Good things are worth waiting for, a conclusion reached by most of the logistics industry when President Bush finally signed the Highway Bill into law in late July—nearly two years after it was due. The final bill not only guarantees that $286.4 billion will go toward maintaining and improving the nation's transportation system over the next six years, but it also deleted a controversial provision that would have mandated fuel surcharges in the trucking industry.
The fuel surcharge provision was mostly the brainchild of the Owner-Operator Independent Drivers Association, which argued that the surcharge was necessary to force larger truckers and brokers to pass along to smaller operators the fuel surcharges they collect from shippers. However, shipping groups like NASSTRAC and the National Industrial Transportation League put up a powerful fight against the proposal.
John Cutler, the Washington-based general counsel for shipping groups like NASSTRAC and the Health and Personal Care Logistics Conference, says that many shippers already have fuel surcharge agreements in their individual contracts with shippers. A federal mandate likely would have resulted in shippers paying for fuel increases twice.
"The idea of making it mandatory was very troubling," says Cutler. "The legislation required it only in truckload contracts, but who knows if things would have stayed that way. Trucking is largely a deregulated industry, and it seemed inconsistent with deregulation for the government to identify one segment to provide protection against inflation. The provision protected truckers at the expense of shippers and consumers, and that seemed wrong to us."
HOS still in flux
The fuel surcharge victory was offset by Congress' failure to address the hours-of-service (HOS) rules for truck drivers. That means the Department of Transportation's Federal Motor Carrier Safety Administration (FMCSA) must issue a new HOS ruling by the end of September. Truckers and shippers thought they had a new set of rules in place at the beginning of 2004, but a court challenge last year has thrown the regulations into a state of flux.
The FMCSA implemented new hours-of-service rules last January, the first major change to the rules in six decades. But those rules were challenged by several organizations that promote highway safety, led by Public Citizen. The rules were eventually vacated by the U.S. Court of Appeals in Washington, requiring the FMCSA to revisit several sections. The ruling created considerable confusion until Congress passed a temporary extension of the new rules in September 2004. That extension expires at the end of this September or when a revised rule takes effect, whichever comes first.
The court called the HOS rules "arbitrary and capricious" for their failure to consider their effects on driver health. Among their provisions, the rules allow an increase in driving time to 11 hours a day from 10, while at the same time limiting drivers to a 14-hour work day, down from 15 hours, followed by 10 hours off duty. Drivers resting in a sleeper cab can divide their 10-hour required rest period in two. Drivers are limited to 60 hours on duty in a seven-day period or 70 hours in eight days, but can restart the clock after 34 hours off duty.
The court said that the agency had not sufficiently explained the effects the rules would have on driver health. Shippers fear that if the 2003 hours-of-service rules are made more restrictive, they'll be taking a double hit—their costs will go up and service quality may go down.
"While Congress included several initiatives that we believe will improve highway safety, we are disappointed that they failed to codify hours-of-service regulations," says Bill Graves, president of the American Trucking Associations. "We remain concerned that Congress' inaction on hours-of-service will negatively impact overall highway safety and force the revision of a rule that took eight years to write and is successfully serving its intended purpose."
While the revamping of the current HOS rules could contribute even further to the truck driver shortage, some relief is presented in the highway bill in the form of $5 million for new driver training and recruitment. The funds come at a time when the trucking industry is experiencing a nationwide shortage of 20,000 professional long-haul truck drivers. The ATA projects that figure will increase to 111,000 drivers by 2014.
ATA is also concerned that the highway bill continues to allow a limited number of tolls on existing interstate highways. Graves says that ATA believes that tolls are an inefficient funding mechanism that double-taxes motor carriers and causes substantial diversion of traffic to other, less-safe roads.
Expect delays
Overall, most industry observers grade the bill in the B range, although Tim Lynch, president of the Motor Freight Carriers Association, says that too much funding went to pet projects and not enough was done to address highway congestion. He says that the government and industry need to address how funding will be achieved for the next highway bill.
"We need to take a serious look at the whole revenue stream to support the highway program," he says. "Tolls or other fees were not fully addressed in this legislation but they've been put out there seemingly as calling cards to be seriously looked at. Our highway needs and congestion needs are larger than [the budgeted $286.4 billion]. We need to look at where the bottlenecks are. If we have significant congestion in 10 to 20 major metropolitan areas, we need to focus some resources there, particularly if we ask the users of the system to pay for it. Not addressing this will hurt productivity and the competitive position of U.S. manufacturers."
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.