Monthly Archives: October 2013

MAP-21 is in Effect. Are You Compliant? Part I

MAP-21, or the Moving Ahead for Progress in the 21st Century Act (1.3MB PDF), took effect on October 1. Is your Supply Chain compliant?

At 584 pages, this act is a monster. Probably the most relevant to your supply chain and logistics activities is Division C which contains the Transportation Safety and Surface Transportation Policy, which starts on page 328 and ends on page 440, which contains the Motor Vehicle and Highway Safety Improvement Act, the Commercial Motor Vehicle Safety Enhancement Act, the Hazardous Materials Transportation Safety Improvement Act, and the Sport Fish Restoration and Recreational Boating Safety Act of 2012, with the first three being the most relevant.

In these acts, the most obvious sections of interest are 31206 that define increased penalties for odometer fraud, 31207 that extends prohibitions on importing non-compliant vehicles and equipment to defective vehicles and equipment, 31208 on the conditions on importation of vehicles and equipment and 31209 on port inspections in subtitle B of the Motor Vehicle and Highway Safety Improvement Act; 31307 on whistleblower protections of subtitle C of the Motor Vehicle and Highway Safety Improvement Act; 32107 on increased penalties for operating without registration and 32109 and 32110 on revocation of registration for imminent hazards and failure to respond to subpoena of subtitle A of the Commercial Motor Vehicle Safety Enhancement Act; 32203 on state reporting of foreign commercial driver convictions, 32204 on the authority to disqualify foreign commercial drivers, and 32205 on the revocation of foreign motor carrier operating authority for failure to pay civil penalties of subtitle B of the Commercial Motor Vehicle Safety Enhancement Act; 32302 on driver medical qualifications and 32304 on commercial motor vehicle operator training of subtitle C of the Commercial Motor Vehicle Safety Enhancement Act; 32504 on impoundment and immobilization of commercial motor vehicles for imminent hazard and 32505 on increased penalties for evasion of regulations of subtitle E of the Commercial Motor Vehicle Safety Enhancement Act; 32915 on additional motor carrier registration requirements, 32918 on financial security of brokers and freight forwarders, and 32921 on additional registration requirements for household goods motor carriers of subtitle I of the Commercial Motor Vehicle Safety Enhancement Act; and 33010 on civil penalties of the Hazardous Materials Transportation Safety Improvement Act.

This, of course, isn’t an exhaustive list of items that you need to be aware of as a broker or carrier, but just a starting one. For example, in 31105 on National Priority Safety Programs, which amends section 405 of title 23 of the United States Code, there is a section on distracted driving grants that authorizes the secretary to award a grant to any state that prohibits texting while driving and youth cell phone use while driving. This is likely going to result in (additional) cash-strapped states banning texting and (youth) cell phone use while driving. (So you better have a policy in place preventing your drivers from texting behind the wheel if you don’t already!)

So what is relevant in the sections of interest? Stay Tuned for Part II.

Banks Have A Place In The Supply Chain – But That Place is Simply Financial!

Supply chains require capital. Lots of capital. And the role of a bank is to provide that capital through financing, even though, these days, private lenders are sometimes doing more through Supply Chain Finance platforms (like those offered by Prime Revenue, Oxygen Finance, and Orbian) than the banks are.

However, and in the United States in particular, the role of a bank is not to invest in, and retain the majority control of, companies that control significant stores of commodities that drive the markets that banks run. It’s an indirect route to a price-fixing monopoly, which is a criminal federal offense under section 1 of the Sherman Antitrust Act. It seems that the banks realize this, and, according to this article on CFO.com that states A Bank Is Hiding Inside Your Supply Chain, they’ve found a new way to inflate commodity prices and make extra profit off of your supply chain at your expense.

