James Cooke is a principal analyst with Nucleus Research in Boston, covering supply chain planning software. He was previously the editor of CSCMP?s Supply Chain Quarterly and a staff writer for DC Velocity.
Diversification may not be for everyone, but for Gibraltar Industries, it proved to be a prescient move. In the mid '90s, management at the Buffalo, N.Y.-based metal products maker decided the corporation had become overly reliant on business from the U.S. automotive industry. Over the next decade, Gibraltar pursued an aggressive diversification campaign, acquiring a string of smaller companies in order to expand into markets like building and construction products, farm equipment, and hand tools.
In light of recent developments, Gibraltar's decision to lessen its dependence on the auto industry is looking more prudent by the day. But the strategy has also created some complications. For one thing, the spate of acquisitions resulted in a sharp rise in the number of private fleets operated by Gibraltar companies. As the fleet tally rose, so did the associated challenges— including truck availability, trailer utilization, and empty return trips. Eventually, it became clear that the corporation was going to need some outside help.
"Gibraltar had grown through acquiring building products companies, all of which had their own trucks and fleets," explains John Wagner, Gibraltar's corporate vice president of supply chain management. "We weren't getting the optimization on the loads like an expert in the field no matter how we tried. So we decided to outsource this [so we could] do a better job and tap into a wider network of backhaul opportunities."
In fact, one of the corporation's building products companies had already tested the outsourcing waters. About five years back, Jacksonville, Fla.-based Southeastern Metals Manufacturing Co. (SEMCO) had turned over management of its private fleet to a third-party logistics service provider (3PL).
SEMCO, which had hired the third party to address problems like lack of truck availability, was happy with the 3PL's performance. Nonetheless, Gibraltar decided to go with a different service provider when it expanded the outsourcing program. With fleets scattered throughout the country, it wanted a 3PL with a national presence.
After weighing its alternatives, Gibraltar chose a national player, Ryder Logistics of Miami, Fla. Under the arrangement the two parties worked out, Gibraltar owns most of the trailers, but leases the trucks from Ryder. Ryder maintains the equipment, and the drivers who operate the trucks are Ryder employees.
Today, Ryder Logistics manages a dedicated fleet of more than 50 trucks at four locations within Gibraltar's Building Products Group. Besides the SEMCO operation in Jacksonville, Ryder oversees fleet operations for Appleton Supply Co., which makes roofing and other metal products at a plant in Appleton, Wis. It also runs a fleet for Dot Metals, both at the company's manufacturing plant in San Antonio, Texas, and its distribution center in Houston. In December 2008, Ryder began taking over the operations of a nationwide fleet run by another Gibraltar subsidiary, Alabama Metal Industries (AMICO). Once Ryder assumes full control of AMICO's fleet, which is expected to be by the end of 2009, it will be managing 65 percent of Gibraltar's private fleets.
Cut costs, boost service, repeat
When it turned over its fleet management to Ryder, Gibraltar set three overall goals for its new partner. First, it wanted to stabilize fleet operations at various locations to improve service. Second, it wanted to reduce or eliminate costs. Finally, it wanted Ryder to pursue ongoing opportunities for further cost reductions and service improvements across multiple Gibraltar divisions.
To that end, Ryder instituted a number of efficiency programs. For example, at the SEMCO facility, which services distribution centers in Atlanta, Miami, and Lakeland, Fla., Ryder developed an order monitoring system that has improved the load planning process. In the past, SEMCO had little advance notice of upcoming orders, which meant it was often left scrambling to manually assign loads to trucks at the last minute. Now, when a customer places an order, that order is entered into a computer system, which then groups orders for optimal routing and load building.
At Appleton Supply, Ryder instituted a dynamic fleet routing application to improve shipping efficiency. Since the orders come from different customers in different locations, the fleet is unable to operate fixed routes. In the past, that lack of predictability made efficient routing difficult.
Under the new arrangement, when an order comes in, Appleton Supply determines whether there's product on hand in inventory. If there is, the order goes to Ryder for routing. If not, Appleton fabricates the item, notifying the warehouse when it's available for shipping. Ryder's routing application takes those make-to-order shipments, optimizes them for shipping, and then tells the warehouse what items to ship together on what day. As a result, Appleton's fleet has gone from an average of six stops per load to 12.
In addition to maximizing the daily fleet routes, Ryder has worked with Appleton Supply to improve trailer utilization and cut its transportation cost per pound. Among other initiatives, Ryder and Appleton designed special racks for Appleton's trailers that can accommodate 20- to 30-foot metal roofing strips, which are particularly vulnerable to damage during shipping. The racks, which can be collapsed for backhauls, have allowed Appleton Supply to get more weight on each flatbed truck. Since the racks were put into use, the average load per truck has risen to 25,000 to 30,000 pounds from 18,000 pounds, an increase of 40 percent.
Gibraltar and Ryder have also begun working together to find backhauls for the fleets, whether the loads come from Gibraltar sister companies or from outside sources. Ryder has implemented a global positioning system on all of the trucks, giving it up-to-the-minute visibility of the vehicles. As a result, it's now in a position to seize the opportunity if a load becomes available.
Costs down, service up
The outsourcing arrangement with Ryder has allowed Gibraltar to rein in its shipping expenses. In fact, Wagner reports that the corporation's freight costs are now on a par with or lower than they were with for-hire carriers.
The third party has also improved fleet performance, enabling Gibraltar to meet tight delivery windows from exacting retail customers like Home Depot and Menards. On top of that, the company has seen improvements in its order-to-delivery times. The 3PL also provides Gibraltar with access to real-time transportation metrics to guide improvement strategies.
Finally, Ryder has helped Gibraltar increase its backhaul revenues, which has helped offset rising fuel and transportation costs. Before contracting with the 3PL, Gibraltar wasn't taking full advantage of backhaul opportunities, Wagner admits. Ryder, however, has made a big push in that regard, he says, often going the extra mile to find a load. In addition to canvassing other Gibraltar locations to locate suitable freight, he says, Ryder takes the added step of using its brokerage arm to locate outside loads.
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.