Goodyear Tire & Rubber Co. held an electronic bidding process where 3PLs competed for Goodyear's Latin American business. Over 20 logistics firms placed bids on a country-by-country basis, with bidding becoming intense in some countries. Goodyear will analyze the bids and background criteria to select finalists to present to its transportation purchasing group. The 3PL with the best presentation will win the Latin American freight contract. Goodyear has implemented a strategy of contracting with single 3PL providers regionally to increase competition and reduce costs.

1. Ensenda: Going the ‘last mile’ 12
China’s air cargo heats up 58
Irrational carrier surcharges 66
Tight capacity in Pacific trade 68
AUGUST 2004
www.americanshipper.com
CCuttingutting
costscosts
David Fisher
manager of global
transportation purchasing,
Goodyear

2. Goodyear deflates transport spend 8
On June 16, The Goodyear Tire & Rubber Co.’s
transportation research group made company
history as global and regional 3PLs fought it
out in an electronic bid for the tire giant’s North
American business. “This is how competition
should work in the forwarding business when
it comes to handling a large shipper’s freight,”
said Goodyear’s David Fisher.
LOGISTICS 8
ISPS enforcement ‘a bumpy voyage’ 18
China Customs expands influence 24
Struggles to classify merchandise 26
Serving up enforcement 30
ACE payment feature not without cost 34
AES Option 4 still an option 36
Planning for when things go wrong 38
Apparel: ‘Year of the cliff’ 46
FORWARDING/NVOs 52
3PLs ripe again for consolidation 52
Menlo’s maritime expansion 53
Antidumping liability 55
TRANSPORT/INTEGRATORS 56
DHL positions itself as alternative 56
TRANSPORT/AIR 58
Polar Air to switch European hubs 64
TRANSPORT/OCEAN 66
Record containership capacity on order 66
Tight capacity in Pacific trade 72
China Shipping raises $1 billion 74
An American in Oslo 77
Matson sails on Hawaiian economy 80
Cargo hazards in a perilous climate 82
Vessel operators ride green wave 86
TRANSPORT/INLAND 88
Truck manifest nears completion 88
Model shipper/trucker contract 88
Study calls for chassis inspections 88
PORTS 89
Houston awards Bayport contracts 89
Savannah expansion progresses 89
Rotterdam terminal gets backing 89
SSA hands over UMM Qasr to Iraq 89
SERVICE ANNOUNCEMENTS
SenatoraddsMontreal/NorthEuropeslots...
Maersk Sealand adds 9th transpacific link
DEPARTMENTS
Comments & Letters 2
Shippers’ Case Law 90
Corporate Appointments 91
Service Announcements 92
Editorial 96
On the Cover
August 2004Vol. 46, No. 8
Going the ‘last mile’ 12
Ensenda has found profit in arranging last-mile delivery
services, the final supply chain link between distribution
centers and product end users. Formed in 2001,
the non-asset company has developed a national reach
to oversee local delivery providers, using proprietary
technology that brings selected local companies across
the U.S. and Canada into one delivery service.
Customers say the company is one of a kind.
China’s air cargo heats up 58
As Asian economic and export growth continues
to gain strength, Asian airlines are beginning to lay
the groundwork to further challenge foreign airlines
for air cargo supremacy in the region and on long-
distance routes. Airlines in Japan, Korea, Taiwan
and Hong Kong are rapidly investing in capacity
to take advantage of economic growth that is expected
to exceed the world average during the next 20 years.
Irrational carrier surcharges 68
Irritated by the lack of explanations about the cost
of several surcharges, shippers are questioning the level
or the very need for the long-established port and fuel
surcharges invoiced by container shipping lines. Ocean
carriers, like providers of other modes, have long
used surcharges to pass on to shippers any changes
in underlying costs. But shippers argue the carriers should
manage bunkers and CAFs as a cost of doing business.
Shippers’ NewsWire DAILY e-mail service
To subscribe call 1 (800) 874-6422 or on the Web at www.americanshipper.com
AMERICAN SHIPPER: AUGUST 2004 1

3. Goodyear deflatesGoodyear deflates
transportation spendtransportation spend
Tire company’s global serviceTire company’s global service
contracting strategy increasescontracting strategy increases
carrier competition for its business.carrier competition for its business.
BY CHRIS GILLISBY CHRIS GILLIS
8 AMERICAN SHIPPER: AUGUST 2004

