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The following is the March, 1999 edition of "The Bulletin". Any
questions or comments regarding content should be addressed to Alistar
Mcnab at 713-678-4300.
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Clinton Administration Transportation Budget Includes New Increases in User Fees
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The fiscal year 2000 budget, with respect to transportation, as proposed by the Clinton Administration includes major safety and environmental spending increases as well as a billion dollars in new user fees.
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However getting those new fees and increases past a Republican controlled Congress and many Democrats who are not in favor of major new charges and increases is unlikely.
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A proposal to tax cargo-vessel operators nearly a billion dollars to pay for coastal, Great lakes and St. Lawrence Seaway deepening and maintenance dredging; and another vessel fee to pay for Coast Guard navigational and other safety services has met with strong opposition from House Coast Guard and Marine Transportation Committee Chairman Wayne Gilchrest, R. MD.
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A plan to replace the unconstitutional Harbor Maintenance Tax with an alternative vessel tax called a Harbor Services Fee, designed to collect nearly $1 billion to pay the federal share of Army Corps of Engineers maintenance dredging and port deepening projects has met with opposition from the American Association of Port Authorities, been criticized by the National Industrial Transportation League and opposed by the AFL/CIO's Maritime Trades Department. The union claims in a policy statement that it would not be fair to impose a tax of nearly $1 billion a year on shipping companies to pay for both maintenance dredging and the federal share of port deepening projects.
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AAPA claims that the new tax would rise nearly twice what is needed for maintenance dredging and also criticized the plan by the federal government to use the funds collected for navigation channel maintenance. This plan could raise the prices of some U.S. bulk exports such as grain and coal enough to make U.S. exporters of these products non-competitive. The AFL/CIO's Maritime Trades Department also wants to know how the shipping tax will affect the competitiveness of U.S. exports and the operation of vessels employing union seafarers.
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Steel Export and Import Analysis 1998
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Cumulative steel imports into the United States during calendar year 1998 totaled 41,520,000 short tons, an increase of 33.3% over the previous year. Substantial tonnage increases were received from Japan, Korea and Russia, while tonnage declines were noted from Brazil, the EU and Mexico.
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U.S. steel producers themselves have been substantial importers of semi-finished steel products from overseas, used to supplement their melting capacity. This category of imports amounted to 6, 800,000 short tons in 1998 or 14.6% of the import total. U.S. steel producers have clearly benefited from low world prices for themselves while at the same time criticizing low "dumping" prices for their customers who are also able to take advantage of the international marketplace.
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The steel industry's customers in the U.S. are the auto industry, equipment manufacturers, oil drilling contractors and construction firms to name a few. Consumers of steel, whether domestically produced or imported, employ 8.3 million workers as compared with 170,000 workers directly employed by domestic steel producers.
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In other words, the steel industry's customers employ 40 workers for every one worker in the domestic steel industry.
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On the export side, U.S. steel producers shipped 5,519,000 short tons during 1998, a downturn of 8.6% from the previous year. That's about the equivalent of the tonnage imported into the USA from Russia alone during 1998.
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Houston has a substantial involvement in the international trading of steel, accounting for about 10% of the entire nation's steel buying and selling activities. The current attempt by domestic steel producers to attempt to manage international competition via protectionism are bound to impinge negatively on what has become one of the Port of Houston's great success stories, the handling of steel imports.
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The American Institute for International Steel (AIIS) seeks to foster economic growth through international and open competition in steel trading. AIIS may be contacted at its Washington, D.C. headquarters by calling Eric Blomquist at 202-466-6210. Here in Houston, Bob Moore of Salzgitter Handel at 713-968-6540 represents the Institute's interests.
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Census Bureau Plans to Develop Web Site for Free AES Filings
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The Bureau of the Census as a means to offset arguments that it is too expensive for small shippers and forwarders to file export documentation, is developing a method to allow these firms to file for free using the Internet.
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Census is planning to have in place a Web site, which will allow firms to file shipper's export declarations into the government's Automated Export System by sometime in the third quarter of 1999.
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Previously, firms needed to invest in expensive software or use an intermediary to file over the Internet. This new plan by Census to develop a Web site for free filing should encourage more firms to file the proper documentation and use the AES system being developed by Customs and the Census Bureau since it will allow shippers the option of filing documents after a vessel leaves port.
