A National Intermodal Shift

William B. Cassidy and John D. Boyd | Apr 5, 2010 4:00AM GMT

The Journal of Commerce Magazine - News Story

http://www.joc.com/government-regulation/national-intermodal-shift (sign-in required)

This cover article speaks of the DOT's plan to move truck traffic to ocean and rail methods.  Deputy Secretary Porcari told Congress “We want to keep goods movement on water as long as possible, and then on rail as long as possible and truck it for the last miles.” That is, let’s transform the trucking industry into drayage carriers for the railroads – just what Norfolk Southern CEO Moorman called for a couple of years ago.  Secretary LaHood spoke recently of how well he has been able to work with railroads, which have received a great deal of DOT funding.

 

Moving truck traffic to the rail would slow the delivery time.  Rails, while gaining in competition, are still not able to handle time sensitive freight.  Today's inventories are leaned and set to work on JIT delivery schedules.  Rail and ocean cannot accommodate this type of system.  In essence, the government is telling big business to change their method of operation.  Companies are leaning inventory and stock to save money, space and general overhead charges.  They have invested much in the last 10 years to achieve this new structure.  I do not see them changing back to the old ways willingly.

JB and Schneider embraced the intermodal methods and changed their business methods accordingly.  Driver miles were cut almost in half as long haul freight disappeared to the rails.  This also meant a change in client base for these carriers.  Swift, who happily grabbed up the Wal-Mart account, split their transport method between rail and ground freight (truck) for JIT customers.  Automotive clients always required JIT service.

While a move to rail claims to be more environmentally friendly and can save up to 30% in transportation costs, time will always be the issue.  Rail is limited in its area of service and ocean is even a slower option.  Claims processing through these channels are a nightmare and one of the main reasons many companies avoid these options totally. 

The government explains that this would help relieve the congestion on our highways, promote safety highways and reduce the cost of infrastructure.  Highways that no longer have to support the weight of heavy truck traffic are cheaper to build.  It is implied that in doing so, fuel cost can be lowered due to the reduced highway funds needed.  I find this hard to believe since the government is already ear marking those funds for railway improvements.

If these were to happen, inventory costs would raise along with replenishment times.  This would mean consumer costs would rise to compensate for the increase.  Large cities may feel a slight relief in traffic but for Main Street America, I doubt much change on the highway will be noticed.

 

More info - http://www.logisticsmgmt.com/article/455871-Logistics_news_Maritime_DOT_unveils_effort_to_expand_America_s_marine_highways.php?nid=4283&source=title&rid=14370409

April 2 was no April fool when it came to pass that EOBR will now be required on all trucks who's company has a 10% or greater violation rate of HOS.  This is one time 10%, not the twice 10% as first spoke of by the FMCSA.  Compliance begins June 4 and in full force by 2012.  Adding insult to injury, even O/Os with their own authority leased to a company falling upon this non-compliance statue will be forced to install an EOBR. 

Drivers, O/O and trucking company owners; we must unite in a common effort to maintain workable conditions for the industry.  Safety has to be priority but who knows better what makes a safe driver than those of us in this industry.  The government only knows what it reads.  We must stand up for our rights.  We must unite for adequate HOS and enforcement not encroachment and infringements.   Rouge drivers need to be removed from our highways.  Education is needed.  Many violations are due to pure misinterpertation of the regulations due to their complexities.  While blantant violators brought the wrath of the government upon the industry, not carriers should burden the weight.

There are many good carriers, drivers and O/Os in our industry.  There are many new rules coming at us quickly.  One that springs to mind is the new sleep apnea testing.  This added to the blood pressure standards and other issues that arise from the required lifestyle of a driver, will place any experienced driver out of work.  Driver "life expectancy" behind the wheel will be reduced to under 10 years unless we do something NOW to curb these attacks from the government agencies.  Get involved now before it is too late.   Write your Congressman, join driver groups and take action to save your profession.  Our voices do count and we, as a group, can be heard.  Do not let the government push us all out until all that are left are yellow and orange trucks on the highway overseen by Big Brother.  Let us learn from what is happening in the car and bank industry.

Read more at: http://www.landlinemag.com/Special_Reports/2010/Apr/040210-FMCSA-targets.htm

Implementation of the International Financial Reporting Standards will have an impact on supply management

International Financial Reporting Standards (IFRS) are replacing the U.S. Generally Accepted Accounting Principles (GAAP) as a global standard.  Currently the US relies up GAAP for their accounting methods, however in 2012 a major change is coming.  IT implementations must begin this year for publically traded companies to be on track.

While reporting standards are the bean counters' problems, these changes affect all aspects of the business including Supply Chain Management.   SCMs will be directly affected in four areas.  Todd Neely explains the changes coming our way.

Supply Management Impacts

Four major changes IFRS has on supply chain management are LIFO, inventory valuation, long-term contracts and management responsibility.

