David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
It's a tangled web we weave when we practice nationwide distribution. A map showing the transportation routes traced by even a single good-sized company's shipments day in and day out could quickly become an undecipherable maze. Open up additional distribution channels, and the picture gets even more complex. Given all the confusion, what assurances do you have not only that your products moved from origin to destination, but that they did so in the most efficient and reliable way available—time and time again?
That was the dilemma faced by Lifeway Christian Resources. The Nashville-based publisher and book distributor, which is owned by the Southern Baptist Convention, delivers 188 different magazines, along with thousands of books, gifts and other materials, to 124 Christian book stores it owns nationwide. The company also distributes through business-to-business (B2B), business-to-consumer (B2C) and international channels. Its two distribution centers in Nashville handle some 14,000 SKUs, with about 500 new products introduced each year.
Prior to last October, the company generally opted for convenience over cost. It shipped 76 percent of its products via parcel service (which is about the most expensive way to ship short of air express), 12 percent via LTL and 12 percent by other modes, including full truckload. But all that changed in October, when it installed a transportation management system, or TMS, from Irista. Today, the balance has shifted markedly. Lifeway has dropped its small parcel shipments to 55 percent of the total, and it now moves 35 percent via LTL and 10 percent via other modes. The result? During the first three months the software was in use, transportation costs dropped a whopping 14 percent.
Not surprisingly, that translated to a speedy return on investment. "The software package paid for itself in just 15 weeks," reports Randy Brough, the company's supply chain manager. "Our old ERP system was leaving $1.5 million on the table compared to now." He attributes the savings to the TMS's capabilities for carrier selection, rate shopping and load building.
Today, when an order is released, the system looks at customer data programmed into the system and compares the customer's requirements to continuously updated carrier information. At that point, it begins to build loads and routes based on orders being processed. The system also has the ability to consider delivery preferences for each store or receipt point, which enhances the customer services offered. An electronic manifest is automatically sent to the customer.
The TMS also handles international shipments, producing customs and other documents required for global trade. On top of that, the company reports that the Irista TMS software integrates nicely with Lifeway's Vista ERP and SSA Global warehouse management system.
As for the future, Brough says he will soon begin using the TMS for freight auditing. He also expects to push his inbound transportation through the system later this year, which will bring even greater savings.
All-purpose tools
While no one TMS system can do everything—some are domestic specialists, others international, and many target specific business verticals—collectively the systems offer the opportunity to optimize operations, reduce labor and improve customer service. Transportation management systems, developers claim, can help companies select carriers, manage internal fleets, provide route management and create visibility. They can also audit carrier performance, perform manifesting, produce customs and other trade documents, and navigate through the security issues of post 9-11 commerce. And that's just for starters. Think of TMS as the Swiss army knife of supply chain software.
By far, the most important benefit of a TMS system is what it does for the bottom line. "Transportation costs are 5 to 10 percent of total sales, so customers are increasingly looking beyond the four walls to gain efficiencies," says Kara Ashby, senior consultant at Sedlak, a supply chain consulting firm located in Richfield, Ohio. "They are looking to get the fastest possible transportation at the lowest cost."
"The more you spend on transportation, the more compelling a transportation management system can be," adds John Blanchard, director of transportation services for ESYNC, a consulting and engineering firm headquartered in Toledo, Ohio. "Payback on a TMS is usually less than two years, and often between six months and a year."
when does it make sense to look at a TMS?
Your annual transportation expenditures exceed $20 million or account for 7 to 10 percent of all expenditures
You regularly ship via more than one mode of transportation—LTL, parcel or truckload
You have problems with accuracy or on-time deliveries
You have compliance issues or simply wish to improve customer service
You ship to numerous international destinations that require customs and other documentation
You do not fully use your transportation assets
Help with the match game
Not surprisingly, the early adopters of TMS have been companies in the business of transportation, where the benefits are most obvious. Take Schneider National, one of the largest providers of logistics services in the nation. Schneider, based in Green Bay, Wis., relies on homegrown software systems to manage its fleet of 14,000 tractors and 48,000 trailers. It also built its own warehouse management system (WMS), so integration was performed internally.
