Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.
Former House majority leader Dick Armey once likened Washington, D.C., to Hollywood without a tan: "They're both filled with overprivileged people who are driven to insanity by the notion that they might somehow lose their privilege." That may explain a lot about what goes on in Washington, but it provides absolutely no insight into how Dirk Van Dongen, the humble head of a little known trade group, has come to be one of the most influential movers and shakers inside the Beltway.
Possibly the most influential man you've never heard of, Van Dongen heads up the National Association of Wholesaler-Distributors (NAW)—a trade group whose members are mostly small and medium-sized owner-managed businesses like South Jersey Welding Supply, Penn State Seed Co. and Burns Veterinary Supply. But the trade group's size—it has just 20,000 members—belies its influence. The companies may be small, but collectively, these middlemen do business that's measured in the trillions of dollars annually.
But that alone doesn't account for NAW's political pull. To understand that, you need to look to the wholesaler-distributors' man in Washington, Van Dongen. During his two decades at the helm of NAW, he's cultivated an impressive list of contacts in high places. (He's rumored to be on the White House's speed dial.) And he's worked those connections for a range of small business causes to remarkable effect. If your business benefited from the first President Bush's tax cut, tort reform or OSHA deregulation, to name just a few, you're in Van Dongen's debt.
As for what he's up to today, Van Dongen says he's focusing his efforts on legislation to repeal the inheritance tax, product liability reform, health plans for small businesses and tax policy. He spoke recently with DC VELOCITY Editorial Director Mitch Mac Donald about NAW's role in Washington, why NAW's members enjoy unusually good access to members of Congress, and why you can't always believe what you read in lobbyists' press releases.
Q: Among Washington lobbying groups, NAW has earned a reputation for wielding far more clout than you would expect from a group of its size. How do you account for that?
A: It starts with our constituency, and I mean that very, very seriously. We don't happen to have deep pockets, but we have an absolutely superior constituency when it comes to impacting Washington. Wholesale distributors make up a very, very significant part of the economy. The way our constituency is shaped, we end up having the same relative numerical strength in a less populous state like Montana that we do in high-population states like New York or California. That allows us to have a great impact.
Q: There must be more to it?
A: Yes. As you know, the overwhelming majority of these businesses happen to be owned by the people who run them. And although there are a number of giants in this industry today, most of these players are small or medium sized. That's important because it means they are community rooted. Our members went to elementary or high school with the people who now represent them in the House and the Senate. They played on sports teams with them. They dated each other's brothers and sisters, and so forth. As a result, they've forged very substantial relationships with the members of Congress. We have a database of personal contacts that folks in this industry have with members of Congress. In fact, we've documented personal relationships between our members and 433 of the 435 representatives in the House and with every single member of the Senate.
Q: Powerful stuff.
A: That's a huge advantage, so when I say that whatever influence we have in this city starts with that resource, I'm quite serious. The overwhelming majority of our members own their companies, which means that if they care about an issue, they're free to take action. They don't have to go down to their lawyer's office and their marketing department and their PR people, and so on and so forth, as is the case—and, appropriately so—with your Fortune 100 corporations. They are action-oriented. All we do is inform, enable and focus that capacity.
Q: In other words, your role is making sure they're aware of the things they need to be aware of?
A: Yes, that and giving them an easy way to convey their views. We have always done that. Today we do it with Internet-based systems that make it very, very easy for members. They just go to our Web site and click on the button labeled "Tell Congress." The site lets you enter your ZIP code to get the names of your senators and representatives. It gives you talking points on various issues to help you write a letter in your own words—we don't provide standard forms or postcards people can mail to Congress. So, you create your message. You hit a button. You are identified in the e-mail, which is important because that lets the receiving software on the Hill identify you as a constituent (messages that don't come from the representative's district or state are filtered out). We get a copy of the message. It's a very effective system. We're not the only people in town with such a system. They're fairly universal these days, but what we've got, again, is that quality base of people.
Q: Sounds like a nice application of technology. It gives NAW members an effective way to be heard inside the Beltway. And it gives members of Congress and their staffs a way to pick out the messages that really matter to them—the ones from their voting constituents—from the tide of incoming messages.
A: Precisely. As a result, the communications flow in real time. A member of Congress can vote "yea" or "nay" on a piece of legislation as you and I are talking and within five minutes, we can notify everybody in the state who needs to know so they can express either their appreciation or their consternation. It's a far cry from the days not so long ago when communication was by snail mail or by telephone.
Q: Why is it important for your members to have representation in the nation's capital?