According to Tim Weiner, Global Risk Manager of Commodities and Metals at MillerCoors LLC, who recently testified at a senate hearing, bank holding companies are slowing the load-out of physical aluminum from warehouses controlled and owned by these U.S. bank holding companies to ensure that they receive increased rent for an extended period of time. According to MillerCoors, they have to wait as long as 18 months for the metal (that is just sitting in a warehouse ready to be used) or pay a high premium in a market where there has been massive oversupply and record production.

And according to the article, and the hearing of the Financial Institutions and Consumer Protection Subcommittee of the Senate Committee on Banking, Housing & Urban Affairs that took place this summer on July 23, 2013, this isn’t the only instance where large U.S. banks have diversified into commodities-markets operations, stretching the limits of rules designed to separate banking and commerce to the point where part of the high prices and price volatility some commodities have experienced is likely due to the banks’ increased involvement in the storage, transportation, and trading of these physical commodities (when they are supposed to stick to the non-physical futures and options markets).

In SI’s view, banks shouldn’t own any business that has any control over a commodity. As the CFO article clearly states, through bank ownership of a commodities business, a financial institution can place its hand on the scale of supply and demand for a commodity and distort the free market. Furthermore, a bank can not only affect the price of the commodity, it can also make profitable bets on its direction in the futures markets. Plus, and this is really scary, a bank that owns a commodities business could choose to deny lending or underwriting to a competitor of that commercial business or even lend at preferential rates to its own commercial commodities business. Thus, SI is in full agreement that regulators need to force banks to be more transparent about their commodities’ operations and divest them where appropriate.

So what does this mean for your supply chain? It means you have to be ever vigilant and know where banks are in, or may be able to take, control in your supply chain and plan appropriately for the disruptive actions to cost or supply that they could take. It means that visibility is key, that transparency from your supply chain partners is more important than ever, and that good record keeping is a must. If banks start to unduly pressure your business, as they are doing to MillerCoors LLC and others, you need to have the data to stand up to them. Price-fixing and manipulation is illegal, and if enough companies stand up to it, it’s a safe bet that something will be done about it (unless the TPP passes. Then all bets are off).

Corporations Will Soon Rule the World


To the tune of Everybody Wants to Rule the World by Tears for Fears.

     Welcome to our life
     There’s no turning back
     Even while we sleep
     They’ll continue
     Acting on their worst behaviour
     Turn their backs on mother nature
     Corporations will soon rule the world

     It’s China’s design
     It’s Harper’s recourse
     A social divide
     That will take the most (of)
     our freedom and our pleasure
     Nothing ever lasts forever
     Corporations will soon rule the world

     There’s a room where the light won’t find them
     Counting money while the poor go bankrupt
     When they do they’ll buy the shelters too

     So sad they’ve almost made it
     So bad Obama’s played it
     Corporations will soon rule the world

     I can’t stand this lack of vision
     That will soon put us all in prison*
     Corporations will soon rule the world

     Say that we’ll never never never never need it
     One headline why believe it ?
     Corporations will soon rule the world

     Our freedom and our pleasure
     Nothing ever lasts forever
     Corporations will soon rule the world

By now, at least 3/4ths of North Americans should know that the Trans-Pacific Partnership, which allows you to be thrown in jail simply for clicking on a hyperlink embedded in a web-page, is bad. Very bad.

But what is not so obvious, as astutely pointed out in this article over on A Corporate Coup in Disguise on AlterNet.org, is that the Trans-Pacific Partnership will create a virtually permanent corporate rule over the people. No wonder the US and Canada, led by the worst prime minister ever, are getting on-board. Under this wonderful trade agreement, any food safety regulations and food labelling laws stricter than “international standards” become “illegal trade barriers” and get stricken down. Exports of natural gas cannot be regulated, and un-regulated instances of destructive fracking will sky-rocket. Big Pharma will get an additional 10 years of monopoly pricing on patented drugs and the ability to block generics until the monopoly runs out. Not only would the NSA would be given legal authority to police the entire internet, but all ISPs would have to act as the NSAs private on-line police force while banking regulations designed to prevent economic collapse get thrown out the window. And Corporations get to relocate all of their factories to the lowest cost TPP member country risk free thanks to enhanced foreign-investor protections.

