the voice of the middleman: interview with Robert Voltmann
The brokers who used to hang around truck stops have been replaced by sophisticated transportation intermediaries who do an estimated $162 billion in business each year. It's Robert Voltmann's job to represent them.
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.
It's not easy these days to find an executive who's bullish on his or her organization's growth prospects. But Robert Voltmann is just that. Voltmann is president and CEO of the Transportation Intermediaries Association (TIA), an organization that represents thirdparty logistics service companies of all stripes—freight forwarders, brokers, and intermodal marketing companies among them. TIA's membership has been growing for the past eight years, Voltmann reports, and he doesn't see that changing anytime soon. In fact, he aims to increase membership by a whopping 17 percent in 2009 alone.
There are a couple of reasons for Voltmann's optimism. First, he sees a large untapped pool of potential members. "We believe that at 1,200 members, we represent 10 percent of the industry by number—we estimate that there are 12,000 operating licensed brokers," he says. And he's confident the organization has much to offer members—online training classes, insurance and credit reporting services, and, of course, advocacy.
Prior to joining TIA in June 1997, Voltmann was director of policy for the National Industrial Transportation League—a position he took after serving as chief of staff to Interstate Commerce Commissioner Ed Emmett. Before coming to Washington, Voltmann worked for two economic development and area planning associations in Houston, Texas.
Voltmann met recently with DC VELOCITY Group Editorial Director Mitch Mac Donald to discuss the biggest challenges TIA faces today, the economy, and the call he has out to the oracle of Delphi.
Q: Could you begin by telling us a little bit about TIA?
A: TIA is the largest organization representing third-party logistics companies. We're at just over 1,200 members and growing. We have been growing in real terms year over year for the past eight years, and our plan is to double again over the next five years.
The association was established in 1978 by the 14 licensed property brokers that existed in the United States prior to deregulation. They decided to push for deregulation of the brokerage business and make that a provision of the Motor Carrier Act of 1980. The association from that day forward has always been about the free market and ethics. They established a code of ethics for the industry, and we have added to it over the years.
Q: Who are your members?
A: The majority of our members are non-asset or asset "light" companies. About a third of our members own trucks. Maybe two or three hundred own warehouse space or broker warehouse space. Maybe 200 are air freight forwarders, a similar number handle ocean freight, and we have more intermodal marketing companies than the Intermodal Association of North America (IANA)—because we have all the small ones.
Q: How did you come to be in charge of this organization?
A: I came to know the Transportation Brokers Conference of America, which is what it was called at the time, when I was at the Interstate Commerce Commission during the first Bush administration. Then when I was at the National Industrial Transportation League, I worked closely with the association. I actually tried to get the job before and lost out to Joni Casey. If I had to pick somebody to lose out to, Joni is a great person to lose to.
Then the position at IANA opened up, and IANA hired Joni. I lost that to her, too, but this is where I really wanted to be. I knew it was a diamond in the rough, and I believe that I have shown it to be a diamond. There is just a really bright future here. I have more than doubled membership. We have built an online university of training courses for our members. We have entered into an agreement now with the Institute of Logistical Management to double our online course offerings. We have an insurance company. We have built a very effective advocacy department. I am more excited today than I was in June 1997 when I took over.
Q: What are the key issues for your members right now?
A: Right now, one of the key issues is credit management. One of the reasons that the third-party logistics industry has exploded is these companies use their free cash flow to become the industry's bank. What I mean by that is they pay the carrier as quickly as the day of delivery but don't expect to be paid by the shipper for 30 to 45 days. So they are financing the freight on their own cash flow.
Well, that worked well enough in the days when the market was booming and you could check your shipper's credit once and then watch your own receivables from that shipper. But in this market, a shipper can go south on you in 30 days because you don't have a clear picture of its total finances. There were credit bureaus like Dun & Bradstreet that gave you a snapshot of how the corporation was doing overall, but there was not any entity looking at a shipper's transportation-specific credit.
We have been working for the past three years—actually since the last dip in the economy—to build shipper transportation-specific credit reporting. The company that we have been working with, Forius, launched a product on March 2 that's going to allow users to track how shippers pay their small transportation providers on a daily basis.
Q: What other issues are you tracking besides credit?
A: Long term, the biggest threat to the industry is from increased regulation. The industry has worked quite well since the mid '90s, when we ended economic regulation of the industry and concentrated solely on safety. But in the last Congress, legislation was introduced that would have required brokers, forwarders, and motor carriers to reveal all of their costs, all of their income, and every invoice.
This is a devastating thing in any industry. Sure, you'd like to know exactly how much Best Buy paid for that Sony television or how much the auto dealer paid for that car you want to buy. You wouldn't have to go through all this nonsense of negotiation. But in our free market, it doesn't work that way. It would have tremendous ramifications. That is a huge threat on the horizon, and we have increased our presence on Capitol Hill to deal with that.
A: A related issue is that of taxation. We fought a provision in Texas two years ago that would have taxed service industries at their gross revenue level, not at net cost.
Q: That would be a bit onerous, wouldn't it?
