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Paul Verst Wins Menzies Honor

Paul T. Verst, president of Verst Group Logistics, was named the 2016 recipient of the Jock Menzies Distinguished Service Award presented each year by the International Warehouse Logistics Association.

The honor was bestowed last March during the association’s 125th anniversary convention and trade show held in Orlando, FL.

The IWLA Jock Menzies Distinguished Service Award, one of the industry’s highest honors, recognizes outstanding leadership and service to the warehouse logistics industry and to IWLA.

During his many years of service with IWLA Verst served in a wide variety of leadership roles, including being its chairman for 2013-14, and on the association’s Executive Committee as immediate past chairman for 2014-15.

Verst obtained a bachelor’s degree and an MBA from Xavier University and served in leadership roles in alumni organizations, community nonprofit groups and his church.

He serves on the executive board of the Northern Kentucky Chamber of Commerce and the Ohio Warehouse Association. He also is active in the Council of Supply Chain Management Professionals and the Warehousing Educational Research Council.

Verst Group Logistics is a family-owned third-party logistics company offering warehousing, transportation and packaging. The company has warehousing trucking operations in Ohio, Kentucky, Indiana and Michigan.

The IWLA award was dedicated in 2014 to the memory of T. “Jock” Menzies III, who died in 2013 and whose Baltimore-based Terminal Corporation is a member of ACWI.  

CP Halts Costly Bid to Acquire NS

After spending a large amount of shareholders’ money on a six-month long futile attempt to acquire Norfolk Southern, the top management of Canadian Pacific has quietly walked away from the effort.

CP CEO Hunter Harrison, said “We have long recognized that consolidation is necessary for the North American rail industry to meet the demands of a growing economy, but with no clear path to a friendly merger at this time, we will turn all of our focus and energy to serving our customers and creating long term value for CP shareholders.”

The announcement came on Apil 11, a little over a week before CP was scheduled to hold its annual shareholders meeting.

CP’s announcement said stepping away from the proposed merger included its withdrawal of a resolution asking NS shareholders to vote in favor of negotiations between the two companies at the NS annual meeting slated for May.

The NS board of directors had rejected three offers from CP late last year, in part because it contends that Surface Transportation Board approval of such a merger two Class I railroads is highly unlikely.

The $28 billion offer to acquire NS raised widespread opposition that took CP management by surprise. Members of Congress, state political leaders, other U.S. railroads and shippers, including UPS and Federal Express, also opposed the merger (AA, 1-15-16, P. 5).

Adding pressure on the CP leadership is the fact that one of its largest shareholders, U.S. hedge fund mogul Bill Ackman, is fighting to rescue the pharmaceutical firm Valeant, which is struggling with $33 billion of previously undeclared debt stemming from a merger binge, and facing accusations of fraud ranging from deceiving consumers to serious accounting violations.

Uber Ends Driver Suits, Keeps Model

The ride service Uber settled two class action lawsuits for $100 million where its drivers claimed to be employees, while managing to retain its independent contractor business model.

Uber continues to fight similar lawsuits regarding driver status in Florida, Arizona and Pennsylvania.

“Drivers value their independence – the freedom to push a button rather than punch a clock, to use Uber and Lyft simultaneously, to drive most of the week or for just a few hours,” said Uber CEO Travis Kalanick.

“That said, as Uber has grown — over 450,000 drivers use the app each month here in the U.S. — we haven’t always done a good job working with drivers,” he admitted. “It’s time to change.”

The suits representing an estimated 385,000 Uber drivers were filed in California and Massachusetts –states where policymakers are unfriendly towards the contractor model, even to the point of enacting legislation written by unions seeking to coerce employers to end their use of contractors.

A bill recently introduced in the California state legislature also would allow independent contractors who drive for companies like Uber and Lyft to organize for the purpose of bargaining over pay and benefits (AA, 4-15-16, P. 3).

Under the settlement terms, Uber agreed to provide drivers with information on why they are terminated from using the company’s app. Previously, drivers were banned with little or no explanation.

Uber said this usually occurs because of such things as unsafe driving, carrying a firearm, using drugs and alcohol, and refusing to pick up passengers after agreeing to do so.

The settlement also allows the creation of drivers’ associations that will meet with management regularly to discuss issues of importance. The Teamsters are creating such an association in California. Uber drivers in Seattle already are working with the Teamsters after the city enacted a law permitting driver contractors to organize.

Trucking Congestion Concerns Planners

Truck and automobile traffic in the United States is growing along with the population and the economy, which is increasing supply chain costs to the point that it raises new concerns for planners and policymakers.

Traffic congestion on the U.S. National Highway System added over $49.6 billion in operational costs to the trucking industry in 2014, according to a study by the nonprofit American Transportation Research Institute.

This year ATRI expanded its previous cost-of-congestion research from the Interstate System to the entire NHS network. ATRI calculated delays total more than 728 million hours in lost productivity, which equates to 264,500 commercial truck drivers sitting idle for a working year.

“Unfortunately we’ve come to expect traffic congestion as a part of our daily lives but ATRI’s latest analysis illustrates what a significant productivity drain that congestion is on our industry and the economy at large,” said David Congdon, CEO of Old Dominion Freight Line.

ATRI’s analysis describes which of the states, metropolitan areas and counties were most impacted by delays and subsequent increased costs.

More than a dozen states experienced increased trucking costs of over $1 billion each due to congestion, with Florida and Texas leading the way with more than $4 billion each, the researchers found.  

As can be expected, traffic congestion tended to be most severe in urban areas, with 88% of the congestion costs concentrated on only 18% of the network mileage, and 95% of the total congestion cost occurring in metropolitan areas.

“This concentration of congestion has been well-documented in ongoing work by ATRI which annually identifies the worst truck bottlenecks in the U.S.,” points out W. Ford Torrey IV, ATRI research associate.

The analysis also demonstrates the impact of congestion costs on a per-truck basis, with an average increased cost of $26,625 for trucks that travel 150,000 miles annually.

The top 10 states measured by total cost of congestion, starting with the worst, are Florida, Texas, California, New Jersey, New York, Illinois, Pennsylvania, North Carolina, Georgia and Wisconsin.

In February the new highway program made available $800 million in federal grants through the government’s first program dedicated to speeding up the flow of cargo.

State and local officials struggle with how to fund new projects aimed at improving freight flow. Various toll schemes, like hot lanes, may alleviate congestion but also add to trucking costs.

The same week the ATRI report was issued the Port of Long Beach announced it is studying how to replace trucks with more trains for shipping containers relatively short distances, including to California’s Inland Empire distribution hub.

A double-stack train could take about 750 truck trips off the roads, Michael Christensen, the port’s senior executive for supply chain optimization, told Transport Topics.

“Drayage costs are up, truck requirements are more stringent, congestion is greater,” he says. “We’re saying maybe now is the right time to look at this,” he explained, admitting that the need to build intermodal yards and other facilities at the destination sites could be a stumbling block.

In the meantime, federal legislators are struggling to find ways to fund the five-year surface transportation program enacted last December.

Congress committed the federal government to spend $305 billion through fiscal 2020, funded with federal fuel tax revenues as well as general revenues and other sources that legislators have not yet identified (AA, 12-15-15, P. 1).

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