In other words, corporations get to go where they want, do what they want, and not give a damn about sustainability, liability, or us. For you Christians out there, I think even the devil himself would be hard-pressed to come up with such a dastardly deal. Say NO to the TPP!


*Soon all prisons will be run by corporations too!

Market Disruption Forces Supply Chain Change

Market Disruption Forces Supply Chain Change

Despite what the title of this recent article over on Just Style might suggest, market disruption does not drive supply chain change, it forces it. However, the article is right when it notes that having an efficient and fast-reacting supply chain should be a must for any brand or retailer.

The difference is slight, but important. Driving implies there is some guidance to the movement. But the nature of disruption, especially in today’s supply chain, does little to guide an organization that needs to respond, and do so quickly. The organization is forced to change, because failure to do often results in a change in liquidity status from profitable to bankruptcy.

And it’s not just demographic shifts that a retailer or brand needs to react to, but disruptions further down the supply chain. Even if a brand can react quickly to a change in consumer preferences and adapt its main product line to have the look, feature, or ruggedness demanded by its target customer base, if a fire takes out its main manufacturing plant, or a labour dispute cuts off production of a needed rare earth metal, or an act of piracy results in its shipment being stolen, what is the brand going to do?

Organizations need supply chains that can react fast, but they also need supply chains that are informed even faster. In order to react, supply chains need multi-tier visibility into critical product lines, such as the visibility that Resilinc can provide. Otherwise, all the market intelligence in the world on changing consumer consumption patterns won’t do them any good if they don’t see that a critical even in their supply chain prevents them from being able to react accordingly.

Why Aren’t We Dealing With Extra-Planetary Supply Management on a Daily Basis? Part III

In Part I we asked Why Aren’t We Dealing With Extra-Planetary Supply Management on a Daily Basis? We decided that while it was a fair question, it wasn’t an easy one, for a number of reasons which include, but are not limited to, cost, time requirements (for a mission to Mars), and human safety (as some asteroids hurtle through space at 30 km/s, which is roughly 3 times the expected speed of a rocket-propelled shuttle). In Part II, after examining these issues, we decided that the primary reasons we aren’t yet on Mars and dealing with extra-planetary supply management on a daily basis are lack of funding and lack of focus. We also decided that both the US and China should provide this funding and this focus because it would solve a number of problems both countries are facing. Today, we explain how this focus, and a new space-race to Mars, is what is needed.

In our last post, we identified these problems facing the US and indicated that they could all be addressed, if not solved, by a nation-wide focus on a mission to Mars.

  • High Unemployment
  • Continual Decline in Manufacturing Jobs and Expertise
  • The Housing Crisis
  • Privacy Issues
  • The Drug War
  • Unfunded Liabilities
  • A Collapsing Dollar

Consider the root causes of these issues. The collapsing dollar is primarily due to the stagnating economy and lack of faith therein by the global investment community, unfunded liabilities are due to declining tax revenues, which in turn are due to economic decline and high unemployment, which is due to a lack of jobs, which is partially due to continued job loss to other countries and a lack of talent, which is due to lack of training. The housing crisis is also a result of unemployment and the economy, since it’s a result of people not being able to pay their mortgage and declining property values as a result of a weak economy. The drug war is ongoing partially due to a lack of funding but also due to a lack of technology and programs to detect and prevent drugs from entering the country, and privacy issues are due to a focus on internal vs. external surveillance, which in turn is partially due to an overfunding of military efforts.

