Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
Those seeking to divine the future of American trucking may want to examine the third-quarter results of J.B. Hunt Transport Services Inc.
Like everyone else in an industry suffering through the worst freight recession in decades, the Lowell, Ark.-based freight giant posted double-digit declines in its over-the-road revenue and income. But its intermodal traffic—by far the largest segment of Hunt's business—grew at a record pace, with revenue and operating income up 24 percent and 21 percent, respectively.
Hunt is reaping the fruits of a multiyear strategy to convert some of its customer loads from the highways to more fuel-efficient intermodal service. Higher fuel costs, environmental concerns, and worsening road conditions are pushing shippers to consider intermodal options, decisions helped along by recent improvements in infrastructure and service consistency.
Hunt's own equipment mix reflects this trend: At quarter's end, it had 37,000 intermodal containers in its fleet, an increase of 4,000 from the 2007 period. By contrast, Hunt ended the quarter with 3,309 tractors, a reduction of 1,419 rigs from the third quarter of 2007.
"In increasing numbers, traditional over-the-road shippers are turning to intermodal for the first time" as they seek to drive down costs and reduce carbon emissions, Kirk Thompson, Hunt's president and CEO, said in a statement accompanying the company's third-quarter results.
Hunt is not alone. Steve Van Kirk, vice president of commercial development for Schneider Intermodal, a unit of privately held truckload carrier Schneider National, says his division is growing at a pace that is "faster than the industry average."
Even truckers who've never before played on the intermodal field are seeing unexpected gains. USA Truck Inc., a large truckload carrier based in Van Buren, Ark., posted $2.1 million in intermodal revenue in its third quarter. The revenue is a tiny fraction of USA Truck's third-quarter revenue of $103 million (excluding fuel surcharges). However, the company had projected only $2 million in intermodal revenue for all of 2008.
"Our intermodal volume is small, and we are still on the steep slope of the learning curve, but we are pleased with our progress," said Cliff Beckham, USA Truck's president and CEO, in a statement.
Going short
Further evidence of truckers' growing use of intermodal can be found in the third-quarter numbers posted by the Intermodal Association of North America. Domestic intermodal operations showed their best quarterly results in more than four years, according to IANA, up by 6.7 percent over the third quarter last year. The surge was led by a 10.5-percent jump in domestic container loadings and buttressed by small gains in trailer loadings. Through September, domestic intermodal volume for both trailers and containers rose 4.7 percent from 2007 levels, according to the group.
Although in the past, intermodal movements tended to be long hauls, that's quickly changing. Through the first nine months of this year, intermodal loads transiting less than 1,000 miles grew by 7 percent, twice the growth rate reported for 1,000-mile plus lanes, IANA says. The "sweet spots," according to IANA, were in corridors between 700 and 1,000 miles; there, freight shipped in domestic equipment—predominantly 53-foot containers—grew by 9 percent through September. The IANA data underscore that the real action in intermodal is now on the short to intermediate corridors, where in the past goods have generally moved over the road via truckload carrier.
Hunt's numbers bear that out. For example, while the carrier's total intermodal load count in 2008's third quarter rose 13 percent over the same quarter in 2007, volumes on its Eastern regional network increased by more than 50 percent. Hunt's typical intermodal movement remains a fairly lengthy haul—the trucker says an average intermodal movement in the quarter traveled 1,817 miles. However, that's down 5 percent from 1,913 miles in the same period a year ago.
The company doesn't see that trend reversing itself anytime soon. Intermodal's length of haul "is going to continue to come down" as it has for over-the-road trucking, says Hunt CFO Jerry Walton. Positioning both intermodal and over-the-road services for shorter lengths of haul is "certainly where the trucker is headed," he said in an interview.
It's a similar story over at Schneider Intermodal. Van Kirk notes that his unit's growth is skewed toward intermediate hauls averaging 1,000 miles. Most of Schneider Intermodal's shorter-haul growth has come from business converted from over-the-road trucking, he says. By contrast, longer-haul volume gains are largely driven by new business.
An economic advantage
Carriers may be bullish on intermodal's future, but analysts are divided on whether intermodal can sustain the momentum. Satish Jindel, president of Pittsburgh-based SJ Consulting Group Inc., says intermodal gains last year were sparked in part by soaring oil prices, and oil's dramatic reversal in recent months will lessen intermodal's appeal. However, intermodal growth is likely to be supported over the long term by concerns over a worsening domestic road infrastructure that may force freight off the highways, Jindel adds.
