An insider's take on the great highway debate: interview with Mortimer L. Downey III
When it comes to handicapping the upcoming battle over highway spending, veteran public servant turned consultant Mort Downey may have the ultimate inside track.
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.
The nation is gearing up for one of the most critical periods in the history of U.S. infrastructure. And sitting in the sweet spot where influence and investment collide is one of the most knowledgeable authorities on infrastructure of the last 25 years: Mortimer L. Downey III.
Downey is a senior adviser to Parsons Brinckerhoff, providing advisory and management consulting services to the firm and its clients, which include public and private entities, developers, financiers, and builders of infrastructure projects worldwide.
Although he works in the private sector today, Downey has had a long career in public service. From 1993 to 2001, he served as deputy secretary of transportation, the longest-serving individual to ever hold the Department of Transportation's number-two job. As its chief operating officer, he developed the agency's highly regarded strategic and performance plans and had program responsibilities for operations, regulation, and investments in land, sea, air, and space transportation. His reputation is such that in 2008, he was named to the transportation policy committee for the Obama presidential campaign, and during the presidential transition was appointed leader of the DOT's agency review team.
Previously, Downey was for 12 years the executive director and chief financial officer of the New York Metropolitan Transportation Authority (MTA), the nation's largest independent public authority.
Downey has received numerous professional awards, including election to the National Academy of Public Administration, where he has served as chairman of the board of directors. He is a member of the board of directors of the Eno Transportation Foundation and has served on the National Academy of Science's Committee on Science & Technology Countermeasures to Terrorism. He has served on a DOT special panel to report on the safety impact of Mexican truck operations in the United States, he recently joined the Industry Leaders Council of the American Society of Civil Engineers, and he has served on the board of directors of the National Railroad Passenger Corp. (Amtrak).
Downey spoke recently with DC Velocity Group Editorial Director Mitch Mac Donald about his career, the nation's "vintage" transportation policy, and why he thinks freight interests might finally get a voice in the next round of transportation policy discussions.
Q: How did you end up in your current role as it relates to transportation and logistics?
A: I have been in the transportation world now for a little over 50 years in one role or another, a lot of it in the public transportation area in New York. I was executive director of the Metropolitan Transportation Authority, but I served during the Clinton administration as deputy secretary at U.S. DOT and got a much better appreciation of the goods movement side of the transportation world. I have kept part of my brain focused on that since I left DOT and entered consulting.
Q: You served on the transportation policy committee for the Obama presidential campaign and then worked as part of the DOT agency review team during the transition. What can you tell us about your work there? A: It was an interesting experience revisiting federal policy and the Department of Transportation. During the campaign, the Obama folks had a very active group exchanging ideas and throwing in ideas about transportation policy. They published several fact sheets and working papers, more than have come out of any other presidential campaign that I can recall. I was fortunate enough to be asked to head up the DOT transition team.
Around this time last year, we began to organize that effort. Immediately after election day, we dropped everything and spent the next couple of months at DOT meetings with the career staff, meeting with virtually every interest group in the world who cared about transportation policy, and preparing documents that were handed over to the incoming secretary, Ray LaHood, when he came on board. We also had the opportunity to brief him. It was a great chance to re-immerse in the policy issues and throw in my two cents' worth on some of the directions. His team is off and running now, and I think the subject of goods movement and logistics is going to be an important part of its policy thinking.
Q: It has long been argued that freight "needs a seat at the table" when national transportation policy is developed, but that has yet to come to pass. What, in your view, makes things different this time around? A: The two catch phrases one usually hears are "freight deserves a seat at the table" and "freight doesn't vote." But the developments over the last eight or 10 years are changing things in a positive way. In the last round of transportation legislation —the so-called SAFETEA-LU bill, which is now mercifully expiring —there was an effort to bring freight into the picture, and those of us who worked on it felt it was moderately successful.
The other thing that came out of that legislation was the naming of two study commissions to prepare policy views in time for the next round of legislation because Congress couldn't agree on a single charter. We had a commission devoted to policy and program development, and a separate commission that looked at financial issues.
