In this issue: US Customs Explains How Budget Cuts Will Slow

Cargo

1

ILA-USMX Agreement: Where Are We Now? 2

Importers Told To Avoid Complacency 3

Amsterdam Port Region Volume Rises 1.6 Percent 4

Transpacific Container Rate Outlook 2013 4

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U . S . C u s t o m s E x p l a i n s H o w B u d g e t C u t s W i l l S l o w C a r g o

F e b r u a r y— M a r c h V o l u m e 9 , I s s u e 2

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Volume 9

Issue 2

In this issue:

What Shipper CEO’s And Execs Should Know About

3PLs

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Atlanta Hartsfield Airport Remains the Busiest, But

Cargo Down

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Study Strives to Improve JFK’s Dwindling Cargo 6

KWE Switzerland Hosts 2nd Annual Educational Day 7

KWE Holiday Schedule

BAF IFC

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8-9

The U.S. Customs and Border Protection agency will take a $754 million cut to its budget through Oct. 1 under the auto-matic federal budget cuts that begins on March 1st, 2013. These cuts will sig-nificantly decrease the efficiency of port opera-tions, according to agen-cy officials who have ex-pressed this sentiment to industry stakeholders in a series of outreach ses-sions. Customs and Border Protection leaders held a conference call with sev-eral trade associations to outline where they were making cutbacks and how the reduced manpower would impact operations at ports of entry. Overtime for Customs officers will immediately be curtailed and front-line personnel will be subject to 12 to 14 days of furloughs, or one day per pay period. The unpaid leave will not take effect until at least mid-April due to a requirement under collective bargaining that employ-ees be given 30 days advance notice of any changes to their work status. The furloughs will leave CBP with a 10 percent reduction in its daily workforce. The result is that wait times for passengers to cross the border will likely double and could

reach four to five hours at some of the busiest crossings on the Mexi-can border, and cargo exams could take five days or longer to complete at seaports. According to a memo posted by Todd Owen, the director of field operations for the Los Angeles port district, The elimination of over-time will result in cargo not being processed prior to 8 a.m. and radia-tion portal monitor and X-ray exams will not being conducted after regu-lar hours. All outbound containers moving by rail or truck must go through the radiation detection booths before being released into U.S. commerce for security reasons. At ports like Los Angeles and Long Beach, the

practice of moving many containers off the docks dur-ing evening hours would have to stop, adding conges-tion to daytime operations. Owen also said express consignments will only be processed during regular business hours and that car-go release at seaports could take longer than five days once cargo starts to back up. CBP will also immediately cut funds for travel, IT sup-port and other back-office functions, according to the FTA briefing memo. The Trade Interface Unit, a prob-lem-solving resource in the

Los Angeles/Long Beach port area, will have reduced staff and hours. Non-priority tasks such as pro-cessing post-entry amendments and protests may be delayed.

CBP officials emphasized that there will be no degradation of security, that they will focus on core pro-cessing for cargo and people, and continue agriculture exams.

American Shipper March 4 Eric Kulisch

2

Early February, the International

Longshoremen’s Association and United States Maritime Alliance reached a tentative agreement on a six-year coastwide master contract. “The tentative agreement is subject to the ratification procedures of both parties and, as well, to agreements being achieved in a number of local union negotiations. Those local negotiations are ongoing and will continue without interruption to any port operation,” FMCS Director George H. Cohen said in a statement. Many assumed the tentative deal made on Feb. 1 regarding a coastwide master contract between the ILA and United States Maritime Alliance meant six years of labor peace was at hand. However, the ILA-USM coastwide agreement was contingent on completion of supplemental local contracts covering port-specific issues, and on ratification by both sides. Local bargaining has been concluded in most ports, but the ILA and the New York Shipping Association, a USMX member, remain far apart on the contract for New York-New Jersey.

The NYSA is seeking changes to what it describes as “archaic” work rules and excess staffing, including pay for workers who aren’t on the job. The ILA is resisting

the changes in the long-established practices.

When the ILA and employers tentatively agreed on the coastwide master contract last month, they set a “soft” deadline of March 1 for wrapping up work on local contracts. That’s been replaced by a hard deadline of Friday, March 8.

