A.M. Executive Briefing - August 5
This Morning's Headlines:
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Cargo Piles Up as Independent Truckers Strike for Higher Wages
Some Port of Vancouver container traffic is at a standstill due to striking independent truckers seeking higher wages from truck companies.Three shipping lines recently started sending Pacific cargo into Vancouver. One of them, Norasia Line, may have to expedite its earlier plans to add a call farther south in the United States.
Vancouver Port Authority President Norman Stark adds that the independent truckers' strike has "resulted in layoffs and plant closures."
Already, the port authority has agreed to foot the bill for a temporary extra $30 a container for the truckers, and trucking companies said they could pay an extra $50 for each move. Cost-cutting measures by shipping companies and terminals in the United States and Canada are leading to lower rates for harbor trucking.
The strike mostly affects containers intended for export or imports for local receivers, since other imports mostly go directly onto freight trains at the docks.
Meanwhile, the British Columbia Maritime Employers Association and the International Longshore and Warehouse Union are in federal mediation after ILWU Local 500 members voted down a contract proposal. Union members, though, have continued working without a contract. As a result, this particular dispute has not led to port slowdowns. Journal of Commerce (08/05/99) P. 16; Mongelluzzo, Bill
On-The-Job Fatalities Show a Sharp Decline
The Bureau of Labor Statistics reported Wednesday that fatal on-the-job accidents dropped 3% from 1997 to 1998, with workplace homicides falling 34% between 1993 and 1998.This includes a 46% drop in workplace killings due to robberies from 1994 to 1998, which the Labor Department attributed to Occupational Safety and Health Administration non-mandatory security guidelines in addition to economic improvement, a healthy job market, and the general downward crime trend.
The chief cause of job-related fatalities is still highway accidents, and two out of every five workers killed that way were truck drivers. Truckers had an occupational homicide rate of 0.8 for every 1,000 workers. That is above the national average of 0.5, but well below cab drivers' rate of 27.5. Washington Post (08/05/99) P. E1; Grimsley, Kristin Downey
Three Firms Join to Form Giant Dealer; $2 Million Truck Facility Opened by J.B. Hunt
Three Navistar International dealers — Mid-America International Trucks, Diamond International Trucks and KCR International Trucks — joined together July 1 to form the $200 million Diamond Cos.Diamond Cos. was put together by Chief Executive Officer Dick Sweebe, who founded Mid-America International in 1982, and Chief Operating Officer Rocky Zinser, who held a similar position at Diamond International.
Mid-America owns nine dealerships in Tennessee, Arkansas, and Missouri, and Zinser has been a Mid-America partner since that company purchased Diamond International's Arkansas dealerships four years ago. KCR International has three dealerships in Missouri and Kansas.
The new organization will have its headquarters at the Mid-America International office in Memphis, Tenn., where 10 headquarters employees are expected to be hired. Diamond Cos. also plans to keep hiring new mechanics and to provide them with additional training.
In addition, the new organization will be able to buy more trucks for its dealerships and save money on parts with volume discounts.
Diamond Cos.' 15 locations will operate separately, but will be linked by a computer system that already includes the Mid-America and Diamond International dealerships.
In an unrelated story, J.B. Hunt Transport Services opened the doors on a $2 million, 27,000-square-foot maintenance site in Memphis last week. With 310 trucks, the Tennessee operations is the company's eighth largest in the United States. Memphis Business Journal Online (08/02/99); Bechard, Theresa
Thirsty For Outsourcing
Though beverage makers have usually maintained their own warehouses and delivery fleets, a recent business boom has prompted more of them to rely on third-party logistics providers.The beverage companies are also experiencing more frequent, but smaller shipment demands. In addition, they are facing seasonal changes in the demand for products.
Turning to third-party logistics firms has allowed these firms to cut investments and warehouse and vehicle assets, while gaining flexibility and saving on freight costs. Companies with less money are finding it valuable to concentrate on marketing and production, while counting on the logistics firms' distribution expertise.
In turn, the logistics companies are learning about the beverage business and are helping their clients with leases and maintenance packages. They have also helped beverage manufacturers streamline their antiquated routes and equipment excess.
Another problem beverage manufacturers have is increased work for warehouse employees when new flavors and products are introduced.
John Deris of Ryder Transportation Services says companies sometimes need to buy new trucks or customize old ones for new products.
Schneider Logistics general manager John Arcuri says companies can periodically mix products in loads to consolidate freight. "As 3PL providers, we create the traffic lanes and put capacity in those lanes," Arcuri says.
Denver Management Group's Kent McSparran anticipates the sharing of warehouses by competing companies will become necessary as more of these industrial facilities close or change functions.
Although third-party logistics providers offer some advantages, a 1998 University of Tennessee Center for Logistics Research study showed that many companies still do not want to give up control over their logistics.
Concerns about logistics providers' Y2K compliance have been frequently cited. But the shift to third-party providers may be inevitable, especially as more larger companies become clients. Food Logistics (07/99-08/99) No. 23; P. 21; Williams, Mina
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