This Week in Logistics News (September 24-28, 2012)

The nation is breathing a huge sigh of relief today. No, the economy is still growing at a snail’s pace, and things in the Middle East aren’t getting better, but in what the White House called “a great day for America,” the regular refs are back in the NFL!

Classify that under “Things that Make You Go Hmmmm.”

In other news…

In my posting earlier this week, I commented on how many 3PLs are adding freight forwarding services to their portfolio. Well, CH Robinson announced this week that it is acquiring Chicago-based Phoenix International, a privately-held international freight forwarder, for $635 million in cash and stock. Phoenix generated gross revenues of about $807 million and net revenues of about $161 million in its most recently completed fiscal year. Phoenix primarily provides international freight forwarding services, including ocean, air, and customs brokerage, currently serving approximately 15,000 customers globally (the company has 76 offices in 15 countries).

“We see significant long-term opportunity in international forwarding as global trade expands, scale and technology continue to become more important, and shippers increasingly look to transportation providers to provide global services,” said John Wiehoff, C.H. Robinson chairman and chief executive officer.

In other 3PL news, Ryder published its third Corporate Sustainability Report since 2008. According to the press release, “The report discloses Ryder’s approach toward maintaining high standards for corporate governance, innovating for the environment, keeping cargo and supply chains safe and secure, and investing in people and communities.” Among the highlights: Ryder has deployed a fleet of 240 heavy-duty natural gas vehicles and has invested in natural gas vehicle maintenance infrastructure in California, Arizona, and Michigan, and the company has reduced electricity, gas, and water use at all Ryder-owned U.S. and Canada facilities for the third consecutive year.

In the trucking sector, the ATA reported that its seasonally adjusted For-Hire Truck Tonnage Index contracted 0.9 percent in August after increasing 0.4 percent in July. Here are some comments from ATA Chief Economist Bob Costello:

“While there has been acceleration in housing during the last few months, truck tonnage is being weighed down by a flattening in manufacturing output and an unintentional increase in inventories throughout the supply chain. While choppy, tonnage has essentially been flat this year with August being the second lowest month of the year.” Costello also noted that the SA index in August was 0.3% below January 2012 and 1.4% less than the high in March.

“Expect tough year-over-year comparisons to continue through the rest of the year as tonnage grew nicely during the last five months of 2011,” he said, adding the economy isn’t expected to grow much in the second half of the year as manufacturing decelerates and excess inventories are worked off. As a result, tonnage is expected to increase less than 3.5% in 2012.

Global trade is also slowing down, prompting WTO economists to downgrade their 2012 forecast for world trade expansion to 2.5 percent from 3.7 percent and to scale back their 2013 estimate to 4.5 percent from 5.6 percent.

If you subscribe to the “Dow Theory” — that the stock performance of transportation companies are an early indicator of what’s really happening in other industries and the economy  — then you’re probably a bit concerned at the moment. As the Wall Street Journal reported this week, “While the Dow has approached five-year highs, the 20-company Dow Jones Transportation Average has tumbled [emphasis mine]: Last week’s 5.9% drop was the biggest weekly decline since November 2011. The index is down 1.2% year to date. The gap in performance between the two indexes is unusually large, analysts say, a conundrum that has put many investors on watch.”

Did I mention that the regular NFL refs are back?

On the technology front, INTTRA announced enhancements to OceanSchedules, its multi-carrier ocean scheduling solution. According to the announcement, “With this release, customers can now access and evaluate over 7 million global vessel schedules from 31 carriers with a new option for integrating OceanSchedules within existing applications and support for additional data formats for customers who want to load data directly into their systems.”

Speaking of ocean shipments, SAP, The Hamburg Port Authority (HPA), and Deutsche Telekom are jointly creating a logistics IT solution called the “Smart Port Logistics” system that “incorporates mobile apps and makes it possible for traffic information and port-related services to be accessed from mobile devices such as tablets and smartphones. The objective of the project is to optimize both traffic and logistics operations in order to allow larger quantities of goods to be trans-shipped in the port area.” You can read the press release for more details, but considering that port operations are a big blind spot for shippers and a major source of lead time variability, it’s good to see that investments are being made to improve this part of the supply chain.

Finally, California passed a law that goes into effect next year allowing self-driving cars onto public roads. According to a Reuters report, the new law “establishes safety and performance regulations for testing driverless cars, provided an operator is ready to take control if necessary.” However, we won’t see many driverless cars on the road for many years, not because of technological limitations, but because of cultural and liability issues (see February 2012 Wired magazine cover story, “Let the Robot Drive: The Autonomous Car of the Future is Here”). But I’m betting that we’ll eventually overcome these issues, and sometime in the future we’ll be sharing the road will driverless cars…and driverless trucks too.

Have a great weekend!

Song of the Week: “Me in Honey” by REM. “Baby’s got some new rules, Baby says she’s had it with me.”

(Note: CH Robinson, Ryder, and SAP are Logistics Viewpoints sponsors)

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