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AFL/CIO Claims U.S. Trade Policy Flawed Vows to Fight Against New Fast Track Authority
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The AFL/CIO, one of the largest and most powerful trade unions in the United States, claims that it wants the U.S. to revamp its current trade policy. The union wants the U.S. to rethink what it deems a "flawed" trade policy and one which has caused the Asian economic collapse.
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The union's executive council criticized U.S. economic policy and claims that policy encourages developing countries to lower barriers to trade and investment and dismantle domestic regulation. This policy the union says encourages these countries to grow while exporting their goods and keeping wages low at home. This they claim places an undue burden on the U.S. market.
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This position by the union is seen as a portend to opposition from the union and other labor organizations to renewal of "fast track" authority for the president. However, some fast track supporters in Congress believe that Congress will eventually work out some type of compromise or other means to get the authority in place, even over the opposition of labor unions.
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Houston-Galveston Area Council's $100,000 Study of Strategic Freight Corridors
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The Houston-Galveston Area Council (H-GAC) is beginning a $100,000 study to assess the surface transportation needs of Strategic Freight Corridors in Harris and its seven adjacent counties.
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Awarding the project to the consulting team of Traffic Engineers, Inc., (TEI) lead by Susan H. Alleman and her associate partners, Jerry L. Bobo, Transportation Program Manager at H-GAC noted that they would be looking for input from industry specialists such as intermodal operators, carriers, shippers, and public sector interests throughout the region.
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Freight moving from source to destination (e.g. factory to seaport; or railhead to consumer) places demands on our existing highways and on the connecting roadways. This particular study will be focussing on these connectors -often- local streets with inadequate turning room for 18-wheelers, non-availability of nearby ramps to freeways, or traffic signals with poor cycling.
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Interested parties are invited to draw attention to any connector traffic impediments which are known to them. In the first instance, you may contact Alistair at the Port Bureau at 713-678-4300 or by contacting TEI at 713-270-8145 referencing the H-GAC study.
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At an early date, many intermodal operators, shippers, and carriers will be contacted for an interview or survey to be followed by a workshop on roadway access and other issues. If you would like to be a part of this phase of the study, please contact the Bureau or TEI to add your company's name to the list of potential participants. It is stressed, however, that high traffic volume will be a deciding factor in the selection process.
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The study is expected to take five months to complete.
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Russia Agrees to Temporarily Suspend Steel Exports
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Russia has agreed to an agreement to temporarily suspend exports of hot-rolled steel and will also accept volume and price limits on a broad range of future steel exports to the U.S.
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The agreement was made after threats by the United States to impose major penalties under a pending anti-dumping complaint.
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The agreement supposedly creates a sliding scale of prices and volumes with the start limiting volumes to about 800,000 tons a year and at a price of not less than $255 a ton. This compares to the current price of about $240 a ton, which means that Russia will probably not ship much product to the U.S. until the market improves dramatically. Earlier reports were that the U.S had originally demanded that the minimum price be close to $300 per metric ton, a figure which Russia claimed would make sales nearly impossible. The agreement does not call for specific prices or quotas, but does link the quotas to the price, in that if the price goes up, the quota will be larger and vice versa.
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It is also understood that a second agreement covering all other Russian steel products exported to the U.S. was reached limiting those commodities to mid-level 1997 volumes.
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The U.S. Department of Commerce has also stated it would consider a similar agreement with Brazil that would enable that country to also avoid retaliatory penalties.
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However American steel companies stated they are not satisfied with the Russian agreement and any similar agreement with Brazil would be unsatisfactory. The U.S. producers are not satisfied with the agreement since it would undoubtedly suspend the anti-dumping lawsuits filed by U.S. producers and deprive them of any trade relief to which they feel they are entitled.
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Houston Tanker Event Conference and Exhibition 25-29 April 1999
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What will be the sixth in a series of successful tanker industry meetings since 1996 will take place at the Omni Houston Hotel between April 25th and 29th. The International Association of Independent Tanker Owners, INTERTANKO, will be hosting their 1999 Annual General Meeting but additional activities taking place will include a tanker industry exhibition, media training courses and a chartering seminar.