The systems are also designed to link to Qualcomm satellite tracking systems in the carrier's trucks.
"As a third-party logistics provider, our role is to match the right driver with the right load at the right time and at the right price," says Vava Dimond, vice president of product management. "We have to understand our shippers' needs, our capacity issues, as well as know the load parameters."
Besides using the TMS system for its own fleet, Schneider also contracts with several hundred owner/operators to move freight. It makes use of its TMS to perform planning and optimization. It includes Web-based tools that allow the contracted carriers to update their rates and vital shipping information, as well as bid for jobs.
Among the more recent fleet tasks that the TMS has helped Schneider manage are adjustments based on new hours of service rules. Dimond says the company's systems capture all of the data necessary to comply with the new rules. Those rules, which restrict the number of hours a driver can work at one time, have proved challenging for both carriers and shippers, requiring changes in routing and scheduling that almost demand robust systems to manage.
"The transportation side can be very manual," adds Dimond. "If you can properly capture data and then manage it, you can create significant savings."
No more missed opportunities
Like carriers, third-party logistics companies have looked to TMS to buttress their other IT systems. Third-party service provider Exel, for instance, chose G-Log's GC3 software for fleet management, routing for road and rail, and for freight forwarding applications. This Web-based system processes 6 million shipments each year. Currently, some 45 client companies with 6,000 total users log into Exel's G-Log system.
"Our customers see us as managing their whole supply chain. With our TMS, we can offer savings to our customers through optimizing their transportation," says Martin Neil, vice president of global solutions.
As a global player, Exel finds there's an advantage to having a Web-based system that can be accessed from anywhere. Exel's customers enjoy real-time visibility and event management capabilities worldwide. The system also operates in multiple languages.
Web-based systems such as G-Log's represent a growing trend in the TMS space. Whereas Exel hosts its G-Log software on its own enterprise, many software providers like G-Log also serve as application service providers to give clients "ondemand" access to the software. In this model, the software lives on the software provider's servers instead of tying up the client's hardware and IT staff, as occurs under an enterprise-based model. The on-demand approach has its advantages. It provides a centralized depository for data and offers high-security, multiple backup locations, high bandwidth and continuous product upgrades. This model is well suited to companies that prefer to outsource functions that are not core competencies, such as transportation management. It can also be less costly for businesses not prepared for a full blown implementation.
Another third-party service provider that has put TMS to good use is Coopersville, Mich.-based Foreway Management. Foreway, which operates no equipment of its own, places staff on-site at its customers' facilities to coordinate and then expedite their shipments. Among current clients are Bissell (the vacuum cleaner folks) and a South African paper producer that has warehouses in the Upper Midwest.
A TMS has made a world of difference to Foreway, says CEO Pam Hassevoort. Before the company acquired its system, it used less-sophisticated optimization software that required a great deal of human intervention. "It was just too labor intensive and we were missing many opportunities for savings," she says. "The loads we were building tended to be too large. Our margins were going down even though our volumes were going up."
Hassevoort realized that hiring more staff wouldn't solve the problem; the company needed a better way of building loads. In January, Foreway went live with RedPrairie's TMS suite, which includes modules that provide carrier selection and routing, load tendering, lane assignments, manifesting and performance metrics. It also allows visibility for both clients and shippers.
"Our customers can now do their own track and trace," reports Hassevoort. "Also, we used to have one of our staff people making phone calls to verify that a load was delivered. Now carriers can go into our system and report back to us."
It's not just more efficient; it's cheaper too. Hassevoort projects cost savings of 13 percent on loads tendered to carriers.
