March 23, 2016
Column | fastlane

The monkeys are back

The start of the Chinese Lunar Year of the Monkey may have gone largely unnoticed, but it's beginning to look as if this monkey year will see more supply chain changes than any of the last 50.

By Clifford F. Lynch

The start of the Chinese Lunar Year of the Monkey, on Feb. 8, may have gone largely unnoticed, but it's beginning to look as if this monkey year will see more supply chain changes than any of the last 50. Monkeys are by nature intellectual and creative, but often have trouble demonstrating these qualities. That can make them seem confused. Nothing could be further from the truth, however.

You need look no further than Amazon.com for an example of that. Amazon, which seems to be entering many logistics businesses, is behaving much like the monkey—appearing to be confused about its business model, but whatever it is, pursuing it with a vengeance. If you're like me, you are growing a little tired of reading about Amazon, quadcopters, etc. If you're in the retail business, however, you have more than a passing interest. Major retailers such as Target are getting serious about mounting Amazon-competitive attacks by investing more resources in their supply chains. Target has announced spending initiatives for technology and supply chain of as much as $2.5 billion annually by 2017 and has hired an Amazon executive to head up its supply chain effort. Walmart has set similar goals.

But let's not forget that Amazon is hardly the only game in town. There are plenty of non-Amazon-related supply chain developments under way. What follows are some observations on a few of these developments and their potential to change the way we ply our trade:

  • The long-awaited expanded Panama Canal opens in May of this year. Although the traffic-flow consequences of the enlarged canal are still a little unclear, the expansion most certainly will result in significant changes in international shipping patterns, particularly to and from East Coast ports. Already, ships are going from large to huge, requiring extensive modifications to port facilities. One German shipbuilder has found a unique way to widen Panamax ships, increasing their capacity by 30 percent.
  • With the price of oil declining as it has, supply chain managers should be able to control their costs a little better. While the economy seems to have softened somewhat, monkey years are considered to be optimistic. (Actually, the U.S. jobless rate in February continued at the lowest rate in eight years at 4.9 percent. Some 242,000 new jobs were added, suggesting the monkeys may be right.)
  • While legislative changes are possible, they are not too likely in this election year. Drivers' hours of service, CSA 2010, and other legislation affecting the motor carrier industry are still a little unsettled and will pretty much stay that way until 2017. One major piece of legislation reauthorizing funding for the Federal Aviation Administration is being handled much the same way the highway reauthorization was—with delays and disagreements. Among other provisions, the legislation provides for the privatization of air traffic controllers, but don't expect anything until next year.
  • E-commerce will continue to grow, and I am still optimistic that logistics service providers will continue to find ways to participate more fully in this new era of retail deliveries, Amazon notwithstanding.

No discussion of monkeys would be complete without some mention of the election process we are experiencing currently; but alas, this is not a political column, and I will refrain from comment. 2016 actually is a "fire monkey" year, and fire monkeys are intelligent and intuitive. They also excel at both setting goals and meeting them. This year, we would do well to stay alert and follow their lead.

About the Author

Clifford F. Lynch
Columnist
Clifford F. Lynch is principal of C.F. Lynch & Associates, a provider of logistics management advisory services, and author of Logistics Outsourcing – A Management Guide and co-author of The Role of Transportation in the Supply Chain. He can be reached at cliff@cflynch.com.

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