4. AMERICAN SHIPPER: AUGUST 2004 9
for Goodyear, who watched the bidding
unfold on a screen image projected from
a laptop.
The 3PL selection process for Latin
America is part of Goodyear’s overall stra-
tegic plan to increase competition among
its transportation and logistics services
providers and drive out millions of dollars
a year in supply chain expenditures.
On this day, more than 20 logistics
firms bid for Goodyear’s Latin American
business on a country-by-country basis.
Goodyear staff monitored the progress of
each country bid on a conference room
screen.A digital ringer sounded each time
a 3PL placed a bid.
Thebiddingtestedthe3PLs’willingness
tohandleGoodyear’sLatinAmericancargo
atacompetitiveprice.However,inthiscase,
the 3PLs had no exact knowledge of whom
they were competing against. They could
only view their rankings against others.
For some countries, the bidding was so
intense that it went into more than a dozen
two-minute overtimes before a single
3PL provided the lowest bid. Most of the
country-by-country bids were finished
by noon.
“Theselogisticsproviderscameintoday
prepared to do battle,” Fisher said. “This
is the best way for them to demonstrate
interest in Goodyear.”
During the summer, Goodyear will
analyze the country-by-country bids,
combined with other background criteria,
to pick a handful of worthy contenders.
These logistics firms will be invited to
AkrontomakepresentationstoGoodyear’s
transportation purchasing group.The 3PL
withthemostconvincingpresentationwill
win Goodyear’s Latin American freight
business.
“Our goal is to have a single logistics
service provider for each region,” Fisher
said.
This is a large operational change for
Goodyear, which once had relationships
with about 200 forwarders and brokers
worldwide.
Latin America is the last market for
Goodyear to implement its single 3PL
service provider program, and perhaps
the toughest to pull off. In North America
andAsia,Goodyearhasalreadycontracted
withHouston-basedEGL.Thecompanyre-
cently selected U.K.-based Exel to oversee
its logistics needs in Europe, North Africa
and the Middle East. Besides serving the
regions, these forwarders are expected to
worktogethertomanageGoodyear’sglobal
freight traffic.
“Our expectation is that the forwarders
andbrokerswillhaverelationshipsnotjust
with us, but also with each other,” Fisher
said.“Theyarenolongercompetitorswhen
it comes to our business. They are cousins
sharingthesameaccount,”headded.“They
will have to discuss how together they can
deliver maximum benefit to Goodyear’s
business.”
Fromthe3PLs’perspective,theyshould
enjoy a long-term relationship with this
global shipper.
The regional logistics providers are
also responsible for managing the service
performance of any subcontracted trans-
portation activities for Goodyear freight
within the region.
Goodyear will realize some immediate
transportation costs savings, such as $8
million a year in reduced documentation
transfer fees. However, the company ex-
pects the biggest benefits to its bottom line
during the next several years.
“We’re in the middle of an intense five-
year plan to improve the logistics perfor-
mance of our company,” Fisher said. “Our
focus is first on the greatest cost savings
opportunities.”
GlobalContracting. Thetiremanufac-
turer has spent the past two and half years
tightening purchasing controls for ocean
transportation, and has standardized its
service contracts with the liner carriers.
Like many multinational firms, Good-
year used to manage its ocean carrier
service contracts on a region-by-region
basis. The company’s business regions for
manufacturing include North America;
European Union; Eastern Europe, North
Africa and Middle East; Latin America;
andAsiaPacific.Goodyearalsohasglobal
business units for engineered products and
chemicals.
“This transportation purchasing model,
while we lived with it for a long time,
resulted in lots of leakage,” Fisher said.
“Noonewascoordinatingourinternational
activity. There was little cohesion in the
supply chain.”
Inmid-2002,Goodyearheldaweeklong
meeting in Akron that included its most
knowledgeable transportation managers
from the global regions. The goal was
to lay the foundation for a standardized
“boilerplate”contractin2003to“aggregate
and leverage” the company’s entire spend
on ocean transportation.
This was no easy feat for Goodyear,
O
n the morning of June 16, The Goodyear Tire &
Rubber Co.’s transportation purchasing group
made company history as global and regional
third-party logistics firms fought it out in an electronic bid
for the tire giant’s Latin American business.
“This is how competition should work in the forwarding
business when it comes to handling a large shipper’s freight,”
saidDavidFisher,managerofglobaltransportationpurchasing
“Our expectation is that
the forwarders and brokers
will have relationships
not just with us, but also
with each other. They
are no longer competitors
when it comes to our
business. they are cousins
sharing the same account.”
David Fisher
manager of global
transportation purchasing,
Goodyear Tire & Rubber Co.