A: The business of Washington is producing legislation and regulation. That is the work product of this city. You've got just an absolutely gigantic machine here that spends every working day doing that. That legislation quite obviously has impact. It has impact on broad economic conditions. It has impact on companies. It has impact on how you can and cannot run your business. It has impact on how much of the profit you make you can keep and on and on and on. Those decisions are going to be made whether you stand up to be counted or not. It is really dangerous to simply ignore it until you get a chance to read what they have decided.
Q: Indeed. What are some of the legislative issues that you folks are watching for your members?
A: We basically track broad economic legislation that impacts all distributors as a class, irrespective of what products might go into their warehouses or through their DCs. We are always concerned with tax policy. We are concerned right now with initiatives that are part of the reconciliation process to extend the reduction in dividend capital gains taxes that was enacted a couple of years back. We are very deeply involved and have been for years in efforts to repeal the so-called death tax. In fact, there was to have been a Senate vote the Tuesday of the week after Katrina hit, which had to be postponed, but that is an extremely high priority of ours. The president's tax reform panel presented its vision for tax reform to him back in November. Should the president bring tax reform to center stage this year, we will be deeply involved in that. We are working very, very hard to secure enactment of legislation for small business health plans or association health plans in order to try to get at the really severe pressure that continually increases our members' health care insurance costs. So it is a full plate.
Q: Obviously, your members move a lot of stuff on the nation's highways and rails, and so forth. Do you also monitor legislation relating to the nation's transportation infrastructure, like the recent highway reauthorization bill?
A: Yes. We weren't deeply involved in the last reauthorization, but we were certainly supportive of finally getting some action on the highway bill. We believe that one of the things that keeps the country competitive is a healthy infrastructure, which raises a concern on our part with respect to federal spending. As you are probably well aware, the paradox with regard to highway funds is that they are collected via a specific tax and are supposed to be expended for that purpose. But those funds are held hostage by the U.S. Congress in a trust fund because it makes the budget look better. When they spend those trust fund dollars, it makes the budget look bad. It's a crazy way to do business.
Q: Do you find people surprised by the level of influence
that NAW has in Washington?
A: Candidly, it is inappropriate, in my view, to brag on it. There are a number of organizations in this town that have a tendency to overstate their impact. You'll see it when a piece of legislation passes. As many as 40 or 50 associations may have been involved, but when you read their internal publications, each one of them will claim that it did it on its own. Figuring out how to tell the story can be a challenge, of course: on the one hand, you want to get the word out about what you're doing. You've got to advertise yourself in this business as in any other business. On the other hand, you don't want to be out there saying, "Look at me, we are just really, really important." You just hope the story gets out in different ways.
Q: There's a perception out there that groups like NAW today have more involvement and influence in helping to set legislative agendas than they might have in the past. Do you agree with that?
A: Qualitatively, I do agree that, yes, groups like NAW have more involvement and influence today, but it's impossible to put some sort of a metric on it. The reality of this town is that every decade, the agenda seems to get more complex than in the previous decade. You have a bigger government. It is interested in more things. It is doing more things. It is dealing with more complicated things. In terms of how you impact the process, organizing yourself to do that as opposed to everybody doing it on an ad hoc basis is really important to advancing your cause. That is why people came together in associations to begin with.
What you have seen mature over the past 20 years is the phenomenon of coalitions, where associations themselves join with other associations to form an entity to advocate for a specific cause. Congress likes it because that means it only has to deal with one entity, not with every member of the entity. There is an efficiency to it because the Congress will say, "Don't come to us until you all agree on something." We have to self arbitrate, if you will, rather than leave that for them to do. Coalitions have gotten extremely large in recent years. For example, one of the major coalitions created in the early days of the president's first term was something called the Tax Relief Coalition. TRC, which is administered out of our office, has over a thousand member organizations. Those thousand organizations represent somewhere around 1.8 million businesses. So it is huge.
Q: That's an impressive number by any measure.
A: When you add to that the real-time response and capabilities to communicate throughout that universe electronically, it is an immense efficiency. Think of it in terms of the supply chain. Instead of moving boxes around, you're moving information around.
Q: Off the top of your head, if you were to look back, say, 50 years, what is the biggest change or innovation that has affected U.S. business?
A: That is a fascinating question. It's kind of like asking: What's your favorite restaurant in New York City? You almost can't name one. There have been so many. It seems to me that through a variety of both challenges and opportunities, American business has this wonderful capacity to reinvent itself. It is the resiliency of the American business community in combination with a very, very strong entrepreneurial bent on the part of the American people.
Congestion on U.S. highways is costing the trucking industry big, according to research from the American Transportation Research Institute (ATRI), released today.
The group found that traffic congestion on U.S. highways added $108.8 billion in costs to the trucking industry in 2022, a record high. The information comes from ATRI’s Cost of Congestion study, which is part of the organization’s ongoing highway performance measurement research.
