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.
The path for E. Hunter Harrison to become CEO of CSX Corp. was effectively cleared this morning when the eastern railroad giant said that Michael Ward, its chairman and CEO, and Clarence Gooden, its president, would retire on May 31.
Jacksonville-based CSX said Fredrik J. Eliasson, 46, has been named president, a post he assumed last week. Eliasson, who has been with CSX for 22 years, is currently chief sales and marketing officer. He will retain that post, CSX said. Gooden has been named vice chairman, a post he will hold until his May retirement, the company said.
There had been much speculation over the past several weeks about Ward's status, especially after Harrison, 72, abruptly quit last month as CEO of Calgary-based Canadian Pacific Railway and joined forces with Paul Hilal, head of New York-based hedge fund Mantle Ridge LP, in a bid to have Harrison installed as CSX's CEO. In language that was striking in its transparency, CSX said Eliasson's appointment is "not intended to preempt or otherwise affect any discussions" between its board and Mantle Ridge over Harrison's possible ascension to the CEO role.
Ward, 65, has spent nearly 40 years at CSX, the last 13 or so as chairman and CEO. He appeared confident he would remain in the top jobs, telling Trains magazine in an interview last week that the board has asked him to remain for three more years and that he planned to work until he was 68. However, CSX said in today's statement that today's changes were "part of an orderly transition of the company's senior leadership" that the board has been mulling for more than a year.
Mantle Ridge has accumulated a 4.9 percent equity stake in CSX, and has pressed its board to quickly make a change at the top. In a letter last Thursday to Edward J. Kelly III, CSX's presiding director, Hilal said the board and Mantle Ridge "owe it to our shareholders to get a deal done promptly."
Mantle Ridge had originally faced a Feb. 10 deadline to propose its slate of directors, but the deadline was postponed to this Friday to give both sides more time to negotiate an agreement. Hilal said he would be the only Mantle Ridge representative on the new board, attempting to allay CSX concerns that he would propose to install as many as six Mantle Ridge employees on the board. Harrison would be on the new board as well.
Hilal also sought to assure CSX's board that bringing in Harrison was not a precursor to a takeover battle for CSX. "This is not a 'battle for control,'" he wrote. The main sticking point now appears to be the length of Harrison's proposed contract. Mantle Ridge wants a four-year duration, while CSX's board had been leaning towards two years.
As chairman and CEO, Ward has presided over major changes at the railroad, notably a dramatic and secular decline in demand for coal, long the railroad's largest revenue source. Concerns about coal's environmental impact and competition from abundant, clean-burning natural gas have forced CSX to slash costs and reposition its infrastructure to focus more on faster-growing intermodal and merchandise traffic. CSX said it will lay off 1,000 managers, most of them in its Jacksonville corporate office and its subsidiaries. The layoffs are set to be completed by mid- to late March, the company said.
Ward has also been under pressure from analysts and investors to improve CSX's industry-lagging operating ratio, the measure of operating expenses compared to revenues, and a key metric of a railroad's efficiency and profitability. Last year, CSX's ratio stood at 69.4 percent after being in the 70s for several years. It has a long-term target of driving down its ratio to the mid-60s. By contrast, CP's 2016 ratio stood at 59.4 percent, a marked improvement from where it was when Harrison was brought in as CEO in 2012.
Harrison is a master at a practice known as "Precision Scheduled Railroading." Utilized by all railroads to some degree, the model drills down into shipment scheduling patterns so a railroad knows exactly which trains, yards, and connections are involved, as well as the precise time a shipment is to arrive at the customer or interchange location. Executed effectively, precision railroading allows a railroad to budget for the exact assets that are needed to fit the plan.
While at CP, Harrison approached CSX about a possible combination, but was quickly rebuffed. CP then launched a takeover bid of Norfolk, Va.-based Norfolk Southern Corp., the other main eastern railroad, only to be rejected there as well. Harrison has long pushed for consolidation of the North American railroad industry, maintaining it is the only path to reducing network congestion and sustainable service improvements. He has also called for less regulatory interference in the industry's affairs, saying railroads need the ability to maneuver freely if they are to deliver consistently cost-effective service.
Harrison's views are not shared by other U.S. railroads, unions, lawmakers, and many shippers, who argue the industry has already consolidated enough.
The U.S., U.K., and Australia will strengthen supply chain resiliency by sharing data and taking joint actions under the terms of a pact signed last week, the three nations said.
