The Logistics Matters podcast: Effects of Covid-19: Workforce challenges, deaths in the industry, emerging companies, cargo volumes, resources | Season 1 Episode 1
The challenges of helping employees feel safe coming to work during the coronavirus crisis; Covid-19 deaths in the logistics industry; new companies emerging to serve the at-home workforce; how the virus is affecting cargo volumes; and Covid-19 resources for supply chain professionals.
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Transcript
David Maloney: 0:03 Covid-19 continues to disrupt global supply chains. Logistic workers find that they're on the front lines fighting a new kind of war. And companies emerge to provide new capabilities for a stay-at-home work forces. Pull up a chair and join us as the editors of DC Velocity discuss these stories, as well as news and supply chain trends, on this week's Logistics Matters podcast. Hi, I'm Dave Maloney. I'm the editorial director of DC Velocity. Welcome. Joining me to provide their insight into the top stories of this week are senior news editor Ben Ames, and senior editor Victoria Kickham. Victoria, just to start with, of course, the story that's dominated the headlines for the past several weeks not only in supply chain, but everywhere, is Covid-19. And you've reported in this past week about how logistics workers are finding themselves on the front lines of this new kind of war.
Victoria Kickham: 0:55 Yes, in my talks with logistics companies from across the spectrum, we're finding that they're facing the challenges of making their employees feel comfortable coming to work, by safety protocols and communicating the most up-to-date information on the virus--while at the same time, keeping their businesses running. This is most acute, it seems, for 3PLs, transportation companies serving customers in essential industries like food service, health care, medical, those kinds of industries.
David Maloney: 1:25 What sort of ways are they helping them to feel comfortable when they're being faced with what everybody is dealing with these days?
Victoria Kickham: 1:34 One company I talked to said they're spending 16 hours a day on this. I talked to a senior human resources representative, and she was saying, just communicating over and over again, reminding employees, why they're coming to work every day. The importance of getting is essential services--products and services--to hospitals, medical facilities, grocery stores And at the same time, reminding them what they need to do. They've put into place all kinds of deep-cleaning regimens, social distancing. In some cases, they've had to retool their work stations so workers are no longer two or three feet apart. They're six feet apart. Just really revisiting all of those things and reminding employees what they need to do and why they're doing it.
David Maloney: 2:21 Yeah. And then we've also seen sort of the first casualties that are--on the workers on the front lines. You reported on that as well [Ben].
Ben Ames: 2:30 I did. Yeah. Just today there was a story in the Wall Street Journal that the U. S. Postal Service has lost a dozen of its workers as casualties, as deaths from Covid-19, so far. And that follows news the previous week of a couple of workers in logistics jobs who had passed away from Covid-19 . One of them was at a military depot in Pennsylvania. And then there was also four additional workers who had been at grocery stores, which is a place where even those of us are sheltering at home have seen that they're workers in really visible jobs, right there among the crowds every day.
David Maloney: 3:14 And certainly I think people are even more aware of supply chain than ever before as they realize the importance supply chain plays on an everyday basis, let alone in the midst of a crisis. Ben, you also talked about some new companies that are beginning to emerge with ways to be able to serve an at-home work force. Can you tell us about that?
Ben Ames: 3:34 Yes, that's right. The Covid has really sort of upended some of the typical patterns in warehousing and delivery and transportation. We've seen the federal FMCSA regulators suspend their hours-of-service limits for truck drivers carrying certain loads, so that there's some real spikes out there in the amount of deliveries and the time the truckers are spending on the roads. And one of the impacts of that, you know, venture capital keeps on going. And there was a $30 million round, it was raised for a startup company called Bringg, which is spelled like it sounds, but with two G's on the end. What Bringg does, they have a software platform that lets users orchestrate and oversee the whole delivery chain, whether it's their own in-house fleets, whether using third party delivery providers, a combination, whatever it is. So it really helps the visibility over that complicated process.
David Maloney: 4:41 Very good. Victoria, the Logistics Manager's Index is also reflecting our new normal. Can you tell us about what that Index is all about and what it's saying right now?
Victoria Kickham: 4:52 Sure. The Logistics Manager's Index is a monthly report that comes out, it surveys professionals across the logistics and supply chain, and it had been trending down for the last couple of years. Still growing--I should say, still indicating growth in the sector, but trending down and sort of showing that the industry had settled into kind of a slow growth mode. But in March, activity really, really picked up and increased, just as you'd expect, because of the growing need for transportation and warehousing. So, really we'll know, what happens in April will tell us a lot. And at the same time, we noticed that earlier this month you know, shipments--or cargo, I should say--through some of the nation's ports were down drastically, so that paints a different picture. So the LMI folks and others a really kind of waiting to see how this plays out in April, to see what happens.
David Maloney: 5:49 Then we'll report on that at that time. Ben, we've also got on our website to some great Covid-related resources. Can you tell us about what's available there?
Ben Ames: 5:59 We have, yeah. There's companies that have been, you know, so affected by this--as Victoria was saying, throughout the logistics sector--that some of them have compiled really incredibly helpful amounts of information to help their partner companies and their clients navigate this strange new world. So, as we've come across those in our reporting and in our speaking with industry figures, we've collected them all on a single resource page, so anybody can come and see how Covid is affecting the logistics sector specifically. I can give an example of one of those.
David Maloney: 6:35 Please.
Ben Ames: 6:37 So that there's a group called MHEDA, which listeners may be familiar with. They're the Material Handling Equipment Distributors Association. And MHEDA has a landing page full of Covid-19 resources and advice for anybody in the industry, and five points on that page that people can help determine who is an essential business, in terms of that classification, to keep on operating. It summarizes the various stay-at-home orders in different states. It gives guidance on how to manage the workplace during the crisis, which again, that would touch on some of Victoria's reporting. It gives members news updates on status of operations. For instance, we've seen some ports, maritime ports, revert to weekend hours, and we've seen some grocery stores have restricted hours so they could have cleaning. And then lastly, it gives a calendar of webinars. Because all of this, as soon as we've learned what's new in Covid, it seems to change the next day. So it's more important than ever to stay informed
David Maloney: 7:47 And so on that resources page at DCVelocity.com, we have links to where other people have placed resources, and those are available. We also have a very special section, too. In fact, a header as you come on to the website, where you can go directly and see the latest in the coronavirus coverage. So that's it for this week. For more information on the stories that we discussed in Logistics Matters, be sure to check out DCVelocity.com for details. Thanks, Ben and Victoria, and thank you all for listening. We'll see you next week on Logistics Matters.
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."