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The principal focus in the conference sessions will be on tanker shipping in the Americas and on the people who ensure the safe and efficient functioning of the tanker industry. Particular emphasis will be placed on North and Latin American waterway management issues, market development and infrastructure including updates on the status of the three ongoing U.S. Coast Guard/Intertanko partnership projects.
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A small number of exhibition stands is still available at a cost of $3,500 which includes meals for one person manning the stand from Sunday dinner up to and including Thursday's buffet lunch. All the major organizations and companies have taken stands. These include ABS, Baltic Exchange, Lloyds, Multiport, Gulf Agency Company and several publications.
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The Bureau is interested in mounting a co-operative stand to showcase members' products and services. Should you wish to participate in this opportunity to present your company to this distinguished and powerful tanker industry group, the Bureau is looking for ten members at $350 each or five members at $700 each who will support the taking of one stand for the duration of the exhibition.
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For more details or to express interest, please call Alistair Macnab at 713-678-4300.
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Senators From Both Parties Criticize Senior Clinton Trade Officials
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At a Senate Finance Committee meeting recently, senior Clinton trade officials were criticized by Senators from both parties for the failure of the United States to adequately enforce its free-trade agreements.
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Republican and Democratic Senators claim American exports of commodities such as grain, poultry, citrus, beef, appliances, aircraft, fiber-optics and computer software face unfair trading conditions from other countries.
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Complaints arose against actions by the European Union as well as Japan, China and even Israel and Mexico. The Finance Committee was holding hearings concerning renewed trade negotiating authority being sought by the Clinton Trade officials in order to properly lead upcoming World Trade Organization talks on trade liberalization scheduled for November 30-December 3, 1999 in Seattle, WA.
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March 1999 Job Hunter's File
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We're certainly seeing a shake out at transportation-related companies these days as this month's longer list of Job Hunters will testify. There are many fine, well-educated and experienced individuals looking for work. If you are looking for good candidates (and you are a member company of the Bureau and its associates) please call Alistair for details of people looking for work and who may very well fit exactly the job description you are seeking to fill.
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- DL - Airline and airport operations background as well as an anticipated MS in Transportation Planning and Management in May 1999. Seeking professional position. Adept in FAA rules and regulations, aviation law, and aviation management.
- YZ - A well-known and well-respected steamship management figure in the Houston liner ship agency sector since 1970, seeks a new position and will travel or relocate either domestically or overseas. Accustomed to multi-project profit and loss responsibility requiring comprehensive knowledge of all operations.
- TDS - This new-entrant is looking for a position in freight forwarding and/or freight logistics. With some work experience in airport operations this candidate has multiple computer skills. An MS in Transportation Planning and Management is anticipated in May 1999.
- RWR - Operations and Boarding Agent experience in Houston since 1972 with all the best companies. This candidate has recently been specializing in grain and steel ships, and in crude and chemical tankers.
- AHH - Another well-known Houston veteran in maritime circles seeks work in the project management, sales, or operations areas which have been the background of this individual since 1989. Before Houston, there were officer positions with a stevedoring, marine terminal, and boat-building firm on the West Coast.
- TJA - With a licensed background in hazardous materials training and a diploma in marine surveying, this individual has extensive towing and offshore experience in support of this search for a marine surveyor's position.
- WRS - A recent operations director position and an eighteen-year background in warehousing suggests substantial suitability as a candidate for a physical distribution management position. Nine years in sales management and human resources further enhance this applicant's qualifications.
- LES - Since 1986, this individual has been working in operations both with principals and at agencies and has gained extensive knowledge of all aspects of the international shipping and distribution industries. Computer experience with various operating systems. Well organized, dependable and self motivated.
- SWC - A US. Navy and US merchant marine background took this individual forward to a business education and to boat charter and operations on the West Coast. Now seeking a maritime-related position in Houston.
- RLP - Seeking a position in Ocean/Air Import or Export, this individual has been working with an international forwarding company at DFW since 1979. Now relocated to Houston.
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This service is offered free to individuals seeking work. Companies desirous of interviewing these and other candidates through the Bureau, must be members of the Bureau or its associates. For more details call Alistair Macnab at 713-678-4300.
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FHWA Seeks Comments on Safety of Intermodal Equipment
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The Federal Highway Administration (FHWA) is seeking comments as to whether the condition of steamship chassis and containers and truck and railroad intermodal trailers which move over the public highways.