I think from a freight standpoint, the policy commission was the more interesting one. Out of a combination of presidential and congressional appointees, that commission wound up with some people who were articulate on these subjects, including [Burlington Northern Santa Fe CEO] Matt Rose. They continued to follow up individually on the implementation of their recommendations and made a very strong case for a better focus on freight. They crystallized the connection between freight and the national economy, and the importance of addressing freight capacity issues as part of the policy debate.
I am not too optimistic that we will see anything but a short-term extension [of the current highway reauthorization bill]. But the major piece of work has been done, which is the development of surface transportation legislation from the House. The House Transportation and Infrastructure Committee has picked up on a lot of our recommendations regarding ways of bringing freight to the table.
Q: This is consistent with the comment I've heard you make that the objective here is to avoid new authorization of old thinking. A: Right. The House in its wisdom has really picked up on that, and Jim Oberstar [chairman of the House Transportation and Infrastructure Committee] refers to it as an authorization bill, not a reauthorization. He has very significantly changed the way programs will be delivered. He hasn't come up with a secret formula for paying for it yet. That remains an open issue, but he has really begun to change things around and he has created within the program structure a nationwide freight program operated through the states. He has also opened the door to federal support for important intermodal improvement projects in the freight arena.
Q: How can the freight community be confident that money appropriated for freight will be spent on freight-only projects? A: I think the discussion about freight fees as well as a freight trust fund, which is not currently in Oberstar's legislation because that is not his jurisdiction, is an effort to assure the freight community that if they agree that improvements are needed and if they pay in, the funds will be segregated and used for that purpose.
The thinking is that if there is an outreach to that source of money, the funds will not simply be another bucket in the highway trust fund but instead be dedicated to good solid freight projects. Now you get into some nuances there. The truckers, for example, are very strong advocates for investment that would improve trucking. They actually are supportive right now of a diesel fuel tax increase. Not very many people in Washington are.
Q: At a recent conference, you noted the need for the nation to align its trade and transportation policies, but you added that while our trade policy is aimed at 2009, our transportation policy is vintage 1956. Can you elaborate? A: That comes from thinking about how U.S. trade policy has developed, the fact that we are now much more involved in foreign commerce, both oceangoing commerce with the other continents and NAFTA-related trade. It is a very different world from where the United States was when the last significant investments were made —basically, the establishment of the Eisenhower interstate highway system.
But we haven't caught up. We don't necessarily frame the debate in the right terms when we make judgments. For example, we agreed that NAFTA should go forward, but we didn't really debate how to make that work. So here we are, still fighting over access for Mexican trucks to U.S. highways. There are good arguments on both sides, but we really should have thought that through.
What strikes me, and it is brought home every time I hear about it, is that our neighbor to the north gets it. In Canada, questions surrounding foreign trade and the handling of import and export shipments are an important part of national policy discussions. If you look at the steps the Canadians have taken to beef up the capability of [the Port of] Prince Rupert and to beef up the capability of Halifax, they are doing things that we have yet to really contemplate, and we are going to be handed our lunch.
Q: Wouldn't it be interesting if the two primary maritime gateways to North America were not in the United States? A: Yes, or the three primary gateways. The Mexicans are looking to develop their facilities as well. I think much of the thinking both from Canada and Mexico is driven by how they handle their imports. I think we also have to figure out how we keep ourselves in the export business with something other than scrap paper.
Q: Any closing thoughts? A: There are some important issues here. I believe we will see in the next six to 18 months a piece of legislation that shapes what goes on for probably the next 20 years. That is usually the pattern when one of these bills passes —it stays in place for a long time. This is an important round of policy discussions. I hope those who care about freight issues will find a way to be participants in that discussion.
When it comes to logistics technology, the pace of innovation has never been faster. In recent years, the market has been inundated by waves of cool new tech tools, all promising to help users enhance their operations and cope with today’s myriad supply chain challenges.
But that ever-expanding array of offerings can make it difficult to separate the wheat from the chaff—technology that’s the real deal versus technology that’s just “vaporware,” meaning products that don’t live up to their hype and may even still be in the conceptual stage.