Eric Starks, president of FTR Associates, a Houston-based consultancy, says the sharp decline in diesel prices will "remove a major tailwind behind the recent intermodal conversion. We expect that any additional conversion [to intermodal] will significantly slow down and likely pause completely for the near term." He notes, however, that intermodal will retain its current share of the market, including recently added short-haul traffic.
Other experts say intermodal is poised for a period of growth regardless of how oil prices behave.
"The wake-up call was when diesel prices hit $5 a gallon," says Charles Clowdis, managing director-North American markets, trade & transportation advisory services for IHS Global Insight Inc., a Lexington, Mass., consulting firm. "But even if prices never reach those levels again, it won't change the dynamic. In intermodal, the industry has found a system that works."
Jindel notes that railroads are poised to deliver "better transit times and on-time performance" in large part through significant infrastructure improvements. As an example, SJ Consulting cites a Norfolk Southern Corp. initiative to enable double-stack service between the port of Portsmouth, Va., and Chicago by raising clearances at 28 tunnels and seven bridges. The $155 million project will shave one day of transit time from intermodal service between the East Coast and the Midwest when it's completed in 2010, according to the firm.
NS's East Coast rival, CSX Corp., has launched its own intermodal expansion by creating double-stack clearances linking Washington, D.C., and Northwest Ohio via Pittsburgh; between North Carolina and Baltimore via Washington; and between Wilmington and Charlotte, N.C. The $700 million project is slated for completion in 2015.
Dray area
Yet the potential of those future projects does not hide the reality that many short and intermediate traffic lanes are still not ready for intermodal operations. The existing rail infrastructure would not be able to support increases in intermodal demand on many of those corridors, according to industry observers.
"There are a zillion markets that will never be intermodally competitive unless the railroads or the government spends money on infrastructure," says John G. Larkin, managing director, transportation logistics group for the investment firm Stifel, Nicolaus & Co.
Tom White, spokesman for the Association of American Railroads, says future intermodal growth "will depend on whether there are capacity constraints in individual corridors. Railroads are investing heavily in expansion aimed at intermodal, but it does take some time for those projects to come on line."
Truckers also will be under pressure to better manage their drayage fleets to ensure that loads can be promptly fed to and from intermodal ramps while minimizing the dray that adds time and expense to an intermodal move. "As the length of haul declines, so too does the 'economic radius' around the rail ramp," Starks of FTR says. "Loads must originate and/or terminate near the ramp in order to minimize high-cost dray miles as a percentage of the total door-to-door move." As a result, Starks predicts intermodal will be hard-pressed to compete for shorter-haul loads outside high-density traffic lanes usually located near rail ramps.
Van Kirk of Schneider Intermodal says the efficiency of drayage operations will often determine whether the shipments should go on a train or a truck. In what may be an attempt to better control that segment of the business, Hunt expanded its in-house drayage fleet by 20 percent in the third quarter of 2008 to reduce its reliance on independent contractors.
Offsetting the increasing costs of dray service as loads are staged farther from main intermodal ramps may prove difficult, according to Larkin. "The longer the dray, the quicker the economies [of intermodal] break down," he says.
Challenges aside, there is little doubt that for a trucking industry confronting weak domestic and international economies, a deteriorating infrastructure, oil price volatility, environmental imperatives, and a demanding clientele, intermodal will take on increased importance.
In the process, companies that made their living off the highways may need to rethink their business models. Those companies that have successfully made the transition have needed to adjust their culture. That goes for firms whose names are virtually synonymous with trucking.
"J.B. Hunt himself might be rolling over in his grave if he knew that intermodal had become the growth and profitability driver for his company," says Clowdis.
The New York-based industrial artificial intelligence (AI) provider Augury has raised $75 million for its process optimization tools for manufacturers, in a deal that values the company at more than $1 billion, the firm said today.
According to Augury, its goal is deliver a new generation of AI solutions that provide the accuracy and reliability manufacturers need to make AI a trusted partner in every phase of the manufacturing process.
The “series F” venture capital round was led by Lightrock, with participation from several of Augury’s existing investors; Insight Partners, Eclipse, and Qumra Capital as well as Schneider Electric Ventures and Qualcomm Ventures. In addition to securing the new funding, Augury also said it has added Elan Greenberg as Chief Operating Officer.
“Augury is at the forefront of digitalizing equipment maintenance with AI-driven solutions that enhance cost efficiency, sustainability performance, and energy savings,” Ashish (Ash) Puri, Partner at Lightrock, said in a release. “Their predictive maintenance technology, boasting 99.9% failure detection accuracy and a 5-20x ROI when deployed at scale, significantly reduces downtime and energy consumption for its blue-chip clients globally, offering a compelling value proposition.”