Last in, first out (LIFO). The change to LIFO is easy to understand. IFRS does not permit inventory to be valued using the LIFO method. If you are valuing inventory using LIFO, implementing IFRS will require switching from LIFO to another method. The switch can have large tax consequences and should be thoroughly investigated to minimize taxes.

Inventory valuation. Under GAAP, inventory is valued once. As long as the inventory sits on the shelf, it reflects the historical prices paid. Under IFRS, inventory is valued at current market price. For many inventory items, the number of turns is high, resulting in current market price being equal to historical price paid. But for other items, significant changes between the price paid and current market price will require repeated revaluation to report the inventory's true value.

Long-term contracts. Under GAAP, possession and ownership are not the same. Under lease or consignment agreements, you can have possession but do not own the inventory. The inventory would not have to be included in the reporting of your financial statements. Under IFRS, when you take possession, you take responsibility. When you are responsible for an item, it is to be reported on the financial statements.

Management responsibility. The responsibility of management in making decisions on how financial data is collected and reported is much greater under IFRS. GAAP has rules and guidelines for most situations. The trick is to determine which rule or guideline applies to the situation you are investigating. Once the rule is found, apply it. Under IFRS, there are fewer rules or guidelines. You are responsible to do what is best to report the true financial condition of the situation. Whatever your decision, you will be responsible to consistently perform the same action repeatedly. If you change — you have to report why.

If you would like to read more, the article may be found in the weekly publication, Inside Supply Management. E-version is available at: http://www.ism.ws/pubs/ISMMag/ismarticle.cfm?ItemNumber=20069

The World Trade Organization has lobbied for standardized practices and a common frequency to be implemented for radio frequency identification devices (RFID) for many years.  In 2006, the ISO introduced the ISO/IEC 18000-6 Amendment 1 incorporating the EPCglobal Generation 2 UHF RFID Air Interface protocol which had the intention of making available a license to manufactures to create devices fitting both the EPCglobal standard and the ISO standard.  This still did not establish a global standard but was a first step in that direction.    Further success is now being seen in this movement thanks to the announcement by the International Organization for Standardization (ISO) on February 19 introducing ISO 17367:2009, Supply chain applications of RFID – Product tagging. 

Global logistics requires better tracking methods, e.g. traceability.   Traceability is defined by the ISO "as the tracking and tracing of product and information related to it at each stage of a chain of production, processing, distribution, and selling.  The development of radio frequency identification (RFID), including peripheral devices and their applications, is indispensable for increasing the safety and reliability of products for consumers".  Craig K. Harmon, Chair of TC 122/WG 10 comments: "ISO 17367:2009 will provide higher level security of products worldwide using RFID technology.  It will enable easy and efficient exchange of commodities in international trade and logistics. "

 

Anyone who has used RFID knows the value this implementation can add to a supply chain.  As this technology has gained recognition and increased in usage, the price per unit has decreased allowing RFID to become an affordable option for many businesses.  True global usage has been uncertain due to the lack of a common global frequency and lack of standardization.  While a common frequency is still needed, the ISO has untaken major steps in the area of standardization.  It is important to note that these standards only address product tagging (identification) and not packaging. 

Freight containers (ocean containers), product packaging, transport units and RTIs (returnable transport items) have recently become regulated by the ISO under different certifications. 

ISO 17367:2009 is applicable to a wide range of industries and it has been elaborated in order to ensure compatibility at the physical, command and data levels with four other International Standards under the general title: Supply chain applications of RFID. International Standards within this suite are interoperable and non-interfering:

·         ISO 17363:2007, Supply chain applications of RFID – Freight containers

·         ISO 17364:2009, Supply chain applications of RFID – Returnable transport items (RTIs)

·         ISO 17365:2009, Supply chain applications of RFID – Transport units

·         ISO 17366:2009, Supply chain applications of RFID – Product packaging.

These International Standards define the technical aspects and data hierarchy of information required in each layer of the supply chain.  ISO technical committee ISO/TC 122/WG 10, Packaging, in collaboration with ISO/TC 104, Freight containers developed this series of standards. TC 122/WG 10 has undertaken a revision of this suite of standards to provide better clarity to the encoded methods to be utilized and support for sensor technology. (http://www.iso.org/iso/pressrelease.htm?refid=Ref1293)

As the global supply chain grows, it is reasonable to expect to see more ISO standardization in this field.  Standardization will aid in cost reduction, loss reduction and overall lower costs in the transportation aspect of the supply chain.

Hope everyone had a wonderful and safe holiday season.  As the New Year begins, I have learned of a very dangerous new drug that is being offered to our children.  Would like to share this information with you so together we can try to keep our families safe.

