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 main hallway at the Transportation Intermediaries Association (TIA) 40th annual conference in Palm Desert, Calif., was clogged Monday with attendees craning their necks, Joséling for a better vantage point, and creating a near-impassable roadblock for folks looking to move to and fro.
The subject of the fuss was not a celebrity or some orange-haired politician. It was for sessions at TIA's two learning centers focusing on the worst truck capacity crisis to hit in at least 15 years, and maybe in the industry's history. Each learning center held enough chairs for about a dozen people. The size of the throng at each was perhaps three to four times that.
The interest was keen, and expected. TIA members—mostly property brokers, freight forwarders, third-party logistics (3PL) providers that do brokerage, and the burgeoning group of IT providers that sell to brokers, forwarders, and 3PLs—live and die by the truck. Rail intermodal executives were in attendance to pitch an alternative mousetrap, something that hasn't been seen much at TIA meetings. Though brokers' use of intermodal was up 3 to 4 percent from a year ago, according to data from Cary, N.C.-based transportation management systems (TMS) provider MercuryGate International, those attending the sessions did not appear keen on shifting their business to the rails.
Broker wariness toward using intermodal is divided into three buckets: Service reliability, lack of container equipment in markets where it needs to be, and too many moving parts—rail and dray—for broker comfort. Besides, the dray segment faces the same challenges of truck and driver shortages as its line-haul brethren.
One broker who looked like he'd seen more than a few business cycles said he shifted some business from over-the-road to rail, only to switch it back to truck. Asked by one of the session's moderators, Jim Perdue, intermodal product manager for MercuryGate, if it was because truck service on his lanes had improved, the broker replied, "No, I was making the best of a bad situation."
A "bad situation" seems like an apt description of the status quo. Some folks at the conference forecast truck rate hikes of 15 to 20 percent over the next 18 months. Moreover, they did so with a tone of acceptance and resignation that made one feel there was certainty behind the projections.
The default explanation for the rate hikes is the shortage of qualified truck drivers. Yet the industry actually added 17,000 net drivers in 2017, according to Damon Langley, director, solution delivery—BI optimization and value engineering for Cleveland-based TMS provider TMW Systems Inc. The problem, at least through the first four-plus months of 2018 as rates have blasted skyward, is the reduction in driver and fleet productivity. Macro factors—ranging from compliance with the federal government's electronic logging device (ELD) mandate to an acute shortage of truck stop parking to too many shippers and receivers still making drivers wait three hours or more to load and unload their shipments—are conspiring to keep wheels turning, on average, just 6.5 to 7 hours each day, well below the 11 continuous drive hours (with a 30-minute rest break during the first 8) within a 14-hour workday that the law allows.
Driver detention has become a real sore spot, with fed-up fleets and drivers becoming increasingly stingy with free time. Langley said fleets and drivers may insist on allowing no more than one hour of free time before charging detention fees, with that number shrinking to "no hours" at some point.
Another problem is that drivers exit the industry almost as fast as they enter it. Only about 15 percent of drivers last beyond their second year in the business, Langley said. Driver survival rates can be measured in milestones, Langley said. The first is 90 days, followed by six months, and then two years. A fleet that holds on to a driver for two years is likely to have a long-term employee, he said.
Drivers, especially owner-operators, don't do themselves any favors by an inability to manage their costs. Brené Hutto, chief relationship officer of Truckstop.com, a New Plymouth, Idaho-based truckload spot market load-board operator, who also moderated one of the learning center sessions, cobbled together a slew of data and found that about 75 percent of owner-operators don't know their costs per mile. Such an eye-opening statistic runs counter to the notion that an entrepreneur's strong suit is knowing where every dollar is going, Hutto said.
All of this chaos might seem to be a golden opportunity for railroads to make themselves shine for brokers. Recognizing this, TIA has developed a tutorial for its members on the ins and outs of intermodal service. Yet the railroads can't seem to get out of their own way, as evidenced last month when the U.S. Surface Transportation Board (STB), which oversees the remnants of rail regulation, asked the seven big railroads to submit what are known as "service outlooks" for the near-term period and for the rest of the year. The STB agency said it is "increasingly concerned about the overall state of rail service," noting that average train speeds had declined noticeably, while average terminal dwell times had risen.
On a separate panel at the TIA conference with brokers, draymen, and IT providers, rail intermodal executives acknowledged they need to improve service, especially the speed of throughput at the notorious Chicago chokepoint, and they pledged to aggressively court brokers with promises of a truck-like service they can consistently depend on. "Our mission is on-boarding new brokers," said Sam Niness, president of Thoroughbred Direct Intermodal Services Inc., a unit of Norfolk-based rail Norfolk Southern Corp.
