American transportation workers concerned for the industry

 Workers within the American transportation and shipment industries have expressed uncertainty over the state of the market, and national economic conditions.

Their main concern is rooted in inventory hangover, a direct result of congestion in the West Coast Port which has led to subsequent delays, backlogs and decreases to productivity. Despite marine terminals returning to productivity, retailers are still feeling the effects. YRC Freight said in a statement, “U.S. businesses are experiencing inventory overstock at a level we haven’t seen since the beginning of the financial crisis in the fall of 2008”.

Shippers also contributed to oversupply with fears they would be out of stock, and pushed their inventory-to-sales ratios to 1:35 in August. Almost half of shippers surveyed reported their inventories were higher than last year.

The increased inventory-to-sales ratio coincide with the West Coast port incident. A survey conducted by Wolfe Research indicated higher than average level inventories have negatively affected freight volumes in the second quarter of this year. The dragging effect is likely to continue for the rest of 2015. Despite their concerns, most shippers expect inventory levels to remain the same.

Employees are also concerned about struggling domestic factory outputs that are producing low levels of exports. Coupling China’s weakening economy with a slowing national GDP, American transportation and shipment workers are concerned for the industry’s performance.

However, for the first time in five years, American shippers are experiencing a surplus in truckload capacity, along with lower fuel prices, decreasing transportation costs. In Wolfe Research’s ‘State of the Freight’ report, only 11 per cent of surveyed shippers complained of tight truckload capacity, compared to 85 per cent earlier this year, it is the lowest reading since 2010.

No shippers reported less than truckload (LTL) capacity in the third quarter, a decrease from 40 per cent earlier this year.

 “This is the first time since 2010 that more shippers cited truckload overcapacity than LTL overcapacity,” Wolfe Research said.

“It’s amazing how quickly the truckload market has gone from tight to overcapacity.”

The increase in capacity is a result of transportation companies ordering a record amount of fleet equipment to boost their services, increased wages 34-hour restart rules, savings from low fuel prices, as well larger inventories.

As a result, the shift from, highway  to railway freight has slowed as companies take advantage of more cost effective transport from increased capacity and lower fuel costs. Shawn Tureman, NS’s director of domestic intermodal marketing believes railway transport is losing its share to road transportation.

““Growth has decelerated, and I think part of that is decreasing fuel prices,” Tureman said.

Despite his estimates, shippers’ expectations for growth in the transportation sector in terms of volume growth state for next year are at their lowest in three years. They estimate a 1.5 per cent increase in intermodal volume for 2016.

SCLAA commences energy saving workshops

The Supply Chain & Logistics Association of Australia is rolling out its Energy Efficiency workshops at aimed helping SMEs reduce their energy costs.

The free workshops will be held in 22 regional and rural areas over the next seven months and will provide companies who store and transport goods the information they need become more efficient.

“This will enable them to lower their cost of doing business and improve their competitive advantage,” the SCLAA said.

To assist SMEs most workshops will start at 7.30am and conclude by 10.30am and will also be available by webinar. 

The SCLAA is also creating an online interactive tool which will provide businesses with a four-step guide on ow to identify and implement energy saving opportunities.

The resource, which will be available by the end of February, features an energy saving calculator that covers transport, warehouse, cool rooms / freezers and materials handling aspects of businesses.

Companies will also be able to download fact sheets, how to guides, case studies, examples of suppliers and details on grants available to SME’s.

To register for a workshop or webinar, please go to the SCLAA website and click on the GREEN icon or go to the following link

Delay in carbon tax repeal would be costly: business

According to business lobbyists, delays to the incoming government’s pledged repeal of a carbon price would have costly results.

Prime minister-elect Tony Abbott on Sunday began moves to have legislation drafted to do away with the tax, which has been in effect for 14 months.

The Australian reports that The Energy Supply Association’s figures predicted business would pay $4.6 billion in 2013-14 and $5.2 billion in 2014-15 due to the carbon tax, taking into account the granting of free permits.

The Greens and senior figures in the opposition have said they would block attempts to remove a price on carbon emissions.

"We are absolutely going to defend taking action on climate change – I could not look my son in the eye and walk away from taking action on climate change," the West Australian reports Labor frontbencher Anthony Albanese as saying.

"We have supported an emissions trading scheme for a very long time. We have that mandate and I see no reason why we should walk away from our legacy."

Innes Willox from the Australian Industry Group said that if the new Senate – in which the Coalition will have a minority – blocked the legislation until 2015, it would mean another two years of emissions costs higher than were paid elsewhere, and that the Coalition’s mandate should be respected.

"It would seem ludicrous if we got to that point of business paying for almost two years of the carbon tax that the voter has voted against," he told The Australian.

The Business Council of Australia also believes that Australian companies should be relieved of the burden of the tax.

"What must be recognised is that Australian businesses will be continuing to be paying the highest price for carbon reduction across the major emitting countries," the BCA’s Maria Tarrant said.


Kumho hopes RFID will save logistics costs

Tyre company Kumho has teamed up with IT company Asiana IDT to become the first tyre manufacturer in the world to implement radio frequency identification tags in all its commercial, 4×4 and passenger vehicle tyres.

Following a successful trial of the technology in truck and bus tyres throughout early 2013, RFID tags will be embedded in all of Kumho’s tyres in a move to streamline production and distribution as well as heighten quality control.  

Kumho hopes to save $10 million per year in logistics and quality control with the new technology.

According to David Basha, Kumho Tyre Australia’s national training and marketing manager, the technology is another example of the company’s constant innovation.

“Globally Kumho is committed to achieving optimum efficiency from its range of passenger and commercial tyres and this starts from production and distribution,” Basha said

 “The implementation of RFID technology across the entire range is as a direct result of the research and development Kumho continually undertakes to improve the quality of our tyres.”