Total hours of congestion fell slightly compared to 2021 due to softening freight market conditions, but the cost of operating a truck increased at a much higher rate, according to the research. As a result, the overall cost of congestion increased by 15% year-over-year—a level equivalent to more than 430,000 commercial truck drivers sitting idle for one work year and an average cost of $7,588 for every registered combination truck.
The analysis also identified metropolitan delays and related impacts, showing that the top 10 most-congested states each experienced added costs of more than $8 billion. That list was led by Texas, at $9.17 billion in added costs; California, at $8.77 billion; and Florida, $8.44 billion. Rounding out the top 10 list were New York, Georgia, New Jersey, Illinois, Pennsylvania, Louisiana, and Tennessee. Combined, the top 10 states account for more than half of the trucking industry’s congestion costs nationwide—52%, according to the research.
The metro areas with the highest congestion costs include New York City, $6.68 billion; Miami, $3.2 billion; and Chicago, $3.14 billion.
ATRI’s analysis also found that the trucking industry wasted more than 6.4 billion gallons of diesel fuel in 2022 due to congestion, resulting in additional fuel costs of $32.1 billion.
ATRI used a combination of data sources, including its truck GPS database and Operational Costs study benchmarks, to calculate the impacts of trucking delays on major U.S. roadways.
There’s a photo from 1971 that John Kent, professor of supply chain management at the University of Arkansas, likes to show. It’s of a shaggy-haired 18-year-old named Glenn Cowan grinning at three-time world table tennis champion Zhuang Zedong, while holding a silk tapestry Zhuang had just given him. Cowan was a member of the U.S. table tennis team who participated in the 1971 World Table Tennis Championships in Nagoya, Japan. Story has it that one morning, he overslept and missed his bus to the tournament and had to hitch a ride with the Chinese national team and met and connected with Zhuang.
Cowan and Zhuang’s interaction led to an invitation for the U.S. team to visit China. At the time, the two countries were just beginning to emerge from a 20-year period of decidedly frosty relations, strict travel bans, and trade restrictions. The highly publicized trip signaled a willingness on both sides to renew relations and launched the term “pingpong diplomacy.”
Kent, who is a senior fellow at the George H. W. Bush Foundation for U.S.-China Relations, believes the photograph is a good reminder that some 50-odd years ago, the economies of the United States and China were not as tightly interwoven as they are today. At the time, the Nixon administration was looking to form closer political and economic ties between the two countries in hopes of reducing chances of future conflict (and to weaken alliances among Communist countries).
The signals coming out of Washington and Beijing are now, of course, much different than they were in the early 1970s. Instead of advocating for better relations, political rhetoric focuses on the need for the U.S. to “decouple” from China. Both Republicans and Democrats have warned that the U.S. economy is too dependent on goods manufactured in China. They see this dependency as a threat to economic strength, American jobs, supply chain resiliency, and national security.
Supply chain professionals, however, know that extricating ourselves from our reliance on Chinese manufacturing is easier said than done. Many pundits push for a “China + 1” strategy, where companies diversify their manufacturing and sourcing options beyond China. But in reality, that “plus one” is often a Chinese company operating in a different country or a non-Chinese manufacturer that is still heavily dependent on material or subcomponents made in China.
This is the problem when supply chain decisions are made on a global scale without input from supply chain professionals. In an article in the Arkansas Democrat-Gazette, Kent argues that, “The discussions on supply chains mainly take place between government officials who typically bring many other competing issues and agendas to the table. Corporate entities—the individuals and companies directly impacted by supply chains—tend to be under-represented in the conversation.”
Kent is a proponent of what he calls “supply chain diplomacy,” where experts from academia and industry from the U.S. and China work collaboratively to create better, more efficient global supply chains. Take, for example, the “Peace Beans” project that Kent is involved with. This project, jointly formed by Zhejiang University and the Bush China Foundation, proposes balancing supply chains by exporting soybeans from Arkansas to tofu producers in China’s Yunnan province, and, in return, importing coffee beans grown in Yunnan to coffee roasters in Arkansas. Kent believes the operation could even use the same transportation equipment.
The benefits of working collaboratively—instead of continuing to build friction in the supply chain through tariffs and adversarial relationships—are numerous, according to Kent and his colleagues. They believe it would be much better if the two major world economies worked together on issues like global inflation, climate change, and artificial intelligence.
And such relations could play a significant role in strengthening world peace, particularly in light of ongoing tensions over Taiwan. Because, as Kent writes, “The 19th-century idea that ‘When goods don’t cross borders, soldiers will’ is as true today as ever. Perhaps more so.”
Hyster-Yale Materials Handling today announced its plans to fulfill the domestic manufacturing requirements of the Build America, Buy America (BABA) Act for certain portions of its lineup of forklift trucks and container handling equipment.
