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.
Lead paint on toys. Poison in pet food. Toothpaste laced with antifreeze. Tainted pharmaceuticals.
It has not been a good year for many businesses that source their products in China. Most recently, Mattel, the maker of some of the world's most popular toys and dolls, had to recall nearly 1 million of its Fisher-Price toys when it discovered that its supplier coated their surfaces with lead paint.
Once it became aware of the extent of the problem, Mattel moved relatively quickly and at great expense to get the toys off retailers' shelves and retrieve them from those consumers who had purchased them. And it instituted new safeguards, testing every batch of paint used by its suppliers and adding more random inspections of suppliers' factories in China.
But this recall, like toymaker RC2's recall of 1.5 million Thomas and Friends toys and parts earlier in the summer (also for the use of lead paint), highlights the difficulties of managing today's sprawling, complex supply chains within the ethical standards of a responsible corporation.
It is not just a matter of rogue operators. The contract manufacturer responsible for using lead paint in the Mattel case was not new on the scene. According to news reports,Mattel had done business with the supplier for 15 years. But China in some respects is still a frontier economy with far fewer legal and ethical safeguards than we enjoy here in the United States. Doing business there entails both business and ethical risks.
Much of the attention to these ethical issues naturally focuses on procurement: Are the supplier's labor practices and business practices fair and consistent with the buyer's ethical standards? Does it operate safely? Does the supplier comply with business requirements or cut corners to make a few extra yuan?
A May 2006 Business Ethics Briefing issued by the Institute of Business Ethics in the United Kingdom suggests that businesses committed to ethical procurement examine not just their suppliers' practices, but their own practices as well. Based on its research into common ethical troublespots, the institute advises managers to pay particular attention to the following three areas of procurement practice: the selection of suppliers (Do ethical criteria carry weight in supplier selection?); procurement conduct (Does the company hold its own staff to standards of high integrity? Does it treat suppliers fairly?); and relationships with suppliers (Does the company impose social and environmental standards on suppliers, seek to influence their policies and practices, or offer them assistance?).
Those are crucial issues, but ethical procurement represents only one aspect of the ethical supply chain. With concerns about global warming coming to the fore, the concept of a business's "carbon footprint" is also gaining more attention— and that will inevitably result in greater focus on green, or sustainable, warehousing as well as the efficiency and productivity of freight transportation.
In a 2005 article in the British publication Ethical Corporation, writer Dale Neef argued, "In the modern global manufacturing, assembly, or distribution company, supply chain scrutiny should include all of the company's activities from ethical purchasing through to proper disposal of the end product. This is because it is specifically during supply chain and logistics activities—purchasing, transportation, manufacturing, assembly, storage, and product disposal— when pollution is caused, oldgrowth forests are cut down, or energy and resources are wasted."
Improving logistics and supply chain practices, he contends, can improve worker health and safety and reduce environmental damage. At the same time, such efforts can enhance a corporation's public image as well as improve its bottom line.
For most businesses, good business practices are fairly well ingrained in everyday behavior. But as supply chains become more dispersed, as concerns over sustainable practices grow, they are worth thinking about anew.
The number of container ships waiting outside U.S. East and Gulf Coast ports has swelled from just three vessels on Sunday to 54 on Thursday as a dockworker strike has swiftly halted bustling container traffic at some of the nation’s business facilities, according to analysis by Everstream Analytics.
As of Thursday morning, the two ports with the biggest traffic jams are Savannah (15 ships) and New York (14), followed by single-digit numbers at Mobile, Charleston, Houston, Philadelphia, Norfolk, Baltimore, and Miami, Everstream said.
The impact of that clogged flow of goods will depend on how long the strike lasts, analysts with Moody’s said. The firm’s Moody’s Analytics division estimates the strike will cause a daily hit to the U.S. economy of at least $500 million in the coming days. But that impact will jump to $2 billion per day if the strike persists for several weeks.
The immediate cost of the strike can be seen in rising surcharges and rerouting delays, which can be absorbed by most enterprise-scale companies but hit small and medium-sized businesses particularly hard, a report from Container xChange says.
“The timing of this strike is especially challenging as we are in our traditional peak season. While many pulled forward shipments earlier this year to mitigate risks, stockpiled inventories will only cushion businesses for so long. If the strike continues for an extended period, we could see significant strain on container availability and shipping schedules,” Christian Roeloffs, cofounder and CEO of Container xChange, said in a release.
“For small and medium-sized container traders, this could result in skyrocketing logistics costs and delays, making it harder to secure containers. The longer the disruption lasts, the more difficult it will be for these businesses to keep pace with market demands,” Roeloffs said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
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.
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.