Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
Jim Burnley doesn't mince words. after serving as Transportation Secretary under President Ronald Reagan from 1987 to 1989 and spending the next 20 years as one of the nation's most prominent transportation attorneys, lobbyists, and power brokers, he has, if nothing else, earned the privilege of candor in a town often bereft of it.
Now senior partner at the Washington law firm Venable LLP, Burnley is spending most of his time helping his transportation clients navigate the American Clean Energy and Security Act of 2009, a 1,100-page bill that seeks to reduce carbon emissions by 80 percent or more between 2012 and 2050 by imposing a national limit on greenhouse gases.
Burnley pulls no punches when the talk turns to the bill's controversial centerpiece—a complex system called "cap and trade," where emission limits are set for each industry, and industries are forced to amass credits or buy allowances equal to their emissions levels. As he sees it, cap and trade amounts to little more than a command-and-control exercise that will wreak havoc on supply chain economics. "This is industrial policy straight out of the 1930s," he said in an interview.
Yet for all its many critics, the bill continues to move forward. The legislation, sponsored by Reps. Henry A. Waxman (D-Calif.) and Edward J. Markey (D-Mass.), was narrowly passed by the House of Representatives on June 26. No companion bill has yet been offered in the Senate, though Majority Leader Harry Reid (D-Nev.) is believed to support the Waxman-Markey legislation. President Barack Obama has said he expects to sign climate-change legislation sometime this fall.
"Massive energy tax"
Burnley and others in and out of transportation contend that when the federal government creates a scarce new commodity—in this case, the right to emit carbon—and then mandates that businesses buy it, the costs will inevitably be passed on to users in the form of higher prices. Transportation interests worry the industry will be disproportionately affected by the cap-and-trade provision. For instance, the existing language calls for 85 percent of all emissions credits to be given away for free initially. However, from 2014 to 2016, the so-called "refiners" category—under which transportation is lumped—will only receive 2 percent of the credits given out during that time, even though by most estimates, the supply chain is responsible for 30 percent of all CO2 emissions in the United States.
As a result, the transportation sector would have to buy credits equal to the 28 percent differential between the free credits it receives and the amount of carbon it emits. This would cost the industry billions of dollars, lead to a spike in oil prices that would be passed through to shippers, and contribute to a severe shipping and economic slowdown, critics warn.
Based on private-sector estimates that, over 10 years, the cap-and-trade measure would cost polluters in all industries between $650 billion and $1.3 trillion, freight costs could rise anywhere from 6 to 10 percent or even higher, analysts say.
"There will be significant increases in fuel costs for all modes," says C. Randal (Randy) Mullett, vice president, public relations and government affairs for Con-way Inc.
And in what some consider an ironic twist, carbon emissions would end up being reduced as an economic contraction leads to fewer goods being shipped and fewer conveyances needed to haul them.
"It is a horrific outcome if you are in the transportation world," Burnley says.
G. Tommy Hodges, first vice president for the American Trucking Associations, said in congressional testimony in early June that the 2 percent allotment only covers refiners' emissions at the facility level and ignores emissions from the burning of petroleum products. This oversight, Hodges warned, leaves "downstream users, such as trucking companies, exposed to dramatic and sudden fuel price spikes." ATA urged Congress to craft carbon-reduction laws that treat so-called mobile sources such as commercial trucks differently from traditional sources.
There is no shortage of groups lining up against cap and trade. The conservative think tank Heritage Foundation has called the proposal a "massive energy tax" that will damage the economy, increase unemployment by about 30 percent, send energy prices soaring, and do little to actually reduce global warming. Heritage projects that cap and trade would lower temperatures by a scant 0.2 degrees by the end of the century.
Global consultant CRA International, in a study commissioned by the National Black Chamber of Commerce, predicts motor fuel prices—the study doesn't distinguish between gasoline and diesel fuel—would climb 59 cents a gallon by 2050 if the current version of cap and trade becomes law.
Some predict even bigger fuel hikes. The American Petroleum Institute, the petroleum industry's trade group, says the law could increase energy costs by 88 cents a gallon for diesel fuel, 83 cents for jet fuel, and 77 cents for gasoline.
There are international trade risks as well, critics warn. Heritage says that because India and China will not move in lockstep with U.S. environmental goals, the legislation may compel U.S. manufacturers to move operations to countries with less-stringent environmental laws.
The other side
Supporters of cap and trade argue that such a system is a more flexible option than a "carbon tax" that would fall equally on everyone's head.
Advocates of carbon-reduction mechanisms like cap and trade say they may trigger higher energy costs in the short run but will yield significant savings starting as soon as 2020, as businesses and consumers find ways to reduce their energy consumption.
In a two-year study released in May, the Union of Concerned Scientists (UCS) said the United States could by 2020 reduce emissions by 26 percent below current levels, with businesses and consumers saving $346 billion in that year. The study also predicted that by 2030, emissions could be slashed by 56 percent, with resultant savings of $465 billion.