That means the Greenville, North Carolina-based company now plans to expand its existing American manufacturing with a targeted set of high-capacity models, including electric options, that align with the needs of infrastructure projects subject to BABA requirements. The company’s plans include determining the optimal production location in the United States, strategically expanding sourcing agreements to meet local material requirements, and further developing electric power options for high-capacity equipment.
As a part of the 2021 Infrastructure Investment and Jobs Act, the BABA Act aims to increase the use of American-made materials in federally funded infrastructure projects across the U.S., Hyster-Yale says. It was enacted as part of a broader effort to boost domestic manufacturing and economic growth, and mandates that federal dollars allocated to infrastructure – such as roads, bridges, ports and public transit systems – must prioritize materials produced in the USA, including critical items like steel, iron and various construction materials.
Hyster-Yale’s footprint in the U.S. is spread across 10 locations, including three manufacturing facilities.
“Our leadership is fully invested in meeting the needs of businesses that require BABA-compliant material handling solutions,” Tony Salgado, Hyster-Yale’s chief operating officer, said in a release. “We are working to partner with our key domestic suppliers, as well as identifying how best to leverage our own American manufacturing footprint to deliver a competitive solution for our customers and stakeholders. But beyond mere compliance, and in line with the many areas of our business where we are evolving to better support our customers, our commitment remains steadfast. We are dedicated to delivering industry-leading standards in design, durability and performance — qualities that have become synonymous with our brands worldwide and that our customers have come to rely on and expect.”
In a separate move, the U.S. Environmental Protection Agency (EPA) also gave its approval for the state to advance its Heavy-Duty Omnibus Rule, which is crafted to significantly reduce smog-forming nitrogen oxide (NOx) emissions from new heavy-duty, diesel-powered trucks.
Both rules are intended to deliver health benefits to California citizens affected by vehicle pollution, according to the environmental group Earthjustice. If the state gets federal approval for the final steps to become law, the rules mean that cars on the road in California will largely be zero-emissions a generation from now in the 2050s, accounting for the average vehicle lifespan of vehicles with internal combustion engine (ICE) power sold before that 2035 date.
“This might read like checking a bureaucratic box, but EPA’s approval is a critical step forward in protecting our lungs from pollution and our wallets from the expenses of combustion fuels,” Paul Cort, director of Earthjustice’s Right To Zero campaign, said in a release. “The gradual shift in car sales to zero-emissions models will cut smog and household costs while growing California’s clean energy workforce. Cutting truck pollution will help clear our skies of smog. EPA should now approve the remaining authorization requests from California to allow the state to clean its air and protect its residents.”
However, the truck drivers' industry group Owner-Operator Independent Drivers Association (OOIDA) pushed back against the federal decision allowing the Omnibus Low-NOx rule to advance. "The Omnibus Low-NOx waiver for California calls into question the policymaking process under the Biden administration's EPA. Purposefully injecting uncertainty into a $588 billion American industry is bad for our economy and makes no meaningful progress towards purported environmental goals," (OOIDA) President Todd Spencer said in a release. "EPA's credibility outside of radical environmental circles would have been better served by working with regulated industries rather than ramming through last-minute special interest favors. We look forward to working with the Trump administration's EPA in good faith towards achievable environmental outcomes.”
Editor's note:This article was revised on December 18 to add reaction from OOIDA.
A Canadian startup that provides AI-powered logistics solutions has gained $5.5 million in seed funding to support its concept of creating a digital platform for global trade, according to Toronto-based Starboard.
The round was led by Eclipse, with participation from previous backers Garuda Ventures and Everywhere Ventures. The firm says it will use its new backing to expand its engineering team in Toronto and accelerate its AI-driven product development to simplify supply chain complexities.
According to Starboard, the logistics industry is under immense pressure to adapt to the growing complexity of global trade, which has hit recent hurdles such as the strike at U.S. east and gulf coast ports. That situation calls for innovative solutions to streamline operations and reduce costs for operators.
As a potential solution, Starboard offers its flagship product, which it defines as an AI-based transportation management system (TMS) and rate management system that helps mid-sized freight forwarders operate more efficiently and win more business. More broadly, Starboard says it is building the virtual infrastructure for global trade, allowing freight companies to leverage AI and machine learning to optimize operations such as processing shipments in real time, reconciling invoices, and following up on payments.
"This investment is a pivotal step in our mission to unlock the power of AI for our customers," said Sumeet Trehan, Co-Founder and CEO of Starboard. "Global trade has long been plagued by inefficiencies that drive up costs and reduce competitiveness. Our platform is designed to empower SMB freight forwarders—the backbone of more than $20 trillion in global trade and $1 trillion in logistics spend—with the tools they need to thrive in this complex ecosystem."