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.
By their own account, conveyor buyers are a pretty demanding bunch. When asked in a recent survey whether they were looking for speed, reliability, safety features or quiet operation, their answer was, in a word, yes. It's safe to assume that this isn't a population that's been agonizing over the tradeoffs between, say, speed and noise levels; the DC VELOCITY readers who answered the survey, which was conducted online last fall, have simply decided they want it all.
Not only do they want it all, but they also want it at a low price. When asked to rank various conveyor selection criteria, the survey respondents put purchase price and return on investment (ROI) near the top of the list, behind only reliability and functionality. (See chart.) Bill Hawthorne, vice president of conveyor manufacturer Hytrol, summarizes the situation this way: "Customers want equipment that will run faster and last longer—and not cost an arm and a leg."
Vendors tighten their belts
Those demands are putting the squeeze on conveyor manufacturers, which are already feeling the pinch of rising manufacturing costs and mounting research and development expenses. But in a market where competition remains fierce, buyers have little incentive to scale back their demands. "It is very definitely a buyers' market," says Leon Kirschner, president of TGW-ERMANCO, a material handling components and systems manufacturer. "There is substantial overcapacity in the conveyor world. It seems as though people who buy conveyors are able to demand more than they ever have in the past. There is a tremendous amount of price pressure."
At the same time, the demands on performance are escalating, Kirschner says. "We are scrambling to make equipment that is quieter and faster with greater throughput. Safety is a big issue. Another big issue is ergonomics." Customers, he says, want equipment that reduces lifting and other stresses that can lead to workers compensation claims. "Companies like ours have to be more innovative and have to outengineer the competition rather than trying to out-price the competition."
The continuing pressure to provide better, safer and more reliable equipment at a lower cost has led some manufacturers to take a closer look at their own manufacturing systems. Hytrol, a large conveyor maker based in Arkansas, is a good example. The company has rolled out a program for implementing lean principles in all of its operations.
"We've gone into a full-blown lean manufacturing mode to be more efficient, to get product out the door faster, but at the same time maintain quality," says Hawthorne.
Focus on total cost
Though price is never far from buyers' minds, manufacturers say some customers take a more enlightened view of it than others. Kirschner, for example, divides conveyor buyers into a couple of camps. "There are two types of customers," he says. "There's the sophisticated customer who thinks about the total cost of ownership and the less sophisticated customer who is not concerned about total cost, who says, 'Let's get an auction going.'"
But that may be starting to change. Several vendors report that they're encountering the auction mentality less often than they once did. Tim Kraus, a conveyor product manager at FKI Logistex, a large material handling equipment manufacturer, says he's seen more emphasis on total cost of ownership in recent years. "We see a shift away from purchase price toward total cost of ownership," he says. "Purchase price is important, but there is more emphasis on durability, mean time to repair, ease of maintenance, and reliability of the equipment. There is more emphasis on ongoing maintenance and how to minimize it."
Bill Hawthorne of Hytrol agrees. "Customers are becoming smarter about conveyors," he says. "They understand that speed has a lot to do with wear and tear and that you need the best components. They are looking for throughput. That's a big difference [from] the commodity buyer."
Kraus adds that he's also noticed a trend among buyers to approach suppliers with requests for a solution to a specific problem rather than requests for a particular piece of equipment. "They are not coming to us saying they need a belt-driven accumulator with photo eye sensors," he says. "They are coming to us with a problem and asking us to come up with a solution, keeping in mind the total cost of ownership."
Less is more
But that emphasis on total cost of ownership is also creating engineering challenges for manufacturers. Kraus, for example, says his company is constantly working to find ways to cut down on repair times and extend maintenance intervals. "The feedback from some large DCs," he says, "is they don't want preventive maintenance scheduled for any less than 60 days."
For a manufacturer, that translates to a demand to develop more rugged and reliable components with fewer moving parts. "We're trying to get away from chain and oil or anything that needs to have the tension continually rechecked," says Kraus. At the same time, he says, the company's engineers continue to work on ways to lock in photo eye alignment and maintain belt tracking.
Del Deur, manager of design engineering for TGW-ERMANCO, says his company is taking the same tack. "We are working toward simplicity," says Deur. "Fewer moving parts means a conveyor with higher reliability and one that is quieter. Our number one priority is to get the number of parts down. That is the vision. Simplicity is the way to go, but it is easier said than done." He explains that reliability is a particular concern for smaller DCs that have no maintenance staff.
TGW-ERMANCO Vice President Gordon Hellberg adds that reducing the number of moving parts also offers savings in installation and power usage and means lower repair costs.
At the same time, the need for flexibility in DC operations resulting from the development of agile supply chains has presented manufacturers with an additional challenge. Conveyor makers report that they're fielding more and more requests from buyers who want equipment that's easy to reconfigure as their operations change gears. "More of our customers are classifying themselves as having the potential for reconfiguration," Kraus says. "In that respect, we're trying to make things as modular as possible so that components can be unbolted and reconfigured."
They want it now!
If today's conveyor buyers have become more demanding, manufacturers say they've also become less patient. They expect fast turnaround on their orders, which creates additional headaches for equipment makers. "Our system delivery lead times are getting shorter and shorter every day," Kraus says. "Large systems used to have a turnaround measured in months. Now it's measured in weeks." That makes it tough for manufacturers to balance the work flow in their plants, he explains. "It becomes more difficult if we have several big jobs going on at the same time."
Hawthorne says that in response to the demands for fast cycle times, Hytrol now pledges to get its standard equipment out the door within four weeks of an order or it will pay the freight costs. The company is now looking to expand the program beyond its standard equipment, he adds. "We're pushing to even get our engineered products out the door faster."
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."