If analyst Chuck Clowdis seems unusually familiar with the ins and outs of the trucking business, there's a reason for that. He spent the first 16 years of his career on the inside.
Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.
Charles "Chuck" Clowdis knows whereof he speaks. Unlike many of the analysts who follow the freight transportation market, he has actually worked in the business. Before switching gears two decades ago, he was a trucking professional himself, working at various times as a dock foreman, terminal manager, sales rep, and vice president of sales and marketing.
Last June, Clowdis joined the renowned economic forecasting and analysis firm IHS Global Insight as managing director - North America in the Global Trade and Transportation Advisory Services practice. In that role, he is responsible for all trade and transportation products and clients in the United States, Canada, and Mexico. Clowdis brought to his current position 30-plus years of experience in transportation, logistics, and supply chain design and management. Earlier in his career, he served as vice president of marketing at Transcon Lines, as vice president at TNT North America, and as an executive at Sun (Oil) Carriers Inc. and Mason & Dixon Lines Inc. He established an independent consulting practice in 1988, and has been an executive consultant since 1992 to Ernst & Young LLP, and since 2001, to KPMG.
His industry involvement includes stints as chairman and past president of the Sales & Marketing Council of the American Trucking Associations and membership in the National Defense Transportation Association.
A frequent contributor to industry publications and speaker to industry groups, as well as author of numerous white papers, Clowdis met recently with DC VELOCITY Group Editorial Director Mitch Mac Donald to discuss his unorthodox career path, the gathering economic storm clouds (and their silver lining), and which carriers stand the best chance of survival.
Q: How did you begin your career in the motor freight business?
A: A I started as a trainee with Roadway Express in 1972 and worked at various times as a dock foreman, a salesman, a city sales manager, a regional sales manager, a terminal manager, a director of operations, and a vice president of sales and marketing for both large and small carriers. In 1988, I decided that I possibly could offer my services to the motor carrier industry as a consultant. After establishing my own little practice, I was fortunate enough to become a subcontractor or an executive consultant to Ernst & Young when they had a national transportation practice. Up until June of this year, I was a sole practitioner transportation consultant but working with KPMG, Capgemini, CSC, Index Consulting, and a lot of other clients along the way as either a subject matter expert or as a project manager on specific trade and transportation matters.
Q: I'm sure you've seen a lot of change since those early days in Akron with Roadway.
A: I was just talking with a colleague about the changes in the industry over the past 30 years—things like the emergence of third-party logistics service providers and the contribution that they make and how much things have changed.We fought for years to bring the purchasing agents or the procurement function or the sourcing function into the supply chain. We finally won that battle. Now, when you think "supply chain," the first link in that chain is the sourcing of raw materials and the transport to either the processing center or the manufacturing plant.We have come a long way, and as you just said, we've seen a lot of change over those years.
Q: Absolutely. I think one of the most intriguing developments we've observed is the emergence of this thing we call the "supply chain." It seems that the logistics component in particular is involved at almost every stage of a business's operation.
A: It does indeed touch every function—everything from the purchasing agent who is looking for the best price on goods or raw materials or services to the marketing director who needs to get his product to market on time and in good condition.
Right now, the supply chain is starting to get more attention at the CFO level because there are an awful lot of dollars spent at every link of the chain. I think each time the economy suffers, good companies start looking for ways to trim costs and do things more efficiently for less money.
Q: The economy is certainly in the forefront of almost everyone's mind right now. How would you describe the environment we're in? Have you ever seen anything like it?
A: I never have. In all my years in this industry, I have never seen the economic stars, if you will, align in such a manner as they have this year. First, we had the slowdown, which I think did start over a year ago, in December 2007; then there was the oil price spike in June and July—I don't think any of us saw that coming or expected we'd ever see $5 per gallon diesel fuel and gasoline. I think that has left a lasting impression, especially on the consumer. We're not only reeling from that experience, but all of a sudden, we're becoming concerned about our jobs. We are concerned about making the mortgage payments. We are concerned about buying the kids new shoes.We are concerned about basic everyday spending. All of those signs plus the credit crunch have aligned to make it a challenging, challenging time for not only motor carriers and transport service providers but for the consumer as well.
Q: From the forecasts I've been hearing, it sounds like we're looking at a deep recession that could last as long as 30 months.
A: Exactly. It is not a pleasant outlook. I think it takes every bit of executive skill that management can muster to deal with the cards we've been dealt. It is not going to be easy.
Q: How do we go about surviving the downturn? Do you think there are ways shippers can actually thrive during the recession?