Radio frequency identification uses radio waves to transmit and receive information stored in uniquely coded tags.

A reader is able to extract the information of a RFID tag from metres away without having to be within line of sight – making it more efficient than a barcode. RFID tags are also capable of holding more data than barcodes.

Currently the technology is used in tracking shipping containers, electronic tolling, motor sport timing, pet microchips as well as a range of other applications.

Each tyre will be able to be tracked by a central database containing information about manufacturing and distribution prior to fitment because of the information stored in the RFID tag.

”RFID technology allows us to easily monitor every tyre that we import and sell in Australia,” Basha said

“In the unlikely event of a defective tyre this technology will mean we can easily identify it and check its full history using the information in the tag,” he added.

The RFID embedded tyres will be available in Australia early next year.

Jobs to go at Aurizon

Rail operator Aurizon will cut costs by more than $230 million over the next two years in a move which will see job losses and property sales.

The company formerly known as QR National announced it would move to cut $70 million in labour costs over the next 24 months however the total number of positions to be affected has not been disclosed.

‘Labour flexibility’ is high on the agenda with the company set to renegotiate enterprise agreements over the next two years, SMH reported.

The company also said it planned to cut real estate costs by up to $25 million by selling property it no longer needs.

In a presentation to analysts, chief Lance Hockridge said the cost cutting measures were aimed at delivering positive outcomes for shareholders and customers.

Aurizon has made a number of job cuts over the past few years with most coming from voluntary redundancies.

Hockridge has previously said that company had staff levels that were higher than needed, which results in “high corporate overheads and bureaucratic structures”.

“Our cost base is too high when compared to competitors and rail industry peers,” he said.

“While QR National continues to grow we need to better serve customers and improve our operating and financial performance if we are to safeguard an ongoing strong future for our company, our employees and shareholders.”

Kmart goes from woe to go after overhauling supply chain

Retail giant Kmart say they turned around their fortune from nearly bankrupt to a $4 billion retailer by undertaking a complete overhaul of their supply chain.

At the company’s recent supplier conference managing director, Guy Russo said the chain was facing tough times and was on the verge of closing down.

“Only five years ago, Kmart was on the verge of bankruptcy, now we are one of the most profitable retailers in Australia,” he said.

Russo said a success was achieved through a combination of clear focus, leadership, and a strong strategy, which included a complete overhaul of their sourcing and supply chain process.

As Russo noted, central to their turnaround strategy, Kmart focused on streamlining the supply chain and growing their direct sourcing and private label mix to maintain their core philosophy of “low prices every day.”

This meant reworking their store layout, reducing the number of products and getting the right selection of products on the shelf. They also focused on increasing volumes and working with suppliers to innovate so as to bring prices down for consumers.

By implementing a lean methodology, they reduced supply chain costs by over $60 million.

Russo said to the drive their sourcing initiative Kmart implemented a Direct Sourcing System (DSS) utilising Core Solutions’ CBX extended supply chain software platform. 

This system helped the company to streamline their operations, reduce costs and triple the volume of direct sourcing without a corresponding increase in headcount.

Asciano to slash costs and jobs

Transport and logistics operator Asciano has announced plans to slash $250 million in spending with jobs cuts expected, blaming tough economic conditions.

The company has cut capital expenditure this year from $700-800 million to $575-625 million.

"If soft economic conditions continue into FY14 management has further flexibility to re-phase capital expenditure to more appropriately align with top line growth," the company said in a presentation to the Macquarie Australia Conference in Sydney.

SMH reports that affected projects could include new trains and freight terminals in the Pacific National Rail coal network.

The company said that some redundancies would now be pushed forward into this quarter instead of waiting until the end of 2013.

The company's latest quarterly update showed its Pacific National Rail volumes fell 3.4 per cent, which it blamed on soft volumes.

It showed that container volumes at its ports also dropped by 4.1%.

However despite falling volumes, the company said it still expected revenue fore the second half of the year to be up.

Earlier this year, the company posted a net profit of $199 million for the six months to December, a 7.45 per cent increase on the same period last year.

The report trumped analyst expectations of $171 million profit, with the company declaring an interim dividend of 5.25%, fully franked.

The result was driven by volume growth in Pacific National Coal following new contacts in Queensland, and growth from contracts in the Hunter Valley, the company said.

Postage costs set to increase by 30%

Price increases announced by Australia Post have been slammed by many Australian businesses who say the decision will result in cost increases.

The prices of prepaid Australia Post packages have been raised by up to 30 per cent.

The rises also means the cost of getting a signature of delivery has almost tripled from $1 to $2.95.

Online retailers have attacked the price hikes as a ''direct hit'' on their businesses.

Many say they will have to charge customers more as a result, SMH reported.

Australia Post has defended the increases saying the company is ''operating in a challenging business environment with increasing external costs''.

The company said the price increases were mostly "less than 7 per cent".

Australia Post has faced a social media backlash over the decision, with angry customers taking to Twitter and Facebook to vent their frustration.

Online businesses say the new prices will make it impossible to compete with international sellers.

Bookstore owner Chris Elworthy from Port Macquarie said he would have to pay $11.70 in postage to send an $8 paperback book, Macquarie port news reported.

Booksellers in the UK can send the same book to Australia for around $3.

"They are bleeding us dry," he said. "Why would people buy from Australia when they can buy from overseas?"

"It's really upsetting to a lot of people," online retailer Tabitha Fernando said.

"We are being forced out," she said. "I'm seeing New Zealand postage prices and it's cheaper [for consumers] to buy from there than here."

More than 4000 online retailers have signed a petition over the past week in protest of the changes.


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