For the past few Januarys, I've attempted to identify the top 10 challenges facing the logistics/supply chain community in the year ahead. My score for 2012 was not too bad, but I have to admit my predictions were pretty safe. This year, I'm going to stretch it a little and see what happens. Herewith, my list of 10 developments that bear watching in 2013:
The usual. Not to trivialize any of these issues, but I believe it's pretty much a given that we'll continue to struggle with driver shortages and hours of service, fuel costs, carrier pricing, possible capacity shortfalls, infrastructure, and sustainability.
Treatment of truck drivers. While salaries certainly enter into it, it is becoming increasingly clear that lifestyle factors keep many from pursuing a career as a truck driver. It will be incumbent upon shippers and receivers to help ease the pain by making their facilities more welcoming to drivers. Consider, for example, that many DCs lack adequate facilities for women and pets, which are on the road in growing numbers. Some minor expenditures can yield some major results.
CSA 2010. Although the driver safety initiative was initially denounced as a huge blow to the industry, I believe CSA 2010 will turn out to be anticlimactic. As carriers and drivers gain experience with the program, the new regulations will prove to be more help than hindrance.
Air travel. Let's face it. Even in first class, air travel is ugly; and unless Singapore Airlines starts flying domestically, it will continue to be that way. Fares and fees have skyrocketed, while service, seat availability, and comfort continue to deteriorate. With no solution in sight, we can expect to see a renewed push to regulate the industry in 2013.
Use of boxcars. As rail service continues to improve and truckers' challenges mount, some companies will begin looking back 50 years and start shipping some products in boxcars. While this might not seem like a step in the right direction, improved rights-of-way, better equipment, and faster, more reliable service can make rail a reasonable alternative to trucks.
Pricing options. As transportation costs continue to rise, more companies will quit trying to be Six Sigma suppliers and begin offering slower, but cheaper, shipping options to customers who don't require premium service. Not everyone needs overnight or even second-day delivery.
Alternative fuels. Several motor carriers already have had excellent results with natural gas, and there is no reason to expect that these experiments will end anytime soon.
Outsourcing. Continuing uncertainty in the economy and the supply chain will give a boost to logistics service providers (LSPs). Contracting with an LSP gives shippers the flexibility to modify their distribution networks relatively swiftly in response to changing market and transportation conditions.
Panama Canal. The expansion of the Panama Canal, scheduled for completion in 2015, will open up new port options for U.S. importers. Although the change won't happen overnight, this could have big effect on where they locate DCs in the future. For example, expect to see an upsurge in interest in a misshapen geographic triangle bordered by Columbus, Memphis, Dallas, and Kansas City that promises to give U.S. companies both the inbound and the outbound flexibility they need.
Freight bill payment. For 50 years, freight bill audit and payment firms have provided a valuable service to the industry, but the widespread availability of transportation management systems with freight payment modules could take a big bite out of that business. Freight bill payment companies will need to broaden their horizons and look for innovative ways to package the valuable information they can provide.
Some readers of this column may believe that I've "lost it" on this one, but let's regroup in December 2013 and see how we did.
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 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.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.