A: I think there are some opportunities in both cases. It may sound trite to some, and it is not an original thought on my part, but if you are a shipper, you really have to work more closely with your carriers, as genuine partners, than ever before. You need to work together to recognize and understand the carriers' costs and do all you can to help them control and lower those costs.
For years, we've been hearing carriers complain about showing up on time for a delivery, then having to wait two hours to get an empty door and unload. Likewise, we've heard from plenty of disgruntled shippers who wanted a truck there at, say, 11, but had to wait until 1: 30. I think a closer dialogue between the parties—between the shippers, receivers, and the motor carriers—could help both the shipper and the carrier understand the costs that they can control and then work toward controlling those. I think that if we have ever needed teamwork between the transportation provider and the transportation buyer, it is with the situation we are in now.
Q: Some have suggested that, as painful as the economic downturn may be, there could be a longer-term benefit in that it's likely to force many of the weaker players out of the market. Do you think that is correct?
A: I think that is absolutely right. I think there is tremendous overcapacity now, despite the fact that we still have carriers teetering on the brink of bankruptcy. When the economy rebounds, we are the first to know in the transportation industry. We can feel that recovery first, and that is good. That will give us a chance to ramp back up.
It is my opinion that the carriers that survive this are those that don't have a great deal of debt, aren't struggling to hold their creditors at bay, and have some extra cash— and at the same time, are devoting executive attention to finding new revenue sources and making sure that their sales forces maximize their penetration of every possible account. I hate to say it—it is not like picking over the bones of the dead—but you have to take advantage when a carrier does unfortunately drop out of the market. You have to be in a position to capture that business while still being careful—even with those new accounts—to go in and open that dialogue and work closely together. The carriers that survive will be the smart ones, and there are an awful lot of smart ones out there.
Q: I've been covering this field since 1988, and I doubt if a year has gone by when I haven't written at least one story or column about the state of our bridges and roads, or the fact that we don't have enough runways, and so forth. But now it seems that for the first time, we're actually hearing officials at the highest level of government saying, yes, we have a problem; yes, we should invest in infrastructure repair and rebuilding projects as part of our economic stimulus package. Is this perhaps a silver lining in the economic storm cloud?
A: I think it is a silver lining, if not gold. I think it puts people back to work. If people are at work, they are going to spend money. If they are spending money, transportation providers are going to have something to haul. I think it is a great idea.
Like many in this business, I've been talking about the need to repair and rebuild the country's transportation infrastructure for years, long before our newly elected president put it at the top of his administration's agenda. And I'm not even talking about new interstates; I am talking about repairing what needs to be repaired. The bridges, like the bridge in Minnesota. And that's not an isolated case— something like 60,000 other bridges need to be inspected more closely. They have faults and problems, not so much that they are unsafe but that they can become unsafe.
We need to look at ways to move trucks more efficiently on the highways. We need to look at rebuilding a lot of our rail infrastructure and finding ways to do that. If there is a silver lining, all those things mean people can go back to work, and that is needed more than anything.
The number of container ships waiting outside U.S. East and Gulf Coast ports has swelled from just three vessels on Sunday to 54 on Thursday as a dockworker strike has swiftly halted bustling container traffic at some of the nation’s business facilities, according to analysis by Everstream Analytics.
As of Thursday morning, the two ports with the biggest traffic jams are Savannah (15 ships) and New York (14), followed by single-digit numbers at Mobile, Charleston, Houston, Philadelphia, Norfolk, Baltimore, and Miami, Everstream said.
The impact of that clogged flow of goods will depend on how long the strike lasts, analysts with Moody’s said. The firm’s Moody’s Analytics division estimates the strike will cause a daily hit to the U.S. economy of at least $500 million in the coming days. But that impact will jump to $2 billion per day if the strike persists for several weeks.
The immediate cost of the strike can be seen in rising surcharges and rerouting delays, which can be absorbed by most enterprise-scale companies but hit small and medium-sized businesses particularly hard, a report from Container xChange says.
“The timing of this strike is especially challenging as we are in our traditional peak season. While many pulled forward shipments earlier this year to mitigate risks, stockpiled inventories will only cushion businesses for so long. If the strike continues for an extended period, we could see significant strain on container availability and shipping schedules,” Christian Roeloffs, cofounder and CEO of Container xChange, said in a release.
“For small and medium-sized container traders, this could result in skyrocketing logistics costs and delays, making it harder to secure containers. The longer the disruption lasts, the more difficult it will be for these businesses to keep pace with market demands,” Roeloffs 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.
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.