The ILA and NYSA opened a scheduled three days of negotiations March 4th in a final effort to reach agreement before the ILA’s 200-member wage scale committee gathers March 12-14 in Tampa. Wage scale delegates will decide whether to ratify the coastwide contract and submit it to a rank-and-file vote.

Several ILA officials say that if there’s a New York-New Jersey deal in place, the coastwide agreement will be easily ratified. But they warn that without a New York-New Jersey agreement, the contract is likely to be voted down.

Management officials have tentatively planned to be in Tampa for the wage scale meetings, but those plans may be canceled if this week’s negotiations don’t yield an agreement.

The coastwide master contract covers all container ports on the East and Gulf coasts. Supplemental local agreements cover work rules and other port-specific issues.

Cohen said the tentative agreement “reflects the culmination of good faith negotiations in which the parties successfully accommodated strongly held competing positions because of their commitment to problem solving.

The ILA-employer negotiations are conducted at two levels. The coastwide master contract covers wages, medical benefits, automation, technology, chassis repair, and carrier-paid container royalties that support annual cash payouts to dockworkers. Work rules, staffing, pensions and other port-specific issues are in supplemental local contracts.

The ILA contract was scheduled to expire last Sept. 30 but has been extended twice — first to Dec. 29, then to Feb. 6 — to avert threatened strikes. Cargo interests were forced to divert shipments or stockpile inventories before both of those deadlines.

After nearly a year of on-and-off bargaining punctuated by acrimonious exchanges, neither the ILA nor employers appear interested in a third contract extension.

The Federal Mediation and Conciliation Service is overseeing the New York-New Jersey negotiations, which are being held in Newark, N.J. The FMCS became involved in the coastwide negotiations last September.

I N D U S T RY U P DAT E V O L U M E 9 I S S U E 2

I L A - U S M X A g r e e m e n t : W h e r e a r e We N o w ?

FEATURED ARTICLE

Journal of Commerce March 4, February 1, Joseph Bonney Author

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Barry Brandman, Danbee Investigations CEO and president, said organizations should enlist senior management in security processes, establish a culture devoted to improvement, design checks and balances, utilize technology and audit safeguards. Even members of the Customs-Trade Partnership Against Terrorism — a key Customs and Border Protection’s program for trusted links in the supply chain — have to remain diligent, Brandman told an audience of nearly 1,200 at the agency’s annual C-TPAT conference.

“Those companies that we have seen over the year that have major security catastrophes are the ones that have lost sight of being innovative,” Brandman said at the three-day event in National Harbor, Md.

Logistics companies, importers and transportation providers need to constantly work to better secure their supply chains to avoid complacency, a state that increases the risk of cargo theft or even terrorist attacks.

In addition senior management must be made aware of the importance of working to constantly improve supply chain security, and the benefits go beyond just preventing loss of cargo and the smuggling of weapons.

“If you don’t have senior executives firmly behind the program, you are always going to be battling upstream.”( Brandman)

Companies that can prove to Customs that their security processes are effective can join the C-TPAT program. Membership equates to faster Customs clearance, as C-TPAT importers are 3 ½ times less likely to have their shipments examined by the agency and seven times less likely to see their cargo through an extensive examination, said Kevin McAleenan, acting assistant commissioner in Customs’ Office of Field Operations. The C-TPAT program has nearly 10,500 members, and

importer participants ship about half of U.S. imported merchandise by value.

More shippers are also requiring logistics firms and transportation providers to be part of the program, which is an incentive to get the C-Suite behind security processes, Brandman said.

“If you don’t have (C-TPAT certification) and another major competitor does, there is a good chance you will lose that customer over time,” Brandman said.

Companies also need to create a culture in which “good enough” is never enough, and the aim shouldn’t be to pass C-TPAT validations but to create a “world-class security program” that incidentally meets the agency’s requirements.

Brandman urged companies to never rely on their first line of supply chain defense because first walls will always fail. Companies should look to casinos in that there are checks of each member of the gambling floor, with the dealer being watched by the section boss, who is under the gaze of the pit boss, who in turn is being scrutinized by the casino

manager. All parties are watched via the “eye in the sky,” or the video network.

