His childhood fascination with the scale of the Berlin airlift led to a role as beraccountant to the logistics industry. Today, Bob Delaney's annual tallies of the nation's freight bill provide the single best indicator of the industry's performance.
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.
As the first squadrons of C-47s swooped into Berlin's Wiesbaden airfield to deliver milk, flour and medicine to desperate residents in June 1948, their progress was being watched with interest from afar—and not just by the Soviets who had ordered the city's blockade. Back in the United States, a New Jersey high school student was keeping a careful eye on the events taking place 4,000 miles away, following the daily progress of the Berlin airlift via newspaper and radio accounts as Allied forces moved 2,326,406 pounds of food and other supplies via 278,228 flights into the city. That experience left the student, Bob Delaney, with a fascination with logistics—the complexities of getting vast amounts of materials from point A to point B. In fact, it set the course for his career.
Fast forward to the late '70s, when Delaney found himself on Capitol Hill, advocating for the deregulation of the U.S. transportation industry. As ammunition in the fight, he used statistics demonstrating the potential economic benefits of deregulation. Ultimately, Delaney's side prevailed and transportation was deregulated. But it wasn't long before opponents began mobilizing efforts to re-regulate the industry, forcing him to dust off his economic model, this time using it to track gains in efficiency made possible by deregulation. Those annual tallies eventually grew into his annual State of Logistics report, a nationally recognized study of logistics efficiency that measures total domestic logistics costs as a percentage of gross domestic product.
Today, Delaney has achieved wide renown as one of the logistics industry's true thought leaders. He recently spoke about his career with DC VELOCITY Editorial Director Mitch Mac Donald.
Q: You set a career path for yourself in this industry at a very early age. Why logistics?
A: I was fascinated by the scale of the Berlin Airlift as a kid, which sparked an interest in the military. By the time I was ready to graduate from high school, the Korean War was on. I was only 17, but I figured I would eventually be drafted anyway, so I enlisted as a regular army person. I selected logistics and I selected Germany, and I got both.
Q: So your first immersion in logistics was in a military capacity?
A: Yes. It was at Fort Eustas, Va. In those days, they called it "movements control." Ironically, my son ended up in the same place in the same branch of the military. We like to joke that I put the missiles in the ground in the '50s and he took them out in the late '80s.
Q: I assume you learned a lot about the way logistics operates in the military sector?
A: The methods and procedures we followed were very statistical ly driven. We didn't worry about cost.We just worried about performance. From a performance point of view, we were superb. It's still that way today.
Q: How were you able to apply what you learned later on in the private sector?
A: One of the things I realized shortly after going into logistics for a private company was that transportation regulation led to huge inefficiencies. The military didn't have that problem because its operations were exempt from regulation. They could negotiate their own costs with railroads, motor carriers and so on.
Q: You could foresee how things would change if we switched to a market-driven model way back then?
A: Without question. In the military we had to run economic models to see where we could gain the most efficiency. It shouldn't have been a surprise to anyone familiar with those models that deregulation in the private sector would change things in a very profound way.
Q: Where did you begin your private-sector career in logistics?
A: When I was discharged from the military, I went to what was called the Academy of Advanced Traffic. I studied there for a year and then began taking evening classes at New York University at the same time I started working for Nabisco.
Q: Nabisco seems to be where many, many people cut their teeth in logistics. That was really quite a proving ground at one point, wasn't it?
A: It sure was. They did many smart things to develop in-house talent, some as simple as assigning seats in the company cafeteria. You would meet with the same six people every day. There would be a senior guy in his 50s, there would be some supervisors in their late 30s, and there would be two or three younger guys. The conversati on might be about baseball, but you learned during lunch.
Q: Where did you start with Nabisco?
A: I got into traffic management at their carton plants, one in Illinois and one in New York. Then I became responsible for operations at some ice cream cone plants. The experience at Nabisco, though, expanded on what I had learned about logistics in the military and brought me into the realms of distribution and forecasting.
