Quick News : Tues 3 Jan 2006
I remember one of the items we discussed in one of my international business classes many years back was the ever declining number of U.S. flag vessels and the proliferation of Liberia, Panama, and other country flag vessels as ship owners tried to avoid expensive fees, U.S. laws, etc.
Now, thanks to the military actions in Afghanistan and Iraq, U.S. flag vessels are on the rise :
But opportunities to deliver tanks, Humvees and supplies to Iraq, and food and equipment to government-sponsored relief projects abroad have prompted multinational shipping companies to change national registries on some vessels. By reflagging and hiring U.S. crews, they can cut lucrative deals with Uncle Sam.
Shippers stand to make hundreds of millions of dollars over the next decade in subsidies and shipping contracts through the U.S. Maritime Security Program, which was expanded this year, primarily to add cargo hauling capacity in support of the war.
The program has created more than 2,400 U.S. merchant marine jobs since 1997, according to the U.S. Maritime Administration.
The program is welcome to American merchant marines, who have seen their numbers dwindle for decades. Between 1998 and 2003, the latest year for which U.S. Census statistics are available, the number of U.S. jobs in deep sea freight transportation dwindled to 12,175 from 19,754, a decline of more than 38 percent.
A New Jersey-based shipping company is one of several that has recently reflagged ships and replaced foreign crews with Americans.
In September, American Roll-On Roll-Off Carriers in Montvale, also known as ARC, replaced Norwegian and Swedish flags on three ships with the Stars and Stripes. The names of the so-called ro-ros – designed to haul cars and trucks, or anything large on wheels – also were changed, to Courage, Honor and Integrity. ARC, which did not respond to requests to be interviewed for this article, says on its Web site that it recently added service to Middle Eastern ports, to haul reconstruction and relief cargoes for the U.S. departments of state and defense, the Agency for International Development, the Export-Import Bank and others.
ARC’s ports of call now include Umm Qasr, Iraq; Alexandria, Egypt; Jeddah and Damman, Saudi Arabia; Dubai, United Arab Emirates; and Ash Shuwaikh, Kuwait.
Local officials in the Gilroy/Central Valley area of California say an intermodal facility is essential to reduce traffic congestion in the area :
Intermodal facilities could be an important part of the governor’s strategy to speed the delivery and lower the costs of goods, especially produce, reduce traffic and accidents and benefit the environment, their advocates say. Placing one in South Valley could ease the congestion choking highways 101, 152, 156 and 25.
“There’s a lot of area in California that’s not being covered by piggyback,” said Al Navaroli, a Gilroy resident who worked in agricultural shipping for about 40 years. “It would be very attractive in the Salinas-Watsonville area. We’ve even discussed taking a branch line between Gilroy and Hollister and putting intermodal there. I think intermodal would provide a balance between growers and shippers.”
Piggyback rail is the use of flat bed cars to haul truck trailers. Intermodal facilities are places where trucks deliver goods that are transferred to rail cars. Transportation planners at all levels of government are quick to praise intermodal facilities but equally fast with a list of reasons why they’re unfeasible.
“It’s a chicken and egg problem,” said Barry Sedlik, the state’s undersecretary for transportation, business and housing.” We need to get all the players lined up to make something like that work. We’re looking at ways to get the private sector more involved and identify sources of public funding. We hope just by calling attention to goods movement that it will get more attention.”
So while the Santa Clara Valley Transportation Authority and the state government are willing to invest hundreds of millions for new roads in South Valley, when it comes to intermodal facilities, they’re calling on private enterprise, even as they acknowledge that moving freight from truck to railroad cars would make driving in the area easier and safer.
“In concept, intermodal freight movement will play a critical role in reducing statewide congestion,” said John Ristow deputy director of the VTA. ” Anything that improves logistics and takes trucks off the roads, we’re all for. But it’s a statewide issue, bigger than can be taken on by one county alone. To make it work, it’s critical that private freight operators come to the table.”
Malaysia’s new naval base is expected to improve the piracy situation in the Malacca Strait.
A quick review of logistics in 2005 and some things to look for in 2006 from a financial perspective .
I love reading about passenger/cargo aircraft and the ongoing battle for worldwide dominance between Boeing and Airbus, so I found this article immensely interesting, but be warned it is rather tech-heavy on the engine/economics side, but I think it is a fascinating read : Boeing’s new 747-8 could be a significant challenger to Airbus’s gigantic A380 :
In fact, at the launch of the 787, Cathay Pacific COO Tony Tyler told ATW that the airline was “delighted with the 787’s launch because of what it means for the 747 [-8].” And what it means, say Boeing insiders, is that the business case for the 450-seat aircraft is compelling, particularly with the company’s new focus on meeting market pricing by extracting greater production efficiencies. As this issue closed for press, Boeing announced it would launch the type in both cargo and passenger models and identified two customers for the 747-8 Freighter.
Cargolux, which had announced its intention to order the aircraft last August, signed up for 10 plus purchase rights on an equal number, with deliveries beginning in third-quarter 2009.
Nippon Cargo Airlines ordered eight freighters with deliveries commencing in the 2009 fourth quarter. It took options on six more.