One way to cut through the confusion is to check out the entries for the “3 V’s of Supply Chain Innovation Awards,” an annual competition held by the Council of Supply Chain Management Professionals (CSCMP). This competition, which is hosted by DC Velocity’s sister publication, Supply Chain Xchange, and supply chain visionary and 3 V’s framework creator Art Mesher, recognizes companies that have parlayed the 3 V’s—“embracing variability, harnessing visibility, and competing with velocity”—into business success and advanced the practice of supply chain management. Awards are presented in two categories: the “Business Innovation Award,” which recognizes more established businesses, and the “Best Overall Innovative Startup/Early Stage Award,” which recognizes newer companies.
The judging for this year’s competition—the second annual contest—took place at CSCMP’s EDGE Supply Chain Conference & Exhibition in September, where the three finalists for each award presented their innovations via a fast-paced “elevator pitch.” (To watch a video of the presentations, visit the Supply Chain Xchange website.)
What follows is a brief look at the six companies that made the competition’s final round and the latest updates on their achievements:
Arkestro: This San Francisco-based firm offers a predictive procurement orchestration solution that uses machine learning (ML) and behavioral science to revolutionize sourcing, eliminating the need for outdated manual tools like pivot tables and for labor-intensive negotiations. Instead, procurement teams can process quotes and secure optimal supplier agreements at a speed and accuracy that would be impossible to achieve manually, the firm says.
The company recently joined the Amazon Web Services (AWS) Partner Network (APN), which it says will help it reach its goal of elevating procurement from a cost center to a strategic growth engine.
AutoScheduler.AI: This Austin, Texas-based company offers a predictive warehouse optimization platform that integrates with a user’s existing warehouse management system (WMS) and “accelerates” its ability to resolve problems like dock schedule conflicts, inefficient workforce allocation, poor on-time/in-full (OTIF) performance, and excessive intra-campus moves.
“We’re here to make the warehouse sexy,” the firm says on its website. “With our deep background in building machine learning solutions, everything delivered by the AutoScheduler team is designed to provide value by learning your challenges, environment, and best practices.” Privately funded up until this summer, the company recently secured venture capital funding that it will use to accelerate its growth and enhance its technologies.
Davinci Micro Fulfillment: Located in Bound Brook, New Jersey, Davinci operates a “microfulfillment as a service” platform that helps users expedite inventory turnover while reducing operating expenses by leveraging what it calls the “4 Ps of global distribution”—product, placement, price, and promotion. The firm operates a network of microfulfillment centers across the U.S., offering services that include front-end merchandising and network optimization.
Within the past year, the company raised seed funding to help enhance its technology capabilities.
Flying Ship: Headquartered in Leesburg, Virginia, Flying Ship has designed an unmanned, low-flying “ground-effect maritime craft” that moves freight over the ocean in coastal regions. Although the Flying Ship looks like a small aircraft or large drone, it is classified as a maritime vessel because it does not leave the air cushion over the waves, similar to a hovercraft.
The first-generation models are 30 feet long, electrically powered, and semi-autonomous. They can dock at existing marinas, beaches, and boat ramps to deliver goods, providing service that the company describes as faster than boats and cheaper than air. The firm says the next-generation models will be fully autonomous.
Flying Ship, which was honored with the Best Overall Startup Award in this year’s 3 V’s competition, is currently preparing to fly demo missions with the Air Force Research Laboratory (AFRL).
Perfect Planner: Based in Alpharetta, Georgia, Perfect Planner operates a cloud-based platform that’s designed to streamline the material planning and replenishment process. The technology collects, organizes, and analyzes data from a business’s material requirements planning (MRP) system to create daily “to-do lists” for material planners/buyers, with the “to-dos” ranked in order of criticality. The solution also uses advanced analytics to “understand” and address inventory shortages and surpluses.
Perfect Planner was honored with the Business Innovation Award in this year’s 3 V’s competition.
ProvisionAi: Located in Franklin, Tennessee, ProvisionAi has developed load optimization software that helps consumer packaged goods (CPG) companies move their freight with fewer trucks, thereby cutting their transportation costs. The firm says its flagship offering is an automatic order optimization (AutoO2) system that bolts onto a company’s existing enterprise resource planning (ERP) or WMS platform and guides larger orders through execution, ensuring that what is planned is actually loaded on the truck. The firm’s CEO and founder, Tom Moore, was recognized as a 2024 Rainmaker by this magazine.