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This issue has been a source of concern for some time between truckers and other carriers which own intermodal equipment. As recently as 1997, the American Trucking Associations urged the FHWA to issue rules which would make the equipment owners more responsible for the condition of the equipment while it is moving over the highway. However, the agency decided to instead study the extent of the problem and gather other information.
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Presently, truckers are responsible for the condition of all intermodal equipment which they move from a port or rail terminal. Intermodal equipment is not subject to the same highway safety rules as regular over the road equipment. FHWA is seeking public comment on this issue until April 19, 1999.
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Port of Houston Authority Briefs Harris County Commissioners
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Ned Holmes, Chairman of the Port of Houston Authority, was on hand on the morning of February 25th. to present his regular State of the Port address to the Harris County Commissioners. On this occasion, however, Mr. Holmes took the opportunity to highlight the development of container traffic through the port and how capacity restraint would ultimately erode Houston's current position as the Gulf's premier container center.
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Steady growth in container traffic from 1988 was overtaken by phenomenal growth in 1997 and a tapering off since then. Even so, current activity is running at just a little under one million teus per annum and future short-range growth can be expected at 3-6% but with acceleration predicted in the longer term. Already, the Barbours Cut facility provides $800 million per annum in economic activity to the county.
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But Barbours Cut is now working at close to maximum throughput and the next growth area for containers will be the PHA's Bayport Project where 1000 acres of land and 7000 feet of Channel frontage have already been acquired.
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It is the Port's desire to be a good neighbor and to work with local communities around Bayport, stated Mr. Holmes. He believes the Port's good record on community and environmental issues have been well demonstrated by the current Ship Channel Deepening and Widening Project. The Bayport Project would be handled with due sensitivity at the same time as it was kept in mind that the Port as a whole, impacted on an estimated 200,000 jobs, $7.7 billion in economic activity, and over $600 million in state and local taxes.
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The pattern of world container flows is still evolving but the Gulf of Mexico will continue to witness continuing growth. In all probability, however, there will be the demand only for one major container center in this region and Mr. Holmes declared that he wanted it to be here in Houston. The elements of road and rail landside connectors and the full range of service and support industries were already present. The projected capacity of Bayport (2.2 million teus on completion), water depth (45 feet), and planned road development of Highway 146 would surely confirm Houston's destiny as the regional load center as containers grew to take up 90% of all general cargo shipments within the next twenty years. In addition to the presence of several members of the PHA staff, Mr. Holmes recognized Captain Charles Alcorn representing the WGMA, Alistair Macnab representing the GHPB, and Benny Holland and his officers representing the ILA.
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Mr. Holland, in his address to the County Commissioners noted that Houston was not merely a pass-through port as were most others. Houston was also a substantial and growing production and consumption center in its own right. The ILA supported the Bayport Project for the benefit it would bring to the economy of the entire region. Feeder services by barge and smaller container ship from Houston to neighboring ports are already in place and destined to grow. The big international container carriers are already planning their future strategies and ports of call. Houston can and should be the Gulf's container load center.
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SAGA Transport USA, Houston TX
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People expressing optimism in the near future prospects of international shipping seem to be somewhat thin on the ground these days. A notable exception, however, must be Niels Aalund, Vice President of SAGA Transport USA who in a recent interview, was enthusiastic about his company's steady growth in Africa. Even with the slowing down of petroleum-based project traffic from the Houston area, Aalund was quick to point out that new opportunities abound on the African continent, especially in the Ivory Coast and Ghana where SAGA has considerable experience.
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SAGA's current services include forwarding, export packing, and material tracking. By continuously investing in state-of-the-art systems and technology, the group has been able provide a competitive and credible stance when it comes to offering assistance to companies seeking to do business in West Africa. Their proprietary software system, PLAMM, has enabled SAGA to provide a fully integrated tracking system incorporating real-time, line-item visibility for the entire logistics process from point of origin to destination.
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Aalund categorizes SAGA as a project specialist doing business in West Africa. All of Africa presents many niche market opportunities, but SAGA's expert and on-the-ground presence in the developing economies of West Africa are unique business advantages available right here through SAGA's Houston office. "We've been doing business in Africa for more than a hundred years." says Aalund. "We have slow times and we have hectic times. But we never loose our enthusiasm for our chosen market".
