Dockworkers Return to L.A.

December 5, 2012

The strike that shut down the Ports of Los Angeles and Long Beach for eight days finally will be over after the union came to a decision on a new contract. The workers were on strike because they were nervous about job security and wanted to assure they had a job in the future, so they wanted it in the new contract. The workers at the ports are part of the 10,000  – member International Longshore and Warehouse Union Local 63. The new deal is for a contract extension into the year 2016.  A union spokesman, Craig Merrilees, said “There are provisions in the contract that provide assurance that the good jobs that are here now will be here in the future”. The provisions in the contract made neither side satisfied with the end contract. However, since both sides recognized the need to open the ports again they both made sacrifices to get the deal passed.

The Ports of Los Angeles and Long Beach are the two largest ports in the United States. Together they account for 40 percent of the value for us imports. According to the article on a average day in November they handle 1.125 billion dollars worth of cargo moving in or out of the country.

In order for the ports not being shut down the unions and the U.S. Maritime Alliance need to be proactive and get the contract done on time. Currently there is another possibility of a strike occurring at the ports stretching from Maine to Texas.

Article website:

http://online.wsj.com/article/SB10001424127887324640104578160453814481838.html?mod=googlenews_wsj

https://www.youtube.com/watch?v=Gr-6lPeJXW4

Barge Lines Want U.S. to Pay Cost of River Improvements

i8fIgENt3LT8 It is a rare top about infrastructure cost in water carrier section of transportation. As we all know  the most significant advantage of water transportation is almost none fix cost, because Mother Nature provide channels free for all the human beings. However, this proposal aim to increase a fuel tax 6 cent per gallon on commercial river-boat operators, big river user like U.S. Army Corps of Engineers who would end up pay 100million on inland water transportation. the cost seems like a variable cost but actually a  cost for infrastructure.

The argument about this proposal is mainly about benefiters and payer of this tax rise. Lawmakers and Obama administration point out the no-change in fuel tax in inland transportation since 1995, and the revenue of tax declined with JIT kitted in inland water transportation lost competency on speed, and this increase in fuel tax would shift cost of maintain the river from tax payer to commercial operator. However, who would pay for this bill doubt the fairness of being place as only payer but one of the benefiters in this proposal.

There are several parts interested me in this news.  6 cents a gallon seems cheap, but consider with the large capacity of water carrier it would not be a small bill any more. In the circumstance that inland transportation lost the advantage of speed in JIT competition with other model carriers, will this proposal shift more transportation out to other models? It is doubtable! Secondly, the maker of legislation says the extra revenue of this tax increase would be use to maintain the river, ”This act will ensure safe, dependable, cost-effective, and environmentally sustainable navigation on our nation’s inland waterway system”. However, water cargo been shift to other models, the environment benefit these cargo been giving out would be gone, so the sustainability is not that absolute in bigger picture, and it is same to safety, and cost-effectiveness, dependability.

Source:

http://www.bloomberg.com/news/2012-12-10/barge-lines-want-u-s-to-pay-costs-of-river-improvements.html

Amazon’s supply chain ‘more admired’ than Apple rival

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With Christmas approaching, there is currently a very high demand period for Apple and Amazon.  Both companies are in an ongoing battle over market share because both have many rival products, such as the iPad and the Kindle Fire.  Any advantage Apple or Amazon can get over one another is essential going forward.  Many supply chain executives believe one advantage Amazon’s has over Apple is its supply chain.

SCM World surveyed 1,136 supply chain executives and the results showed Amazon’s supply chain is “more admired” than Apple’s supply chain.  There were four key supply chain attributes both companies were rated on – agility, collaboration, execution, and innovation.

For agility, 62 percent of those surveyed sided with Amazon, while 33 percent were in favor of Apple’s supply chain agility.  59 percent voted for Amazon when it came to collaboration.  31 percent voted for Apple.  With execution, 57 percent liked Amazon compared to 38 percent for Apple.  While surveyors were in favor of Amazon by a decent margin for the first 3 attributes, Apple dominated the vote for the last attribute.  On innovation, Apple had 78 percent of the vote, while Amazon got just 19 percent.

In addition to the four attributes, 58 percent of respondents said in general they like the way Amazon runs its supply chain, while 38 percent were in favor of Apple’s overall supply chain.   The results of the survey from over one thousand supply chain executives show Amazon is ahead of Apple when it comes down to managing the supply chain.

Links:

http://www.science20.com/news_articles/executives_think_amazon_beats_apple_three_four_important_attributes-97199

http://www.supplychaindigital.com/global_logistics/amazons-supply-chain-more-admired-than-apple-rival

FTA urges UK govt to support transition to gas fuel

The Freight Transportation Association has asked the UK government to give assurance to the freight operators in order to encourage them to make the switch from conventional diesel to gas. The FTA urged the government to look into alternatives to the normal diesel fuels. This alternative would potentially provide carbon savings, including natural gas and biomethane. Natural gas was specified as the target alternative. It can be used as road fuel either as a liquefied natural gas or a compressed natural gas. These both produce less harmful emissions than the conventional fuel. A potential carbon savings of 60 percent can be possible with this alternative.
The FTA needs the Treasury to guarantee at least a 7 year plan so that it can plan ahead and provide support for all the vehicles and provide infrastructure. The FTA Climate Change Policy manager replied and said that in order for this implementation to happen, they need the government’s support in the development of a national refueling infrastructure on main motorway routes so that they can enable long-distance trucking for vehicle fleets. They said that they have identified potential spots for refueling infrastructure, and also mentioned that the government needs to give consideration to the operator as well and ensure that there are benefits to their investment.
John Lewis Partnership and UPS both show great support for this and are also members in the FTA’s Logistics Carbon Reduction Scheme. They believe that the best way to reduce their carbon emissions is the biomethane fuel alternate. At UPS, they are always trying to look out in the market for the best technologies and alternative fuels to try and reduce their carbon emissions for their ground transportation. However, UPS requires the use of liquefied biomethane, which is great for them and works the best for their HGV fleet on long distance routes.
They believe that a long term strategy for ensuring that there is an alternative and the availability of these alternates will make sure that their investments are worth it and will allow for future innovations and improvements.