A: Yes, very onerous, and other states are looking at this same thing, so as an industry we have got to get our hands around this. We have to figure out how to mobilize the opposition at the state level because, frankly, no state wants somebody from Washington coming in and saying, "We are from Washington and we don't like what you're doing."
Q: Let's shift gears a little. What are the biggest challenges your members face in serving their customers these days?
A: Well, the biggest challenge right now is the lack of freight. Everybody is facing it. As a result, we're seeing the strong preying on the weak to get more volume—for example, they might be offering to pay the carriers even faster.
Q: I almost hesitate to ask because nobody wants to go out on a limb and make a prediction, but we have to go through the routine. Is there an end in sight to this freight recession?
A: I don't know. I'm hearing different things from the group's members. The members who are heavily involved in the auto industtry are really hurt. But I talked to a small member last week who does a lot of work with a box company—a cardboard box company—and its freight is picking up.
I have a call out to the oracle of Delphi, but she hasn't returned my call yet, so I am not sure. I hope it is soon.
Q: We all do. I recall market analyst John Larkin saying at your annual conference, "Every day we are in this situation, we are one day closer to being out of it."
A: Well, I think that's right. I recently went back and read Franklin Roosevelt's first inaugural address. In it, he told the people that things were not as bad as they had been in the past. We are not plagued by locusts and other biblical plagues that our forefathers persevered through.
Things are certainly better today than they were when Roosevelt took office. What we have—and what America in 1933 didn't have—is a modern sophisticated logistics and distribution system. In March 1933, in the depth of the Great Depression, we left food rotting in the fields because we couldn't get it to market. We don't have any of those problems. At the depth of the Depression in 1933, we had 25 percent unemployment. Today, we are pushing at 10 percent—or maybe a little less.
Anyway, we have great things in place. Now that we have passed the stimulus bill, everything should be good. It is time to start instilling hope instead of selling fear.
Q: The economic environment aside, what does the future of logistics hold? If we were to take a nap and wake up 10 years from now, what would the market look like?
A: Oh, man, if I knew exactly what the market would look like 10 years from now, I would be really fat, dumb, and happy.
I think it will look a lot like it does today but with more logistics companies. Over the past 20 years, shippers have shed jobs from what used to be their traffic departments. They are not going to hire those back. They are going to have high-level experts in their systems to oversee outsourced providers and work with them in partnership.
States across the Southeast woke up today to find that the immediate weather impacts from Hurricane Helene are done, but the impacts to people, businesses, and the supply chain continue to be a major headache, according to Everstream Analytics.
The primary problem is the collection of massive power outages caused by the storm’s punishing winds and rainfall, now affecting some 2 million customers across the Southeast region of the U.S.
One organization working to rush help to affected regions since the storm hit Florida’s western coast on Thursday night is the American Logistics Aid Network (ALAN). As it does after most serious storms, the group continues to marshal donated resources from supply chain service providers in order to store, stage, and deliver help where it’s needed.
Support for recovery efforts is coming from a massive injection of federal aid, since the White House declared states of emergency last week for Alabama, Florida, Georgia, North Carolina, and South Carolina. Affected states are also supporting the rush of materials to needed zones by suspending transportation requirement such as certain licensing agreements, fuel taxes, weight restrictions, and hours of service caps, ALAN said.
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.
Two European companies are among the most recent firms to put autonomous last-mile delivery to the test with a project in Bern, Switzerland, that debuted this month.
Swiss transportation and logistics company Planzer has teamed up with fellow Swiss firm Loxo, which develops autonomous driving software solutions, for a two-year pilot project in which a Loxo-equipped, Planzer parcel delivery van will handle last-mile logistics in Bern’s city center.
The project coincides with Swiss regulations on autonomous driving that are expected to take effect next spring.
Referred to as “Planzer–Dynamic Micro-Hub w LOXO,” the project aims to address both sustainability issues and traffic congestion in urban areas.
The delivery vehicle, a Volkswagen ID. Buzz battery-electric minivan, will feature Loxo’s Level 4 Digital Driver navigation software, a highly automated solution that allows driverless operation. The van was retrofitted to include space for two swap boxes for parcel storage.
During the two-year pilot phase, Loxo’s Digital Driver will navigate a commercial vehicle several times a day from Planzer’s railway center to various logistics points in Bern's city center. There, the parcels will be reloaded onto small electric vehicles and delivered to end customers by Planzer’s parcel delivery staff.
Following the completion of the pilot phase, Planzer and Loxo will build on the program for rollout in other Swiss cities, the companies said.
The partners said the project addresses the increasing requirements of urban supply chains and aims to ensure the “scalability of their disruptive solution.” With largely emission-free delivery, it contributes to greater levels of sustainability for the city as a living space, they also said.
“The uniqueness of this project lies in the fact that it will have a direct impact on society,” Planzer’s CEO and Chairman Nils Planzer said in a statement announcing the project. “We didn't just want to integrate automated technology into existing systems, we wanted to develop a completely new concept and a new business model.”
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.