Help spread this important message:

This is a new drug known as 'strawberry quick'. There is a very scary thing going on in the schools right now that we all need to be aware of. There is a type of crystal meth going around that looks like strawberry pop rocks (the candy that sizzles and 'pops' in your mouth). It also smells like strawberry and it is being handed out to kids in school yards. They are calling it strawberry meth or strawberry quick. Kids are ingesting this thinking that it is candy and being rushed off to the hospital in dire condition. It also comes in chocolate, peanut butter, cola, cherry, grape and orange. Please instruct your children not to accept candy from strangers and even not to accept candy that looks like this from a friend (who may have been given it and believe it is candy) and to take any that they may have to a teacher, principal, etc. immediately. Pass this email on to as many people as you can (even if they don't have kids) so that we can raise awareness and hopefully prevent any tragedies from occurring.

Just want to wish everyone a very Merry Christmas and a safe New Year!

Thank you all for being a part of the DOT Doctor family and we look forward to our continuing relationship in the New Year.

I am sure you have all heard about the Arrow ordeal by now. (If not check out my Facebook page).  Awful!  But in all this, it was wonderful to see OOIDA, Schneider and all the other drivers and companies who stepped up to help out a fellow driver.  Great Christmas spirit!

Anyone celebrating - Happy Holidays, be safe and have a prosperous New Year!

So it did pass.  Well add some more confusion to the mix.  Proper revision is needed.  More pot stirring with no real results is not.  Will be interesting to see what actually comes out of this.  The trucking industry needs to become more involved in this process and find a way to greater influence the outcome.  This includes drivers not just corporations.   Letting this all up to the delegates, auto groups and insurance industry is only going to hurt the trucking industry even more.

Let me share a posting from Jeffery Trainor at LinkedIn:

Breaking News: US Truck Driver Hours of Service Rules to be Re-Written 

The Federal Motor Carrier Safety Administration (FMCSA), in response to a legal challenge to the current hours of service (HOS) regulations, will completely rewrite the 2008 HOS regulations. The agency will issue a proposed rulemaking within 9 months and a new Final Rule in less than two years.
This settlement is in response to a legal challenge brought against FMCSA by Public Citizen, Advocates for Highway and Auto Safety, the Truck Safety Coalition and the International Brotherhood of Teamsters. In March 2009, the groups asked a D.C. Appeals court to throw out the HOS rule. The March 2009 challenge was the third challenge to the Bush Administration’s HOS rules.

I have seen the clerk in the Safety Position too often. Many of the clients was serviced or prospective clients feel they are too small to need a safety person. They actually say they do not need to worry about the DOT since they only had x trucks. (generally under 10). Then that audit paper comes and they run crying. 

We all know 1 truck or 1 million trucks, the DOT is coming. The free DOT HELP group we run on Yahoo addresses this issue with so many small companies. I speak with their "safety clerk", who professes they are clerical and haven't a clue, on how to conduct a safety department. Not only is this unsafe practices; the drivers walk all over them. Drivers are not stupid. They know when the safety person is clueless and they use that to their advantage. Can you blame them? 

Our virtual safety director service has helped some companies. It is nice for a long term contract on our part but it really feels better when you can go in and educate management on the importance of a good safety department. While you are their virtual director for a bit to get the ball rolling; it is great to see them learn to value this position and place a full time, qualified person in the spot. Maybe this new ruling will draw more attention to the need for safety and achieve what we have been trying to do for over 10 years in our little part of the world.

Having said this - I want to share a posting from LinkedIN

 

SEASONED EXPERIENCED SAFETY DIRECTORS NEEDED
Over the years several carriers have tried to cut expenses by using safety clerks instead of experienced or Certified Safety Directors.

This mindset has worked for some carriers, over the years, because the carrier’s Safety Rating would only be affected when a compliance review was conducted. THINGS ARE ABOUT TO CHANGE!

CSA2010.com states: “DON’T WAIT! What you and your drivers are doing RIGHT NOW will affect your company's new safety rating with CSA 2010. FMCSA assessment has already begun and will use the data they have been collecting to levy corrective actions or even declare drivers and companies “unfit” to continue service!”
Carriers can not afford to NOT have an experienced and seasoned Safety Director in control of the day-to-day operations. Carriers MUST develop educational and progressive discipline programs to prevent their drivers, contractors and even their own company from being declared “UNFIT” to continue service.

A carrier can no longer afford to allow a clerk to carry the title of Safety Director and live in denial or the fantasy world that CSA2010 is not going to affect them. This mentality has already cost several carriers large fines and even more to close their doors.

The attached link is an interview with a carrier from one of the test states which is currently using CSA2010. After reading the interview: Ask yourself can you afford not to have a seasoned certified and experienced Safety Director in charge of your company’s future?

http://www.csa2010.com/articles/Interview_CSA_2010_Test_State.htm

Please take a couple seconds and answer two quick POLL questions and then view the results of the others.

What has your company done to prepare for CSA2010? http://polls.linkedin.com/p/62919/kmfwb

Who is in charge of your company’s DOT Compliance and Safety? http://polls.linkedin.com/p/62918/lywoh

I would like to hear your thoughts.

 

_____________________

 

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