References:
http://www.supplychaindigital.com/global_logistics/fta-urges-uk-govt-to-support-transition-to-gas-fuel

North America and Asia Leading Charge for Eco Friendly Mass Transportation

Everyone is aware of the current movement that is electric and hybrid cars. Ford, Chrysler, Toyota, General Motors and many more auto manufacturers are changing the game, and going eco friendly. Electric and Hybrid cars (like the Ford Fusion) have been out on the market for quite some time now and do there part to reduce the carbon footprint.

Now joining the movement at an alarming rate however is the mass transportation industry. Buses are starting to rely more and more on natural gas, electricity and bio diesel. Studies show that by 2015 more than 50% of the 64,000 new transit buses will be running on alternative fuel methods. Compare this with the new transit buses that were delivered in 2010, and a 28% growth can be seen.

This movement by the mass transportation industry is so vital to reducing carbon emissions as a bus can emit up to 4 times as much green house gases as a sedan. This is all made possible and efficient because of the small impact that they have on the overall infrastructure of the industry.

Leading the pack is North America and Asia. According to a study by Tom Ripley of driving today, within the next 5 years, both regions will have up to a 60% adoption rate of new eco friendly buses. On top of that another healthy fact is the statistic that shows in the entire world, these two regions will boast 70% of all new buses, and 60% of those will be running on alternative fuel.

 

Sources

iHaveNet.com

http://www.ihavenet.com/Auto-Mass-Transit-Cleans-up-Its-Act-DT.html

 

 

Overbooking, Gains or Losses?

Since the core concept of yield management of airline is to sell the right seat to the right type of customer, at the right time and for the right price, overbooking has become the trump for airline to maximize its revenue or profits. In the airline industry, seats are regarded as inventory. If a plane leaves gates with empty seats, this inventory is lost and spoiled. Company will lose revenue without any compensation for losing inventory so that overbooking is a effective strategy to avoid such kind of loss. Because not everyone travels on their booked flight for various reasons, most airlines will overbook their flights, sometimes by as much as 50% with mixed prices to make sure the plane will take off with no empty seats. If overbooking is done correctly, that will be a win-win situation between travelers and airline companies. Customers can get lower fare and airlines can earn more revenue. However, what if overbooking goes wrong?

Using overbooking method requires a very comprehensive and accurate demand forecast.  Some exceptional cases might happen that if the actual number of passengers is higher than airline company forecast. Some passengers will be forced to take later flight sometimes have to stay over the night in airport. Airline need to compensate those passenger with any discounts, premiums or accommodation. On the other hand, the airline should try to predict the price of overbooking. A passenger who is denied a seat despite his reservation can happen to be very expensive. In the short run, it is only a ticket revenue loss, but long term implications include passenger loyalty and airline reputation. In a word, the higher level of overbooking, the faster cost increasing and higher risk with less passengers are willing to modify their flight arrangement. Poor overbooking decisions will be very costly.

References:Why and How Airlines Overbook Flights http://www.thetravelinsider.info/airlinemismanagement/allaboutoverbookingflights.htm

Yield Management In The Airline Industry

http://www.ieor.berkeley.edu/~ieor166/Yield%20Management%20in%20airlines.pdf

UPS, FedEx want more of holiday shipping pie

Tis the season for two of the heaviest hitting delivery companies to experience a massive surge in shipping volume.  In the weeks between Thanksgiving and Christmas, both UPS and FedEx will hire thousands of seasonal workers; 55,000 and 20,000 respectively.  These workers will be helping to sort packages, load, and drive the delivery vehicles.  Coming this next Monday, the second Monday in December, a day that is known as “Green Monday” in the e-commerce industry.  It marks the start of one of the busiest shopping weeks of the year; last year $1.1 billion was spent on this day alone.

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As compared to last year, both companies will see a significant increase in shipping volume. UPS will see an increase of about 10% taking the total packages shipped to about 570 million.  As for FedEx, they will see an increase near 13% for a total of 280 million shipments.  Although these numbers may seem like an overwhelming amount to deliver in the roughly 5 weeks it is not enough for the big two.  Both companies are employing differing strategies in order to attract more business.  UPS has its My Choice service which allows users to reieve alerts before their package arrives to ensure they are home to collect the package.  In addition, if the user knows they will not be home they are able to easily reschedule the delivery with this service.  FedEx will be working with targets in the e-commerce industry to help online retailers make shipments high in volume and low in weight to the residential customer.  They will pick, sort, and deliver packages to the post office for delivery.

Both companies operate very complex supply chains so let’s hope that they work flawlessly and everything gets to where it needs to be.

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