A.M. Executive Briefing - April 19
This Morning's Headlines:
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Deutsche Post Allies With Lufthansa
A pair of deals between Deutsche Post and Lufthansa Cargo could foreshadow a broad alliance between the two German firms, which combined hold a little more than half of all shares in DHL International.One of the deals will combine the two firms' voting rights in DHL into the new Deutsche Post-managed entity Aerologic – the goal, said Deutsche Post Chairman Klaus Zumwinkel, being to boost DHL's spot "as the world leader in the international express delivery business."
The other deal between the two German firms will create a new e-commerce and supply-chain management firm, e-logic, which is likely to concentrate on business-to-business e-commerce.
The deals, months in the making, did not live up to some analysts' expectations, which foresaw the companies forging a tighter financial tie-up or Deutsche Post acquiring the other firm. An unnamed company official said the announcement was timed to stoke interest in Deutsche Post's upcoming IPO and that the structure of the agreements will provide "tax advantages" for the companies.
A bigger deal may be in the offing, said another official, and this could be helped along by proposed German legislation to provide tax advantages for mergers. Journal of Commerce (04/19/00) P. 1; Koenig, Robert
Equipment Supply Worries Rail Users
Containerized freight entering the United States from Asia has risen some 17% from last year's first quarter, and the maritime industry is concerned that there may be too little railroad equipment at Union Pacific and Burlington Northern Santa Fe for this year's peak season.The railroads' company TTX has ordered pool equipment for this year relying on original projections that expected containerized imports entering Los Angeles-Long Beach in the first quarter of 2000 to be less than half of what they turned out to be. By October, TTX's orders will expand the current intermodal fleet by 11%, while the amount of platforms to be brought in by third parties is not known.
Rail carriers argue that if they order as much equipment as ship lines want for the peak season, it will go unused the rest of the year. Pacer Stacktrain executive vice president Dan Pendleton said UP is actively gathering new data on what its needs will be for the peak season; BNSF is doing the same, and a spokesman said BNSF is moving on time and believes it will be prepared.
Because domestic and agricultural shippers' peak season coincides with that of international freight, containers can spend days at the terminal while railroads piece together a long double-stack train. Railroads say that better utilization would make for better equipment availability, and the BNSF spokesman advocated longer gate hours at marine terminals.
Meanwhile, Pacer's Pendleton said the Southern California intermodal interests will have to get together to examine its options if most believe equipment availability will be too low. Journal of Commerce (04/19/00) P. 1; Mongelluzzo, Bill
Delaware to Burn Soybean Diesel in State Fleet
In a six-month pilot test of diesel-fuel alternatives, the Delaware Department of Transportation will use a blend of soybean and diesel fuel in state vehicles, with hopes of eventually boosting the state's farmers and reducing its smog issues with a marketable clean diesel.While saying any method of cutting emissions "would be wonderful," Clean Air Council's Emily Bertram said Delaware's air-quality problem requires further measures, such as boosting mass transit and carpooling as well as encouraging land-use patterns that enable pedestrian travel. Associated Press (04/19/00); Thorne, Christopher
Big Trucks Rumble on New Bridge
The new World Trade Bridge across the U.S.-Mexican border at Laredo, Texas, has reduced the two-mile-long backup of trucks headed for Mexico that used to be the daily routine on Interstate 35 in the area, but the region's traffic congestion is bound to remain.Monday morning saw clots of trucks and cars along roads leading to Interstate 35 and the new bridge, also called Bridge No. 4, although a Texas Department of Transportation spokesman said part of that was due to some minor accidents.
Commercial freight carriers must use the new bridge or the Colombia-Solidarity Bridge now, but commuter congestion is not about to go away in Laredo, which has the second-largest growth rate of any U.S. city.
However, in its first day of use, the new bridge saw almost three times the amount of crossings to Mexico than were the norm on downtown's Bridge No. 2, enabling short-haul truckers to make more runs than usual. San Antonio Express-News (04/18/00) P. 1A; Pfister, Bonnie
On the Road to Ruin in Mexico
Mexico, where nine-tenths of freight is moved in trucks, also averages 800 reported truck hijackings a year – and most truck robberies are not reported. By far, most hijackings take place in the Mexico City area, and other common locations for the crime are the states of Queretaro, Michoacan, Puebla, San Luis Potosi, and Sinaloa.The organized, heavily-armed hijacking gangs boast efficient distribution chains, and observers disagree on the identity of the thieves and the people who give them information about shipments. Among those suspected are crooked police, employees of shippers, truckers, and customs brokers.
Robberies cause huge difficulties for shippers and carriers, not to mention enormous increases in insurance premiums, and shipments are rarely recovered; some insurance companies have begun refusing to insure loads beyond the border areas.
Mexico City-based shipper Adolfo Juarez now only works with carriers that use GPS tracking, and he also protects his shipments with private security guards.
Some security firms have mastered the art of protecting trucks, such as Grupo Diamante, which sends out escort vehicles with three guards each who stay in contact with the trucker and their home base.
While more and more carriers turn to satellite tracking, the cost of the technology is prohibitive to smaller firms; only about 4,000 of the group Canacar's 30,000 members use such equipment. Many companies say the need to control costs, and rates for shippers, is more important than protecting cargo.
With hijackings on the rise, the Public Safety Ministry established a full-time motorcycle police force for important truck routes, but some say the police themselves are likely to be the thieves. Houston Chronicle (04/18/00) P. 1, Business Section; Suval, John
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