Carbon-reduction technologies installed in freight trucks could produce net savings—savings after efficiency investments and higher energy costs are factored in—of $38 billion by 2030, while keeping emissions constant at 2005 levels, according to the UCS study.
Eric de Place, senior researcher at Sightline Institute, a Seattle-based think tank that supports the legislation, says he expects cap and trade's impact on the freight industry to be "relatively modest." He declined to provide specific numbers but said it might end up increasing fuel prices by a "few nickels" per gallon over the decades.
De Place also cited International Monetary Fund data showing that if the cap and trade provisions were applied on a global scale, they would shave only one-half of 1 percent off world economic activity over the next 50 years. He says concerns that cap and trade will trigger the greatest transfer of wealth in history are "nutty."
Asleep at the switch
As for what's next, opponents of the Waxman-Markey bill are hoping its most onerous language will be watered down or stripped away when it reaches the Senate. However, given Majority Leader Reid's support of the House bill, Burnley calls such wishes "naive in the extreme."
Burnley says the transportation industry fumbled its opportunity to lobby for its interests as the bill was being crafted and must now face the consequences.
"The transportation community was asleep at the switch," he maintains.
Generative AI (GenAI) is being deployed by 72% of supply chain organizations, but most are experiencing just middling results for productivity and ROI, according to a survey by Gartner, Inc.
That’s because productivity gains from the use of GenAI for individual, desk-based workers are not translating to greater team-level productivity. Additionally, the deployment of GenAI tools is increasing anxiety among many employees, providing a dampening effect on their productivity, Gartner found.
To solve those problems, chief supply chain officers (CSCOs) deploying GenAI need to shift from a sole focus on efficiency to a strategy that incorporates full organizational productivity. This strategy must better incorporate frontline workers, assuage growing employee anxieties from the use of GenAI tools, and focus on use-cases that promote creativity and innovation, rather than only on saving time.
"Early GenAI deployments within supply chain reveal a productivity paradox," Sam Berndt, Senior Director in Gartner’s Supply Chain practice, said in the report. "While its use has enhanced individual productivity for desk-based roles, these gains are not cascading through the rest of the function and are actually making the overall working environment worse for many employees. CSCOs need to retool their deployment strategies to address these negative outcomes.”
As part of the research, Gartner surveyed 265 global respondents in August 2024 to assess the impact of GenAI in supply chain organizations. In addition to the survey, Gartner conducted 75 qualitative interviews with supply chain leaders to gain deeper insights into the deployment and impact of GenAI on productivity, ROI, and employee experience, focusing on both desk-based and frontline workers.
Gartner’s data showed an increase in productivity from GenAI for desk-based workers, with GenAI tools saving 4.11 hours of time weekly for these employees. The time saved also correlated to increased output and higher quality work. However, these gains decreased when assessing team-level productivity. The amount of time saved declined to 1.5 hours per team member weekly, and there was no correlation to either improved output or higher quality of work.
Additional negative organizational impacts of GenAI deployments include:
Frontline workers have failed to make similar productivity gains as their desk-based counterparts, despite recording a similar amount of time savings from the use of GenAI tools.
Employees report higher levels of anxiety as they are exposed to a growing number of GenAI tools at work, with the average supply chain employee now utilizing 3.6 GenAI tools on average.
Higher anxiety among employees correlates to lower levels of overall productivity.
“In their pursuit of efficiency and time savings, CSCOs may be inadvertently creating a productivity ‘doom loop,’ whereby they continuously pilot new GenAI tools, increasing employee anxiety, which leads to lower levels of productivity,” said Berndt. “Rather than introducing even more GenAI tools into the work environment, CSCOs need to reexamine their overall strategy.”
According to Gartner, three ways to better boost organizational productivity through GenAI are: find creativity-based GenAI use cases to unlock benefits beyond mere time savings; train employees how to make use of the time they are saving from the use GenAI tools; and shift the focus from measuring automation to measuring innovation.
According to Arvato, it made the move in order to better serve the U.S. e-commerce sector, which has experienced high growth rates in recent years and is expected to grow year-on-year by 5% within the next five years.
The two acquisitions follow Arvato’s purchase three months ago of ATC Computer Transport & Logistics, an Irish firm that specializes in high-security transport and technical services in the data center industry. Following the latest deals, Arvato will have a total U.S. network of 16 warehouses with about seven million square feet of space.
Terms of the deal were not disclosed.
Carbel is a Florida-based 3PL with a strong focus on fashion and retail. It offers custom warehousing, distribution, storage, and transportation services, operating out of six facilities in the U.S., with a footprint of 1.6 million square feet of warehouse space in Florida (2), Pennsylvania (2), California, and New York.