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Optimism at SAGA is clearly not just a market-driven phenomenon but is derived also from corporate longevity, well-learned expertise, and the employment of good people and good business systems. For more information, you may call SAGA at 713-679-7147.
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Y2K and The Port of Houston
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Are you ready for Y2K? What is likely to happen at midnight on this coming December 31 when computers may not recognize the new millennium or your workers may be spooked? These and other "what ifs...?" were examined at a meeting held at Houston's downtown DoubleTree Hotel on February 22nd.
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As far as port operations are concerned, both public and private sectors are planning a "business as usual" Friday night on December 31st. All docks and terminals are expecting that their own systems will have been tested to ensure a smooth transition to the year 2000. What stills remains as an unknown factor, however, is the capability of visiting ships and barges to operate normally, and some time was taken at the meeting to examine ways of ensuring full Y2K compliance by them.
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Starting in mid-Pacific, Y2K will have eighteen hours to reach Houston so any international problems likely to emerge will have done so before Houston reaches the millennium hour. With computer and electronic systems all checked out, the potential problem might be more cultural and human than has previously been considered. While visiting vessels must be fully operational in the technical sense, so too, their captains and crews must be ready to work and cooperate with the terminal operators' and pilots' standard procedures. All terminals are emphasizing that they expect normal vessel arrivals and departures during the Y2K period and the pilots, towboats, and linesmen also emphasize this normalcy.
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Ship Agents are to be approached to pass on to their Principals that the Port of Houston will be operating in normal mode over Y2K. It is felt that if early notice of this port's plan to operate normally is given wide distribution then misunderstandings can be avoided. In concert with the Captain of the Port and the U.S. Coast Guard, Agents will be directed to ensure that visiting vessels are in Y2K compliance in all respects and that sea staffs will be fully operational as required by the prevailing circumstances.
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A further meeting is to be held in April, following which the Captain of the Port, in cooperation with the private sector, is looking to set up a symposium date around May 27th for all parties to have the opportunity to report on Y2K progress and share methods of resolving any outstanding problems still requiring attention.
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Mr. Paul Caruselle of SeaRiver Maritime, Inc., who may be reached on 713-758-5214 chairs this Y2K initiative. Additional information also from Alistair Macnab of the Bureau at 713-678-4300.
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Chinese Longhorn Beetle Still Seen as Potential Threat
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The United States Department of Agriculture is considering new regulations which would strongly encourage or even make mandatory the use of non-hardwood packaging for Chinese imports, due to the continuing threat of the Chinese longhorned beetle which has no natural predators in the U.S. and is considered a danger to U.S. hardwood trees.
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Any complaints over such a ban would undoubtedly be offset by public pressure to Congress if a potential outbreak of the beetle would result in loss of large amounts of American hardwood forests and causes extreme monetary damage to U.S. industries.
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Untreated wooden packaging from China has already been banned since December 17, 1998. Also, any cargoes moving on wooden pallets or packaging must have a document endorsed by the Chinese government testifying that the wood has been doctored against the bugs.
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Why is Information Technology so Important for Shippers & Carriers?
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By Michel M. Benoit*
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Most steamship companies to date, rely heavily on the quality of information flow through their network of customers, and through their internal systems to communicate, when they are doing business with third party service providers and other subcontractors.
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The 21st century will be very technology and information-oriented and it will even be more evident to transportation professionals that a good management information system is the key to success and competitiveness.
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A variety of software's is available today on a global scale with functions ranging from scheduling, tracking, billing, freight booking, automatic vehicle identification, container and chassis identification; to maintenance scheduling for equipment and so forth.
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The advantages of all those essential tools include increased competitiveness, increased accuracy in information exchange, increased safety for monetary transactions, and increased customer satisfaction. Reduction in paper work, time, money and energy also provide substantial cost-savings, when information technology is introduced to facilitate communication among shippers, carriers and third party providers.
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Managing Change: CLM's Monthly Lecture
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The Council of Logistics Management held its monthly meeting at the Sheraton Brookhollow Hotel, in Houston, Texas on the Thursday 18th of February 1999; when the topic under review was the need for managers to manage change in order to be able to handle diligently both corporate and personal success.
