Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
An effort by four prominent companies to shrink transit times on U.S.-Mexico intermodal rail service
by streamlining customs clearance procedures at the border appears to be paying off, according to a top executive at
Kansas City Southern Railway (KCS), which launched the initiative some eight months ago.
The group—which includes KCS, consumer products giant Whirlpool Corp., trucker and third-party logistics
provider Schneider National Inc., and freight forwarder and customs broker Expeditors—has been working on a pilot
program to drive down delivery times on Whirlpool shipments moving from factories in Mexico to end points in the United States.
KCS initiated the program after receiving complaints from various customers about bottlenecks in Mexico that extended delivery
times beyond what was deemed acceptable for intermodal service. For example, a KCS analysis of Whirlpool's supply chain found that
it took 12 to 15 days to move shipments from the company's Mexican factories to its U.S. destinations.
In a bid to identify the problems, KCS created a pilot program with Benton Harbor, Mich.-based Whirlpool as the test customer.
KCS asked Whirlpool to participate because of its strong manufacturing and distribution presence in Mexico and its reputation for
collaborating with partners to improve supply chain performance in the corridor, according to Patrick Ottensmeyer, chief marketing
officer for Kansas City, Mo.-based KCS.
Once Whirlpool signed on, Schneider and Expeditors followed suit. Green Bay, Wis.-based Schneider is Whirlpool's trucker in the
market. Seattle-based Expeditors is its customs broker.
One of the program's key objectives was to cut Whirlpool's end-to-end delivery times to between 8 and 10 days, which could
potentially save the company millions of dollars in inventory carrying costs, according to Ottensmeyer.
ELIMINATING CHOKEPOINTS
KCS analyzed the operations of multiple terminals, customs brokers, and intermodal marketing companies (IMCs) that sell intermodal
services on behalf of the railroads. KCS also conducted a thorough review of its own processes. It discovered that it was
partially responsible for the tie-ups. A containerized Whirlpool shipment arriving at a KCS ramp would typically spend up to 90
hours at a terminal from the time it entered the gate until the time the train pulled out. KCS set about reducing that dwell time
to 24 hours, Ottensmeyer said.
Another chokepoint revolved around the nonuniform schedules of Mexican Customs. Some locations were open around-the-clock,
while others were not. Some kept evening and Saturday hours, while others did not. Customs closures would present problems for
KCS if a truck entered a terminal with cargo that was ready to be processed, according to Ottensmeyer.
In addition, the flow of containers and paperwork were often out of sync. Containers would enter KCS' terminal, where they would
be placed in a bonded yard awaiting processing and clearance. However, Mexican Customs is set up to receive documentation from
brokers in two daily batches. This meant containers could wait for hours before the documentation would reach Customs for
processing. To speed up the process, KCS, brokers, and Customs agreed to transmit and accept information in smaller batches and
with more frequency. KCS also digitized its manual data entry practices, a step that reduced the potential for human error,
Ottensmeyer said.
KCS has significantly cut dwell times since the steps were introduced, Ottensmeyer said. When the pilot began, KCS achieved a
24-hour turnaround on Whirlpool's containers about 37 percent of the time, Ottensmeyer said. Today, it is over 50 percent, he said.
Discussions are under way to automate the customs approval process itself; this includes the potential for digitizing a
long-standing tradition of requiring that customs officials stamp hard copies of export documentation before the goods can be
released. Ottensmeyer said KCS has "developed a productive dialogue" with Mexican customs officials about the possibility for
increased automation. "They are receptive to modernizing these processes to facilitate improved flow of goods across the border,"
he said.
The Holy Grail for speeding up transit times, according to Ottensmeyer, would be for customs brokers to provide truckers with
the "pedimento"—the Mexican export document that controls and verifies customs clearance—before the driver reaches the
ramp with the load. That would effectively provide release authorization at the time of arrival at the rail terminal. Currently,
the paperwork process doesn't begin until truck, driver, and container arrive at the ramp. KCS operates three dedicated ramps in
Mexico and uses other public ramps throughout the country.
If intermodal can remove the bottlenecks that slow transit times, it could capitalize on shippers' concerns about border
congestion and security on the roads and make meaningful inroads into the trucking industry's dominance of cross-border trade.
Through April, the last month public data was available, trucks carried 67.8 percent of the $44.4 billion worth of freight to and
from Mexico, followed by rail at 13.4 percent, according to the Department of Transportation's Bureau of Transportation Statistics.
Intermodal advocates argue that its users avoid truck traffic tie-ups at the border because shipments are often cleared in-bond
at interior locations. In addition, intermodal theft is virtually nonexistent because the doors of the lower container on a
double-stack train can't be opened while the container is in the well car, and the upper container is more than 15 feet off the
ground.
Ottensmeyer estimates that KCS has a less than 3-percent share of the 3 million trucks serving the U.S.-Mexican market each year
that either could be converted to intermodal service or would have the potential for conversion.
The number of container ships waiting outside U.S. East and Gulf Coast ports has swelled from just three vessels on Sunday to 54 on Thursday as a dockworker strike has swiftly halted bustling container traffic at some of the nation’s business facilities, according to analysis by Everstream Analytics.
As of Thursday morning, the two ports with the biggest traffic jams are Savannah (15 ships) and New York (14), followed by single-digit numbers at Mobile, Charleston, Houston, Philadelphia, Norfolk, Baltimore, and Miami, Everstream said.
The impact of that clogged flow of goods will depend on how long the strike lasts, analysts with Moody’s said. The firm’s Moody’s Analytics division estimates the strike will cause a daily hit to the U.S. economy of at least $500 million in the coming days. But that impact will jump to $2 billion per day if the strike persists for several weeks.
The immediate cost of the strike can be seen in rising surcharges and rerouting delays, which can be absorbed by most enterprise-scale companies but hit small and medium-sized businesses particularly hard, a report from Container xChange says.
“The timing of this strike is especially challenging as we are in our traditional peak season. While many pulled forward shipments earlier this year to mitigate risks, stockpiled inventories will only cushion businesses for so long. If the strike continues for an extended period, we could see significant strain on container availability and shipping schedules,” Christian Roeloffs, cofounder and CEO of Container xChange, said in a release.
“For small and medium-sized container traders, this could result in skyrocketing logistics costs and delays, making it harder to secure containers. The longer the disruption lasts, the more difficult it will be for these businesses to keep pace with market demands,” Roeloffs said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.