October 1, 2005
operations insight | Logistics: Contributing to the Bottom Line

The price of success

the price of success

By DC Velocity Staff

Port congestion. Record high diesel prices. A shortage of trucks and drivers. Congestion on the highways and the railroads. Those are the realities for business managers responsible for supply chain management today. Ironically, these are woes born not of catastrophe but of prosperity. A rising tide of economic growth has lifted the nation's domestic freight volume to unprecedented levels. But the systems in place to move that freight have failed to keep pace. Together with a surging tide of low-cost imports, that cargo now threatens to overwhelm the nation's transportation infrastructure.

So far, it's been manageable, despite glitches caused by such things as lockouts and work slowdowns at West Coast ports. Yet as Hurricane Katrina so clearly demonstrated as this special report was being prepared, the nation's logistics system may be more fragile than shippers suspect.

In this report, DC VELOCITY has teamed up with several contributors to examine just where we stand. In the first of three parts, Richard Sharpe and John Deasy of Competitive Logistics LLC examine just how severely constrained shipping is, identify factors that may threaten it even further, and conclude by suggesting management approaches for what appears to be a coming collision, as they term it, between what the nation's shippers need and what the system can provide. In part two, Paul Marshall of Limited Brands discusses how his company, a major international shipper, has coped with tighter capacity and rising prices. We conclude with an analysis of a survey of Warehousing Education and Research Council members and DC VELOCITY readers penned by Robert Shaunnessey, WERC's executive director.

The issues will not be easily resolved. And so, this special report is only the beginning of what the editors of DC VELOCITY intend to be continuing coverage of the critical issues facing business supply chains in the years to come.

—The Editors

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