The agreement creates a “Supply Chain Resilience Cooperation Group” designed to build resilience in priority supply chains and to enhance the members’ mutual ability to identify and address risks, threats, and disruptions, according to the U.K.’s Department for Business and Trade.
One of the top priorities for the new group is developing an early warning pilot focused on the telecommunications supply chain, which is essential for the three countries’ global, digitized economies, they said. By identifying and monitoring disruption risks to the telecommunications supply chain, this pilot will enhance all three countries’ knowledge of relevant vulnerabilities, criticality, and residual risks. It will also develop procedures for sharing this information and responding cooperatively to disruptions.
According to the U.S. Department of Homeland Security (DHS), the group chose that sector because telecommunications infrastructure is vital to the distribution of public safety information, emergency services, and the day to day lives of many citizens. For example, undersea fiberoptic cables carry over 95% of transoceanic data traffic without which smartphones, financial networks, and communications systems would cease to function reliably.
“The resilience of our critical supply chains is a homeland security and economic security imperative,” Secretary of Homeland Security Alejandro N. Mayorkas said in a release. “Collaboration with international partners allows us to anticipate and mitigate disruptions before they occur. Our new U.S.-U.K.-Australia Supply Chain Resilience Cooperation Group will help ensure that our communities continue to have the essential goods and services they need, when they need them.”
A new survey finds a disconnect in organizations’ approach to maintenance, repair, and operations (MRO), as specialists call for greater focus than executives are providing, according to a report from Verusen, a provider of inventory optimization software.
Nearly three-quarters (71%) of the 250 procurement and operations leaders surveyed think MRO procurement/operations should be treated as a strategic initiative for continuous improvement and a potential innovation source. However, just over half (58%) of respondents note that MRO procurement/operations are treated as strategic organizational initiatives.
That result comes from “Future Strategies for MRO Inventory Optimization,” a survey produced by Atlanta-based Verusen along with WBR Insights and ProcureCon MRO.
Balancing MRO working capital and risk has become increasingly important as large asset-intensive industries such as oil and gas, mining, energy and utilities, resources, and heavy manufacturing seek solutions to optimize their MRO inventories, spend, and risk with deeper intelligence. Roughly half of organizations need to take a risk-based approach, as the survey found that 46% of organizations do not include asset criticality (spare parts deemed the most critical to continuous operations) in their materials planning process.
“Rather than merely seeing the MRO function as a necessary project or cost, businesses now see it as a mission-critical deliverable, and companies are more apt to explore new methods and technologies, including AI, to enhance this capability and drive innovation,” Scott Matthews, CEO of Verusen, said in a release. “This is because improving MRO, while addressing asset criticality, delivers tangible results by removing risk and expense from procurement initiatives.”
Survey respondents expressed specific challenges with product data inconsistencies and inaccuracies from different systems and sources. A lack of standardized data formats and incomplete information hampers efficient inventory management. The problem is further compounded by the complexity of integrating legacy systems with modern data management, leading to fragmented/siloed data. Centralizing inventory management and optimizing procurement without standardized product data is especially challenging.
In fact, only 39% of survey respondents report full data uniformity across all materials, and many respondents do not regularly review asset criticality, which adds to the challenges.
Artificial intelligence (AI) tools can help users build “smart and responsive supply chains” by increasing workforce productivity, expanding visibility, accelerating processes, and prioritizing the next best action to drive results, according to business software vendor Oracle.
To help reach that goal, the Texas company last week released software upgrades including user experience (UX) enhancements to its Oracle Fusion Cloud Supply Chain & Manufacturing (SCM) suite.
“Organizations are under pressure to create efficient and resilient supply chains that can quickly adapt to economic conditions, control costs, and protect margins,” Chris Leone, executive vice president, Applications Development, Oracle, said in a release. “The latest enhancements to Oracle Cloud SCM help customers create a smarter, more responsive supply chain by enabling them to optimize planning and execution and improve the speed and accuracy of processes.”
According to Oracle, specific upgrades feature changes to its:
Production Supervisor Workbench, which helps organizations improve manufacturing performance by providing real-time insight into work orders and generative AI-powered shift reporting.
Maintenance Supervisor Workbench, which helps organizations increase productivity and reduce asset downtime by resolving maintenance issues faster.
Order Management Enhancements, which help organizations increase operational performance by enabling users to quickly create and find orders, take actions, and engage customers.
Product Lifecycle Management (PLM) Enhancements, which help organizations accelerate product development and go-to-market by enabling users to quickly find items and configure critical objects and navigation paths to meet business-critical priorities.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.