Skip to content
Search AI Powered

Latest Stories

fastlane

Top 10 logistics challenges for 2011 (and beyond)

The experts tell us the economy is improving, but the logistics/supply chain community will still face challenges throughout the year. Here's what to watch for.

What issues will bear watching in 2011? With apologies to David Letterman, I have once again conjured up a "Top 10" list of developments that should be of concern to logistics and supply chain managers. Some are positive. Some are negative. But all are important. In no particular order, they are as follows:

1. The economy. Although the recession has officially been declared over, there are many who will disagree. With millions of Americans still out of work, it's difficult to see a significant recovery on the near horizon. Until we do, we must be concerned about the financial state of carriers, shippers, and individuals. It will be years, if ever, until we get back to "business as usual" in the supply chain.


2. The price of diesel. According to Department of Energy projections, diesel fuel will average $3.23 per gallon in 2011, or 25 cents higher than in 2010. While we're likely to see some fluctuations, I believe fuel will continue to be a thorn in the side of both carriers and shippers.

3. Rail regulation. As was the case last year at this time, there is still a bill in Congress that would change the way the rail industry is regulated. While I sympathize with captive shippers, I think rail reregulation would be bad public policy, leading to higher prices, reduced productivity, and capacity constraints. It's difficult to tell what the new Congress will do, but hopefully, this bill will collapse under its own weight.

4. Continued deterioration of the nation's infrastructure. In spite of stimulus spending, we've made little, if any, progress on this front. We are nowhere near where we need to be to accommodate our growing volumes of highway and rail traffic. If the economy improves dramatically, it will only exacerbate an already bad situation.

5. The surface transportation bill. Legislation to replace the current, and oft-extended, highway spending bill is expected to emerge from Congress in 2011. It will be interesting to see how it is handled by the new chairman of the House Transportation and Infrastructure Committee, John Mica. This bill has been languishing in the House for 18 months.

6. The national export initiative. In his 2010 State of the Union Address, President Obama outlined a strategy to double U.S. exports over the next five years, from $1.57 trillion in 2009 to $3.14 trillion by 2015. This may be difficult given the limitations of our current infrastructure and port capacity. The nation's ongoing trade dispute with Mexico won't help the cause. Mexico, one of our most important trading partners, has levied tariffs on various imports from the United States because we can't seem to resolve our long-standing differences over cross-border trucking.

7. Higher truck rates. Rising fuel costs and new regulations governing engine emissions will mean higher truck rates in 2011. Some carriers have already put through rate hikes, but look for more ahead. We may be shifting to a carrier advantage position. Much will depend on what happens to YRC.

8. Trucking capacity. If the economy improves, capacity problems could develop. Many carriers sold off equipment during the slowdown, and potential driver shortages could limit the number of vehicles on the road. While new truck orders are up, we still could experience an imbalance.

9. Ocean shipping. With the Panama Canal expansion scheduled for completion in 2014, several steamship companies are ordering new post-Panamax vessels. Look for continued expansion and retrofitting at some Gulf and East Coast ports in order to accommodate the giant ships.

10. Security. Following the recent attempt to blow up cargo planes with package bombs, we can expect to see further security restrictions on international shipments. It will be impossible to plug every leak, but the government and carriers will keep scrambling to seal any gaps that are detected.

The Latest

More Stories

Sean Webb of Sparck Technologies
Sparck Technologies

In Person: Sean Webb of Sparck Technologies

Sean Webb’s background is in finance, not package engineering, but he sees that as a plus—particularly when it comes to explaining the financial benefits of automated packaging to clients. Webb is currently vice president of national accounts at Sparck Technologies, a company that manufactures automated solutions that produce right-sized packaging, where he is responsible for the sales and operational teams. Prior to joining Sparck, he worked in the financial sector for PEAK6, E*Trade, and ATD, including experience as an equity trader.

Webb holds a bachelor’s degree from Michigan State and an MBA in finance from Western Michigan University.

Keep ReadingShow less

Featured

office workers talk at computer

Mid-market businesses stumble in rush to AI

Mid-marketorganizations are confident that adopting AI applications can deliver up to fourfold returns within 12 months, but first they have to get over obstacles like gaps in workforce readiness, data governance, and tech infrastructure, according to a study from Seattle consulting firm Avanade.

The report found that 85% of businesses are expressing concern over losing competitive ground without rapid AI adoption, and 53% of them expect to increase their budgets for gen AI projects by up to 25%. But despite that enthusiasm, nearly half are stuck at business case (48%) or proof of concept (44%) stage.

Keep ReadingShow less
chart of global supplier capacity

Suppliers report spare capacity for fourth straight month

Factory demand weakened across global economies in October, resulting in one of the highest levels of spare capacity at suppliers in over a year, according to a report from the New Jersey-based procurement and supply chain solutions provider GEP.

That result came from the company’s “GEP Global Supply Chain Volatility Index,” an indicator tracking demand conditions, shortages, transportation costs, inventories, and backlogs based on a monthly survey of 27,000 businesses. The October index number was -0.39, which was up only slightly from its level of -0.43 in September.

Keep ReadingShow less
container ship at sea

Hapag-Lloyd orders 24 new container ships

Ocean freight liner Hapag-Lloyd has ordered 24 new container ships through $4 billion in contracts with two Chinese shipyards, saying the investment will continue to modernize and decarbonize its fleet.

Half the order will include 12 vessels with a capacity of 16,800 twenty-foot equivalent units (TEU) to be built by Yangzijiang Shipbuilding Group, and will expand the Dutch company’s capacity. The other 12 ships with a capacity of 9,200 TEU each will be made by New Times Shipbuilding Company Ltd. and will replace aging vessels. Hapag-Lloyd’s current fleet includes 287 container ships with a total transport capacity of 2.2 million TEU.

Keep ReadingShow less
high-tech warehouse illustration

Robotics Roundtable: Automation drives forward

2024 has been a bumpy ride for many parts of the material handling equipment industry. It’s not necessarily that orders have been weak; it’s just that they aren’t up to the levels seen during the heyday of the pandemic-induced warehouse expansions. One of the brighter spots has been the robotics and automation sector, which has benefited from warehouse leaders’ continuing struggles with worker shortages and increased labor costs—both of which can be addressed through the judicious application of automated systems.

As we do every year, we recently gathered experts from the robotics and automation industry to weigh in on both the challenges facing the market and the opportunities that lie ahead. Here’s what they said.

Keep ReadingShow less