It appears that the era of motor carrier collective ratemaking is over. After nearly 10 years of deliberation, the Surface Transportation Board (STB) last month eliminated antitrust immunity for motor carrier bureaus engaged in col lective ratemaking and freight classification. "This will help the shipping community because each individual carrier will be fighting for its own traffic, rather than having that [rate] protection," says transportation consultant Cliff Lynch, principal of Clifford F. Lynch & Associates. "I think it's a good thing. Things will certainly get a little more interesting in the marketplace."
"We have felt for many years that collective ratemaking by carriers is anticompetitive and does not benefit shippers," says Gail Rutkowsi, director of operations at AIMS Logistics and president of the National Shippers Strategic Transportation Council (NASSTRAC).
The ruling takes effect after a 120-day waiting period, which means price competition may begin to heat up toward the end of the summer. However, consultants agree that the ruling will be appealed. At the least, an extension may be sought to allow industry to better prepare for the massive changes about to take place. Once implemented, the decision could save shippers anywhere from 5 to 10 percent on truck rates.
John Cutler, general counsel for NASSTRAC, says his group will oppose an extension of the 120-day waiting period, as well as an appeal. Cutler adds that NASSTRAC will seek a price freeze if an extension is granted to keep bureaus from trying to put through one last general rate increase.
But at least one observer worries that the 120-day window might be too short. Longtime industry consultant Hank Mullen of Mullen Associates says the tight timeframe could create havoc in the marketplace as shippers and truckers scramble to adjust to the phase-out of a practice that has been in place for 70 years. "I am of the opinion that the system needs to change, but not at the cost and confusion this will create," says Mullen. "I'd say it is easily another year before this settles down, and even that would be kind of fast." He adds that the 37-page rulemaking alone could take some companies weeks to digest.
Though the STB decision is likely to have a huge impact on its operations, SMC3 has yet to comment on the ruling beyond acknowledging its existence. The Peachtree City, Ga.-based bureau publishes CzarLite, the de facto standard for the base tariffs used by many less-than-truckload carriers in their rate negotiations. "SMC3 will be evaluating the STB's decision in detail in order to fully address both the challenges and opportunities it presents us and our customers," says Danny Slaton, who is senior vice president, business development for SMC3. "We will provide regular updates to our customer segments regarding our business responses to the decision."
While the STB's decision means that carriers will be required to develop rates individually—rather than collectively—in the future, they will still be allowed to use the National Motor Freight Classification for rating shipments, as long as all parties to the negotiation agree. The classification, which rates commodities on density, handling difficulty, and other factors, is often used to establish pricing for particular products. Changes in class ratings, however, will now be subject to negotiation, instead of being imposed by carriers acting collectively.
"This is an issue we've been working on for more than 10 years," says Cutler. "Motor carrier collective ratemaking is a holdover from the cartel era of trucking industry pricing and is inconsistent with the competitive goals of deregulation. Reforms the STB adopted in the last round of proceedings did not solve the problem, so NASSTRAC welcomes the new decision by the Surface Transportation Board. Shippers and carriers benefit from competition. That is the main lesson of deregulation."
planning for automation
It might seem intuitive: better workforce planning and scheduling will lead to greater productivity in the distribution center. Unfortunately, knowing and doing are not always the same thing. A recent study of workforce planning and scheduling practices conducted by the University of Wisconsin at Madison's E-Business Consortium reveals that in many DCs, there's a big gap between the real and the ideal.
The study was designed to identify current practices for workforce planning and scheduling, and to determine whether greater automation might yield benefits. What researchers found was that manual processes continue to dominate both planning and scheduling practices. Fifty-nine percent of the respondents reported using manual practices for planning, while a mere 3 percent said their processes were fully automated. An even greater percentage—67 percent—said they used manual processes for scheduling labor, while just 2 percent said they had automated their processes.
A slight majority of the participants said they were dissatisfied with their companies' current planning processes. A greater percentage said they believed that automating those processes would pay off in greater workforce utilization. And most believed the payoff could be significant; two-thirds of the survey participants estimated that automating their planning and scheduling processes would improve workforce utilization by anywhere from 6 to 20 percent.
Nonetheless, the survey respondents said their biggest frustration wasn't their own scheduling woes but the lack of visibility into future demand and the inaccuracy of forecasts they do receive. Survey respondents believe automation would ease the process of converting demand forecasts into accurate workforce requirements and allow them to simulate staffing requirements based on the forecast information.
"According to the overwhelming majority of survey respondents, the primary benefit of automated workforce planning capabilities would be more efficient and effective labor utilization, as well as the closely related benefits of reduced unit labor costs and improved customer satisfaction," the report says.
Most of the 196 respondents to the survey, which was sponsored by supply chain software and services provider RedPrairie, were managers or directors within the distribution, logistics, or operations functions of various-sized companies in 11 industry segments. The full study, "Workforce Planning and Scheduling in Warehouses and Distribution Centers," can be found at <www.dcvelocity.com/workforcestudy.
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
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.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.