The money supports the firm’s approach of "Hybrid Autonomous Mobile Robotics (Hybrid AMRs)," which integrate the intelligence of "Autonomous Mobile Robots (AMRs)" with the precision and structure of "Automated Guided Vehicles (AGVs)."
According to Anscer, it supports the acceleration to Industry 4.0 by ensuring that its autonomous solutions seamlessly integrate with customers’ existing infrastructures to help transform material handling and warehouse automation.
Leading the new U.S. office will be Mark Messina, who was named this week as Anscer’s Managing Director & CEO, Americas. He has been tasked with leading the firm’s expansion by bringing its automation solutions to industries such as manufacturing, logistics, retail, food & beverage, and third-party logistics (3PL).
Supply chains continue to deal with a growing volume of returns following the holiday peak season, and 2024 was no exception. Recent survey data from product information management technology company Akeneo showed that 65% of shoppers made holiday returns this year, with most reporting that their experience played a large role in their reason for doing so.
The survey—which included information from more than 1,000 U.S. consumers gathered in January—provides insight into the main reasons consumers return products, generational differences in return and online shopping behaviors, and the steadily growing influence that sustainability has on consumers.
Among the results, 62% of consumers said that having more accurate product information upfront would reduce their likelihood of making a return, and 59% said they had made a return specifically because the online product description was misleading or inaccurate.
And when it comes to making those returns, 65% of respondents said they would prefer to return in-store, if possible, followed by 22% who said they prefer to ship products back.
“This indicates that consumers are gravitating toward the most sustainable option by reducing additional shipping,” the survey authors said in a statement announcing the findings, adding that 68% of respondents said they are aware of the environmental impact of returns, and 39% said the environmental impact factors into their decision to make a return or exchange.
The authors also said that investing in the product experience and providing reliable product data can help brands reduce returns, increase loyalty, and provide the best customer experience possible alongside profitability.
When asked what products they return the most, 60% of respondents said clothing items. Sizing issues were the number one reason for those returns (58%) followed by conflicting or lack of customer reviews (35%). In addition, 34% cited misleading product images and 29% pointed to inaccurate product information online as reasons for returning items.
More than 60% of respondents said that having more reliable information would reduce the likelihood of making a return.
“Whether customers are shopping directly from a brand website or on the hundreds of e-commerce marketplaces available today [such as Amazon, Walmart, etc.] the product experience must remain consistent, complete and accurate to instill brand trust and loyalty,” the authors said.
When you get the chance to automate your distribution center, take it.
That's exactly what leaders at interior design house
Thibaut Design did when they relocated operations from two New Jersey distribution centers (DCs) into a single facility in Charlotte, North Carolina, in 2019. Moving to an "empty shell of a building," as Thibaut's Michael Fechter describes it, was the perfect time to switch from a manual picking system to an automated one—in this case, one that would be driven by voice-directed technology.
"We were 100% paper-based picking in New Jersey," Fechter, the company's vice president of distribution and technology, explained in a
case study published by Voxware last year. "We knew there was a need for automation, and when we moved to Charlotte, we wanted to implement that technology."
Fechter cites Voxware's promise of simple and easy integration, configuration, use, and training as some of the key reasons Thibaut's leaders chose the system. Since implementing the voice technology, the company has streamlined its fulfillment process and can onboard and cross-train warehouse employees in a fraction of the time it used to take back in New Jersey.
And the results speak for themselves.
"We've seen incredible gains [from a] productivity standpoint," Fechter reports. "A 50% increase from pre-implementation to today."
THE NEED FOR SPEED
Thibaut was founded in 1886 and is the oldest operating wallpaper company in the United States, according to Fechter. The company works with a global network of designers, shipping samples of wallpaper and fabrics around the world.
For the design house's warehouse associates, picking, packing, and shipping thousands of samples every day was a cumbersome, labor-intensive process—and one that was prone to inaccuracy. With its paper-based picking system, mispicks were common—Fechter cites a 2% to 5% mispick rate—which necessitated stationing an extra associate at each pack station to check that orders were accurate before they left the facility.
All that has changed since implementing Voxware's Voice Management Suite (VMS) at the Charlotte DC. The system automates the workflow and guides associates through the picking process via a headset, using voice commands. The hands-free, eyes-free solution allows workers to focus on locating and selecting the right item, with no paper-based lists to check or written instructions to follow.