Florida-based United Customs Services offers import and export solutions, specializing in remote location filing across the U.S., customs clearance, and trade compliance. CTPAT-certified since 2007, United Customs Services says it is known for simplifying global trade processes that help streamline operations for clients in international markets.
“With deep expertise in retail and apparel logistics services, Carbel and United Customs Services are the perfect partners to strengthen our ability to provide even more tailored solutions to our clients. Our combined knowledge and our joint commitment to excellence will drive our growth within the US and open new opportunities,” Arvato CEO Frank Schirrmeister said in a release.
And many of them will have a budget to do it, since 51% of supply chain professionals with existing innovation budgets saw an increase earmarked for 2025, suggesting an even greater emphasis on investing in new technologies to meet rising demand, Kenco said in its “2025 Supply Chain Innovation” survey.
One of the biggest targets for innovation spending will artificial intelligence, as supply chain leaders look to use AI to automate time-consuming tasks. The survey showed that 41% are making AI a key part of their innovation strategy, with a third already leveraging it for data visibility, 29% for quality control, and 26% for labor optimization.
Still, lingering concerns around how to effectively and securely implement AI are leading some companies to sidestep the technology altogether. More than a third – 35% – said they’re largely prevented from using AI because of company policy, leaving an opportunity to streamline operations on the table.
“Avoiding AI entirely is no longer an option. Implementing it strategically can give supply chain-focused companies a serious competitive advantage,” Kristi Montgomery, Vice President, Innovation, Research & Development at Kenco, said in a release. “Now’s the time for organizations to explore and experiment with the tech, especially for automating data-heavy operations such as demand planning, shipping, and receiving to optimize your operations and unlock true efficiency.”
Among the survey’s other top findings:
there was essentially three-way tie for which physical automation tools professionals are looking to adopt in the coming year: robotics (43%), sensors and automatic identification (40%), and 3D printing (40%).
professionals tend to select a proven developer for providing supply chain innovation, but many also pick start-ups. Forty-five percent said they work with a mix of new and established developers, compared to 39% who work with established technologies only.
there’s room to grow in partnering with 3PLs for innovation: only 13% said their 3PL identified a need for innovation, and just 8% partnered with a 3PL to bring a technology to life.
Volvo Autonomous Solutions will form a strategic partnership with autonomous driving technology and generative AI provider Waabi to jointly develop and deploy autonomous trucks, with testing scheduled to begin later this year.
The announcement came two weeks after autonomous truck developer Kodiak Robotics said it had become the first company in the industry to launch commercial driverless trucking operations. That milestone came as oil company Atlas Energy Solutions Inc. used two RoboTrucks—which are semi-trucks equipped with the Kodiak Driver self-driving system—to deliver 100 loads of fracking material on routes in the Permian Basin in West Texas and Eastern New Mexico.
Atlas now intends to scale up its RoboTruck deployment “considerably” over the course of 2025, with multiple RoboTruck deployments expected throughout the year. In support of that, Kodiak has established a 12-person office in Odessa, Texas, that is projected to grow to approximately 20 people by the end of Q1 2025.
Women are significantly underrepresented in the global transport sector workforce, comprising only 12% of transportation and storage workers worldwide as they face hurdles such as unfavorable workplace policies and significant gender gaps in operational, technical and leadership roles, a study from the World Bank Group shows.
This underrepresentation limits diverse perspectives in service design and decision-making, negatively affects businesses and undermines economic growth, according to the report, “Addressing Barriers to Women’s Participation in Transport.” The paper—which covers global trends and provides in-depth analysis of the women’s role in the transport sector in Europe and Central Asia (ECA) and Middle East and North Africa (MENA)—was prepared jointly by the World Bank Group, the Asian Development Bank (ADB), the German Agency for International Cooperation (GIZ), the European Investment Bank (EIB), and the International Transport Forum (ITF).
The slim proportion of women in the sector comes at a cost, since increasing female participation and leadership can drive innovation, enhance team performance, and improve service delivery for diverse users, while boosting GDP and addressing critical labor shortages, researchers said.
To drive solutions, the researchers today unveiled the Women in Transport (WiT) Network, which is designed to bring together transport stakeholders dedicated to empowering women across all facets and levels of the transport sector, and to serve as a forum for networking, recruitment, information exchange, training, and mentorship opportunities for women.
Initially, the WiT network will cover only the Europe and Central Asia and the Middle East and North Africa regions, but it is expected to gradually expand into a global initiative.
“When transport services are inclusive, economies thrive. Yet, as this joint report and our work at the EIB reveal, few transport companies fully leverage policies to better attract, retain and promote women,” Laura Piovesan, the European Investment Bank (EIB)’s Director General of the Projects Directorate, said in a release. “The Women in Transport Network enables us to unite efforts and scale impactful solutions - benefiting women, employers, communities and the climate.”