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 saying goes: "Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds." But what about insolvency? We may find out in the months ahead.
As this issue went to press, U.S. Postmaster General Patrick Donahoe was slated to appear before the Senate Homeland Security and Governmental Affairs Committee, where he was expected to seek congressional permission to override anti-layoff language in the agency's collective bargaining agreement with postal workers. That would pave the way for substantial reductions in staffing.
That's just one of several cost-cutting measures the U.S. Postal Service (USPS) has proposed in recent months. It has also offered up such suggestions as suspending Saturday deliveries and closing several thousand branch offices. Such drastic measures are said to be necessary to keep the postal service from essentially going under before the end of the year.
The fiscal crisis facing the postal service has been brewing for the better part of a decade, but the problem now appears to be coming to a head. According to published reports, the venerable agency that touches almost every American every day (except Sunday, of course) is so cash poor that it's on the brink of defaulting on a pending $5 billion-plus payment to pre-fund retiree health benefits.
This is no temporary setback. A number of independent analysts have reviewed the USPS's projected profit-and-loss profile over the next eight to 10 years, and the results could only be described as dismal. For example, a recent study by McKinsey & Co. concluded that without significant changes, the postal service faces a cumulative net loss of $238 billion by 2020.
It's clear that the USPS's centuries-old business model is no longer sustainable in a digital world. Its customers have abandoned "snail mail" for e-mail in droves. It will have to look elsewhere for revenue if it hopes to stay afloat.
So what options does the USPS have? What are its strengths, and how can it use them to its best advantage? What many see as the agency's most valuable asset is its enormous and underutilized ground delivery network, which reaches every node within the postal infrastructure. The nodes include not only every business and residential address in the United States, but also a vast network of regional distribution centers, bulk mail centers, and destination delivery units (i.e., local post offices).
In fact, the USPS has already leveraged this network with some success. For instance, it has carved out a profitable niche providing "last mile" delivery and "first mile" pickups of returns on behalf of private parcel service companies like FedEx and UPS in places where the private carriers lack the package density to justify sending out a truck.
So is this the agency's ticket to sustainable, long-term success? Could the USPS reinvent itself as primarily a provider of parcel services?
The short answer is, not without a great deal of difficulty. Such a step would require overcoming considerable hurdles. Right now, the postal service faces severe regulatory constraints. Congress essentially micro-manages the USPS's operations. For instance, it tells the postal service which post offices it must keep open and which it can close, which days it can and/or must deliver, and so forth. The bottom line is that the USPS is subject to a vast array of governmental and political imperatives, while its private sector rivals operate free from any such constraints.
What that means is that in order to reinvent itself as primarily a parcel delivery provider, the USPS would first have to convince Congress to free it from the regulatory yoke it wears as a quasi-government agency. Otherwise, it most assuredly would be unable to compete and ultimately, to survive.
This article has been updated to reflect the fact that the $5 billion-plus payment is needed to pre-fund retiree health benefits, not fund current retiree health benefits.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills 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.