Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.
Every day, giant container ships chug into the nation's ports and disgorge their contents: 20-foot boxes, 40-foot boxes and 45-foot boxes packed with mer- chandise bound for every corner of the nation. Once unloaded, those containers are swiftly transferred to trains or trucks, which whisk them off to destinations across town and across the country.
At least that's how it's supposed to work. In recent years, things haven't always worked out that way. Freight volumes have exploded over the decades, putting severe pressure on the aging transportation infrastructure. As a result, it's become all too common for intermodal freight to encounter backups and delays at the ports, on the highways and at intermodal terminals. "Our highways, waterways, railroads and aviation networks are simply not keeping up with ordinary demands," says Mike Eskew, chairman of UPS.
Lately, the rails have become a particular concern. Thanks to an upsurge in imports, the railroads are handling more intermodal containers today than at any time in their history. But they're not doing it well. Average train speeds have dropped, and service levels have slipped, prompting public criticism from some of their biggest customers. In recent months, both Scott Davis, chief financial officer of UPS, and Bill Zollars, chairman of YRC Worldwide, have assailed the railroads' poor record of on-time performance. And in April, UPS, the rails' biggest customer, announced that it had reluctantly begun shifting some of its freight from the rails back to the already congested highways.
An Interstate on steel? The looming infrastructure crisis has generated more discussion than solutions to date. But one long-time railroad executive, regulator and now academic observer has come up with a compelling answer to the problem. His vision? He calls it Interstate II. As he sees it, Interstate II would be a 21st century parallel to the Interstate Highway System developed in the 1950s and 1960s, with one important difference. The system he envisions would be based not on pavement, but on steel rails.
Who is this visionary? He's Gilbert Carmichael—known to most of his colleagues as Gil. Carmichael is one of the founders and senior chairman of the Intermodal Transportation Institute at the University of Denver. Appointed by President Ford to the National Transportation Study Committee, he served as chairman of the National Highway Safety Advisory Committee from 1973 to 1976. In 1997, he chaired the North American Intermodal Summit, which brought together highranking transportation officials from the United States, Canada, and Mexico to discuss intermodal policy. In 1990, he received the Founder's Gold Medal Award from the Pan American Railway Congress for a paper he wrote on the role of rail transportation in the 21st century.
In Carmichael's view, high-speed rail isn't just the best answer. It's the only answer. The railroads' current problems notwithstanding, rail represents the nation's sole hope for handling huge volumes of freight. "There is no way highway capacity can increase 2 to 3 percent a year for the next 20 years," he says. "No matter how many billions of dollars we spend, we cannot increase capacity by more than 1 or 2 percent." In contrast, he contends, railroads could double their capacity in that time.
Carmichael believes the technology for creating a highspeed train network is already available. He points to the high-speed passenger rail systems in Europe as an example of what might be. If the United States is willing to invest in the necessary infrastructure, he says, we could be seeing freight trains running at 80 miles per hour (and being passed by passenger trains streaking by at 120 miles per hour) before long.
The future is now
In fact, Carmichael argues that the development of a speedy and reliable rail system is already under way. "It's started," he says. Railroads are already making huge investments in their own systems.
As evidence, he points to the Alameda Corridor, a freight rail "expressway" for containers moving to and from the ports of Los Angeles and Long Beach. He also cites the Burlington Northern Santa Fe's investment in double track from Los Angeles to Chicago, and a joint venture between the Norfolk Southern and the Kansas City Southern to increase capacity on KCS's Meridian Speedway, a major east-west link in the rail network.
Carmichael also foresees the continued development of large multi-tenant distribution complexes with on-site access to road, rail and in some cases, ocean and air connections.
"New intermodal yards are becoming industrial parks, where trains and trucks swap containers and where companies are building distribution centers," he says. For example, early this year, CSX Corp. announced that it intended to build a 1,250-acre integrated logistics center in Winter Haven, Fla., which it describes as a truck, rail and warehousing hub and intermodal transfer facility. And the Wall Street Journal has reported on a similar development in tiny Rochelle, Ill., where Target, Lowe's and toy-maker RC2 Corp. are all building large DCs in close proximity to the Union Pacific's four-year- old Global III intermodal transfer yard.
Workin' on the railroads
Right now, the railroads are funding these capital projects on their own. But Carmichael would like to see the government step in and encourage them to continue investing. "I just hope that we come up with incentives, like tax-exempt bonds," he says.
Providing those incentives would be good for the nation, not just for the railroad industry, he argues. Railroads, which are easily the most fuel efficient of all the transport modes, can move freight nine times farther than a truck can on the same amount of fuel. With diesel fuel prices closing in on $3 a gallon, he believes it's in the national interest to improve rail performance. "The railroads are just so damned fuel efficient," he says. "And if oil goes to $100 a barrel, they can electrify if they want to."
But incentives alone won't be enough. The long-term development of an intermodal network depends on changing the way transportation executives and policy makers think about transportation issues, Carmichael says. "The old highway lobby hasn't begun to think intermodally yet," he says. "Even congressional committees are still structured by mode. The mindset is just not there yet to do these new intermodal facilities." Despite his Republican roots, he admits to frustration with the current administration. "They do not have a transportation program at all," he laments. He believes leadership on the issue is more likely to emerge from state governments.
