James Cooke is a principal analyst with Nucleus Research in Boston, covering supply chain planning software. He was previously the editor of CSCMP?s Supply Chain Quarterly and a staff writer for DC Velocity.
Earlier this year, one of the truckers in Kimberly-Clark's carrier base went out of business. But the personal and health-care products giant wasn't caught flat-footed.
Kimberly-Clark was able to swiftly analyze the ramifications for its distribution network by using special software. "We modeled the impact [of the carrier's exit,] including how much incremental capacity we needed to acquire from our other carriers," says Tim Zoppa, transportation center of excellence manager at Kimberly-Clark.
Kimberly-Clark is a pioneer in the use of a new type of forward-looking transportation software that helps shippers plan for their future truck capacity needs. Historically, transportation management systems (TMS) have focused on shipment execution, handling tasks like carrier selection, load tendering, and freight management. But they haven't been much use in helping shippers project their capacity needs out into the future.
"TMS applications are very good at optimizing within the order-delivery planning horizon," says Gartner analyst Dwight Klappich. "But they are not good at forward planning—weeks, months, quarters in advance."
Although companies have tried using other demand forecasting and procurement applications to determine how many and what type of carriers they'll need, Klappich says they haven't had much success. In his view, so-called "product-centric planning tools" are not suited to transportation planning because they can't get down to the required level of detail. In other words, they can't look at future capacity needs by lane, carrier, or piece of equipment.
Gary Girotti, a vice president at the supply chain consulting firm Chainalytics, agrees that traditional demand planning software isn't suited for the job of forecasting transportation needs. "People have tried to apply forecasting systems from products to transportation, and it just doesn't work. Demand plans do not care about modes," says Girotti. "That's why we need special tools."
THE NEW ARRIVALS
The good news for shippers is that in the past few years, a number of software developers have stepped forward to provide these special tools.
One such vendor is JDA Software Inc., which developed the application used by Kimberly-Clark. Called Transportation Modeler, the software is designed to draw data from the vendor's own TMS but can also be used on a stand-alone basis.
Kimberly-Clark (KC) has been using the software since 2006 to optimize shipments from more than 100 distribution centers in North America, using about 100 carriers. (Although KC has an extensive carrier base, it should be noted that most of the company's shipment volume is concentrated with fewer than 10 carriers.)
Zoppa of Kimberly-Clark says his company uses the tool to analyze the effect of shipping network changes on load planning. For example, if the company gets a lower price quote from a carrier, it might use the software to model how shifting freight to the new carrier would affect overall load tendering patterns.
"We can run changes through the model to figure out how it will impact freight expense or how it will affect participation [in shipping movements] by each carrier," says Zoppa. He adds that one of the biggest pluses from his company's perspective is that the optimization engine in the modeling tool is the same engine used in the TMS that manages K-C's day-to-day transportation operations.
JDA isn't the only software developer selling this type of application. A German TMS provider, inet-logistics GmbH, also offers a strategic planning module as part of its solution.
Inet-logistics' strategic planning module uses both forecasts and historical data on freight movements to run a simulation to provide a "picture of prospective transportation activity," says Werle Oswald, the company's chief executive officer. He adds that the module helps shippers optimize costs and capacity requirements within a network.
Another vendor offering software for transportation planning is Terra Technology, a supply chain planning software specialist. Terra has an application called Transportation Forecasting that's designed to assist with capacity planning. The software uses historical shipment data drawn from the manufacturer's enterprise resource planning (ERP) system to produce a daily forecast of shipping needs by lane and mode.
The forecasting application also allows users to plan ahead for special shipping requirements. For example, it can take marketing plans for product promotions weeks in advance and use the data to help determine how much freight capacity the company should reserve from its carriers, says Robert F. Byrne, Terra Technology's president and CEO. "Shifts in sourcing and volumes due to changes in manufacturing capabilities are also reflected in the logistics forecast," says Byrne, "so contracts and budgets can be more effectively managed."
PREPARING FOR A CRUNCH
For all its potential as an advanced planning tool, transportation forecasting software has yet to see widespread adoption by shippers. Klappich attributes that to the relative ease with which shippers can find a carrier willing to move a load for a reasonable rate these days.
"When capacity is plentiful, you figure anytime you want a carrier, you can get a carrier," Klappich says.
But that could well change if the predicted trucking capacity shortage materializes, Klappich warns. As shippers find themselves going farther down their carrier lists to locate a trucker willing to haul a load, their attitude will change, he predicts. "We'll see more interest in transportation forecasting over the next few years as capacity dries up."
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."