Thibaut also uses the tech provider's analytics tool, VoxPilot, to monitor work progress, check orders, and keep track of incoming work—managers can see what orders are open, what's in process, and what's completed for the day, for example. And it uses VoxTempo, the system's natural language voice recognition (NLVR) solution, to streamline training. The intuitive app whittles training time down to minutes and gets associates up and working fast—and Thibaut hitting minimum productivity targets within hours, according to Fechter.
EXPECTED RESULTS REALIZED
Key benefits of the project include a reduction in mispicks—which have dropped to zero—and the elimination of those extra quality-control measures Thibaut needed in the New Jersey DCs.
"We've gotten to the point where we don't even measure mispicks today—because there are none," Fechter said in the case study. "Having an extra person at a pack station to [check] every order before we pack [it]—that's been eliminated. Not only is the pick right the first time, but [the order] also gets packed and shipped faster than ever before."
The system has increased inventory accuracy as well. According to Fechter, it's now "well over 99.9%."
IT projects can be daunting, especially when the project involves upgrading a warehouse management system (WMS) to support an expansive network of warehousing and logistics facilities. Global third-party logistics service provider (3PL) CJ Logistics experienced this first-hand recently, embarking on a WMS selection process that would both upgrade performance and enhance security for its U.S. business network.
The company was operating on three different platforms across more than 35 warehouse facilities and wanted to pare that down to help standardize operations, optimize costs, and make it easier to scale the business, according to CIO Sean Moore.
Moore and his team started the WMS selection process in late 2023, working with supply chain consulting firm Alpine Supply Chain Solutions to identify challenges, needs, and goals, and then to select and implement the new WMS. Roughly a year later, the 3PL was up and running on a system from Körber Supply Chain—and planning for growth.
SECURING A NEW SOLUTION
Leaders from both companies explain that a robust WMS is crucial for a 3PL's success, as it acts as a centralized platform that allows seamless coordination of activities such as inventory management, order fulfillment, and transportation planning. The right solution allows the company to optimize warehouse operations by automating tasks, managing inventory levels, and ensuring efficient space utilization while helping to boost order processing volumes, reduce errors, and cut operational costs.
CJ Logistics had another key criterion: ensuring data security for its wide and varied array of clients, many of whom rely on the 3PL to fill e-commerce orders for consumers. Those clients wanted assurance that consumers' personally identifying information—including names, addresses, and phone numbers—was protected against cybersecurity breeches when flowing through the 3PL's system. For CJ Logistics, that meant finding a WMS provider whose software was certified to the appropriate security standards.
"That's becoming [an assurance] that our customers want to see," Moore explains, adding that many customers wanted to know that CJ Logistics' systems were SOC 2 compliant, meaning they had met a standard developed by the American Institute of CPAs for protecting sensitive customer data from unauthorized access, security incidents, and other vulnerabilities. "Everybody wants that level of security. So you want to make sure the system is secure … and not susceptible to ransomware.
"It was a critical requirement for us."
That security requirement was a key consideration during all phases of the WMS selection process, according to Michael Wohlwend, managing principal at Alpine Supply Chain Solutions.
"It was in the RFP [request for proposal], then in demo, [and] then once we got to the vendor of choice, we had a deep-dive discovery call to understand what [security] they have in place and their plan moving forward," he explains.
Ultimately, CJ Logistics implemented Körber's Warehouse Advantage, a cloud-based system designed for multiclient operations that supports all of the 3PL's needs, including its security requirements.
GOING LIVE
When it came time to implement the software, Moore and his team chose to start with a brand-new cold chain facility that the 3PL was building in Gainesville, Georgia. The 270,000-square-foot facility opened this past November and immediately went live running on the Körber WMS.
Moore and Wohlwend explain that both the nature of the cold chain business and the greenfield construction made the facility the perfect place to launch the new software: CJ Logistics would be adding customers at a staggered rate, expanding its cold storage presence in the Southeast and capitalizing on the location's proximity to major highways and railways. The facility is also adjacent to the future Northeast Georgia Inland Port, which will provide a direct link to the Port of Savannah.
"We signed a 15-year lease for the building," Moore says. "When you sign a long-term lease … you want your future-state software in place. That was one of the key [reasons] we started there.
"Also, this facility was going to bring on one customer after another at a metered rate. So [there was] some risk reduction as well."
Wohlwend adds: "The facility plus risk reduction plus the new business [element]—all made it a good starting point."
The early benefits of the WMS include ease of use and easy onboarding of clients, according to Moore, who says the plan is to convert additional CJ Logistics facilities to the new system in 2025.
"The software is very easy to use … our employees are saying they really like the user interface and that you can find information very easily," Moore says, touting the partnership with Alpine and Körber as key to making the project a success. "We are on deck to add at least four facilities at a minimum [this year]."