So what if you corrected the funding, and focussed on meeting one big challenge, like the US did in the 1960s? You’d need talented people to meet this challenge, so you’d create jobs. Initially you wouldn’t have enough qualified people to fill the jobs, so you’d train them. As a result, employment would be lower and the output per person would be higher, as they’d be trained. In addition, since you’d need to create newer and better technology, and do it quickly in-house, you’d not only bring back manufacturing, but take it to a new level. The housing crisis would vanish. In addition, more employment and more innovation, which would have the side effect of developing new technologies that could be sold around the world, would prop up the economy, increase taxes, and decrease unfunded liabilities. Some of the necessary sensor technology would likely spark advances in technologies that could be applied to border security and drug tracking, without invading privacy, and advances could be made on the war on drugs. The only thing the space race wouldn’t address is the privacy issue, which could be solved simply by turning off the technology that monitors residents and citizens beyond a reasonable point and directing that funding to the new space race.

Moreover, it would also fix many of the problems facing China. As per Mitch Free’s recent article in Forbes on how Nothing Is As It Appears in China, China has some serious problems. The big ones we noted in our last post were:

  • the need to maintain an appearance of success and save face,
  • 1.3 Billion citizens to keep happy and 930 Million to keep employed,
  • population growth that can’t be adequately managed by the one-child policy,
  • factories that need to run and products that need to be consumed, and
  • corruption and the age-old tradition of bribery.

An appearance of success is important in China. That’s why the streets of Shanghai are lined with beautiful buildings, striking architecture, elaborate homes, and professionally marketed businesses even though the layouts are sparse and the offices bare or even unfinished on the inside. In addition, the government, needs to provide the appearance of stability, productivity, prosperity, and optimism in order to keep calm and order over an unprecedented population living on the edge of poverty. One has to remember that in China, the 1% control nearly 70% of the country’s wealth, which is double what the 1% control in the US. And even the one-child policy is not managing the growth the way the government wants. First of all, those that can afford to pay the fine and have a second child. Secondly, those who can’t afford to pay a fine and have a second child, especially in rural areas, will favour male children, even though families in most rural areas will be permitted a second child if their first child is a female. (This is evident by the fact that China will soon have 30 Million more men than women of marrying age.)

In addition, in order to keep its citizens working, if it has no other option, China will not only keep factories producing goods that the market doesn’t need or want, but will keep building entire cities in preparation for an urbanization that just doesn’t happen. For example, one Chinese State Owned Enterprise (SOE) produced 60,000 machines in the last year that are manually operated for a global market that only buys automated machines. Even though the market is no longer there, the machines were produced just to keep workers employed. In addition, in an effort to get rural citizens into affordable urban housing, China has been building as many as 10 new cities a year, some the size of New York and London, to accomodate hundreds of thousands or millions of residents, that never arrive. These beautifully planned, fully finished “ghost cities” designed to accomodate large populations only have a few thousand residents, who are primarily infrastructure employees and construction workers. (Forensic analyst Gillem Tulloch estimates there may be as many as 64 million empty apartments in Chinese ghost towns.)

Now imagine what would happen if China declared that its mission was to be the first country to land on Mars? It would likely start by taking all of that money being used to build “ghost cities” and directing it at R&D establishments. It would move the brighter workers out of the factories and into R&D labs and re-tool the factories producing useless machines to produce proto-types and components for rockets, shuttles, and other space vehicles. It would be able to keep just as many people employed, but it would be working towards a meaningful, useful goal. In addition, it would increase its rate of innovation, improve its GDP, and not only cement itself as the world’s second largest economy, but accelerate towards the point where it could potentially overtake the US, which would make it enormously successful in the eyes of its citizens and allow it to not only save, but gain, face in Asia (where face is important). And if it happened to figure out how to successfully create workable, maintainable artificial gravity in a manner that was hydroponic friendly, it could be the first to colonize Mars, which could help to solve its population problem (especially if it can also figure out how to mine water from asteroids).

The only problem that isn’t directly addressed is corruption, but if the population is focussed on progress, and not capital gain, corruption is less of a problem.

So bring on the space-race to Mars. The world will benefit! (A rising tide lifts all boats. And what tide is bigger than the tide that controls 1/3 of the world’s economy?)