NORTH-EAST USA\\\ Eimskip finds


new business in Newfoundland


E


imskip has strengthened links with Newfoundland,


via Iceland, following the introduction of a second container vessel. The addition of Skogafoss, a 700teu container ship will allow it to serve the North-American market with two vessels instead of one. The revised sailing schedule comprises two calls per month in Everett (Boston, MA) and Argentia (Newfoundland), and monthly calls


in Halifax (Canada) and


Norfolk, VA. Reykjafoss, Eimskip’s current


vessel on the North-America route, will continue its schedule between Iceland, Halifax, Everett, Argentia and Norfolk. The new vessel, Skogafoss, will focus on


Newfoundland and Everett in Boston. Eimskip provides a link from


Immingham in the UK on its weekly service to Reykjavik, Iceland’s main port, from where it is fed to Newfoundland on its fortnightly service. Managing director of Eimskip UK, Mike Lane, said that there was brisk business from Newfoundland, mainly Canadian shrimp, with oilfield and other industrial goods moving back the other way. It said the Newfoundland market had been showing steady growth, with an upturn in both the fishing and heavy industries and that there had been increased demands for services between Newfoundland and Europe.


US firms rethink supply chain patterns


C


ompanies in the US have been adopting a more regionalised


approach to their supply chains – and that is equally true of the North-east, says UPS Freight president, Jack Holmes. Central Pennsylvania has been one of the chief beneficiaries of this trend, as companies seek to move away from the single giant DC in the middle of the country model. “Three and a half years ago, fuel


prices spiked and people started to remodel their distribution networks, so we have more warehouses in different regions,” Jack Holmes explains. “There has been a more regionalised and localised approach – especially in the North-East.” UPS is the heavy freight arm of


UPS headquartered in Richmond, Virginia and is the nation’s fourth- largest less-than-truckload (LTL) carrier with a full range of regional, interregional and long-haul LTL and TL capabilities in all 50 states, plus cross-border services to Canada and Mexico. The process of re-evaluating supply chains has only just started,


and it will continue over the next couple of years, Holmes believes. The other factor that is changing


supply chain patterns is the enlargement of the Panama Canal. These changes in distribution


patterns should not have too many implications for UPS’s own network however, Holmes continues. “In general, we’ve got the network in place and the infrastructure we’ve already built up gives us great flexibility.” The UPS system is already designed to ‘flex’ to cope with seasonal peaks, so an increase in business due to changes to distribution patterns should not put any one part of the system under any great stress. UPS


has though recently


purchased a large hub in Harrisburg, which is in the heart of the region where many companies are looking to develop regional DCs and it has also put a new building up at North Reading, near Boston, Massachusetts. The Internet has also played a part in reshaping distribution patterns. “It hasn’t so much changed the geography, but it has


led to more focus on business to consumer delivery,” Holmes explains. “That means you need equipment with liſt gates (tail-liſts) and a small, nimble fleet.” UPS does in fact have its roots


in ‘public’ parcels service, so the move to home deliveries was not such a hard change to assimilate. However, he does not see UPS taking on the role of the US Postal Service, should the latter’s current financial difficulties prove to be insurmountable. “Our view is that while the parcel market is well- served by the private companies, the first class mail business is something completely different.” Fuel prices and emissions are a


major concern for UPS too, and the company has been at the forefront of efforts to introduce hybrid or battery-electric vehicles, especially to the large metropolitan areas of the North-east. More intelligent routing and scheduling soſtware, that can start to plan delivery routes as soon as a shipment’s details are known have also helped to reduce the company’s fuel bill. The North American continent


does not end at the US border, of course, and business to and from Canada is also important to UPS. This tends to fluctuate, depending on the relative strength of the US versus the Canadian dollar, but the trends over the couple of years has tended to favour northbound flows. There is a customs element to be catered for, but Holmes considers that this is to UPS’s advantage. “There has been a lot of discussion on making it easier for US firms to export recently and UPS can take some of the ‘noise’ out if the process.”


Issue 6 2011


37


Toll hikes drive APL off Staten Island


I


ncreased bridge tolls and a lack of space were cited in a decision


by APL line to move its operation from New York Container Terminal (NYCT) on Staten Island to Maher Terminal in Elizabeth, New Jersey. The Port Authority of New York and New Jersey, which is also responsible for bridges and tunnels in the Tri- Borough area, recently increased the tolls it charges. According to local press reports, APL said it would save


around $100 per round trip at its new location compared with Staten Island. APL has decided not to renew


its lease and will leave NYTC next July. It is not the first shipping line to have pulled off the island because of the tolls issue, they added. Turkon American Line also relocated to New Jersey in 2009. The loss of APL will reduce NYCT’s


container volumes by around 37%, said the press reports.


A complex and difficult market


O


utsiders tend to think of the US as a huge open space with acres of


land and rapid freeway links connecting all and every part to everywhere else, but the commercial property market is surprisingly varied and intricate, say Jones Lang LaSalle’s experts. Head of the industrial Americas


brokerage, Craig Meyor, says that, for a start, rents tend to be much higher close to major air- and sea-ports and can also vary sharply depending on how close to the actual terminals they are. “Rents within 1-2 miles of the airport can be double those of 3-4 miles away, with the highest rates reserved for actual on-airport property,” he explains. His colleague, executive vice-


president of the global supply chain practice, Richard Thompson points out that firms wishing to unload goods direct from an aircraft onto delivery vehicles – shippers of urgent, perishable or high value goods – will always be willing to pay a premium to do so. But move away from the major


hubs – even to the smaller, less busy regional airports and ports – and property values drop abruptly. The US has its equivalents to the


UK’s ‘Golden Triangle’ in the Midlands, which act as a focus for distribution and logistics activities. Chief among


these is the ‘Inland Empire’ just inboard of the giant West Coast twin ports of Los Angeles/Long Beach but there is also an East Coast equivalent around Harrisburg. Companies need to take account


of total supply chain costs, not just property costs, says Thompson, and even in as large a country as the US, moving an operation a couple of miles can save millions of dollars a year in logistics costs – savings that often outweigh any increased rental costs, he says. Both the Jones Lang LaSalle


experts see the enlargement of the Panama Canal as having some effect on US East Coast ports, but their guess is that it is those on the southern segment such as Savannah, Miami and Charleston that stand to benefit most. These ports have the chance to develop as distribution hubs for the whole of the inland US because ships steaming through the Canal come there first, they have relatively inexpensive labour and land and, increasingly, good transport links. In the North-East, it is more a question of serving existing large local markets. The other big beneficiary of the


Canal could be Panama itself, which has the potential to turn itself into the Dubai or Rotterdam of the Americas – but that is another story.


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