“People know the risk is so overwhelming high that they don’t even try” to steal, he said.

Brandman has helped implement a similar level of scrutiny within several Mexican companies that ship to the United States. U.S.-bound cargo is kept physically separate from domestic shipments and tagged differently electronically. The facilities have 24-hour video coverage, and both logistics and security personnel use lasers to measure the shipments for irregularities before they are loaded onto trucks. Each truck is embedded with a GPS unit that provides a “bing,” or tracking signal, at least every 12 minutes. Once at the border, another layer of security personnel checks the cargo again and is monitored via live video.

Despite the prevalence of video cameras in logistics facilities, Brandman said roughly 60 percent of the sites he inspects don’t use their feeds correctly. Aside from making sure the video cameras provide quality feeds and are targeted on the right areas of the facility, he said organizations should also consider buying wireless backup communication devices and decoy antenna. Lastly, companies should pay special attention to their safeguards, and the most relied upon one are security guards. Such personnel are often underpaid, making the highly susceptible to bribes, and their employers regularly fail to provide background checks. A organization that values safety, is an organization that values longevity.

I N D U S T RY U P DAT E V O L U M E 9 I S S U E 2

I m p o r t e r s To l d t o Av o i d C o m p l a c e n c y

FEATURED ARTICLE

(JOC Mark Szakonyi, Associate Editor | Jan 10, 2013

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Steamship line members of the Transpacific Stabilization

Agreement (TSA) plan to raise the baseline for dry and reefer

cargo in 2013-2014. The increases will be an effort to reverse

losses incurred during 2011 and 2012. The pricing proposals will

be addressed in the coming 2013-2014 contract negotiations.

Additional market forces give further incentive for the lines to

impose increases. Among the factors are the declines in sales

growth due to slow demand, as well as the current growing

surplus of new, larger ocean vessels.

Beginning in January, 2013, TSA member lines have begun to

recommend increases of $600 per 40 ft. container (FEU) for US

West Coast destinations, and $800 for all other destinations.

Market data on January 18th, however, shows only modest

increase of $179 per FEU to the West Coast, and $145 to the

East Coast.

Current industry factors including freight rate increases,

restrained demand and volatility will be discussed at the 2013

TPM Conference, the largest shipping and logistics event in

North America. In a statement in reference to the March TPM

conference, Peter Tirschwell (Senior VP of UBM Global Trade),

gave the following statement:

“By the time TPM in early March comes around, the results of

carriers’ early 2013 efforts to boost spot rates in advance of

service contract negotiations will be better understood. Carriers

are aiming to reverse the negative trend of eastbound rates in

the second half of 2012 but will be doing so against a backdrop

of global overcapacity but also rising layups and vessel

scrapings. This combustible mix will make for an interesting

Market Outlook session and indeed an interesting event this

year,” .

I N D U S T RY U P DAT E V O L U M E 9 I S S U E 2

According to provisional figures, the total volume in the port region along the North Sea Canal in the Netherlands, including the ports of Amsterdam, Ijmuiden, Beverwijk and Zaanstad, is expected to reach 94.4 million metric tons for the year 2012, increasing 1.6 percent from 2011.

Volume in the Port of Amsterdam increased by 3 percent compared with 2011, to a record 77 million metric tons. Imports were stable at 50.5 million metric tons, and exports rose 9 percent to 26.6 million metric tons. Container volume jumped 36 percent to more than 800,000 metric tons.

However, the other three regional ports reported decreases in

volumes handled. In Ijmuiden, volume fell by about 3 percent

compared with 2011, to 17.1 million metric tons; in Beverwijk,

volume from seagoing vessels plummeted by about 25 percent to

239,000 metric tons, and in Zaanstad, volume plunged 53 percent

to 83,000 metric tons.

