Since this is our first Briefing of 2007, and it‘s been awhile since our last Executive Briefing, you might be asking, “Hasn’t there been anything noteworthy in 2007?” The answer is a qualified, “Yes.” There are all sorts of things happening, but most of these things have yet to be resolved. So, it’s impossible to determine the impact that these things will have on shippers. Having said this, here are the items we are watching most closely.

Security
With the Democrats now controlling both the House and Senate, there has been a renewed effort to pass legislation implementing the recommendations of the 9/11 Committee. For shippers, the most significant provision of this legislation was the “scan-all container” language under which there would be a 100% mandatory screening of all cargo coming into the United States. On March 1, 2007 the Senate defeated S.4, Improving America’s Security… by a vote of 58-38.  Even though this Bill was defeated this issue is far from over. The National Retail Federation noted, “Our job isn’t done.”

In other security related developments, effective March 12, 2007, the Transportation Security Administration (TSA) will require, in certain situations, carriers and forwarders to review and record valid identification information from individuals who tender cargo for air transport. So you may see notices such as the one from UPS Supply Chain Solutions which state: Before we can accept your cargo, we must record the identification number from a government issued I.D., such as a driver's license. A company issued I.D. is not acceptable. These new TSA security requirements apply to the entire air freight forwarding industry, but do not affect ground shipments. We are unable to share all of the details of these requirements because they are considered by TSA to be Sensitive Security Information. Having highlighted this topic we offer the following observation. Some industry experts have expressed concerns that far too many companies are sticking their heads in the sand and hoping this issue goes away. These companies are not investing resources in a comprehensive security plan and consequently may be seriously exposed by changes in legislation or changes resulting from TSA directives.

Container Fees
The California Legislature introduced S.B. 974, which requires the Ports of Los Angeles, Long Beach and Oakland to collect a new $60 per container fee (per forty foot equivalent unit - FEU) on freight moving through their ports to help finance transportation  infrastructure, as well as, environmental mitigation projects to offset the effects of containers moving through the State. These fees will be passed along to shippers. Some shippers may say, “big deal, we don’t ship that many containers through the ports!” Here is why all shippers should be concerned. Experts are predicting that user fees to finance infrastructure projects will become increasingly common in the future. Given the condition of our national transportation infrastructure, what seems like a small insignificant fee today may actually become very significant in the future. When you consider the number of states that are considering privatization initiatives, where they sell/lease portions of their highway systems, shippers are looking at a distinctly different future.

Oil
Some people believe that the “fuel crisis” is over. In fact, we believe shippers should still factor the variability of fuel pricing into their transportation strategies. We’re thankful that the past seven to nine months have been relatively uneventful in terms of oil, but all it takes is one significant event to send the price of oil back to record highs. We’re hoping that kind of event never takes place but, practically speaking, companies should be looking at contingency plans if oil goes back up.

Trucking - The Market is Soft
Finally, The American Trucking Assn. (ATA) said its advanced seasonally adjusted Truck Tonnage Index dropped by 2.3% in January, 2007. The index is a pretty good indicator, but here’s an even better one: The LTL and Truckload carriers are aggressively using price as a factor to protect or, in some instances, increase their business in targeted lanes. Several carriers noted that they are either holding the line on rates this year or getting increases of 1%. If you’re interested in saving some money let me know.  Simply hit the “Send Mike an E-Mail” button or call 630-530-6190 and we’ll get back to you.

That’s it for now, and all on one page….

Michael A. Regan, CEO
TranzAct Technologies
TranzAct Technologies, Inc. 360 West Butterfield Road, Elmhurst, IL 60126