Shawntell Kroese, vice president of Loup Logistics, a newly reconstituted intermodal unit of Omaha-based Union Pacific Co., said the company will purchase containers and chassis during the year to respond to concerns over equipment shortages and imbalances. To hear the intermodal executives tell it, chassis availability is a more acute challenge than containers. "We had enough boxes, but not enough chassis," said Todd Biscan, director, intermodal sales for Jacksonville-based CSX Transportation Inc.
At the same time, Kroese cautioned the intermediaries in the audience that reliability cuts both ways. "We plan on your freight," she said. "We plan on the containers and the draymen." If the demand doesn't materialize as promised and expected, then the relationship could be compromised, she said.
The Boston-based enterprise software vendor Board has acquired the California company Prevedere, a provider of predictive planning technology, saying the move will integrate internal performance metrics with external economic intelligence.
According to Board, the combined technologies will integrate millions of external data points—ranging from macroeconomic indicators to AI-driven predictive models—to help companies build predictive models for critical planning needs, cutting costs by reducing inventory excess and optimizing logistics in response to global trade dynamics.
That is particularly valuable in today’s rapidly changing markets, where companies face evolving customer preferences and economic shifts, the company said. “Our customers spend significant time analyzing internal data but often lack visibility into how external factors might impact their planning,” Jeff Casale, CEO of Board, said in a release. “By integrating Prevedere, we eliminate those blind spots, equipping executives with a complete view of their operating environment. This empowers them to respond dynamically to market changes and make informed decisions that drive competitive advantage.”
Material handling automation provider Vecna Robotics today named Karl Iagnemma as its new CEO and announced $14.5 million in additional funding from existing investors, the Waltham, Massachusetts firm said.
The fresh funding is earmarked to accelerate technology and product enhancements to address the automation needs of operators in automotive, general manufacturing, and high-volume warehousing.
Iagnemma comes to the company after roles as an MIT researcher and inventor, and with leadership titles including co-founder and CEO of autonomous vehicle technology company nuTonomy. The tier 1 supplier Aptiv acquired Aptiv in 2017 for $450 million, and named Iagnemma as founding CEO of Motional, its $4 billion robotaxi joint venture with automaker Hyundai Motor Group.
“Automation in logistics today is similar to the current state of robotaxis, in that there is a massive market opportunity but little market penetration,” Iagnemma said in a release. “I join Vecna Robotics at an inflection point in the material handling market, where operators are poised to adopt automation at scale. Vecna is uniquely positioned to shape the market with state-of-the-art technology and products that are easy to purchase, deploy, and operate reliably across many different workflows.”
Third-party logistics (3PL) providers’ share of large real estate leases across the U.S. rose significantly through the third quarter of 2024 compared to the same time last year, as more retailers and wholesalers have been outsourcing their warehouse and distribution operations to 3PLs, according to a report from real estate firm CBRE.
Specifically, 3PLs’ share of bulk industrial leasing activity—covering leases of 100,000 square feet or more—rose to 34.1% through Q3 of this year from 30.6% through Q3 last year. By raw numbers, 3PLs have accounted for 498 bulk leases so far this year, up by 9% from the 457 at this time last year.
By category, 3PLs’ share of 34.1% ranked above other occupier types such as: general retail and wholesale (26.6), food and beverage (9.0), automobiles, tires, and parts (7.9), manufacturing (6.2), building materials and construction (5.6), e-commerce only (5.6), medical (2.7), and undisclosed (2.3).
On a quarterly basis, bulk leasing by 3PLs has steadily increased this year, reversing the steadily decreasing trend of 2023. CBRE pointed to three main reasons for that resurgence:
Import Flexibility. Labor disruptions, extreme weather patterns, and geopolitical uncertainty have led many companies to diversify their import locations. Using 3PLs allows for more inventory flexibility, a key component to retailer success in times of uncertainty.
Capital Allocation/Preservation. Warehousing and distribution of goods is expensive, draining capital resources for transportation costs, rent, or labor. But outsourcing to 3PLs provides companies with more flexibility to increase or decrease their inventories without any risk of signing their own lease commitments. And using a 3PL also allows companies to switch supply chain costs from capital to operational expenses.
Focus on Core Competency. Outsourcing their logistics operations to 3PLs allows companies to focus on core business competencies that drive revenue, such as product development, sales, and customer service.
Looking into the future, these same trends will continue to drive 3PL warehouse demand, CBRE said. Economic, geopolitical and supply chain uncertainty will remain prevalent in the coming quarters but will not diminish the need to effectively manage inventory levels.
