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.
UPS Inc., the nation's largest transportation company and a major user of railroad service, has warned that it may be forced to pull traffic off of the rails should service levels deteriorate as a result of proposed regulatory changes governing how the rails exchange, or switch, their carload traffic.
In comments filed Wednesday with the U.S. Surface Transportation Board (STB), the federal agency that oversees what remains of rail regulation, UPS said the agency's proposal to implement a railcar switching scheme will compromise the velocity of the nation's rail network and force the railroads to incur significant capital costs that might hurt their service and raise prices.
"Ultimately, if rail intermodal service levels fall below UPS' time-in-transit obligation standards, we would have no business option" but to shift intermodal traffic back to the highway, UPS said.
Atlanta-based UPS moves about 3,000 containers and trailers on the rail network each day, and spends approximately $1 billion a year with the railroads. It has used the railroads for about 40 years, and was long considered the rail industry's single-largest intermodal customer. UPS ships the equivalent of 6 percent of the nation's gross domestic product. It also wields significant lobbying clout on Capitol Hill and with the federal agencies involved in transportation.
UPS would not be directly affected by the STB's railcar switching proposal, as it is aimed at shippers of bulk commodities that are captive to the railroads. However, Thomas F. Jensen, UPS' vice president of transportation policy, said in a phone interview today that the company is concerned that any fallout from rail-carload service problems would "bleed over" into the intermodal arena where UPS is a huge player.
With abundant measurement tools at its disposal, UPS would know if rail service levels were being impacted and, by extension, if its own commitments were being jeopardized, Jensen said.
Shipper and rail interests have been engaged in a five-year dispute before the STB over the need for new regulations governing the switching of carload traffic. In late July, the STB proposed to modify language to make it easier for shippers to prove the need for "reciprocal switching," where one railroad, for a fee, switches carloads to a rival carrier to give shippers access to facilities they might not otherwise reach.
Under the STB proposal, a shipper seeking reciprocal switching for its freight must show that the arrangement would be, in the agency's words, "practicable and in the public interest," or that it is "necessary to provide competitive rail service." The current standard, adopted in 1985 by the old Interstate Commerce Commission, the STB's forerunner agency, requires shippers to prove that reciprocal switching would be necessary to "prevent an anticompetitive act." Since 1985, almost no shipper requests for reciprocal switching have been filed, and none have been granted.
In July 2011, the National Industrial Transportation League, which represents industrial companies that are heavy rail users, proposed that a captive shipper or receiver—a business that can only use one mode or even just one railroad—be allowed to gain access to a second railroad as long as the customer's facility is located within a 30-mile radius of an interchange where regular switching occurs. The switch would not take place if the railroad faced with the revenue loss from switching could prove that the practice was unsafe or would impair existing rail service, under the NIT League proposal.
Rail interests and free-market advocacy groups have criticized the NIT League proposal and the STB's July decision as steps toward re-regulating an industry that has been free of most economic regulation since 1980, and which in the ensuing decades has dramatically improved its service and prospered without the need for taxpayer dollars.
Big shipper interests said the actions represent commonsense reform that will require railroads to compete with one another and free currently captive shippers from the twin burdens of high freight rates and less-reliable rail service.
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.