News from Cornerstone Systems

PierPass Program May End, Chinese Manufacturing Surges, U.S. Manufacturing Expands, Intermodal Hits Lowest Level Since 2003, Trucking Hopes To Thrive in Economic Recovery, FMCSA Slates 3 Public Hearings for HOS Review

The popular PierPass program giving shippers incentives to move cargo at off-peak hours through Southern California ports may no longer be justified because of reduced cargo volumes, the U.S. head of NYK Line said Monday. "Right now, we need to take a new look at what we are doing, in terms of whether it still makes sense to have those night gates, NYK Line (Americas) Executive Vice President Peter Keller told the National Retail Federation annual conference. "Pierpass was something we started for all the right reasons, and with the deterioration of volumes there is significant capacity on the day side to handle the business," he said. "The issue is that it has been institutionalized and many shippers now prefer the night gates. Now it's a cost issue. We have fully manned day shifts, we are also paying excessive amounts of overtime to man the Pier pass gates. Right now we need to take a new look at what we are doing, in terms of whether it still makes sense to have those night gates," Keller said.

Two reports on Chinese manufacturing showed production at the country's factories surged in December, pointing to a full recovery in 2010. The purchasing manager's index (PMI) from the China Federation of Logistics and Purchasing jumped to 56.6 from 55.2. The PMI has been above 50 for 10 consecutive months. London-based HSBC bank published its own PMI for China which rose from 55.7 in the previous month to 56.1 in December, the highest mark on record since the survey began in April 2004. The average PMI for the quarter is the highest in survey history and follows a record low a year earlier. Both surveys indicated positive effects from the second round of China's stimulus spending as demand for manufactured goods, led by metal products, swelled with government spending.

U.S. manufacturers carried their expansion into a fifth consecutive month in December, according to a monthly survey by the Institute for Supply Management. As the overall economy grew for the eighth consecutive month, the nation's supply executives responded to ISM with reports of increased activity in nine of the 18 manufacturing industries surveyed. The closely watched PMI index hit 55.9 percent, up 2.3 percentage points from the previous month as it reached the highest level since April 2006. While not as spectacular as the recovery in China (see above), the U.S. manufacturing sector shows solid prospects for the coming year. "This month's report is quite strong as both the new orders and production indexes are above 60 percent," said Norbert J. Ore, chair of the ISM Management Business Survey Committee. "The sector may be benefiting from an excessive destocking cycle as indicated by the recent performance of the customers' inventories index. Customers' inventories have been 'too low' for nine consecutive months, and this month's index is the lowest reading since the inception of the index in January 1997. Overall, the recovery in manufacturing is continuing, but there are still some industries mired in the downturn as evidenced by the seven industries still in decline."

Major U.S. railroads hauled fewer intermodal units in 2009 than any time since 2003, meaning the deep recession took six years of growth away from intermodal train traffic. U.S. Class I railroads and some major regionals that report to the Association of American Railroads ended the year with 9,880,602 loadings of containers and trailers. That was down 14.1 percent from 11,499,978 for the corresponding 52 weeks in 2008, AAR said in its latest week's volume report. AAR in a separate publication, Railroad Facts, reports that the last time those carriers picked up fewer than 10 million box loads was in 2003, when they had 9,955,605.

With the worst of the steepest economic downturn in decades apparently in the rearview mirror, trucking executives are shifting their focus to the recovery in 2010, while also bracing for what could be an onslaught of new safety and environmental regulations. This year also will mark the introduction of cleaner-burning, but more expensive, diesel engines as equipment manufacturers comply with the final phase of current emissions reduction targets set by the Environmental Protection Agency. For freight carriers, the pace of business recovery will be crucial. A weak rebound would perpetuate excess hauling capacity and keep freight rates down, while a strong one could create an almost instantaneous shortage of capacity and sharply higher rates, according to analysts. Fitch Ratings said recently that while demand for truck and rail hauling services is expected to be positive in 2010, overall freight demand "is not expected to return to pre-recession levels until sometime in 2011 at the earliest."

The Federal Motor Carrier Safety Administration announced it would host a series of public "listening sessions" over its intentions to modify again its often-challenged hours-of-service rule for commercial drivers. "Public input is critical to the rulemaking process," FMCSA Administrator Anne Ferro said in a Jan. 4 statement announcing the sessions. "The public listening sessions will provide opportunities for a broad cross-section of stakeholders to present views, comments and relevant research on this forthcoming federal safety regulation proposal." Industry and enforcement groups have said that uncertainty over - and changes to - the embattled rule, which federal courts have rejected three times over the past six years, could jeopardize effective enforcement. FMCSA has said it intends to revise the latest rule by July. The agency's changes to the driving limits rule during the Bush administration increased the allowed driving time to 11 hours a day from 10 hours, while cutting the maximum time a driver could be on duty each day to 14 consecutive hours. The rule also allowed drivers to reset their weekly clocks after a 34-hour rest. The first of the three planned sessions will be Jan. 19 in Arlington, Va., with the others scheduled for Dallas and Los Angeles on Jan. 22 and Jan. 25, respectively.

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