Air Freight in Africa

In recent trends in airfreight Africa has shown that it will become a major player in the near future.  The International Air Transport Association reported that in August the continent had seen a 10 percent increase in demand for air cargo transport.  This increase was the largest of all the continents and a continuing grow rate for Africa would create a very significant economic impact in for the continent. The biggest market that is developing for Africa is its relationship with the Middle East.  Trade with the Middle East has increased 17.9% over the quarter where as trade between Europe and the Middle East has increased by only 1.4% during the same time period.

 

Many companies have started to take notice of Africa as an opportunity in the logistics market.  DHL has decided to build a strong relationship inside of Africa in hopes to take advantage of its potential economic prosperity.  Charles Brewer the Managing Director at DHL for Sub-Saharan Africa describes Africa as a perfect opportunity to create new jobs and income in a time when many in Europe and North America are struggling because their markets lack the chance for immediate growth.  He also notes that there are many challenges facing DHL in Africa because of a lack of infrastructure and quality labor regulations but the future benefits in the continent are too great to ignore.

Sources:

http://www.africanbusinessreview.co.za/money_matters/african-freight-flying-high

http://www.observer.org.sz/index.php?news=44739

Aging U.S. Infrastructure Effects Business

Every business in the United States relies on the infrastructure to be able to get its products or services to its customers. They need to be linked to a transportation network so that they can ship goods to its customers or be easily accessible to its customers if they need to come to them. Right now our country’s infrastructure is aging and deteriorating, and the country is spending less to keep it maintained, relative to other countries. The United States spends only around two percent of its GDP on infrastructure while Europe spends around five percent and China around nine.[1] The current state of our infrastructure is already causing headaches for people working in the transportation industry and will surely continue to worsen as our roads, bridges, locks, and air ports continue to age.
The ASCE (American Society of Civil Engineers) released a report card grading the nation’s infrastructure in 2009. The results of the report card are quite concerning. Aviation received a D, bridges received a C, inland waterways received a D-, rail received a C-, and roads received a D-.[2] Mr. Seifarth from Logicos, showed us the challenges Logicos faces with the increasing number of over aged locks and the increasing age of barges. This is unfortunately the state for many other forms of infrastructure as well. In 2009 “more than 26%, or one in four, of the nation’s bridges are either structurally deficient or functionally obsolete”.[3]
The Brent Spence Bridge in Ohio is a bridge “the federal government has labeled “functionally obsolete” and unsafe”. [4] It is also ranked by the American Highway Users Alliance as “one of the 24 worst highway bottlenecks in the United States.”[4] It is so bad in fact that “UPS trucks avoid the bridge as much as possible but that adds time to its routes, [and] pushing up costs”.[1]
Sources:
[1] http://www.reuters.com/article/2011/08/16/uk-usa-economy-infrastructure-idUSLNE77E04E20110816
[2] http://www.infrastructurereportcard.org/
[3] http://www.infrastructurereportcard.org/fact-sheet/bridges
[4] http://en.wikipedia.org/wiki/Brent_Spence_Bridge

Panama Canal Expansion and the Effect on US ports

 

The Panama Canal expansion is expected to be done by the year 2014. The expansion is going to allow the Post Panamax ships to use the canal instead of traveling farther distances and or use land bridges to move goods across the United States. Before the expansion the Panama Canal could only accept ships as big as 5,000 TEUs, however the new expansion expects the canal to be able to accept ships as big as 12,000 TEUs. With the growth of the canal, transportation companies will be able to take advantage of the economies of scale due to being able to ship more goods on one ship than you could on two. Money will be saved because only having to run one ship is less gas used, and less labor needed.

Companies from the United States and the rest of the world will want to take advantage of the Post Panamax ships since there are so many benefits to using these larger ships. However, most of the ports on the United States east coast are not capable to support the larger ships. The only current port on the east coast is the Norfolk port in Virginia and three more will be ready by the year 2015. Since this is the only port the U.S. will have to invest a lot of money into its ports so they can dredge them and add the necessary infrastructure to support the new larger ships.

The expansion of the Panama Canal will see improvement in the amount of ship traffic to American ports.  Obviously, the ports will need to be expanded both in width and depth in order to support larger ships, but also land transportation out of ports and intermodal transportation will see an increase.  The number of roads in and out of the ports may need to be improved, as well as the railroads.  With the rise of intermodal transportation, more cranes will be needed to transport containers from ships to trucks or railcars.  The number of flatbed trailers as wells as flatbed railcars may need to be increased to accommodate the number of containers coming off of the larger ships.  With an increase in these containers, the inventory system for containers may need to be updated and expanded to accommodate the larger ships and increased traffic.

 

For further reading:

http://online.wsj.com/article/SB10001424052702303448404577410131264191046.html

http://en.wikipedia.org/wiki/Panama_Canal_expansion_project

Hurricane Sandy and the Affects on Global Transportation

Potential weather disasters can create a serious impact on many forms of transportation.  They can create delays, damage goods, or in extreme cases, completely shut down transportation modes. The recent Hurricane Sandy is no exception to this rule.

Hurricane Sandy Affecting Airline Passenger Travel

Hurricane Sandy is wreaking havoc across the Northeast Coast. As of Monday afternoon, airlines have canceled more than 12,600 flights to and from the Northeast United States. This surpasses Hurricane Irene in August 2011, which had roughly 10,000 canceled flights.  Simon Calder, travel editor of the UK’s The Independent newspaper predicts that airlines take a combined lose of roughly $10 million everyday airlines are shut down. When taking into consideration the losses that Amtrak, hotels, and other businesses that benefit from business traveling take, the total combined losses is much higher. Due to the flight cancelations, many people traveling internationally are stranded and won’t be able to fly out until flights resume, which could take as late until this weekend.