Q: This was managing essentially what we would call the larger enterprise, which was both the transportation and the distribution center activity?
A: Right. And at about this time, we began to think about logistics, and especially distribution, as a connected whole.
Q: What did you do next?
A: I left Nabisco and went to work for Monsanto in 1962. I was also beginning to develop my graduate degree thesis. But I couldn't use Monsanto as a case study—there were too many confidentiality issues. So I went back to Nabisco and asked if I could use the Biscuit Division's distribution operation as a case study. They agreed.
Q: What was the focus of the thesis?
A: The point of the paper was that you could manage the process without reorganizing the company. You had to have a vision and you had to have integration and you had to have people who understood service and cost control. You didn't have to elect one person to dominate the thing, which had been popular in the day; they call it the one-man theory. Peter Drucker, who was then on the faculty at New York University, read the paper and gave it an "A."
Q: What did you do after graduate school?
A: After I finished graduate school in 1966, I went to St. Louis with Monsanto. Later, I moved to Pet Inc., also in St. Louis, in hopes of get ting a chance to run an overall distribution network. At the time, Pet's chairman was developing an internal consulting team of five or six specialists who could operate inside the businesses and also, if one of the businesses got off track, go in and replace management for a while. Being part of that team was a good job and I learned a lot, but we weren't very popular within the company, as you can imagine. We were almost like " internal affairs" in a police department, showing up only when something was wrong and something unpleasant had to be done.
We didn't know it at the time, but Pet was up for sale. Ultimately, the buyer turned out to be the Illinois Central Railroad, of all things. As the company headed into the acquisition, International Paper came along with a job offer and I accepted.
Q: What was your role there?
A: Well it's interesting the way it evolved. Efforts to deregulate the transportation industry were just getting under way.Most of the companies I had been with had been quietly in favor of deregulating the transportation industry, and International Paper was no exception.
This was all taking place in 1976 and 1977. The Carter White House got behind the idea of deregulation, mostly because they were scared to death that Ted Kennedy, who was taking up the cause, might gain the support of big business at their expense. To avoid that, they assigned a guy named Ron Lewis to work the issue. Lewis asked for help from International Paper. International Paper gave him me. They simply said, "Help him any way you can." They also, of course, wanted to be sure that whatever came out by way of deregulation was favorable to International Paper.
Q: Let's fast forward now to how all this came to a point where you essentially created the annual state of the industry report.
A: That came about in a strange way. In 1973, in the course of updating a textbook they had written, some academics I had worked with created a methodology for calculating logistics growth. When I was given responsibility to try to guide the deregulation legislation, I took that methodology and applied it. What it showed was that we were growing inventories. Logistics costs in total were increasing faster than inflation. Inflation was bad enough, but logistics costs were driving inflation higher. We used those results to prove the economic value of deregulation.
Q: After the deregulatory battle was won, you kept on using the methodology to calculate overall logistics costs. Why?
A: We had to continue. We still had 41 states that were regulating transportation. We also had a lot of anti-deregulation forces fighting hard to win back some ground. They were arguing that we had made a mistake, that the pendulum had swung too far, that it was time to let it swing back. So by updating and publishing the data, we could show not only that we were making progress post-deregulation, but also that there was a lot of potential for furt her progress.
Q: How can we make logistics even more efficient?
A: Finished product inventory is where I have been focusing my attention in the last two or three years. We need to drive down those inventory levels even further. The raw material inventories and the work-in-process inventories are managed efficiently. The finished product inventories are not.
Q: Is there an operations answer or a technology answer?
A: We're still studying that. Ultimately, the answer might be to stop letting marketing issues drive so many business decisions. Consider that when we put lemon flavor in Coke, for example, we created 57 new stock-keeping units! Companies, I think, need to start looking very hard at how big their product line is. Do you need it all? Are all those products contributing to profitability? Lever Brothers is cutting its number of brands from 1,600 down to 400. That's a big gamble the company is making there. They won't be growing their top line, but they are going to be increasing their bottom line.
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."