Krish Nathan is the Americas CEO for SDI Element Logic, a provider of turnkey automation solutions and sortation systems. Nathan joined SDI Industries in 2000 and honed his project management and engineering expertise in developing and delivering complex material handling solutions. In 2014, he was appointed CEO, and in 2022, he led the search for a strategic partner that could expand SDI’s capabilities. This culminated in the acquisition of SDI by Element Logic, with SDI becoming the Americas branch of the company.
A native of the U.K., Nathan received his bachelor’s degree in manufacturing engineering from Coventry University and has studied executive leadership at Cranfield University.
Q: How would you describe the current state of the supply chain industry?
A: We see the supply chain industry as very dynamic and exciting, both from a growth perspective and from an innovation perspective. The pandemic hangover is still impacting decisions to nearshore, and that has resulted in a spike in business for us in both the USA and Mexico. Adding new technology to our portfolio has been a significant contributor to our continued expansion.
Q: Distributors were making huge tech investments during the pandemic simply to keep up with soaring consumer demand. How have things changed since then?
A: The consumer demand for e-commerce certainly appears to have cooled since the pandemic high, but our clients continue to see steady growth. Growth, combined with low unemployment and high labor costs, continues to make automation a good investment for many companies.
Q: Robotics are still in high demand for material handling applications. What are some of the benefits of these systems?
A: As an organization, we are investing heavily in software that will allow Element Logic to offer solutions for robotic picking that are hardware-agnostic. We have had success deploying unit picking for order fulfillment solutions and unit placing of items onto tray-based sorters.
From a benefit point of view, we’ve seen the consistency of a given operation improve. For example, the placement accuracy of a product onto a tray is far higher from a robotic arm than from a person. In order fulfillment applications, two of the biggest benefits are reliability and hours of operation. The robots don't call in sick, and they are happy to work 22 hours a day!
Q: SDI Element Logic offers a wide range of automated solutions, including automated storage and sortation equipment. What criteria should distributors use to determine what type of system is right for them?
A: There are a significant number of factors to consider when thinking about automation. In my experience, automation pays for itself in three key ways: It saves space, it increases the efficiency of labor, and it improves accuracy. So evaluating which of these will be [most] beneficial and quantifying the associated savings will lead to a “right sized” investment in technology.
Another important factor to consider is product mix. With a small SKU (stock-keeping unit) base, often automation doesn’t make sense. And with a huge SKU base, there will be products that don’t lend themselves to automation.
With any significant investment, you need to partner with an organization that has deep experience with the technologies that are being considered and … in-depth knowledge of the process that is being automated.
Q: How can a goods-to-person system reduce the amount of labor needed to fill orders?
A: In most order picking operations, there is a considerable amount of walking between pick faces to find the SKUs associated with a given order or set of orders. Goods-to-person eliminates the walking and allows the operator to just pick. I have seen studies that [show] that 75% of the time [required] to assemble an order in a manual picking environment is walking or “non-picking” time. So eliminating walking will reduce the amount of labor needed.
The goods-to-person approach also fits perfectly with robotic picking, so even the actual picking aspect of order assembly can be automated in some instances. For these reasons, [automation offers] a significant opportunity to reduce the labor needed to fulfill a customer order.
Q: If you could pick one thing a company should do to improve its distribution center operations, what would it be?
A: Evaluate. Evaluate the opportunities for improving by considering automation. In my experience, the challenge most companies have is recognizing that automation is an alternative. The barrier to entry is far lower than most people think!
Toyota Material Handling and its nationwide network of dealers showcased their commitment to improving their local communities during the company’s annual “Lift the Community Day.” Since 2021, Toyota associates have participated in an annual day-long philanthropic event held near Toyota’s Columbus, Indiana, headquarters. This year, the initiative expanded to include participation from Toyota’s dealers, increasing the impact on communities throughout the U.S. A total of 324 Toyota associates completed 2,300 hours of community service during this year’s event.
The PMMI Foundation, the charitable arm of PMMI, The Association for Packaging and Processing Technologies, awarded nearly $200,000 in scholarships to students pursuing careers in the packaging and processing industry. Each year, the PMMI Foundation provides academic scholarships to students studying packaging, food processing, and engineering to underscore its commitment to the future of the packaging and processing industry.
Truck leasing and fleet management services provider Fleet Advantage hosted its “Kids Around the Corner Foundation” back-to-school backpack drive in July. During the event, company associates assembled 200 backpacks filled with essential school supplies for high school-age students. The backpacks were then delivered to Henderson Behavioral Health’s Youth & Family Services location in Tamarac, Florida.
For the past seven years, third-party logistics service specialist ODW Logistics has provided logistics support for the Pelotonia Ride Weekend, a campaign to raise funds for cancer research at The Ohio State University’s Comprehensive Cancer Center–Arthur G. James Cancer Hospital and Richard J. Solove Research Institute. As in the past, ODW provided inventory management services and transportation for the riders’ bicycles at this year’s event. In all, some 7,000 riders and 3,000 volunteers participated in the ride weekend.