Most of the apparel sold in North America is manufactured in Asia, meaning the finished goods travel long distances to reach end markets, with all the associated greenhouse gas emissions. On top of that, apparel manufacturing itself requires a significant amount of energy, water, and raw materials like cotton. Overall, the production of apparel is responsible for about 2% of the world’s total greenhouse gas emissions, according to a report titled
Taking Stock of Progress Against the Roadmap to Net Zeroby the Apparel Impact Institute. Founded in 2017, the Apparel Impact Institute is an organization dedicated to identifying, funding, and then scaling solutions aimed at reducing the carbon emissions and other environmental impacts of the apparel and textile industries.
The author of this annual study is researcher and consultant Michael Sadowski. He wrote the first report in 2021 as well as the latest edition, which was released earlier this year. Sadowski, who is also executive director of the environmental nonprofit
The Circulate Initiative, recently joined DC Velocity Group Editorial Director David Maloney on an episode of the “Logistics Matters” podcast to discuss the key findings of the research, what companies are doing to reduce emissions, and the progress they’ve made since the first report was issued.
A: While companies in the apparel industry can set their own sustainability targets, we realized there was a need to give them a blueprint for actually reducing emissions. And so, we produced the first report back in 2021, where we laid out the emissions from the sector, based on the best estimates [we could make using] data from various sources. It gives companies and the sector a blueprint for what we collectively need to do to drive toward the ambitious reduction [target] of staying within a 1.5 degrees Celsius pathway. That was the first report, and then we committed to refresh the analysis on an annual basis. The second report was published last year, and the third report came out in May of this year.
Q: What were some of the key findings of your research?
A: We found that about half of the emissions in the sector come from Tier Two, which is essentially textile production. That includes the knitting, weaving, dyeing, and finishing of fabric, which together account for over half of the total emissions. That was a really important finding, and it allows us to focus our attention on the interventions that can drive those emissions down.
Raw material production accounts for another quarter of emissions. That includes cotton farming, extracting gas and oil from the ground to make synthetics, and things like that. So we now have a really keen understanding of the source of our industry’s emissions.
Q: Your report mentions that the apparel industry is responsible for about 2% of global emissions. Is that an accurate statistic?
A: That’s our best estimate of the total emissions [generated by] the apparel sector. Some other reports on the industry have apparel at up to 8% of global emissions. And there is a commonly misquoted number in the media that it’s 10%. From my perspective, I think the best estimate is somewhere under 2%.
We know that globally, humankind needs to reduce emissions by roughly half by 2030 and reach net zero by 2050 to hit international goals. [Reaching that target will require the involvement of] every facet of the global economy and every aspect of the apparel sector—transportation, material production, manufacturing, cotton farming. Through our work and that of others, I think the apparel sector understands what has to happen. We have highlighted examples of how companies are taking action to reduce emissions in the roadmap reports.
Q: What are some of those actions the industry can take to reduce emissions?
A: I think one of the positive developments since we wrote the first report is that we’re seeing companies really focus on the most impactful areas. We see companies diving deep on thermal energy, for example. With respect to Tier Two, we [focus] a lot of attention on things like ocean freight versus air. There’s a rule of thumb I’ve heard that indicates air freight is about 10 times the cost [of ocean] and also produces 10 times more greenhouse gas emissions.
There is money available to invest in sustainability efforts. It’s really exciting to see the funding that’s coming through for AI [artificial intelligence] and to see that individual companies, such as H&M and Lululemon, are investing in real solutions in their supply chains. I think a lot of concrete actions are being taken.
And yet we know that reducing emissions by half on an absolute basis by 2030 is a monumental undertaking. So I don’t want to be overly optimistic, because I think we have a lot of work to do. But I do think we’ve got some amazing progress happening.
Q: You mentioned several companies that are starting to address their emissions. Is that a result of their being more aware of the emissions they generate? Have you seen progress made since the first report came out in 2021?
