|As opposed to making an issue over what happened, you are taking issue over what happened. And, that is exactly what you should do.|
Your manager demonstrated poor judgment by allowing a new hire to dictate his own title because he does not want to report to a female. This completely undercuts your credibility, influence, and role in the department. If a new hire is not comfortable reporting to an individual because of his or her gender, then that person should not be hired.
You should voice your concern to your boss, but since he went along with the new hire's demand, you will probably need to speak with upper management. Company topsiders are often interested in managerial decision-making that undercuts morale, motivation, professionalism, and equitable treatment. You may be managing the Logistics Department, but there is no logic to this hiring decision at all.