officer of YRC Worldwide, stated “this new labor contract positions our company for improved performance by providing a long-term market competitive cost structure as well as enhanced efficiency to meet the demands of today’s transportation and supply chain customers.  Given the progress we have made over the last two quarters, this new labor agreement provides a strong foundation for long-term growth”.

It’s refreshing to see labor and management on the same page for the good of everyone, especially the shipper customer.

As we have been reporting for months now, UPS and FedEx have made it abundantly clear they will not negotiate rates with their customers when the customer employs a Third Party Negotiator.  Well, as we have also reported, it didn’t take long for the first lawsuit to be filed.

AFMS a third party firm specializing in parcel carrier contracting and negotiations has filed a suit in the Central District of California alleging that both UPS and FedEx have violated antitrust provisions of the Sherman Act; intentional interference with contract and prospective economic relationships; breach of contract; as well as unfair competition.

The lawsuit seeks “treble” damages, which means three times the actual damages sustained by the plaintiff to its business.  Obviously this will amount to millions of dollars should AFMS prevail.  We are sure and we have stated on several occasions that this will not be the only lawsuit filed and now that AFMS has taken the lead, we suspect others will surely follow.

We will be providing a comprehensive analysis on this issue in our Quarterly Supply Chain Business Review which will be coming to you early next week.  Be sure to look for it as it will contain a number of different perspectives on the UPS/FedEx policies, as well as interpretation from several industry experts.  Stay tuned it’s going to be VERY interesting to say the least!

Shippers may or may not be aware, but many of the major LTL motor carriers have already taken their Annual General Rate Increases averaging between 6 and 7%.  Typically the LTL motor carriers increase their rates in January, however this year they have certainly jumped the gun in an effort to help them recover some of the losses they incurred in 2010.  Here are a few examples:

CARRIER        EFFECTIVE DATE OF INCREASE     AVERAGE INCREASE

ABF Freight Systems               October 1, 2010                                     5.9%

FedEx Freight                       November 1, 2010                                   6.9%

UPS Freight                         October 18, 2010                                      5.9%

YRC Worldwide                      September 20, 2010                               5.9%

It is important to note that the increases are an “average” of all increases in base rates, as well as charges for ancillary services.  Shippers should perform a benchmark analysis to ascertain what their actual increases will be.  They could be in excess of 10% in specific areas.  The aforementioned increases are assessed for all shippers that do not have a contract agreement with their freight carriers.  One of the main benefits of having a contract with a freight carrier is the fact that the carrier cannot unilaterally increase the rates without the shippers consent.  That is a huge advantage for shippers.  Secondly, many contract agreements limit general rate increases at percentages much lower than the carriers assess for the general shipping public.

If your company does not have a contract agreement with ALL of your freight carriers you are playing “Russian Roulette” with your freight budgets.  Please contact us for more information on how to implement transportation contract agreements to better control your shipping costs while at the same time creating a true partnership with your freight carriers.

In our next issue of Logistics Strategies, we will be providing a comprehensive analysis of the proposed UPS and FedEx General Rate Increases. You won’t want to miss it.

On August 1, 2010 a new cargo screening law went into effect mandating 100% screening of all cargo transported on passenger planes.  The law was part of the 9/11 Commission’s Recommendations Act of 2007.  The law mandates that all air cargo, traveling on passenger planes, be screened at the piece level for all cargo leaving US airports.  You would think that law would have been in effect for years now!

Interestingly, some air freight forwarders are looking to avoid the headaches of the 100% screening provisions and have opted to move their airfreight shipments on all-cargo airlines. Since this new law went into effect, there has been no reported evidence of interruptions or delays due to the 100% cargo screening requirements.

Recently, the Department of Homeland Security Inspector General’s Office completed an audit of the screening program at nine unnamed selected airports.  The initial report and recommendations however remain classified at this time.  Back in 2007, the Inspector General found several vulnerabilities with air cargo security, including access control and background check issues for cargo handlers.  The hope now is that the former concerns are no longer an issue.

