Everyone who has worked in a DC is familiar with the problem: pallets and cases come pouring into the facility faster than you can unpack them, clogging the aisles and slowing operations even further. Even if it signals that business is booming, it's not a pleasant problem.
Now imagine the nation as a distribution center, with ports and railroads and trucks and aircraft in the role of material handling, and goods streaming in so fast that the whole system is threatened with gridlock.
It may be closer than you think. Indications are that the nation's logistics networks will soon be overwhelmed. Whether anybody—business, labor or government—can do anything to prepare for the coming floodtide remains in doubt.
I got a close-up view of the problem last month at a conference held by the Massachusetts Institute of Technology's Center for Transportation and Logistics on managing transportation in an era when demand is outstripping supply. Though the conference didn't yield many answers, it certainly shed some light on the root cause—our increasingly international economy. International trade now represents about 27 percent of the nation's gross domestic product (GDP), compared to 8 percent in 1970, according to the Department of Transportation (DOT). And U.S. consumers' appetite for imports shows no sign of abating.
Meanwhile, the ability of international suppliers to feed goods into North America is growing far faster than our infrastructure's capacity to handle that volume. China, for example, is investing in logistics infrastructure improvements at an astonishing pace. Within five years, the Port of Shanghai's annual capacity is expected to reach 25 million TEUs—that is, 25 million twenty-foot containers. That's greater than the capacity of the entire U.S. port system, says Richard Biter of the DOT's Office of Intermodalism.
The answer is not merely building more infrastructure, though that would help. Ports and railroads and motor carriers and highway authorities have already spent billions on improvements, and we're still behind. Nor is it practical to sit back and hope that the trade balance will somehow shift, slowing the torrent of imports to more manageable levels.
There's no finger-in-the-dike solution to the surging tide. It demands unprecedented levels of collaboration among shippers, carriers, labor unions, environmentalists and public officials. It demands inventiveness and investment. And it's time to get started.
Loxo/Planzer