Quick News for Tuesday 9-13-05

Despite the few spots of good news we have noted concerning the transportation and logistics surrounding the relief efforts of hurricane Katrina, due to the overwhelming damage and incredible need caused by the hurricane, problems still abound, as noted by EU officials who have experienced some logistics problems in getting aid to the areas affected by Katrina :

"There appear to be some transportation problems," Barbara Helfferich, a
spokeswoman for the European Union's executive Commission, told a news
briefing.
She said a Swedish plane laden with aid was waiting to take off but
had not got U.S. approval to enter the United States.
High-speed pumps
offered by Germany had arrived but Helfferich said unspecified "coordination
problems" in the United States had prevented them from being deployed so far.

One of the obvious side effects of Hurricane Katrina is that more and more cargo is being handled by smaller ports while the port of New Orleans recovers.

The docks in Morehead City are booming this week, as longshoremen unload
twice the amount of rubber that normally passes through the port. The same is
true down the coast in Wilmington, where 12,000 tons of steel came off the boat
Wednesday.
The Port of Pensacola in Florida has increased cargo traffic by
about 60 percent and companies are calling to see how much more steel, lumber
and other products it can handle. Panama City, Fla., expects a 60 to 70 percent
increase this year.
"I've been here eight years and I've never seen this
level of activity before," Pensacola port director Leon Walker said.
None of
those four ports ranks in the country's top 40 by tonnage, but they are
receiving cargo once headed for New Orleans or Pascagoula and Gulfport, Miss.,
before Hurricane Katrina swept through, damaging ports and forcing shippers to
divert to docks elsewhere along the Gulf and East coasts.

Business must go on, and as always when 1 part of the logistics puzzle breaks down, other pieces of the puzzled pick up the slack and a solution is found.


But hopefully New Orleans will get back on its feet sooner than expected. A promising sign that things are moving in the right direction, the port of New Orleans re-opened today and commercial flights began at the airport once again:

In New Orleans, a shipment of steel coils left the port by barge Monday,
bound for a Hyundai auto plant in Greenville, Ala., port spokesman Chris Bonura
said.
The port expected the arrival of its first cargo ship since the
hurricane late Tuesday and at least three more ships by week's end, said Gary
LaGrange, port president and chief executive. The arriving ship was carrying up
to 500 containers of coffee and wood products from Argentina, Brazil and Mexico,
LaGrange said.
"It's a historical moment. Two weeks ago the prognosis was six
months, so to pull it off so our customers have enough faith and confidence in
us is very heartwarming," LaGrange said. He added: "From a commercial and
psychological standpoint, this is five stars. This shows the people of New
Orleans their city is back in business."
The port of New Orleans is the
gateway to a river system serving 33 states along the Mississippi River or its
tributaries. The port also connects to six railroads.
Also Tuesday, Louis
Armstrong New Orleans International Airport was scheduled to receive its first
commercial flight since Katrina struck on Aug. 29.

In other positive news, Eagle Global Logistics pulled out all the stops in locating all their displaced employees and is going to extraordinary lengths to ensure that their displaced employees are well taken care of. A must read:

EGL is sparing no expense to ensure employees are receiving adequate aid in
the midst of this crisis. For employees unable to work or who have temporarily
relocated outside the EGL service network, the Company is continuing to
compensate 100 percent of their salary. In addition, the Company has offered
jobs at any available location in the EGL system and relocation assistance to
any employee not wishing to return to the New Orleans area. Ten employees and
their families have moved to Houston, where EGL is providing employment,
temporary housing and the expenses necessary to meet their basic needs. EGL's
Executive Management Team and representatives from the Human Resources
Department will review each employee's status on a continuing basis for up to
three months in an attempt to reduce the anguish caused by Hurricane Katrina.
"Our employees are the foundation of our Company, and we are committed to
helping our people overcome this devastating event and rebuilding their lives.
We view each other as family, and this was clearly demonstrated by the speed in
which our stations and corporate employees united to respond to this tragedy,"
stated James R. Crane, Chairman and CEO of EGL.

Wow. This is one company that knows how to take good care of their employees, which is a rare thing these days, especially in our industry. How is your company handling employees affected by Hurricane Katrina ? Let us know.


