Tag Archives: supply chains

New Panama Canal rail alternative into the US

Posted on August 13, 2023 by | Leave a comment

We all know now that the Panama Canal is suffering from a lack of water, due to a prolonged drought. The result is limits on draft of ships traversing it. The Canal has also raised rates recently. So shippers are looking for alternatives.

Just remember that the canal was getting increased use as shippers migrated from US West Coast ports, and started using East Coast ports. The trip is a lot longer in time, but if there is a disruption danger at West Coast ports, it makes some sense. Over the COVID period, East Coast ports such as Savannah and the Port of Virginia have made major investments in inland infrastructure to support better distribution of goods inland. Of course Houston is also a very good port to reach from the Panama Canal and has significant container capacity.

Now we see some results from the merger of the Kansas City Southern railroad, formerly a US Class I line, and the Canadian Pacific (CP) railroad. The new line has significant capacity in Mexico which the KC developed on its own for some years. This new route will allow shippers to send cargo to Lazaro Cardenas in Mexico, a West Coast Mexico port, to Houston or north to Chicago. The route from Asia is longer in time than the US West Coast ports, but days shorter than the East Coast ports, and with excellent penetration to the Central US areas around Chicago and Kansas City.

I think this is a good marketing strategy for the CPKC railroad. Another West Coast port could well get a steady stream of container cargoes. The route would be less sensitive to West Coast US disturbances such as strikes, and less dependence on the BNSF and UP rail systems, both of which are under fire for scheduling issues, and are known to be a bit light on staff, according to recent reports from their various craft unions.

However, when there are no disturbances, the West Coast ports of Los Angeles and Long Beach are still the fast and dependable way to get cargoes into the central US. They are also good fast ways via the land bridge to get cargoes to Europe by transshipping again from the East Coast ports such as New York.

If the West Coast ports can keep on an even keel, I think their efficiency will attract back a good chunk of the trade they lost due to the strike. Trade of all kinds is down, but it’s still considerable.

Seatrade logo

Marcus Hand | Aug 09, 2023

CPKC offering Panama Canal rail alternative via Lazaro Cardenas into the US

Leave a comment

Posted in Logistics, Rail, Shipping, Supply Chains

Tagged , , , , , , , , , , , , ,

Rail storage fee disputes – STB or FMC?

Posted on May 10, 2023 by | Leave a comment

When containers go by rail to or from ports, we would expect that any detention or storage fees would fall under the Surface Transportation Board (STB) which governs rail traffic in the US. And these fees have become more common, as railroads in the US struggle with manpower shortages, longer trains, lower traffic, and efforts to operate in a leaner fashion. But who to send the bill to?

Many containers are owned by ocean shipping firms, and it would seem like they should be billed if their containers are not picked up in a timely fashion. But it’s the shippers who get the bill.

The Federal Maritime Commission (FMC) has come down with some fairly explicit rules about detention and demurrage charges. The rules specify who is billed, what information must be provided and when, and how disagreements over bills can be resolved, through a process. But when the charges are from rail detention, the FMC claims they have no jurisdiction.

Shippers think the ocean carriers should be billed, and bill disputes be handled at the FMC under the new rules. But ocean carriers think the STB should handle rail demurrage.

I don’t think this can be settled without some Congressional input. It’s one of the gray areas that come up often in logistics, where many partners collaborate to move cargo or cause delays. The parties are never going to agree. For ocean carriers the divided authority is just fine; since they are not getting the rail bills, they have no stake in disputes.

We just need to get a single point of oversight, to lay down rules, like those of the FMC, for demurrage and detention charges including the rail lines. It’s a big ‘just’.

John Gallagher·Friday, May 05, 2023

Ocean carriers: Keep rail storage fee disputes at STB – FreightWaves

Leave a comment

Posted in Logistics, Rail, Shipping, Supply Chains

Tagged , , , , , , , , , , , , ,

Insiders say Flock Freight is a ‘toxic dumpster fire’

Posted on April 25, 2023 by | Leave a comment

I don’t usually comment on shenanigans at specific firms. But here’s the case of a logistics unicorn, a startup with a valuation of over $1 billion, that so fits the pattern of many startups from my experience in Silicon Valley in the frantic 80’s and 90’s. Burning through cash like there’s no tomorrow. Beating down employees. Inadequate software for doing a large amount of business. A CEO who’s over the top, demanding performance and ridiculing or shunning those who don’t perform to his (most of them are men!) exalted standard based on false assumptions.

The idea behind Flock Logistics is a decent one. Try to pool smaller shipments that normally would need to travel as LTL cargo into a single trailer, and carry it as FTL cargo. How you load and unload it and how you schedule the trips is a complicated question, and software could play a big role. But the essential problem is one of the pooling concept. Can you put together enough small cargoes with similar destination from similar starting points and then meet the time schedules of all the shippers and receivers, with a single truck load? It’s a problem you face one load at a time, and you have to solve it to satisfy multiple customers for each truckload.

It’s not surprising that they have troubles with customer service. It’s not surprising that they can’t sell enough cargoes to fill a truck most of the time, so to meet commitments they have to ‘ship air’. It’s a hard problem to crack. And yelling at the sales folks won’t create business.

And it’s not surprising that the CEO would be a dingbat. Particularly in software, I met one of these a week in Silicon Valley. They think they are Steve Jobs, or Bill Gates (both with reputations like that), or more up to date, Elon Musk, and their idea is great and executable because they found some investors willing to throw millions if not billions at them. But very few have what it takes to make a great company out of a startup.

The employees are the ones who suffer. They have to have thick skins to submit to being beaten up for goals actually not feasible, and they are the ones who have to speak with disgruntled customers and try to preserve their personal reputation along with that of the firm. Especially these days after COVID, employees are much less likely to take that kind of abuse; working conditions are part of their package. They’d be gone even if they didn’t get laid off.

One startup CEO I can think of who seems to have succeeded is Ryan Petersen of Flexport. Despite the billions Flexport has been given, they seem to be able to keep meeting customers’ needs in logistics. And Ryan was smart enough to step away when the firm became so big and needed to be sustainable; I guess he didn’t see it as his mission to run that big a firm with such intense customer service needs.

The story below tells it all. Don’t bet on Flock Logistics being around long.

Clarissa Hawes·Friday, April 21, 2023

Insiders say Flock Freight is a ‘toxic dumpster fire’ with only months of cash left – FreightWaves

Leave a comment

Posted in Leadership, Logistics, Supply Chains, Trucking

Tagged , , , , , , , , ,