December 21, 2016
Column | fastlane

2017: The big question mark

What lies in store for shippers in the coming year? The crystal ball is unusually cloudy right now, but here are my best guesses.

By Clifford F. Lynch

About this time each year, I try to imagine what supply chain developments we might see during the coming year. But after the contentious presidential campaign and its surprise outcome, it's difficult to predict what might happen in 2017. My hope is that we will continue to see exciting developments in areas like drone use, last-mile deliveries, increased customer intimacy, growing sophistication in the logistics service provider (LSP) sector, driverless vehicles, supply chain transparency, and robotics.

I think it's more likely, however, that this year will bring a number of changes in the more basic operational areas. What these changes might be is difficult to predict, though. The slate of (yet-to-be-confirmed) cabinet members and advisers selected by the president-elect reveals little except the fact that it is an eclectic group. It contains politicians, both state and national; business leaders; military leaders; a female wrestling promoter; and a former secretary of labor who happens to be married to the Senate majority leader. What's particularly interesting is that some of them have a dog in the hunt they will be managing. For example, the new choice for secretary of labor is a fast-food CEO who's violently opposed to the idea of a $15 minimum wage. Where this band of merry men and women will take us is anyone's guess.

One thing I think we can finally count on is some movement on shoring up the country's crumbling infrastructure. President-elect Donald Trump has released a plan that includes $1 trillion in investment, supported by as much as $140 billion in tax credits. While this would fall short of covering the total cost, at least it is a start, and I believe that for the first time in many years, we might see a workable plan. Having said that, I also believe we will all feel a little more comfortable when we see a sound total funding proposal. Management of the infrastructure initiative will fall to the secretary of transportation—presumably Elaine Chao, who served as secretary of labor under George W. Bush. Some think her marital relationship will help her push the administration's transportation agenda through Congress, but whatever the case, I believe we will see some significant progress on infrastructure. Both Democrats and Republicans in Congress should be willing to get on board since Democrats will like the job creation aspect and Republicans the tax reform.

Chao's record in government suggests she is not a big fan of regulation. During her four-year term as secretary of labor, OSHA issued no significant new safety regulations. She seems to prefer leaving regulation to the states. Since she will be directly responsible for the Federal Motor Carrier Safety Administration, this bias could mean a new look at several contentious motor carrier safety regulations, including the driver hours-of-service rule.

Chao's appointment to the top job at the Transportation Department would likely have implications for the rail industry as well. The Surface Transportation Board (STB) seems to be leaning toward some serious rail reregulation (it is considering new rules for reciprocal switching as well as caps on certain rates). Most believe the board's current thinking runs counter to the intent of the Staggers Act of 1980 and will harm both the industry and the economy. The STB, which is currently controlled by Democrats, has two vacancies. I believe that between Trump and Chao, we will see these vacancies filled quickly and new thinking will prevail.

On another matter: Look for a quick resolution to the controversy over the Dakota Access pipeline as well.

The supply chain will no doubt feel the impact of other politically motivated changes in 2017. But once again, I believe the best course of action for the supply chain manager will be to stay flexible and seize any opportunities that may arise.

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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