In unfortunate economic news, the blow to the nation's logistics and transportation industry due to Katrina is pushing up costs for numerous commodities:

Wholesale prices of tuna, grouper and snapper -- all of which are found in
the Gulf of Mexico -- are up $1 to $1.50 per pound.

Crabs became tough to find in the Baltimore area in early September. Yes,
Maryland has its own crabs, but the big ones come from the Gulf. That led to
trouble over the Labor Day weekend, traditionally a time for steamed crabs in
the Chesapeake Bay area.
"The phone was ringing, we just didn't have the
crabs," said Chris Hubbard, an owner of Don's Crabs in Maryland.
The pain
doesn't stop there. Farmers trying to ship their harvest on the Mississippi
River may have trouble finding barge space.

About 60-70 percent of the nation's grain exports travel from the Port of
New Orleans.

The storm left giant agricultural companies like Cargill Inc. high and dry.
At one point last week, the firm had 300 barges loaded with grain, fertilizer
and other goods stranded on the Mississippi. Cargill and others are scrambling
for storage space for grain, as trains bound for New Orleans are parked across
the country.

The Malacca Strait is one of the most congested and important shipping lanes in the world. It is the main route connecting the Indian and Pacific oceans and tens of thousands of vessel traverse it yearly. And.......it is plagued by piracy. Yes, there are still pirates in the world today, but today's pirates run around in speedboats with heavy weapons, it has been a growing problem in the Malacca Strait for many years now :

- More than 50,000 commercial vessels ply the sea lane each year, carrying
a quarter of global trade, half of all oil shipments and over 80 percent of oil
imports for China and Japan.
- The waterway has been a magnet for pirates for centuries. The
International Maritime Bureau said in its 2004 report that of the 325 recorded
pirate attacks worldwide, 93 cases occurred in Indonesian waters, including the
Malacca Strait.
- Security analysts have warned that terrorists could
paralyse trade in the strait by attacking tankers carrying liquefied natural gas
or by sinking a large ship at the sea lane's shallowest point, which is just 25
metres (82 feet) deep.
- Analysts say this could send freight rates up 500
percent or more as ships would have to make a detour of around 1,000 km (600
miles) through the Indonesian archipelago.

Finally, Singapore, Malaysia, Thailand, and Indonesia have started coordinated air patrols to better protect against piracy and also to reduce the risk of a seaborne terrorist attack:

Indonesia, Malaysia, Singapore and Thailand launched their first joint air
patrols over the Malacca Strait on Tuesday to boost maritime security in the
pirate-infested waterway.
The launch of coordinated air patrols marks
the
strongest commitment yet by littoral states to try to curb piracy and
prevent
militants mounting a seaborne attack to cripple global trade.

Read the whole thing here.


And finally, in an effort to improve Indonesia's logistics industry, a study released at a seminar called "Enhancing Indonesia's competitiveness: Meeting the Challenges for Industrial Development" may surprise some : they claim that Indonesia's logistics costs are lower than those in Thailand :

The study showed that total logistics costs in Indonesia comprised 14.08
percent of total production costs, while in Thailand the figure stood at 22
percent

Don't get so excited that you start making plans to source your product from Indonesia rather than Thailand - Indonesia suffers from low productivity and exports are subject to burdensome government regulations, not to mention other problems such as corruption and poor infrastructure, as this article also points out.

The government needs to deregulate and simplify bureaucracy as a short-term
solution to increasing investment, as well as improving institutions such as the
tax office, customs and others in the long term, said Chatib, who is also an
economic advisor to Coordinating Minister for the Economy Aburizal Bakrie.
The study further revealed a surprising finding that the cost of logistics
from suppliers to manufacturers was almost double the cost from factories to
port, contrary to the wide perception that costs in ports were the major factor
in reducing the country's product competitiveness.
"One explanation is that
Indonesia's export industries still require more imported than domestic input,
which has an implication to the higher input logistics costs," it said.
The
study said that logistics costs from input to manufacturer contributes 7.22
percent of the total cost, in-house logistics contributes 2.82 percent and
logistics from factories to port 4.04 percent.
The main sources of the
inefficiency in logistics in export industries, based on respondents
perceptions, were poor infrastructure, illegal imposts along distribution
chains, and government regulations such as those for export procedures.

But at least they are looking at the positive points they were able to discover from their study while openly discussing the problems they still face.