A: Yes. When we published the first roadmap back in 2021, our statistics showed that only about 12 companies had met the criteria [for setting] science-based targets. In 2024, the number of apparel, textile, and footwear companies that have set targets or have commitments to set targets is close to 500. It’s an enormous increase. I think they see the urgency more than other sectors do.
We have companies that have been working at sustainability for quite a long time. I think the apparel sector has developed a keen understanding of the impacts of climate change. You can see the impacts of flooding, drought, heat, and other things happening in places like Bangladesh and Pakistan and India. If you’re a brand or a manufacturer and you have operations and supply chains in these places, I think you understand what the future will look like if we don’t significantly reduce emissions.
Q: There are different categories of emission levels, depending on the role within the supply chain. Scope 1 are “direct” emissions under the reporting company’s control. For apparel, this might be the production of raw materials or the manufacturing of the finished product. Scope 2 covers “indirect” emissions from purchased energy, such as electricity used in these processes. Scope 3 emissions are harder to track, as they include emissions from supply chain partners both upstream and downstream.
Now companies are finding there are legislative efforts around the world that could soon require them to track and report on all these emissions, including emissions produced by their partners’ supply chains. Does this mean that companies now need to be more aware of not only what greenhouse gas emissions they produce, but also what their partners produce?
A: That’s right. Just to put this into context, if you’re a brand like an Adidas or a Gap, you still have to consider the Scope 3 emissions. In particular, there are the so-called “purchased goods and services,” which refers to all of the embedded emissions in your products, from farming cotton to knitting yarn to making fabric. Those “purchased goods and services” generally account for well above 80% of the total emissions associated with a product. It’s by far the most significant portion of your emissions.
Leading companies have begun measuring and taking action on Scope 3 emissions because of regulatory developments in Europe and, to some extent now, in California. I do think this is just a further tailwind for the work that the industry is doing.
I also think it will definitely ratchet up the quality requirements of Scope 3 data, which is not yet where we’d all like it to be. Companies are working to improve that data, but I think the regulatory push will make the quality side increasingly important.
Q: Overall, do you think the work being done by the Apparel Impact Institute will help reduce greenhouse gas emissions within the industry?
A: When we started this back in 2020, we were at a place where companies were setting targets and knew their intended destination, but what they needed was a blueprint for how to get there. And so, the roadmap [provided] this blueprint and identified six key things that the sector needed to do—from using more sustainable materials to deploying renewable electricity in the supply chain.
Decarbonizing any sector, whether it’s transportation, chemicals, or automotive, requires investment. The Apparel Impact Institute is bringing collective investment, which is so critical. I’m really optimistic about what they’re doing. They have taken a data-driven, evidence-based approach, so they know where the emissions are and they know what the needed interventions are. And they’ve got the industry behind them in doing that.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”
That result showed that driver wages across the industry continue to increase post-pandemic, despite a challenging freight market for motor carriers. The data comes from ATA’s “Driver Compensation Study,” which asked 120 fleets, more than 150,000 employee drivers, and 14,000 independent contractors about their wage and benefit information.
Drilling into specific categories, linehaul less-than-truckload (LTL) drivers earned a median annual amount of $94,525 in 2023, while local LTL drivers earned a median of $80,680. The median annual compensation for drivers at private carriers has risen 12% since 2021, reaching $95,114 in 2023. And leased-on independent contractors for truckload carriers were paid an annual median amount of $186,016 in 2023.
The results also showed how the demographics of the industry are changing, as carriers offered smaller referral and fewer sign-on bonuses for new drivers in 2023 compared to 2021 but more frequently offered tenure bonuses to their current drivers and with a greater median value.
"While our last study, conducted in 2021, illustrated how drivers benefitted from the strongest freight environment in a generation, this latest report shows professional drivers' earnings are still rising—even in a weaker freight economy," ATA Chief Economist Bob Costello said in a release. "By offering greater tenure bonuses to their current driver force, many fleets appear to be shifting their workforce priorities from recruitment to retention."