The Week

The Week

Copyright 2003, Traffic World, Inc.

Quote of the week: "I don''t think anyone should see RFID as a cost but as an opportunity to increase profitability." -- Kevin Ashton, executive director of the Auto-ID Center at the Massachusetts Institute of Technology.

Shippers being pressed to jump on the RFID bandwagon fear they may fall under its wheels. From banana pickers to diaper makers, Wal-Mart Stores suppliers privately are blanching at the retail giant''s demand that they adopt radio frequency identification technology, billed as a revolutionary - though perhaps costly - step up from the barcode. With Wal-Mart''s deadline little more than two years away, experts say manufacturers, logistics companies and transportation operators are trying to figure out how to comply with Wal-Mart''s edict without losing millions of dollars.

Representatives of the air cargo industry say they can work with security-related changes a federal advisory group proposed on Oct. 1. But aviation safety advocates and some members of Congress say the recommendations don''t go far enough. Rep. Edward Markey, D-Mass., reacted by vowing to reintroduce legislation that would require tougher inspection of some air cargo.

The market for outsourced third-party logistics services is maturing but the gap between what shippers expect and what they receive still is large enough for opportunistic providers to grab market share, according to the eighth annual study of third-party logistics. The study authors, Cap Gemini Ernst & Young, Georgia Institute of Technology and FedEx Supply Chain Services Inc., presented their findings at the Council of Logistics Management''s recent conference in Chicago.

Technology that can help ensure railcar security is gaining importance as a result of the fear that terrorists might attack, steal or use railcars loaded with hazardous materials. When shipping hazardous materials by rail, "the bottom line is you have to know where the car has been, who has touched it," said Jim Jundzillo, transportation and terminals manager for Tetra Chemicals, The Woodlands, Texas. A unit of Tetra Technologies, Tetra Chemicals is a $120 million oil and gas services company that has used software from RMI, an Atlanta-based rail business systems and service provider, for about 10 years to identify problems and improve service with its railcars.

The blending of Air France and KLM Royal Dutch Airlines into a single European airline giant sets the stage for even greater consolidation in the troubled airline industry and cargo customers say that is fine with them. Air France and KLM, Europe''s second- and fourth-largest combination airlines, sent a shock wave through the airline industry Sept. 30 when they announced they plan to merge their corporate structures into a single unit, creating the continent''s largest airline group. They said they would maintain the two airlines, and their hubs, in separate holding companies but the unprecedented scale of the deal suggested that the long-forecast consolidation in Europe''s fractured aviation market finally had arrived.

The pending Yellow-Roadway Corp. merger already is being felt on Roadway''s bottom line. The nation''s largest LTL trucker is taking a third-quarter charge of $24.3 million to pay for more than $20 million in stock sales by its three top executives. As a result, Roadway reported a $3.4 million loss in the quarter, compared with $6.9 million earnings in the year-ago quarter. Roadway says at least $22 million of the $24.3 million charge is to cover the stock sales while the rest covers administrative costs associated with the merger. Meanwhile, Roadway cut 17 marketing employees from its Akron, Ohio, headquarters, citing the need to streamline functions. Among those losing their jobs was Bill Michael, vice president of marketing. After the cuts, Roadway will have about 40 marketing employees. A Roadway spokesman said those cuts were unrelated to the merger.

Canadian Pacific Railway''s vision for the future is systemwide scheduled operations among the North American railroads. Speaking at a conference in Calgary on Sept. 22, CP''s senior vice president of operations said that such a system would make the railroads more productive as an industry, reduce operating costs and provide shippers with higher service levels and even reduced rates. But the railroads'' resistance to collaboration may prevent such a vision from becoming reality.

The European Commission fined the shipping lines of the Trans-Atlantic Conference Agreement five years ago for alleged anti-competitive behavior in the mid-1990s. The case against TACA and the fines - a point of friction between carriers and their customers - have been thrown out. That sore point removed, the EC now is looking for a more constructive dialogue. In addition, by year''s end the commission either will present a draft offering several alternatives to regulating antitrust immunity or decide on a single course of action. Not surprisingly, shippers still are not entirely comfortable with carriers'' ability to discuss rates and service among themselves.