A m s t e r d a m P o r t R e g i o n Vo l u m e R i s e s 1 . 6 P e r c e n t

Tr a n s p a c i fi c C o n t a i n e r R a t e O u t l o o k 2 0 1 3

Wikipedia Image

JOC Staff 1-10-13

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In an article by Mary Shacklett of Global Trade Magazine, key areas were identified to assist shipper CEO’s and Execs in their selection of 3PL’s for their organization. The following consists of the Top Seven. No. 1. “Bigger” May Not Be Better and Longevity Is Not Always the Whole Story. Many shippers believe that the biggest 3PLs and the longer the 3PL has been in business equates to better performance and service. This is not necessarily the case. “Many Tier II 3PL providers excel in specific industry niches. They provide customers with direct, hands-on expertise, with the benefit of a larger platform,” (Robert Voltmann, president & CEO of Transportation Intermediaries Association. Shippers can also find great success with 3PLs whose cultures, work ethics and operations closely align with their own. These 3PL’s might not have been in business long-but if they can provide trustworthy

customer references, it might be worth taking the chance. No.2. Knowledge of Product, Industry , and Geographic Sector Counts. A shipper and its 3PLs should have knowledge of the industry sectors, products and areas of the world in which they work. If they don’t, products can get damaged during shipment because of inexperience handling them-or logistics can get delayed because of countries’ policies and politics. No.3 Talent Is In Short Supply

Finding and retaining talent is significantly impacting shippers and 3PL’s right now. Newer workers easily move from place to place, go after the top dollar if they are well-skilled and don’t demonstrate much company loyalty. When considering a 3PL partner, ask 3PL’s about their employee turnover rate and

query them about the certifications and internal education they provide their staff. Since everyone is fighting for talent, it makes sense to team with someone that you feel is in a strong position to both command and retain

it. No.4. Reliable Technology Is Critical Most 3PLs depend upon technology to flow instructions to their in-field logistics. The same technology provides tracking and update statuses on shipments. In some cases, 3PLs offer cloud-based technology of the end-to-end logistics process. No.5. 3PLs Can Help You With Sustainability When Shippers evaluate 3PLs for transportation capability, they should also inquire into the sustainability numbers and initiatives of these companies. No.6. Maintain Single Points of Contact With Your 3PL Shipper-3PL communications and operations flow best when there is a single point of contact for managing activities ( and the

relationship) on each side. If communications pour in from all points of the shipper and the 3PL, operations and execution have the potential to become confused. No.7. Don’t Count Out Air Freight Shippers have done a good job in managing speed of delivery against costs as they have assembled various strategies. But, there is a special place

for air freight in this mix. Air freight is an excellent option for high valued freight and/or highly perishable goods. Air Freight will serve to be your most expedient and cost effective choice.

I N D U S T RY U P DAT E V O L U M E 9 I S S U E 2

W h a t S h i p p e r C E O ’s A n d E xe c s S h o u l d K n o w A b o u t 3 P L s

FEATURED ARTICLE

Global Trade Magazine January/February 2013

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I N D U S T RY U P DAT E V O L U M E 9 I S S U E 2

Hartsfield-Jackson Atlanta International Airport retained its title of the world’s busiest airport during 2012, however cargo was down for the year.

The airport’s annual air cargo decreased by 2.52 percent – from 663,162 tons in 2011 to 646,481 tons in 2012. The cargo operations reflected a global decrease of consumer purchases and reduced manufacturing, according to airport officials.

Aviation officials reported passenger traffic increased by more than 3.1 million passengers in 2012, making 2012 the busiest year ever for the airport.

The 2012 total of 95.49 million passengers is 3.35 percent higher than the previous record of 92.39 million passengers, set in 2011. Aircraft operations (landings and takeoffs) increased by .68 percent – from 923,996 in 2011 to 930,310 in 2012. Domestic operations increased by .81 percent – from 855,215 to 862,101 in 2012.

Passenger traffic in December increased by 3.19 percent over

December 2011 – from 7.21 million to 7.44 million. Aircraft

operations decreased slightly by .82 percent over the same

period – from 74,513 to 73,899. Air cargo decreased by 5.05

percent over that period – from 57,095 to 54,212.

Airport officials hope to see increased air cargo volumes in 2013.

A t l a n t a H a r t s fi e l d A i r p o r t R e m a i n s t h e B u s i e s t , b u t C a r g o D o w n

S t u d y S t r i v e s t o I m p r o v e J F K ’ s D w i n d l i n g C a r g o

Air Cargo World John McCurry Author

John F. Kennedy International Airport can have a robust air cargo industry again if it makes

some improvements, according to a study released by the Port Authority of New York and New Jersey and the New York City Economic Development Corporation.

