Eric Joiner's Freightdawg.com - The Logistics and Supply Chain Blog!

Welcome to Freight Dawg!

The Logistics Blawg!

My name is Eric J. Joiner, Jr.  I've been fortunate to work in the logistics and supply chain field for a quarter of a century. I work with a large 3PL and logistics integrator in a global sales role. I am blessed to work in an industry that I love!

Freight Dawg topics range from leadership, careers, green supply chains, supply chain technology, most transportation modes, passenger airlines, as well as logistics and supply chain strategy.  I'm not above the occasional tantrum on the trials and tribulations of my weekly air travel either!  This is a truly multi-modal blog.  Shippers, consignees and carriers are all covered here. 

The goal for Freightdawg.com is to provide industry level depth of content and perspective to logistics and supply chain professionals and interested parties. 

Your feedback and participation are welcomed.

Please comment on what you read here!

Eric

AF/KLM Blow up the Fuel Surcharge Model.

Air France and KLM are part of the same corporation so it is not unusual to see their marketing operations work in tandem.

What they announced today however is an air freight market changer. Both carriers announced that fuel surcharges, which have been soaring, will be calculated from September 1, 2008 based on MILEAGE.

There are a few implications. First is the change to the model in general. Second is the impact to the Skyteam joint marketing alliance. The Skyteam member airlines market their cargo businesses under a joint venture between the carriers for sales purposes. With divergent Fuel surcharge mechanisms, it will be interesting to see how a shipment that misses a Delta flight to Europe but then loads to an Air France jet, will differ in charges.

This has so many huge implications for future contract negotiations as well as Forwarder block space agreements.

I just wonder when they can tell me when I can exchange my frequent flyer miles for gasoline coupons.  (that might actually be pretty attractive for airlines with members with low mileage balances).

clipped from www.aircargoworld.com Air France-KLM Modifies Surcharge Mechanism Air France Cargo and KLM Cargo on Tuesday unveiled a fuel surcharge mechanism based on flight miles to better reflect today's realities of punishing high jet fuel prices as well as provide shippers with a more transparent method of collecting the fee from customers. The revised mechanism also represents a complete change of the present model for air cargo surcharges. Effective Sept. 1, the fuel surcharges will be incorporated into the shipping rates, making them commissionable.  Under the old system, forwarders complained that the carriers would adjust the fuel surcharges but let the rates stagnate or slide. The portion of the fuel surcharge going to the forwarder was reduced under the old system. The United States dollar will serve as the basis for the new mechanism and be converted to the Euro and other currencies for invoicing. Existing exchange rates will be used to determine the new fuel surcharge levels should prices increase or decrease. "The validity of the current fuel surcharge mechanism is at its end as the important underlying factors (the United States dollar and the price of oil) have gone to structural new levels," said Michael Wisbrun executive vice president for Air France-KLM Cargo. "For transparency reasons and in answer to the requests of our customers, Air France Cargo-KLM Cargo is taking this step." The new model will be based upon short haul, medium haul and long hall flights, and fuel surcharge increases and decreases will now be implemented in steps of ten cents instead of 5 cents. "In order to increase stability and prevent changes due to short-term peaks, a monthly moving average will be used for the jet fuel price," said a statement released to reporters in Paris announcing the plan.

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Spike does have some Talent

My friend and fellow blogger, Rob Mark, who runs the really excellent Jetwhine.com wrote a nice article about freightdawg.com and the article about Colleen Barrett of Southwest Airlines.   

What impressed me most though was how perceptive Rob is.  He immediately recognized that the true talent behind freightdawg.com is Spike the freightdawg. Spike appears in the intro article on this blog and to the right here.   

He really is a a unique beast.

I mean, how many dogs do you know that can not only discuss logistics and supply chain, but also type?  Spike is mad at me right now.  Mainly because there are close to 400 articles on this "blawg" and I haven't given the actual "Dawg" one by-line or even a mention.  Ok I suck. I think Spikes words to me were "gravy sucking pig"...but that's another story.

I travel a lot. You think I write this stuff?  Heck no. Spike writes most of it. I just pimp his work. He's on a tether only because I don't pay him enough and I figure Rob Mark or some other blogger will pay him more. Anyway he is a good dog.   

Spike costs me a few T-bones but he better start thinking fuel strategy if he wants any more. (hint to you "dawg"...you are only as good as your last article!  Don't forget I got you from the pound. I still know where it is.)   

Sorry.  I have to "keep it real" with Spike. Otherwise he starts thinking he is Snoopy and will get an agent.  I'm not playing that Charlie Brown thing with him.