In a push to automate manufacturing processes, businesses around the world have turned to robots—the latest figures from the Germany-based International Federation of Robotics (IFR) indicate that there are now 4,281,585 robot units operating in factories worldwide, a 10% jump over the previous year. And the pace of robotic adoption isn’t slowing: Annual installations in 2023 exceeded half a million units for the third consecutive year, the IFR said in its “World Robotics 2024 Report.”
As for where those robotic adoptions took place, the IFR says 70% of all newly deployed robots in 2023 were installed in Asia (with China alone accounting for over half of all global installations), 17% in Europe, and 10% in the Americas. Here’s a look at the numbers for several countries profiled in the report (along with the percentage change from 2022).
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.
Q: How would you describe the current state of the packaging industry?
A: The packaging and e-commerce industries are rapidly evolving, driven by shifting consumer preferences, technological advancements, and a heightened focus on sustainability. The packaging sector is increasingly prioritizing eco-friendly materials to reduce waste, while integrating smart technologies and customizable solutions to enhance brand engagement.
The e-commerce industry continues to expand, fueled by the convenience of online shopping and accelerated by the pandemic. Advances in artificial intelligence and augmented reality are enhancing the online shopping experience, while consumer expectations for fast delivery and seamless transactions are reshaping logistics and operations.
In addition, with the growth in environmental and sustainability regulatory initiatives—like Extended Producer Responsibility (EPR) laws and a New Jersey bill that would require retailers to use right-sized shipping boxes—right-sized packaging is playing a crucial role in reducing packaging waste and box volume.
Q: You came from the financial and equity markets. How has that been an advantage in your work as an executive at Sparck?
A: My background has allowed me to effectively communicate the incredible ROI [return on investment] and value that right-size automated packaging provides in a way that financial teams understand. Investment in this technology provides significant labor, transportation, and material savings that typically deliver a positive ROI in six to 18 months.
Q: What are the advantages to using automated right-sized packaging equipment?
A: By automating the packaging process to create right-sized boxes, facilities can boost productivity by streamlining operations and reducing manual handling. This leads to greater operational efficiency as automated systems handle tasks with precision and speed, minimizing downtime.
The use of right-sized packaging also results in substantial labor savings, as less labor is required for packaging tasks. In addition, these systems support scalability, allowing facilities to easily adapt to increased order volumes and evolving needs without compromising performance.
Q: How can automation help ease the labor problems associated with time-consuming pack-out operations?
A: Not only has the cost of labor increased dramatically, but finding a consistent labor force to keep up with the constant fluctuations around peak seasons is very challenging. Typically, one manual laborer can pack at a rate of 20 to 35 packages per hour. Our CVP automated packaging solution can pack up to 1,100 orders per hour utilizing a fully integrated system. This system not only creates a right-sized box, but also accurately weighs it, captures its dimensions, and adds the necessary carrier information.
Q: Beyond material savings, are there other advantages for transportation and warehouse functions in using right-sized packaging?
A: Yes. By creating smaller boxes, right-sizing enables more parcels to fit on a truck, leading to significant shipping and transportation savings. This also results in reduced CO2 emissions, as fewer truckloads are required. In addition, parcels with right-sized packaging are less prone to damage, and automation helps minimize errors.
In a warehouse setting, smaller packages are easier to convey and sort. Using a fully integrated system that combines multiple functions into a smaller footprint can also lead to operational space savings.
Q: Can you share any details on the typical ROI and the savings associated with packaging automation?
A: Three-dimensional right-sized packaging automation boosts productivity significantly, leading to increased overall revenue. Labor savings average 88%, and transportation savings accrue with each right-sized box. In addition, material savings from less wasteful use of corrugated packaging enhance the return on investment for companies. Together, these typically deliver returns in under 18 months, with some projects achieving ROI in as little as six months. These savings can total millions of dollars for businesses.
Q: How can facility managers convince corporate executives that automated packaging technology is a good investment for their operation?
A: We like to take a data-driven approach and utilize the actual data from the customer to understand the right fit. Using those results, we utilize our ROI tool to accurately project the savings, ROI, IRR (internal rate of return), and NPV (net present value) that facility managers can then use to [elicit] the support needed to make a good investment for their operation.
Q: Could you talk a little about the enhancements you’ve recently made to your automated solutions?
A: Sparck has introduced a number of enhancements to its packaging solutions, including fluting corrugate that supports packages of various weights and sizes, allowing the production of ultra-slim boxes with a minimum height of 28mm (1.1 inches). This innovation revolutionizes e-commerce packaging by enabling smaller parcels to fit through most European mailboxes, optimizing space in transit and increasing throughput rates for automated orders.
In addition, Sparck’s new real-time data monitoring tools provide detailed machine performance insights through various software solutions, allowing businesses to manage and optimize their packaging operations. These developments offer significant delivery performance improvements and cost savings globally.