Global forklift sales have slumped in 2024, falling short of initial forecasts as a result of the struggling economy in Europe and the slow release of project funding in the U.S., a report from market analyst firm Interact Analysis says.
In response, the London-based firm has reduced its shipment forecast for the year to rise just 0.3%, although it still predicts consistent growth of around 4-5% out to 2034.
The “bleak” figures come as the European economy has stagnated during the second half of 2024, with two of the leading industry sectors for forklifts - automotive and logistics – struggling. In addition, order backlogs from the pandemic have now been absorbed, so order volumes for the global forklift market will be slightly lower than shipment volumes over the next few years, Interact Analysis said.
On a more positive note, 3 million forklifts are forecast to be shipped per year by 2031 as enterprises are forced to reduce their dependence on manual labor. Interact Analysis has observed that major forklift OEMs are continuing with their long-term expansion plans, while other manufacturers that are affected by demand fluctuations are much more cautious with spending on automation projects.
At the same time, the forklift market is seeing a fundamental shift in power sources, with demand for Li-ion battery-powered forklifts showing a growth rate of over 10% while internal combustion engine (ICE) demand shrank by 1% and lead-acid battery-powered forklift fell 7%.
And according to Interact Analysis, those trends will continue, with the report predicting that ICE annual market demand will shrink over 20% from 670,000 units in 2024 to a projected 500,000 units by 2034. And by 2034, Interact Analysis predicts 81% of fully electric forklifts will be powered by li-ion batteries.
The reasons driving that shift include a move in Europe to cleaner alternatives to comply with environmental policies, and a swing in the primary customer base for forklifts from manufacturing to logistics and warehousing, due to the rise of e-commerce. Electric forklift demand is also growing in emerging markets, but for different reasons—labor costs are creating a growing need for automation in factories, especially in China, India, and Eastern Europe. And since lithium-ion battery production is primarily based in Asia, the average cost of equipping forklifts with li-ion batteries is much lower than the rest of the world.
Companies in every sector are converting assets from fossil fuel to electric power in their push to reach net-zero energy targets and to reduce costs along the way, but to truly accelerate those efforts, they also need to improve electric energy efficiency, according to a study from technology consulting firm ABI Research.
In fact, boosting that efficiency could contribute fully 25% of the emissions reductions needed to reach net zero. And the pursuit of that goal will drive aggregated global investments in energy efficiency technologies to grow from $106 Billion in 2024 to $153 Billion in 2030, ABI said today in a report titled “The Role of Energy Efficiency in Reaching Net Zero Targets for Enterprises and Industries.”
ABI’s report divided the range of energy-efficiency-enhancing technologies and equipment into three industrial categories:
Commercial Buildings – Network Lighting Control (NLC) and occupancy sensing for automated lighting and heating; Artificial Intelligence (AI)-based energy management; heat-pumps and energy-efficient HVAC equipment; insulation technologies
Manufacturing Plants – Energy digital twins, factory automation, manufacturing process design and optimization software (PLM, MES, simulation); Electric Arc Furnaces (EAFs); energy efficient electric motors (compressors, fans, pumps)
“Both the International Energy Agency (IEA) and the United Nations Climate Change Conference (COP) continue to insist on the importance of energy efficiency,” Dominique Bonte, VP of End Markets and Verticals at ABI Research, said in a release. “At COP 29 in Dubai, it was agreed to commit to collectively double the global average annual rate of energy efficiency improvements from around 2% to over 4% every year until 2030, following recommendations from the IEA. This complements the EU’s Energy Efficiency First (EE1) Framework and the U.S. 2022 Inflation Reduction Act in which US$86 billion was earmarked for energy efficiency actions.”
Many AI deployments are getting stuck in the planning stages due to a lack of AI skills, governance issues, and insufficient resources, leading 61% of global businesses to scale back their AI investments, according to a study from the analytics and AI provider Qlik.
Philadelphia-based Qlik found a disconnect in the market where 88% of senior decision makers say they feel AI is absolutely essential or very important to achieving success. Despite that support, multiple factors are slowing down or totally blocking those AI projects: a lack of skills to develop AI [23%] or to roll out AI once it’s developed [22%], data governance challenges [23%], budget constraints [21%], and a lack of trusted data for AI to work with [21%].