The Real Secret though is that Spike has Brothers.   

Roscoe is his older brother and Robbie is his kid bro. Likable and good dogs, but somewhat less experienced with this venue.

Spike has an "edge" that neither of the siblings have. Plus he can type. Spike has been pushing me to give the two moochers a job.  Times are tough when gas is $4.10 a gallon. 

I might give the two brothers section leader jobs.

Roscoe tends to think about urban transit, railroads and heavy freight.

Little Robbie is a newbie. He tends to think "Green" That's the future anyway.  Given that he's also a smart pup, I might also give him a shot at the AST&L articles that appear here.

What do you think?  Should Roscoe and Robbie render paw prints here?

I might do it anyway just to keep Spike in line but the two others will be taking typing lessons in the next couple of weeks at least!

I'm not running some "Alvin and the Chipmunks" operation here.

Eric

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Southwest Airlines President on Servant Leadership

Colleen Barrett, President of Southwest Airlines was a recent speaker at the Wharton School of Management at the University of Pennsylvania. Her speech to Wharton MBA candidates during the 12th annual Wharton Leadership Conference is about servant leadership.   

Ms. Barrett was Herb Kelleher's legal secretary who eventually was appointed SWA President.   I can tell you right now some folks at United, US Airways, Northwest, Delta and others could do well by paying attention to her description of customer value.

My grandmother was a "legal secretary" (but actually a bar admitted lawyer) to the CEO of Lockheed Georgia Company in the 60's. As the father of 3 young ladies, I sometimes wonder if she had been born 30 years later, what an amazing career "Nana" could have had. Such were the career limitations for women in those days.

Colleen Barrett delivers a unique value to Southwest Airlines. SWA is lucky to have her. She however is also unbelievably blessed to have worked for Herb. 

Her message here is amazing.

Eric

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Boeing Tries the Blimp Biz

The Wall Street Journal had an interesting article today about Boeing's new venture with Canada's SkyHook International to produce a heavylift blimp capable of moving heavyweight cargoes up to 230 miles.

What's interesting about this is that it could be a perfect asset for movement of drilling rigs and other heavy cargoes needed in remote locations.  However I immediately thought of an potentially really ironic use.

Airbus produces commercial aircraft components from assembly plants located all over Europe. These travel to the Toulouse, France final assembly plant by road, barge, and even the "Beluga" customized version of the Airbus A330.  (Check out this youtube video to see what I'm talking about.)

What if this new airship, called the JHL-40, were used to move components of the Airbus A380?  The components are huge and heavy. Any ability to transport them by air would be a major logistics cost saver.  Given that Boeing and Airbus are fierce competitors, the irony of using a Boeing platform to deliver Airbus assets to final assembly would be rich indeed.

clipped from online.wsj.com Boeing Plans Bold Airship Hauler By J. Lynn Lunsford July 9, 2008 Boeing Co. has teamed with Canada's closely held SkyHook International Inc. to combine a blimp and four helicopter rotors into a behemoth airship capable of hauling heavy drilling, mining and timber equipment into remote wilderness areas. The two companies say they hope to have the 302-foot long airship ready for commercial service by 2012, although the marriage of helicopter and lighter-than-air technologies will require them to overcome some significant hurdles that doomed an attempt at a similar contraption in the mid-1980s. The aircraft will break new ground by achieving what is known as neutral buoyancy, in which the helium-filled blimp will provide enough lift to bear the weight of the aircraft, including the engines and rotors. By doing this, all the lift generated by the rotors will be available for lifting payloads, a significant advantage over conventional helicopters that expend much of their energy getting the aircraft to fly. The plan is for the ship to carry loads as heavy as 80,000 pounds as far as 230 miles. Officials said the aircraft's ability to lift and easily transport dense or bulky items such as drilling rigs or other oil-field equipment will make it possible for oil, timber and mining companies to more quickly explore remote areas while reducing the environmental damage caused by road construction. The companies say they believe there is demand for roughly 65 of these aircraft, mainly for use in remote regions of North America. They said the aircraft has potential military-cargo uses as well, but their first goal is to get it into the commercial market.

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Where Ships go to Die.

This is an interesting video that appeared on the American television show "60 Minutes" back in 2006.  It shows how old merchant vessels are beached and cut up in Bangladesh.  Ship breaking is a dirty, filthy job, done by the poorest of the poor. Conditions are somewhat improved now thanks to this story, but this is how the vessels of commerce go to die in the east.