Hurricane Sandy affecting other modes of transportation

Hurricane Sandy is also affecting seaport, trucking, and railway transportation.  Seaports across Virginia to Boston have been closed by the Hurricane. Trucking companies are being ordered to stay out of the storm. Some of the largest railway contractors around the East Coast have also been shut down. This is during the middle of the freight-transport industry’s peak. Logistic companies are now working to reroute freight-transport to other distribution. However, many goods may already be damaged.

Only time will tell until everything is back in running. Weather disasters are a constant concern and with improved planning the impact can be minimized.

http://www.cnn.com/2012/10/29/travel/hurricane-sandy-flight-cancellations/index.html

http://online.wsj.com/article/SB10001424052970204840504578086833916411390.html

Trucking Theft On the Rise

Trucking Theft On the Rise

Trucking piracy has became an industry and a major issue for retailers and suppliers because increased gang presence, the relative ease of breaking into trucks and trailers to access goods and a  lack of concern from law agencies. It is reported that trucking theft results in about $30 billion in losses each year, and unfortunately, this number is only set to grow even larger.
Focusing on theft
Companies are beginning to develop new ways to deter this theft that is costing them greatly. Focusing on truck driver is the most efficient and important way to stop theft activities rather than hiring many people to oversee the transportation of goods along the way of supply chain. Many businesses provide extra incentives to drivers who ensure the safe delivery of goods because drivers is a key to ensuring a valuable load of cargo is safe.

Preventing driver involvement
The driver is the key in a company’s supply chain, as they’re responsible for the safety of a truckload of goods that may be worth millions. While most drivers carefully get their products to their intended destinations safely, there have been incidents that call for concern about truckers on the part of businesses. The source reported that drivers are specifically instructed not to stop near high-theft areas, and their treks are carefully planned and closely watched to keep an eye on precious cargo at all times. By monitoring drivers and keeping an eye on logistical operations, companies can deter theft and decrease the losses incurred at the logistical level.

Waste Of Transportation

Transportation waste is the unnecessary movement of parts, double-handling of materials, or shuffling of inventory to get access to the right components. Transportation waste is one of the seven wastes that Taiichi Ohno identified as barriers to flow.

Waste of transportation can involve raw components, sub-assemblies, empty boxes or just about anything that is required for production. It will not only be found in the production area, but also the material delivery areas, throughout the supply chain and even in offices. Transporting material is a necessary activity but it doesn’t add value to the end product. Eliminating or reducing this type of waste within your facility (or within your supply chain) may reduce overall lead time or cycle time.

Within the production area, waste of transportation will be found when product is not stored close to the point of use. If space allows (based on component sizes), keep a small store of inventory near the production area. This will avoid having to bring the product back and forth to a warehouse.

It is obvious why moving parts further than necessary is wasteful. Transportation takes time. There is also the frequently overlooked fact that people often have to make round trips, adding to the delay. It is surprising how far people walk in the course of a year in many processes. Walking 100 feet to get parts 20 times a day can add up to nearly 170 miles a year.

The need to transport parts also drives inventory up, creates a need for space to store those parts, and uses energy for more forklift time and warehouse heating. The list of additional waste generated by transportation goes on and on.

Transportation waste stems from poor factory layout and large batch sizes. When processes are not close to each other, parts need to be transported. Batches tend to come from big, multi-function machines that serve many product lines. These large machines are one of the drivers of poor layout.

Shared machines are also a culprit of transportation waste. This is especially prevalent in offices where printers and copiers are shared. In an extreme example, I observed a groove in the floor where people had worn a trough by walking back and forth across the hall to make copies over the years.

Eliminating this waste requires a focus on flow. When parts move directly from one process to an adjacent one, the distance travelled is minimal. Reducing batch size through SMED and designing product oriented work cells are both good methods of reducing transportation waste. Switching to right-sized machines also helps limit transportation.

One word of caution about transportation waste: it often doesn’t seem wasteful when a factory’s layout is not viewed as a problem. If functional cells are considered good business, transportation between those cells seems like a necessary task.

http://www.velaction.com/waste-transportation/

http://www.lean-manufacturing-junction.com/waste-of-transportation.html

 

 

Driver Shortages & Increased Regulations Lead LTL Shippers to Consolidate

In an article published last week on the Logistics Management web page reporters are stating that LTL shippers may be faced to further consolidate sooner rather than later due to the looming threat of a driver shortage and the increasing federal regulations that are being put into place. The LTL industry operates in a situation where rates have stabilized leading to increased competition amongst industry players. Profits are in turn measured as cents on the dollar leading to a much lower profit margin percentage. This industry characteristic has left many just barely operating for profit with many others constantly on the edge of a loss. Interviewed was Steve O’Kane president of A. Duie Pyle who stated that the fit will survive will the rest will begin to fade our of the competitive landscape. He suggests that the best enabler in creating efficiencies to be successful in operating in such a low margin environment would be the utilization of technology systems.

O’Kane states that one of the biggest issues effecting the industry is the shortage of truck drivers due to an aging work force and the lack of new truck drivers coming into the industry. In addition to this shortage the government has put a program in place called CSA, Compliance, Safety and Accountability, which scores a driver/carrier and keeps record of their incidents and violations from the code (see video below for program overview). However, a major criticism is that not all have scores making comparison a difficult task. Pyle prides their workforce as a competitive advantage that should help shield them from major harm cased by the shortage.

 

For Further Reading Please Visit the Following:

http://csa.fmcsa.dot.gov/default.aspx

http://www.logisticsmgmt.com/article/ltls_facing_growing_threat_of_labor_shortages_increased_regulation_that_cou/

http://www.natera.org