The Week

The Week

Copyright 2004, Traffic World, Inc.

Quote of the week: "I''m told we''re losing capacity because the drivers are running out of hours, but is that a capacity issue or a productivity issue?" -- Steven Berkowitz, vice president of logistics and production planning at All American Poly, Piscataway, N.J.

It''s good to be king. That''s the feeling across the trucking industry as company after company reports the best returns in a decade despite the new hours of service rules and rising fuel costs. Truckload rates are rising by high single digits, $3 billion in capacity has left the system and some shippers are apprehensive about truck capacity as the peak summer freight season approaches. "Trucking is fun," says Con-Way''s Gerald Detter. Shippers see things differently. One calls it "the most severe year" in recent memory for trucking rates.

Despite improvements in California and Phoenix, Union Pacific Railroad''s congestion problems are getting worse in the Pacific Northwest and Houston, UP officials told rail shippers last week. Shockwaves from UP''s service crisis are hitting its interchange partners as well.

Pessimism is growing over the chances of passing a highway bill this year as the campaign season heats up. "There''s sort of a general consensus that if it doesn''t happen by June, it''s not going to happen this year," said American Highway Users Alliance Senior Vice President for Policy and Government Affairs Greg Cohen.

The new hours of service rules already are impacting shippers and forcing them to rethink everything from dock operations to distribution strategies. Shippers at the Richmond Events Logistics and Supply Chain Forum in New York said they are doing all this plus adjusting operations to contain transportation costs and to ensure unbroken access to the trucks and trailers they need to move their goods.

Internal political foes of Teamster union President James P. "Jimmy" Hoffa are piling on in the wake of the resignation of the union''s chief mobster buster, Edwin Stier, arguing that Stier''s quitting is evidence that Hoffa isn''t serious about cleaning up the 1.4 million member IBT. In his letter of resignation, Stier accused Hoffa of undermining probes of organized corruption and misconduct implicating close associates, including investigations into conduct in Hoffa''s own office. Hoffa called the charges "reckless and false."

The Federal Railroad Administration says railroads and their customers could reap billions of dollars in benefits from installing positive rail control. Railroads doubt it. "I''ve seen the numbers and we don''t think they are accurate," said Association of American Railroads President Ed Hamberger. The huge economic rewards of PTC - technology that allows trains to make better use of track space - are touted in draft FRA documents obtained by Traffic World for use in a pending report to Congress.

Trans-Atlantic carriers report that 2003 was one of the most profitable years on record and say there''s no end in sight yet. For the first half of 2004, westbound capacity is projected to increase 5 percent and eastbound to stay the same as last year.

Rising fuel prices and following surcharges aren''t causing shippers to shift cargo from airlines to ground - yet. But if those costs/charges keep rising, some air cargo may be pushed back onto the ground as shippers move freight from overnight to second-day delivery. "If they''re shipping low-value commodities, a 10 percent increase is a big difference," said Campbell-Hill Avialion Group President Brian Campbell. The price of a barrel of oil topped $41 in mid-May, causing many carriers to add to the surcharges they are tacking onto cargo.

UPS and FedEx have thrown in the towel - at least for the present - in their efforts to keep competitor AStar Air Cargo from flying within the United States. The end followed a mid-May decision by the Department of Transportation not to review a mid-December ruling that AStar meets U.S. citizenship requirements and should be allowed to continue flying. "We''re going to keep our powder dry," said UPS spokesman David Bolger. FedEx spokeswoman Kristin Krause agreed. "It''s pretty much the end of the road for us." Krause said FedEx will concentrate its efforts on better access for express carriers to foreign markets.

A carefully chosen mix of specialized cargo and containerized freight keeps American Containers Line''s profits growing. The trans-Atlantic carrier saw profits jump 15 percent last year while volume increased 10 percent. The shipping line hopes to hold its course now that the economy is heating up. It plans to introduce direct service to Mediterranean markets from three or four U.S. ports in the near future