A number of other carriers including China Airlines, Japan Airlines, All Nippon Airways, Cathay Pacific, Malaysia Airlines and Singapore Airlines have been identified with the program, although the last two already have ordered the A380, with SIA set to take first delivery late next year. There are also a host of airlines that have medium and small 747 fleets and are leery of making the big step up to the A380. One of these, Air New Zealand, told this magazine that “if Boeing launches [the 747-8], we will probably buy it.”
Former British Airways CEO Rod Eddington confided to ATW in late September that his favored solution for the replacement of BA’s 57 747-400s was a mix of 777-300ERs and 747-8s. He said he “preferred to see the A380 in airline service before making a commitment. BA doesn’t need to make a decision for a few years yet so we have the luxury of observing the A380 in service.”
By The Numbers
Boeing’s pitch is, “Why invest in an A380 [with what Boeing claims are 25% higher trip costs] when the 747-8 will deliver 3% lower seat-mile costs?” The economics naturally form a major part of the sales pitch and the new model has some significant advantages, says VP-Marketing Randy Baseler. Fuel is obviously of major concern and this is where he sees the aircraft having a clear edge over the A380. He claims the 747-8 “will burn 13% less fuel per seat than a 416-seat 747-400 and 12% less than a 542-seat A380.”
Key to that performance is the 66,500-lb.-thrust General Electric GEnx derived from the 787 program. GE was selected as the sole-source engine supplier for the 747-8 and this version of the GEnx will have bleed air and a smaller fan than the 787 engine. “The engine is all new,” says Baseler.
Taiwan’s stock market took a tumble following President Chen Shui-Bian’s speech on New Year’s Day regarding greater restriction on mainland investments. As usual, an excellent article from the International Herald Tribune, you can find the article here.
Wu, chairman of the cabinet-level Mainland Affairs Council, tried to reassure investors Monday by saying Taiwanese investment in China would be allowed to expand as long as it did not harm the island’s economy.
“We will strengthen our management on these investments,” Wu said. “If we can better manage, in fact there will be room for opening” new investments.
Wu stressed that Chen had tried to ease tensions with China by proposing dialogue on closer trade ties, but that Beijing had rebuffed the overtures. “If relations worsen, China should take the blame because they have ignored all our calls for improving ties,” Wu saidAs of Monday night, China had not commented on Chen’s speech.
Taiwanese investors have invested more than $100 billion in China and want Taipei to end a ban on direct transportation links with the mainland.
Huang, the deputy presidential secretary general, addressed this concern Monday. Taiwan was willing to open unconditional talks with China on cross-strait tourism and air links, he said. But Chen’s government would not make compromises with Beijing on fundamental questions related to the island’s status or prerogatives, Huang said.
Chen and his governing Democratic Progressive Party have long favored independence from China, which claims sovereignty over the island. Political analysts said Monday that Chen’s strong speech, in which he vowed to continue advocating a new constitution asserting Taiwan’s separate identity, was intended to demonstrate that he remained in control of major policies and would not become a lame-duck president before he retires in 2008.Beijing views Chen’s constitutional ambitions as a step toward a formal declaration of independence, although Chen has related it more to an effort to modernize Taiwan’s political structure.
“We will take a firm stance. Taiwan’s identity should be given priority over conciliation in dealing with China over the next two years and a half,” Huang told the Taipei Foreign Correspondents’ Club. “That is the message from President Chen.”
Huang said the Chen administration did not intend to overhaul its China policy. “The existing mainland policy remains intact. We are more than willing to talk with Beijing without any preconditions on visits by China’s tourists and chartered cargo flights,” he said.On Monday, Huang blamed Beijing for the lingering hostilities across the Taiwan Strait. “President Chen repeatedly delivered olive branches to Beijing over the past five years, but what have we got in return? Nothing,” he said.
“Signs suggest Beijing has no intention to talk to Chen before 2008,” he said. “If that’s the case, then there is no reason for the president to further compromise on the mainland policy.”
The opposition Nationalist Party called Chen’s proposal for a new constitution a “dangerous move” that could worsen political relations. “It also runs counter to our economic needs,” a party statement said.
And finally, nothing-new-here, the truck driver shortage in the U.S. is expected to worsen.
Peter Bennison, vice president of Waste Management & Recycling Products Inc., has been having a problem.
Lately it’s been a challenge to get his Scotia company’s products picked up by trucking companies. He doesn’t know why, but the end result is inefficiency. Equipment that should have been moved out of the warehouse sits on the floor. It takes up space that should be used for getting the next shipment ready.
Bennison’s problem could become more common if a shortage of truck drivers the American Trucking Association (ATA) documented in a May 2005 report gets worse.
Eighty-five percent of American products move by truck, according to industry figures. When trucks don’t move, production bottlenecks and costs increase.
The ATA estimates annual demand for truck drivers outpaces supply by about 20,000 drivers, or 1.5 percent of the 1.3 million long-haul truck drivers working in the United States.
The number of long-haul truckers needed in the United States will hit 1.62 million by 2014, the same time 219,000 drivers hit retirement age. The industry says it will need 539,000 new truck drivers over the next nine years.
Comments
Subscribe to our free monthly newsletter to have the latest 3PLwire articles delivered directly to your inbox. Just enter your email below:Tell us what you're thinking...