Between 2000 and 2010, JFK fell from third to seventh in a nationwide ranking of air cargo tonnage. The airport’s tonnage also dropped 25 percent.

For David Hopkins, director of aviation at the New York City EDC, the study demonstrates the significance of the air cargo industry.

“It verifies I think for us as a city how important the air cargo industry is to the city and the regional economy and showed us the tens of thousands of jobs that that industry supports region-wide,” he said. “It’s a pretty big economic linchpin.”

The study calls for improving truck access to the airport and replacing

aging cargo facilities and business practices.

Hopkins spoke about why cargo tonnage at JFK has taken a nosedive, leading to airports such as O’Hare International Airport and Hartsfield-Jackson Atlanta International Airport capturing more of the market share that had before gone to JFK. “With deregulation, as the number of these competing airports develop direct international flights, they begin to capture some of the market share that was originally destined for some of those places in the first place,” he said. “As the industry changed from a more freighter-oriented industry to a more belly-cargo-oriented industry, that trend was exaggerated.”

JFK has many strengths – such as an established network of freight forwarders and a large consumer market. The Port Authority is looking into implementing some business solutions such as plans to build a new air cargo building and a animal-handling facility and current construction projects.

“As the industry regains its footing and grows again, Kennedy can participate in that growth by implementing these solutions” Hopkins.

Air Cargo World Adina Solomon Author

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I N D U S T RY U P DAT E V O L U M E 9 I S S U E 2

In October 2011, the KWE Zurich office established its first Air Freight Educational Day to invite customers for a day in a total Air Freight environment at Zurich Airport’s Cargo facilities as well as a “meet ‘n greet” with all of the staff members of the KWE offices in Bassersdorf, Zurich.

Due to the great success of the 1st Educational Day event, the 2nd Educational Day was held on November 8th with a total of 15 customers attending the event. The tour took the group through the Cargologic Aircargo Terminal including a visit to the Dangerous Goods and Perishable sections of the terminal. The tour also involved a viewing of how various ULD’s are palletized, and as a highlight, a special visit to the Tarmac Side was made in order to observe the loading of an Airbus A340-300 from Swiss Int’l Airlines.

All participants were allowed to enter the Cargo Compartment at the Aircraft’s Lowerdeck. The participants, who usually understand aviation from a travelers perspective, were highly impressed with the process of organization and the important details involved for a smooth transport of their Cargo.

After lunch, the tour continued to visit the KWE Zurich facilities in order to demonstrate all of the necessary steps to prepare an Air Freight Consignment “ready for carriage”.

The educational airfreight tour is a great success, and the KWE team in Switzerland looks forward to many more in the future!

K W E S w i t z e r l a n d H o s t s 2 n d A n n u a l A i r F r e i g h t E d u c a ti o n a l D a y

KW E H o l ida y Sc he du le F e b -Ma r

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Intl. Women’s Day

St. Patrick’s Day

Start of Spring

Good Friday

Easter Sunday

Russia

Ireland

Japan

Americas

Americas

KWE Spotlight

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I N D U S T RY U P DAT E V O L U M E 9 I S S U E 2

B u n ke r A d j u s t m e n t Fa c t o r & I n l a n d F u e l C h a r g e

C a n a d a U p d a t e s

TRANSPACIFIC OCEAN (from Asian origins to Canada)

per 20’ per 40’ per 40HC per 40 HC Reefer

per 45’

Via West Coast 442 553 622 622 700

Via East Coast 840 1050 1181 1181 1329

SURCHARGES EFFECTIVE JANUARY O1, 2013

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I N D U S T RY U P DAT E V O L U M E 9 I S S U E 2

B u n ke r A d j u s t m e n t Fa c t o r & I n l a n d F u e l C h a r g e

TRANSPACIFIC OCEAN (from Asian origins to Canada)

per 20’ per 40’ per 40HC per 45’

Via West Coast 429 536 603 679

Via East Coast 812 1,015 1,142 1,285

C a n a d a U p d a t e s

SURCHARGES EFFECTIVE APRIL 1, 2013