5. LOGISTICS
A shipment of tires is loaded on a vessel in Russia.
Reform Act. The U.S. Federal Maritime
Commission has received a handful of peti-
tions from the country’s largest NVOs, such
as UPS, FedEx Trade Networks and DHL
Danzas, seeking exemption under OSRA
to enter confidential service contracts with
shippers.
“We as a shipper consider government
sponsorshipofthisasapositiveofferingfor
the industry, because a lot of NVOs could
adequately compete in this market,” Fisher
told American Shipper.
A portion of Goodyear’s ocean freight,
however, remains outside the global tariff.
The company uses bulk carriers, primarily
PACC Lines and Indo Trans, to transport
bundles of natural rubber from sources in
Malaysia, Indonesia, Thailand and Singa-
pore to the U.S. West Coast.
On A Roll? For now, competition among
tire manufacturers remains
fierce. Goodyear not only com-
petes worldwide with other in-
dustryplayers,suchasMichelin,
Bridgestone, and CooperTire &
Rubber, it must confront numer-
oussecond-tiertireproducersfor
market share. Goodyear makes
both name brand and lower-
priced private-label tires, which
it sells to a large international
network of dealers.
Thecompanyisstrugglingfor
profitability. In 2003, Goodyear
reported a net loss of $802.1
million.Between2001and2002,
Goodyear reported a combined
net loss of $1.4 billion. The tire
company recently completed an
investigation over accounting ir-
regularities,whichresultedinthe
restatementofitsfinancialresults
backto1999.Goodyearhasstartedtonarrow
its losses in 2004 and reported a first quarter
netlossof$76.9million,comparedto$196.5
million for the same quarter last year.
Goodyear, with its plants and tire dealers
scatteredthroughouttheworld,believesthat
improvements to how it manages its supply
chain are one of the key strategic ingredient
to the company’s return to profitability.
“This one cuts right to the heart of what’s
important,”saidGoodyearchairmanRobert
J.KeeganatanAkronbusinessroundtablein
March.“Ournewsupplychainorganization
was designed, staffed and funded to create
a competitive advantage in our industry for
our customers and for us.
“It’s designed to streamline and simplify
the order process with unprecedented ac-
curacy. And to get the right tire in the right
place at the right time, and accomplishing
this at low cost with low inventories.” ■
which moves more than 100,000 TEUs of
cargo in about 2,200 trade lanes worldwide
eachyear.Duringthemeeting,theGoodyear
team compressed its trade lanes into 150
bundles. They decided to allow carriers to
bid on any lane in any bundle of the bid to
increase competition.
More than 35 liner carriers were given
three days to bid on the Goodyear’s freight
business.Afterthebidswerereturned,Good-
yearbrokeapartthebundlesbylaneforcost
analysis.Awardswerethenimplementedon
a per-lane basis. The 2003 service contract
structure resulted in a global transportation
savings of more than 17 percent.
Thecontractforallcarriersalsoexpanded
credit (payment) terms for Goodyear by
about 40 percent, and for the first time
centralized access to ocean freight rates for
all regions. It also established a standard-
ized global routing guide and mechanisms
for contract compliance and data
visibility.
Fisheradmittedthatthefirstyear
under the new contracting process
was “intense” for the carriers.
“There was some need to improve
the process,” he said.
Goodyear refined the terms and
conditionsofitscontractsfor2004.
The company also placed a portion
of its contract proposal online and
gave the carriers a week to submit
their bids. Goodyear then took a
week to analyze the results. The
company gave the carriers another
week to make any minor changes
to better their offers before final-
izing its contracts under the global
tariff.
“It’s a diplomatic process,”
Fisher said. “We don’t want to treat
the carriers like a commodity. All
we’re doing is developing a global tariff to
get everyone operating off the same page.
We want to generate positive cash flow and
keep our cargo moving.”
Besides, Fisher said, some of Goodyear’s
biggest customers are the ocean carriers
themselves,becausetheyneedtiresfortheir
container chassis pools.
Goodyearuses12selectioncriteria,such
aspaymentandshippingterms,cargotransit
times and frequency of sailings, to select its
carriers for its contract.
Carriersthatparticipateintheglobalcon-
tract must provide Goodyear with monthly
reports about the actual amounts of cargo
moving through the port pairs. “We use this
data to evaluate our own data,” Fisher said.
“Our portfolio becomes crisper.”
Fisher said Goodyear’s goal is not to put
“false freight” in its global tariff. “We don’t
want the carriers to bid for 100 containers
in a lane when we actually ship 80,” he said.
“Our improved forecasts help the carriers
determine how busy their ships will be.”
Centralized control of global transporta-
tionpurchasesalsohelpsGoodyearmanage
changes in its business, such as adding
trade lanes to serve new customers. “Be-
cause we’ve done the lion’s share of work,
contract maintenance work is generally
straightforward. In the past, there were
lots of people all over the world involved
in contract changes,” Fisher said.
While many shippers began experienc-
ing freight rate increases from the carriers
during the past two years, Goodyear kept
its transportation spend steady through its
contracts. The company even realized a 5-
percent savings globally in transportation
expenditures in 2003. “We held our own in
the market last year, which was a victory
for us,” Fisher said.
Goodyear anticipates that next year
carriers will begin to experience capacity
increases beyond what large shippers, such
asitself,areabletoabsorb,whichcouldstart
a backpedaling on future rate increases.
Goodyearisalreadyplanningforimprove-
ments to its 2005 contract. The company
wants to create additional incentives for
the carriers, such as reverse or cross-trade
lane definitions and continuous movement
agreements. Goodyear will also use its 2005
contract to:
• Leverage credit (payment) terms.
• Leveragepricesbetweencontainerand
breakbulk carriers.
• Include inland trucking and delivery
trucking within negotiations.
Goodyear is open to the prospect of non-
vessel-operating common carriers entering
service contracts with shippers, a process
banned under the 1998 Ocean Shipping
10 AMERICAN SHIPPER: AUGUST 2004