John Johnson joined the DC Velocity team in March 2004. A veteran business journalist, John has over a dozen years of experience covering the supply chain field, including time as chief editor of Warehousing Management. In addition, he has covered the venture capital community and previously was a sports reporter covering professional and collegiate sports in the Boston area. John served as senior editor and chief editor of DC Velocity until April 2008.
Want to drive a hydrogen-powered car? Be prepared to wait 10 years or so. Want to drive a hydrogen-powered forklift? Just step in to your nearest distribution center. If it isn't testing out forklifts powered by hydrogen fuel cell technology today, it might be soon.
Hydrogen fuel cell technology is fast making inroads in North America's manufacturing and distribution operations, where fuel cell-powered lift trucks are quietly taking their place beside their battery- powered counterparts. This April, retail giant Wal-Mart expects to take delivery of an unspecified number of fuel cells from Plug Power Inc. that will be used to power pallet trucks at its food distribution center in Washington Court House, Ohio. The purchase follows an in-depth pilot program at two Wal-Mart DCs in Ohio in late 2006. In those trials, 12 fuel cell-powered pallet trucks operated under regular working conditions for more than four months, logging more than 18,000 hours and 2,100 indoor fuelings by pallet truck operators.
In South Carolina, the Greater Columbia Fuel Cell Challenge just concluded the last of six individual twoweek trials with fuel cell-powered lift trucks. Organizers of the Fuel Cell Challenge, which is aimed at making the Greater Columbia area a hotbed of fuel cell development, expect to run more trials this year. The Department of Defense has also put in an order for fuel cell-powered lift trucks to be used at its facilities in California and Virginia, and fuel cell trucks are already in use at a General Motors facility in Canada.
In New York, Raymond Corp. has been testing a fuel cell-powered lift truck since last summer. Raymond, a lift truck maker that's owned by Toyota, recently added two more vehicles, the latest in December. Raymond's fuel cell lab will run at least four fuel cell trucks from multiple suppliers for two years, measuring performance and reliability in specific applications. In May, Raymond opened an onsite indoor refueling facility for fuel cells. The refueling station, which is located at Raymond's Greene, N.Y., manufacturing facility, is the first such refueling center in the state.
All of this has led Wall Street analyst Brannon Cook to predict big things for fuel cells in the distribution arena. The JPMorgan Chase analyst says that although fuel cell technology has proved more expensive to develop than initially expected, the demand from certain markets is growing.
In a research report, Cook says he believes that cars powered by fuel cells are "over a decade away from pre-commercial adoption," but that demand from smaller markets, like forklifts and backup power, is growing.
Wal-Mart's green machines
Some of that demand is likely to come from Wal-Mart. "We've seen how fuel cells can improve efficiency in our distribution centers while enabling us to be more responsible global citizens," says Johnnie Dobbs, Wal-Mart's executive vice president of logistics and supply chain. "Wal-Mart is focused on finding ways to improve our relationship with the environment throughout our operations. Our hope is that our investment in fuel cell technology will encourage its development as a viable option to existing technologies."
Along with corporations like Wal-Mart, states and municipalities are investing in the technology. In fact, Wal- Mart chose the Washington Court House, Ohio, DC for its upcoming fuel cell tests in order to take advantage of funding from the state of Ohio. Ohio recently awarded a grant to fuel cell vendor Plug Power Inc. and its Cellex subsidiary in an effort to increase the viability of fuel cells. "The funding is to help us not only to move the technology forward, but to prove the cost effectiveness locally at distribution centers," says Tom Hoying, vice president of sales and customer operations for Plug Power's Motive Power Division.
In the Wal-Mart tests, the cell-powered lift trucks will be refueled at an indoor refueling station. Drivers will simply pull up to a hydrogen pump, much the way automobile drivers pull up to the pump at a gas station. A compression system located outside the DC will allow for the onsite generation of hydrogen, something made possible by the state funding.
As for Plug Power's next venture, Hoying says the company is preparing for an "early commercial release" of a product for use in the food, retail, and mass-merchandising sectors this spring. Testing at six companies will begin in April, and Hoying expects many of those companies to place initial orders in the second half of the year.
"The key thing is making sure the technology does what the customer needs it to do, and that when it goes down, you can resolve problems quick enough so they aren't experiencing any down time," says Hoying. "If [the technology] works, demand will be very strong."
