When Shakespeare wrote that the course of true love never did run smooth, he could as easily have been writing about the 21st century supply chain. In 2004, distribution professionals struggled to keep goods flowing smoothly into and out of their DCs as the economy rebounded, volumes surged, and freight backed up at ports, on the railroads and on the highways.
We examine the capacity constraints on the motor carrier industry in a report that begins on page 38 of this issue. But the truck shortage—and indeed the congestion in all modes—is just a symptom of a much bigger problem: With virtually every analyst expecting freight flows to swell over the next several years, both national and international logistics networks are being strained to the breaking point.
In an interview in November, James Welch, president and CEO of Yellow Transportation, characterized the market conditions that led to the trucking capacity crunch—a driver shortage, spiking fuel and insurance costs, a manufacturing recovery—as a "perfect storm" of sorts. But that perfect storm may be only a mild forewarning of the catastrophic conditions ahead.
Those on the front lines are well aware of the challenge. Speaking during the National Industrial Transportation League's annual conference, NITL Chairman Michael Barr warned that congestion, security requirements, and capacity constraints, each a source of supply chain friction in its own right, were combining to create serious impediments to the smooth flow of commerce. He also pointed out that the peak season for shipping starts earlier each year and lasts longer. "Eventually, [what we now consider peak levels] are going to be the norm," he said.
Scary, isn't it? Still, distribution pros may become the next business heroes before it all ends. It's not that they alone will solve the problems —solutions are going to have to come from industry, government, academia and labor. But those solutions will almost certainly center on their sphere of influence: the modern DC. The research consultancy The Colography Group, for one, argues that the successful business of the future will rely on hyper-efficient regional DCs that can receive shipments from around the globe and then whisk those goods right out the door to customers.
Ultimately, effective and efficient distribution will prove to be the core of business success. You don't have to don a cape or leap over tall buildings to save the day—you just have to be good at what you do.
