This Week in Logistics News (February 17-21, 2014)

By Adrian Gonzalez

I went downhill skiing for the first time in 15 years yesterday. A lot has changed since then, especially the lift ticket prices. The good news is that the lift ticket price for kids 5 and younger was only $5. The bad news is that “I ski like a 5 year old” didn’t get me the discount.

Nonetheless, the day was a complete success. I didn’t break any bones — mine or anybody else’s — and while everybody was decked out in The North Face or Patagonia, I was styling in my 1987 no-name ski jacket that my parents bought me in high school. Yes, it still fits. And yes, the colors and patterns are still in fashion, despite what my wife says.

In more relevant news…

Global trade dominated the news this week. On the technology front, Oracle announced the release of Oracle Global Trade Intelligence, which “helps organizations optimize global customs and compliance operations by leveraging global trade data to measure, predict and optimize performance.” According to the product sheet, “Oracle Global Trade Intelligence provides a dashboard view into the unique metrics by which your customs and compliance operation measures success. Users have the ability to modify existing formulas and / or create custom measurements of their own that suit their specific needs.”

And yet, despite the continued advancement of global trade management solutions, many companies still rely on Excel spreadsheets to manage this highly strategic and risky supply chain process.

Also this week, President Obama signed an Executive Order that “cuts processing and approval times from days to minutes for small businesses that export American-made goods and services by completing the International Trade Data System (ITDS) by December 2016.” According to the press release:

Today, businesses must submit information to dozens of government agencies, often on paper forms, sometimes waiting on process for days to move goods across the border. The ITDS will allow businesses to electronically transmit, through a “single-window,” the data required by the U.S. Government to import or export cargo. This new electronic system will speed up the shipment of American-made goods overseas, eliminate often duplicative and burdensome paperwork, and make our government more efficient.

Although this sounds like a new system, it’s actually been in the works for more than 8 years. The 2006 SAFE Port Act required the Secretary of the Treasury to oversee an interagency initiative to establish a “single portal system,” to be known as the “International Trade Data System.” The president is basically saying, “Okay, it’s been 8 years, I’ll give you 3 more to get it done.” An annual update on ITDS issued to Congress in December 2013 highlighted the challenges:

In the past, competing priorities have resulted in delays in implementing ITDS priorities and ITDS funds being redirected for other uses [emphasis mine]. It is critical that progress on the current plan for implementing ITDS functions continue, so that the experience and knowledge developed in the preparation and planning for ITDS are not lost due to retirement and rotation of staff from the ITDS agencies.

Should we hold our collective breath on this one?

On the trade agreement front, negotiations continue between the U.S. and EU on the Trans-Atlantic Trade and Investment Partnership. According to the Wall Street Journal, Karel De Gucht, the EU trade commissioner, and Michael Froman, the U.S. Trade Representative, met in Washington, D.C. this week to discuss the agreement. A couple of notable quotes from the article:

“We both see opportunities to make substantial progress in the coming months, as well as some challenges,” Mr. Froman said. “But our resolve and the political will to reach an ambitious, comprehensive agreement remain strong.”

“Mike Froman realizes very well that if we are in the end game, it would be practically impossible to close a deal if there is no (trade promotion authority) at that moment in time,” Mr. De Gucht said. “That’s very clear.”

Of course, there’s a political battle going on right now between President Obama and members of Congress over fast track authority. Will Mr. De Gucht’s comments sway any votes? Probably not, but it certainly makes the EU’s position “very clear.” For more on this topic, as well as the Trans-Pacific Partnership, I invite you to participate in our upcoming Talking Logistics episode with Pete Mento, Director Global Customs and Trade Policy at C.H. Robinson.

President Obama also had fuel efficiency of trucks on the brain this week. He directed the EPA and the DOT’s National Highway Traffic Safety Administration (NHTSA) to develop and issue the next phase of medium- and heavy-duty vehicle fuel efficiency and greenhouse gas standards by March 2016. Mr. Obama also highlighted the success of the National Clean Fleets Partnership that he launched “to speed the deployment of clean, energy-efficient vehicles and the infrastructure to support their use.” According to the press release:

This public- private partnership helps the nation’s largest fleet operators reduce diesel and gasoline use in their fleets by incorporating alternative fuels, electric vehicles and fuel-saving measures. To date, 23 major national companies, such as ARAMARK, Coca-Cola, Staples, UPS, AT&T, Enterprise Holdings, and Waste Management have joined the National Clean Fleets Partnership. Collectively, the National Clean Fleets Partners operate more than one million commercial vehicles nationwide.

The press release highlighted Con-way as an example:

Con-Way, a 2013 SmartWay Excellence Award winner, has equipped 100% of its tractors with SmartWay-certified fuel-savings and emissions-reduction technologies, and nearly half its trailers with fuel-saving aerodynamic features. The company’s tractors also have automatic idle shutdown, and the company has equipped its tractors and trailers with low- rolling resistance tires to increase miles per gallon and lower carbon emissions.

Finally, an article in USA Today discussed how “snowstorms and frigid temperatures across much of the USA the past six weeks have stalled shipments, forcing some manufacturers to shut down for days and delaying deliveries to some retailers.” This is not only leading to stockouts, but also higher transportation rates. Transplace’s Ben Cubitt was quoted in the article:

Many truck shipments leaving cities such as Atlanta, Chicago and Dallas have been delayed two to three days after each storm, says Ben Cubitt, senior vice president of logistics company Transplace. Sub-zero temperatures also have caused truck engines to fail.

Cubitt says some shippers are scrambling to hire alternative trucks to meet deadlines but that’s driving up certain trucking rates by 15% to 20% — costs that eventually could be passed to consumers.

Spring can’t come soon enough.

Have a happy weekend!

Song of the Week: “Bullet” by Franz Ferdinand