So far at least, the technology appears to be delivering on its promise. Roy Eckmeier, senior manager of operations at FedEx Express, says he's been pleasantly surprised by his company's experience using fuel cells provided by Hydrogenics on its fleet of Hyster lift trucks. "Until now, we've operated heavy equipment with battery or propane power, but we recently began using hydrogen power," says Eckmeier. "As with any new technology, the first concern we had was [whether it would] operate as well as the equipment we have presently. Our experience to date has been that there has been relatively no difference between the fuel cell technology and the equipment we have used previously."
Lots to like
It's not hard to see why companies are interested in experimenting with fuel cells. Aside from the environmental benefits (see sidebar), fuel cell-powered lift trucks offer a number of operating advantages. For starters, they're able to operate at full power up until the moment the cell runs out of fuel, much the way a car does before it runs out of gas. Lift trucks powered by traditional batteries, by contrast, tend to lose power toward the end of each shift as the battery wears down, which can become a drag on productivity.
Fuel cells also have the advantage over batteries when it comes to refueling. While it can take 20 minutes or longer to change a battery, a fuel cell can be recharged in a matter of minutes. In the Greater Columbia Fuel Cell Challenge project, for instance, drivers generally were able to refuel the trucks in a minute or two and be on their way. In addition, fuel cells eliminate the headaches surrounding the proper disposal of lead acid batteries.
Bruce Mantz, who operates third-party logistics service provider Automated Distribution Systems, adds that fuel cells can also save DC operations valuable space. With fuel cells, there's no need for a separate storage area to house the units when they're not in use (as there is with batteries). In the Wal-Mart trial, for example, the indoor fuel dispensing area required just 200 square feet of floor space, compared with the 4,000 square feet needed for the lead acid battery room. That's a major consideration for a 3PL operation like Mantz's, where every square inch of DC floor space represents a revenue opportunity.
A tough cell
Though fuel cells are getting generally high marks from users, the technology still has some obstacles to overcome. A user in the South Carolina trial had to shut down its test when high temperatures in the non-air-conditioned distribution center began to affect the fuel cell's performance. Fuel cell testers also report that replacing batteries with fuel cells changes the characteristics of a lift truck. Before they can send a truck that's been converted to fuel cell power out onto the floor, they have to re-do their calculations for load center and stability, taking the fuel cell into consideration.
Then there's the cost. Although the price of outfitting a truck with a fuel cell power pack is about half what it was two years ago—and continues to decline—it can still run to about $40,000 per truck, or about 10 times the price of a conventional lead acid battery. In addition, it can cost $100,000 or more to equip a building with a hydrogen storage tank, compressor, and dispensing system. Cook notes that both technological advances and price decreases are taking longer than expected, which has given rise to charges that the technology has failed to live up to the hype.
Those charges will sound familiar to anyone who followed the RFID market in the early days, back when Wal-Mart first began testing the technology. What happened with RFID may offer some clues to fuel cell technology's future. With the Behemoth of Bentonville as its champion, RFID soon took off. Prices dropped, technological advancements were made, and reliability issues were resolved. Today, RFID is slowly but steadily becoming embedded in supply chain operations from coast to coast.
The hope is that Wal-Mart can do the same for fuel cells. And at least one industry player thinks that's precisely what the retail giant has in mind. Commenting on the retailer's commitment to the fuel cell trials, Hoying of Plug Power has this to say: "Wal-Mart's commitment [to the technology] shows their strong interest in seeing fuel cells brought into the mainstream materials handling industry."
goodbye, air pollution?
The continued development of hydrogen fuel cells for lift trucks won't cut down on traffic congestion, but the air we breathe could be cleaner in 10 or 15 years if the technology takes off as expected.
How much of a difference could the technology make? A new study sponsored by fuel cell makers Plug Power Inc. and Ballard Power Systems could offer some clues. Last year, the two collaborated on research to evaluate the potential impact of hydrogen fuel cell technology on greenhouse gas emissions, focusing on the fuel cell applications that are most likely to see near-term commercial use (which included material handling as well as residential cogeneration, backup power systems, and public transit buses). The study's results showed that global greenhouse gas reductions from these combined applications could be in the range of 31 million to 116 million metric tons through the year 2025, assuming a baseline level of hydrogen production. A reduction in greenhouse gases of that magnitude would be the equivalent of removing between 1.4 million and 5.6 million cars from roadways around the world.
"Our analysis provides a view of realistic environmental benefits that can be anticipated from fuel cell adoption in commercial markets," said John Sheridan, president of Ballard, in a statement announcing the study's results. "There are a range of market applications for which fuel cell-based products provide competitive advantage, while at the same time significantly reducing [greenhouse gas] emissions."
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.