The numbers come from a survey of 4,200 C-Suite executives and AI decision makers, revealing what is hindering AI progress globally and how to overcome these barriers.
Respondents also said that many stakeholders lack trust in AI technology generally, which holds those projects back. Over a third [37%] of AI decision makers say their senior managers lack trust in AI, 42% feel less senior employees don’t trust the technology., and a fifth [21%] believe their customers don’t trust AI either.
“Business leaders know the value of AI, but they face a multitude of barriers that prevent them from moving from proof of concept to value creating deployment of the technology,” James Fisher, Chief Strategy Officer at Qlik, said in a release. “The first step to creating an AI strategy is to identify a clear use case, with defined goals and measures of success, and use this to identify the skills, resources and data needed to support it at scale. In doing so you start to build trust and win management buy-in to help you succeed.”
Many chief supply chain officers (CSCOs) are focused on reorganizing their supply chains in today’s business climate—but as they do so, they should be careful to avoid common pitfalls that can derail their efforts.
That’s according to recent research from Gartner that identifies critical organizational design mistakes that will prevent supply chain leaders from delivering on business goals.
“Supply chain reorganization is high up on CSCOs’ agendas, yet many are unclear about how organization design outcomes link to business goals,” according to Alan O'Keeffe, senior director analyst in Gartner’s Supply Chain practice.
The research revealed that the most successful projects radically redesign supply chain structure based on distinct organizational needs “while prioritizing balance, strength, and speed as key business objectives.”
“Our findings reveal that the leaders who achieved success took a more radical approach to redesigning their supply chain organizations, resulting in the ability to deliver on new and transformational operating models,” O’Keefe said in a statement announcing the findings.
The research was based on a series of interviews with supply chain leaders as well as data gathered from Gartner clients. It revealed that successful organizations assigned responsibilities to reporting lines in radically diverse ways, and that they focused on the unique characteristics of their business to design supply chain organizations that were tailored to meet their needs.
“The commonality between successful organizations is that their leaders intentionally prioritized the organizational goals of balance, strength and speed into their design process,” said O’Keeffe. “In doing so, they sidestepped the most common pitfalls in supply chain reorganization design.”
The three most common errors, according to Gartner, are:
Mistake 1: The “either/or” approach
Unbalanced organizational structures result in delays, gaps in performance, and confusion about responsibility. This often stems from a binary choice between centralized and decentralized models. Such an approach limits design possibilities and can lead to organizational power struggles, with teams feeling overwhelmed and misaligned.
Successful CSCOs recognize balance as a critical outcome. They employ both integration (combining activities under one team structure) and differentiation (empowering multiple units to conduct activities in unique ways). This granular approach ensures that decisions, expertise, and resources are allocated optimally to serve diverse customer needs while maintaining internally coherent operating models.
Mistake 2: Debilitating headcount reduction
Reducing headcount as a primary goal of reorganization can undermine long-term organizational capability. This approach often leads to a focus on short-term cost savings at the expense of losing critical talent and expertise, which are essential for driving future success.
Instead, CSCOs should focus on understanding what capabilities will make the organization strong in the short, medium, and long term. They should also prioritize the development and leveraging of people capabilities, social networks, and autonomy. This approach not only enhances organizational effectiveness but also ensures that the organization is ready to meet future challenges.
Mistake 3: The copy/paste approach
Copying organizational designs from other companies without considering enterprise-specific variations can slow decision-making and hinder organizational effectiveness. Each organization has unique characteristics that must be factored into its design.
CSCOs who successfully redesign their organizations make speed an explicit outcome by assigning and clarifying authority and expertise to remove elements that slow decision-making speed. This involves:
Designing structures that enable rapid response to customer needs;
Streamlining internal decision-making processes;
And differentiating between operational execution and transformation efforts.
The research for the report was based in part on qualitative interviews conducted between February and June 2024 with supply chain leaders from organizations that had undergone organizational redesign, according to Gartner. Insights were drawn from those who had successfully completed a radical reorganization, defined as a shift that enabled organizations to deliver on new activities and operating models that better met the needs of the business. The researchers also drew on more than 1,200 inquiries with clients conducted between July 2022 and June 2024 for the report.