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Mr. Mike Schern, Director of Logistics and Customer Service for Solvay Inc., was the guest speaker. He delivered a well-received presentation about information technology, which dictates that managers must maintain a positive attitude to the continuous and rapid changes that are taking place in business and in the transportation industry.
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As examples, Mr. Schern mentioned that, in the 1920's, 85% of U.S. workers were engaged in Agriculture but by the 1950's, 66% were employed in service-related industries. By the year 2000, it is expected that 45% of all U.S. workers will be functioning in the data and information services areas.
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He went on to reveal that "Each day, there is more and more to know. There has been more information generated in the last 30 years than all the information generated in the previous 5000 years. Today's information will double in more than 5 years. What is driving this ever-increasing rate of change? For one, there are more people in the world today. In 1860 there were about 1 billion people. Today, we are near 6 billion and predicting a world population of 10 billion by the year 2040. That's a lot of people coming up with new ideas the latest technology. With these technologies, information is shared more rapidly almost instantly worldwide. This shared knowledge in turn results in still more ideas. And this cycle continues at an ever-increasing pace."
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Continuing on this theme, Mr. Schern stated that sometime it is hard to comprehend how rapidly things are changing. "Consider that the first computer built in 1944 was larger than a 40 ft. trailer, weighed more than 17 automobiles, used 140,000 watts of power and could conduct an amazing 5000 operations per second. 1996's 486 chip is the size of dime, weighs less than a package of NutraSweet, uses only 2 watts of power and can conduct an unbelievable 54 million operations per second. And now, the Pentium II chip is 5 times faster than the 486. Your digital watch has more computing power than existed in the world before 1961. The first robot was built in 1960, and today, there are more than 20 million in manufacturing use in the U.S."
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"Since change is inevitable along with its pain and struggle, the question is how do we manage it?" asked Schern who then went on to consider some steps for the individual to personally manage the change culture: "Invest in your own knowledge" he advised. "Remind yourself that rewards always reflects service and contribution - set your personal standards - Rest. Take 15 minutes per day to be alone - Make no excuses. Accept no excuses - Allow others to make mistakes. Forgive. Grudges are too heavy, they drag you down - Be curious about everything - Break your routines - Take the blame, share the credit - Smile more. If you are not having fun, it is just work - Be thankful - Talk to yourself - Say nice things."
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The Solvay Group is deeply involved in the field of information technology and they are currently using a software called SAP, developed by in-house computer programmers within the Group. The system has been designed on the basis of a bottom to top management and operations program and covers virtually all areas of the company's procedures, including accounting, fleet management and equipment maintenance, freight billing and invoicing, real-time tracking of cargo, electronic bookings, electronic bills of lading and other import/export documents. "It is, of course, Y2K tested" stated Mr. Schern.
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Over 30 CLM members were on hand to hear Mr. Schern's address. For more information on CLM and its meetings, call Samuel Massey on 713 525 4021.
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Matson Intermodal System
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By Michel Benoit*
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The meeting of the U.S. Gulf International Commerce Club on Thursday 11th February was very informative in terms of new issues expected to come up in the next few months. According to James F. Sells, President of Matson Intermodal System, who was the guest speaker, intermodal transportation is growing extremely rapidly in the U.S. and railroads seem to be playing a significant role in that growth.
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Consequently, it is forecast that competition will be so tight in the 10 to 15 coming years, that only the 10 top IMCs (Intermodal Marketing Companies) will be able to handle a consistent traffic with the railroad and thus, achieve full competitive status with beneficial negotiating strengths.
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Exceptions will be made for some niche markets that have not been explored yet. Railroad carriers will have the choice to arbitrarily decide whom they want to do business with, and it will surely be to the advantage of the most competitive truck and ocean carriers, and particularly IMCs because they are among the larger parties railroads are focused on.
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James F. Sells also mentioned the trend in bigger ships (4,000 to 8,000 teus) and bigger terminals and how shippers are reluctantly reacting to it. He also mentioned however, that conventional ships will stay in the market because they will still be efficient to operate. Some routes are more profitable to operate with normal sized-ships because of the type of traffic they attract, but also because all ports are not ready to accommodate giant vessels.
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*Mr. Benoit currently works as a logistics and information systems intern at the Greater Houston Port Bureau. He will graduate with a Master of Science in Transportation Planning and Management from Texas Southern University in August 1999.
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