Despite the obstacles, Carmichael remains optimistic about Interstate II's prospects. "I may be a little bit Pollyannaish, but with oil at $70 a barrel, we have to have the railroads as part of the solution," he says. "If we can hook rail and highway together, we can make an ethical transportation system, one that's both fuel efficient and environmentally sound. I'm talking about a whole new, safer and more secure transportation system. If we do it just right, the container will become a warehouse in motion."
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.
Krish Nathan is the Americas CEO for SDI Element Logic, a provider of turnkey automation solutions and sortation systems. Nathan joined SDI Industries in 2000 and honed his project management and engineering expertise in developing and delivering complex material handling solutions. In 2014, he was appointed CEO, and in 2022, he led the search for a strategic partner that could expand SDI’s capabilities. This culminated in the acquisition of SDI by Element Logic, with SDI becoming the Americas branch of the company.
A native of the U.K., Nathan received his bachelor’s degree in manufacturing engineering from Coventry University and has studied executive leadership at Cranfield University.
Q: How would you describe the current state of the supply chain industry?
A: We see the supply chain industry as very dynamic and exciting, both from a growth perspective and from an innovation perspective. The pandemic hangover is still impacting decisions to nearshore, and that has resulted in a spike in business for us in both the USA and Mexico. Adding new technology to our portfolio has been a significant contributor to our continued expansion.
Q: Distributors were making huge tech investments during the pandemic simply to keep up with soaring consumer demand. How have things changed since then?
A: The consumer demand for e-commerce certainly appears to have cooled since the pandemic high, but our clients continue to see steady growth. Growth, combined with low unemployment and high labor costs, continues to make automation a good investment for many companies.
Q: Robotics are still in high demand for material handling applications. What are some of the benefits of these systems?
A: As an organization, we are investing heavily in software that will allow Element Logic to offer solutions for robotic picking that are hardware-agnostic. We have had success deploying unit picking for order fulfillment solutions and unit placing of items onto tray-based sorters.
From a benefit point of view, we’ve seen the consistency of a given operation improve. For example, the placement accuracy of a product onto a tray is far higher from a robotic arm than from a person. In order fulfillment applications, two of the biggest benefits are reliability and hours of operation. The robots don't call in sick, and they are happy to work 22 hours a day!
Q: SDI Element Logic offers a wide range of automated solutions, including automated storage and sortation equipment. What criteria should distributors use to determine what type of system is right for them?
A: There are a significant number of factors to consider when thinking about automation. In my experience, automation pays for itself in three key ways: It saves space, it increases the efficiency of labor, and it improves accuracy. So evaluating which of these will be [most] beneficial and quantifying the associated savings will lead to a “right sized” investment in technology.
Another important factor to consider is product mix. With a small SKU (stock-keeping unit) base, often automation doesn’t make sense. And with a huge SKU base, there will be products that don’t lend themselves to automation.
With any significant investment, you need to partner with an organization that has deep experience with the technologies that are being considered and … in-depth knowledge of the process that is being automated.
Q: How can a goods-to-person system reduce the amount of labor needed to fill orders?
A: In most order picking operations, there is a considerable amount of walking between pick faces to find the SKUs associated with a given order or set of orders. Goods-to-person eliminates the walking and allows the operator to just pick. I have seen studies that [show] that 75% of the time [required] to assemble an order in a manual picking environment is walking or “non-picking” time. So eliminating walking will reduce the amount of labor needed.
The goods-to-person approach also fits perfectly with robotic picking, so even the actual picking aspect of order assembly can be automated in some instances. For these reasons, [automation offers] a significant opportunity to reduce the labor needed to fulfill a customer order.
Q: If you could pick one thing a company should do to improve its distribution center operations, what would it be?
A: Evaluate. Evaluate the opportunities for improving by considering automation. In my experience, the challenge most companies have is recognizing that automation is an alternative. The barrier to entry is far lower than most people think!
Toyota Material Handling and its nationwide network of dealers showcased their commitment to improving their local communities during the company’s annual “Lift the Community Day.” Since 2021, Toyota associates have participated in an annual day-long philanthropic event held near Toyota’s Columbus, Indiana, headquarters. This year, the initiative expanded to include participation from Toyota’s dealers, increasing the impact on communities throughout the U.S. A total of 324 Toyota associates completed 2,300 hours of community service during this year’s event.
The PMMI Foundation, the charitable arm of PMMI, The Association for Packaging and Processing Technologies, awarded nearly $200,000 in scholarships to students pursuing careers in the packaging and processing industry. Each year, the PMMI Foundation provides academic scholarships to students studying packaging, food processing, and engineering to underscore its commitment to the future of the packaging and processing industry.
Truck leasing and fleet management services provider Fleet Advantage hosted its “Kids Around the Corner Foundation” back-to-school backpack drive in July. During the event, company associates assembled 200 backpacks filled with essential school supplies for high school-age students. The backpacks were then delivered to Henderson Behavioral Health’s Youth & Family Services location in Tamarac, Florida.
For the past seven years, third-party logistics service specialist ODW Logistics has provided logistics support for the Pelotonia Ride Weekend, a campaign to raise funds for cancer research at The Ohio State University’s Comprehensive Cancer Center–Arthur G. James Cancer Hospital and Richard J. Solove Research Institute. As in the past, ODW provided inventory management services and transportation for the riders’ bicycles at this year’s event. In all, some 7,000 riders and 3,000 volunteers participated in the ride weekend.