These old ships are filled with asbestos, chemicals, fuel and other contaminants that just wind up on the beach and in the ocean. This struck me as a sharp contrast to the conversion of the American aircraft carrier USS Oriskany, which was so carefully sanitized prior to sinking as a man-made reef and diving attraction.

Somehow, I dont think the 11,000 TEU, 170,000 metric ton, M/V Emma Maersk will be driven on any beach when her trading days are over.

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Kalitta 747 Crashes Again...This time in Colombia.

Two months after a Kalitta Air B747-200F bound from Brussels to the middle east crashed on take off,  a second Kalitta jumbo has crashed, this time in Bogota,Colombia. Though none of the crew were killed, two bystanders died from wreck related injuries. The air crew sustained injuries ranging from moderate to severe.

The air crew are said to have reported an engine fire prior to loss of communications. The US National Transportation board, Boeing and engine maker Pratt & Whitney will be sending representatives to assess the cause of the crash.

The aircraft was on a sub-charter to Centurion Air Cargo of Miami and carrying a cargo of fresh flowers. Flowers are a major export from Colombia to the US and other global destinations. About 900 metric tons of flowers move weekly from Colombia to the United States alone. Cargo jets full of flowers arrive at Miami International airport (KMIA) every week where the flowers are USDA inspected, customs cleared and processed for delivery all over the US. Amazingly, transit times from the finca (farm) in Colombia to your dinner table can take as little as 3 days.

This is a major air freight business with carriers like Centurion, Florida West, Tampa Air Cargo, DHL, UPS, FedEx, and others participating in the US trades.  Martinair, KLM, Air France and others work the European trades. Even ocean carriers like Maersk have worked on products to serve this market.

These crashes coupled with the drag racing death of Scott Kalitta, son of Kalitta Air founder Connie Kalitta, have made this a very difficult period for the Kalitta family.

Kalitta Air is based in Ypsilanti, Michigan.

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Wind Power: An intermediary Step?

Freightdawg.com is a blog about logistics and supply chain. The thing is that supply chains have become so tied to fuel expenses that inevitably I wind up writing more and more about energy.

Lately I have written quite a bit about the value and possibilities of wind energy. It is among the purest forms of electrical generation. The problem is that wind isn't constant, even in the most turbulent locations. Just to have a wind farm in a given location, the wind has to blow at least 13.5 mph on average.

I looked it up with the National Oceanic and Atomospheric Administration (NOAA).  There are not a lot of places with this much wind. Wind generated power is also limited by the fact that wind energy must go directly into the power grid for consumption regardless of demand. Wind energy cannot be stored.

The article below is a very good one from the Dallas Morning News today.  It discusses these limits as they relate to west Texas. The thing that struck me about this article though is that the majority of thought is related to the infrastructure needed to get the energy to points of consumption. Namely, building the power grid.   

What if...instead of building massive power lines and related corridors, wind energy were converted to potential energy in the form of hydrogen, or some other intermediate fuel? My thought process is incomplete here, but it goes to another article I wrote the other day on the need for a divergent, multi-faceted energy policy. None of the bio-fuel type alternatives is a panacea. 

I find myself thinking a lot about this stuff lately. I'm convinced we borrow this planet from our children.  This energy thing is something that needs to be cured, both as a national, strategic issue but as a global one.

clipped from www.dallasnews.com Debate flares over wind power in Texas 12:28 PM CDT on Sunday, July 6, 2008 By ELIZABETH SOUDER There is such a thing as too much wind power. Sure, wind is among the cheapest, cleanest fuels generating the power Texans increasingly demand. But as officials brag about the state's status as the No. 1 wind producer in the country, they're also debating how much is too much. Building the transmission lines to bring wind power from rural West Texas to population zones will cost billions. And even with enough transmission lines, the on-again, off-again nature of wind can leave coal and natural gas-fired power plants scrambling to fill in the gaps For electricity companies, predicting wind patterns is a new art. The wind blows hardest before the sun comes up, when people aren't using much power. It tends to die down during the afternoon – especially in the summer – just when people demand more juice. Wind developers say wind power is so cheap that the cost to accommodate it is negligible. Coal, nuclear and natural gas plant owners doubt it. "As we add more and more wind, there are some uncertainties and some costs," said Thad Hill, head of Texas operations for NRG Energy, which operates coal, nuclear, gas and wind plants in Texas. "The important thing is, when we decide how much wind is the right amount, that we make that decision understanding these costs," he said. Paul Sadler, executive director of advocacy group the Wind Coalition, said wind must be accommodated fairly, and technology exists to do so. "Integration of wind is not sending a man to the moon," he said. "It's just a matter of having the will to do it."

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