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.

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Beer Pipelines of Europe

Group 6

  When one thinks of a pipeline, they often think of oil being transported to its destination, when in fact pipelines can transport much more; beer.  Beer pipelines are slowly becoming a feature of bar districts and stadiums alike to bring cold beverages to fans or paying customers.  In cities like Randers, Denmark and also Gelsenkirchen, Germany beer pipelines are in use.

Both cities are unique.  In Gelsenkirchen, the home of the German soccer power FC Shalke 04, their arena named Veltins Arena has a five kilometer beer pipeline that runs throughout the stadium.  The stadium stores four cooling centers underneath it that houses 52,000 liters of beer.  Each pipe can transport up to 14 liters of beer in a minute.  The pipelines feed over one hundred bars and restaurants inside the stadium.  However the pipeline sees noticeable fluxuations in the amount of beer moved through the pipeline determinant on if the team wins or loses!  Stadiums make a large amount off of their profits based off of their beer sales.


In the case of Randers, the Denmark the city features a beer pipeline as well.  The Thor Brewery, originally downtown had a pipeline in which it could pump beer to local breweries.  However in the nineties the brewery moved outside the city, but still supplies bars with beer.  Information is extremely limited on this pipeline, but Randers seems like a very interesting place to visit.

With the rise of microbrewery’s the opportunity for beer pipelines may grow.  Bars near microbrewery’s may look to beer pipelines to cut costs and cut down risks of stockouts.  European soccer teams such as Zenit St. Petersburg have seen Schalke’s state of the art pipeline and are looking to implement a beer pipeline in their new stadium.


ASL to acquire TNT Express’s airlines

The ASL Aviation Group from Ireland has come to an agreement to purchase both of Dutch logistics company TNT Express’s airlines, TNT Airways and Pan Air Lineas Aereas. This agreement is pending the approval of UPS’s acquisition of TNT Express from the European Union. UPS announced that it would buy-out TNT Express for 5.2 billion Euros back in March, but this transaction has drawn heavy fire and opposition from the European Competition Commission, who is currently unsure whether or not to allow UPS to carry out this deal.

As a group mentioned in an earlier blog, according to the European Competition Commission, there are only four global “integrators” in the express delivery business that combine both ground and air modes of transport: UPS, DHL, Fedex, and TNT Express. Currently, Fedex has a very small market share in Europe, meaning that the majority of transportation needs in Europe would be handled by only two companies, thus causing backlash from the European Union.

TNT Express was required to sell their airlines before the UPS merger (if it gets approved) because stiff European Union regulations make it very difficult for European registered airlines to be owned by non-European companies, such as UPS. According to TNT Express’s deal with ASL Airlines, if the transaction is approved, ASL commits to handle all of TNT Express’s air freight post-merger as well as maintain TNT Airways’ headquarters in Liege, Belgium and inherit all its employees. This clause in the contract may put to rest the concerns that the UPS and TNT merger would lead to lay-offs.



The Future of Air Travel

“The airfreight industry is continuing their expansion, and tackling the final frontier, space. In May 2012 the privately owned SpaceX Falcon 9 rocket took a nine-day trip that delivered 1,300 pounds of scientific cargo, food, and clothing to the international space station, beginning a new area for expansion” (Terry). While this expansion to air carriers is not going to be large for the time being, the future of space travel is an unknown territory that could become huge in the future. As more space stations are being created and the technology increases the only way to transport goods to space is by air. In the future if space stations do increase or even if there will be people living in space the future of air freight will be endless and see a huge growth.
But on planet earth, perspectives on the expansion and demand of air travel are a bit mixed. A hurting economy, high fuel costs and security concerns make further expansion in the field seem difficult. The industry depends heavily on fuel prices, which makes for high price volatility and a lack of stability in air transit. An example to show this was that Southwest Airlines first-quarter fuel bill was 478 million dollars higher in 2012 than in 2011. As stated above as well, the economic downturn has had a large effect on the industry, specifically in Europe. Declining consumer confidence has also weakened the demand in Europe and leaves the air freights future uncertain. Lastly, there has been a recent trend to nearshoring, bringing US manufacturing companies plants closer to the US, in places such as Mexico and South America.
As air carriers are facing challenges with the three above obstacles, areas for expansion are popping up. Developing markets in Asia in countries like China are supplying opportunity. As Chinese manufacturers are shifting manufacturing plants from the coast to inland areas, air carriers are needed. Additionally Brazil is supplying opportunity with the development of their economy. Air carriers must look to accommodate these new areas to gain business with large manufacturers. Also, ecommerce and the need to deliver goods the next day have helped increase the need for air as the mode of transportation to be able to do the fast delivery times.
For the time being air carriers will continue to be used the same amount and in order for air carriers to grow business and usage they are going to have to lower the cost and find areas that need the fast delivery.

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.


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