The Association of American Railroads recently reported that US railroads initiated a total of 299,394 carloads of freight for the week ending October 7, 2010.  This figure represents an increase of 7.7% over the same time period in 2009 however the new totals were still down by 10.7% over the same period in 2008.

Intermodal shipment loadings were a little more impressive.  There were 240,252 trailers and containers loaded which was up 16.5% over the same period last year, but down only 1.9% over the same period in 2008.  When we break these numbers down we find container volume was up 17.6% from 2009 levels and 5.9% over 2008 levels.  Trailer volume increased 10.2% from 2009, but dropped 30.6% from 2008 levels.

These numbers certainly reflect positive news on the economic front, indicating an improvement over last year.  There is also a “green effect” to these numbers as many companies are shifting “over the road” truckload shipments to Intermodal service to save on fuel and be more energy conscious.

Global Port Tracker, a monthly report from the National Retail Federation has reported that import containers for the retail industry at all major US ports will increase by approximately 11% over last years totals.  The report indicates the upward trend should continue as we close out 2010.

According to Jonathan Gold, NRF’s Vice President for Supply Chain and Customs Policy, “cargo is still coming through but retailers are mostly stocked up for the holiday season”.  The industry experienced an early “peak” season spike in August when many retailers took advantage of lower than expected import ocean rates and over capacity.  The trend in ocean rates has been up so the retailers decided it was better to bring in inventory early and save on the freight side.

In another area affecting retailers, legislation has recently been introduced that would establish a new unit at the Department of Justice which would focus squarely on investigating and prosecuting organized retail crime.

Under the bill, “organized retail theft” would be defined as “obtaining retail merchandise by illegal means for the purpose of re-selling or otherwise placing such merchandise back into the stream of commerce, aiding and abetting the commission of such acts, or conspiring to commit such acts”.

NRF reports that retailer’s lose between $15 Billion and $30 Billion annually to organized retail crime each year.  In addition, a whopping 89% of retailers indicated they were victims of organized retail crime in the past year alone.  The thefts force retailers to increase prices to cover the losses and threaten public health when crime rings tamper with items such as infant formula or medication by extending expiration dates or repackaging and re-labeling the items.

Dear Friend,

It’s the “official” end of summer and time for us to get back to those critical business issues.  The primary concern for all companies is to drive additional revenue to their bottom lines as quickly as possible.  This is a difficult task when sales are still weak.

One way is to reduce operating expenses– which will have an immediate positive impact on a company’s bottom line–and cost nothing out of pocket.  We have created the attached “Summer Success Stories” of ACTUAL results ICC Logistics has achieved for our clients over this past summer.

Perhaps your own company would benefit from our services to become more profitable.  Or perhaps you may know of a company who could really benefit from learning more.  In that case, feel free to pass this along…

Let’s talk soon.

Kindest Regards,

Tony Nuzio

Parcel giants UPS and FedEx appear to be getting even bolder in their message to shippers.  That message is that UPS and FedEx will not allow their customers to use Third Party Parcel Negotiators to negotiate their new pricing agreements.  Industry experts are mulling this strategy over to see if it is a good one or a bad one.  It obviously depends on which side of the negotiation table you are sitting on.

Certainly for UPS and FedEx this decision is one that may save millions of dollars annually.  So from their perspective it’s a BRILLIANT decision.  Shippers will continue to monitor UPS and FedEx’s quarterly profits and will see them rise steadily as they have over the past several quarters.  Some of these rising profits are coming out of the pockets of many of these unsuspecting shippers and that fact will not sit well with the shipping community.

On the other side of the negotiating table sits the defenseless shipper who will be at a distinct disadvantage.  It may not have the detailed information it needs to negotiate a favorable contract and therefore WILL pay more than they might have had they sought the advice and counsel of a Third Party Parcel Negotiator.  With limited competition in the parcel shipping marketplace, shippers really do have their hands tied behind their backs.  The real question that WILL ultimately have to be answered is whether or not this move by both FedEx and UPS is legal.  That decision will be left up to the legal community and perhaps even the courts.