A lobbyist's-eye view of the Washington transport scene
Two decades after leaving DOT's top job, James H. Burnley remains plugged into the Washington transportation scene. And he's concerned about some of what he sees.
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.
If political ideology were a condition for employment, James H. Burnley IV would never have gotten a foot in the door at the white-shoe Washington, D.C., law firm he now works for, Venable LLP.
Venable has deep and enduring liberal roots; its senior partner, Benjamin R. Civiletti, served as attorney general in the last two years of the Carter administration. By contrast, Burnley, who heads the firm's transportation practice, is an unabashed conservative who cut his teeth in the Reagan administration and whose work both in and out of government has been largely informed by that experience.
But competence and influence often trump ideology, and there is little doubt that when it comes to knowledge of transportation law and the ability to effectively lobby for client interests, few can match the 61-year-old Burnley.
In 1983, Burnley was appointed deputy secretary of transportation under Elizabeth H. Dole. In 1987, Burnley was named secretary of transportation, a post he held for the last two years of President Reagan's term. Since leaving the Department of Transportation (DOT) in 1989, Burnley has remained a key player in transportation matters as a lawyer and lobbyist, all the while remaining devoted to the free-market principles that defined his time in government.
Burnley spoke recently with DC Velocity Senior Editor Mark Solomon about the DOT then and now, similarities and differences in presidential administrations, and his stand on key transport and infrastructure issues.
Q: You've been out of government for more than 20 years. How has life been on the other side?
A: Life, in general, has been good. I've been able to stay involved in transportation policy issues, which is what I enjoy. While the pace is still intense, it's not as intense as it was at DOT. That was a six-and-a-half day a week pace. This is much more civilized.
Q: As you look at the scope of the DOT then and now, and the transportation industry then and now, what has been the biggest change at DOT and in the transportation world in general since your time at the agency? A: The biggest set of changes at DOT occurred as a result of 9/11 when the [Department of Homeland Security (DHS)] was created, the Coast Guard was moved out of DOT, and what responsibilities the department had in aviation security were moved to DHS. In terms of the shape and scope of the DOT, those are the biggest events of the past 20 years.
I think virtually everyone would agree that DHS is a work in progress. It's had some very able leadership, but it's such a disparate set of agencies, and there were so many differences among the agencies that were thrown into DHS. It's fair to say that if Congress had to do it over again, it might think through whether that's what it wanted.
In the transportation world, the biggest events have revolved around the continuing evolution of economic deregulation. When I was at DOT in the 1980s, the transportation industries were just beginning to shape their response to the changes that had taken place from 1978 to 1980 [when airlines, railroads, and truckers were deregulated]. At this point, we've hit a plateau. These are still dynamic industries, but they've plateaued as dynamic industries. The dynamic is mature.
Q: It's been 30 years since the railroad and trucking industries were deregulated. How would you judge that evolution? A: I think it's been enormously favorable. The average American is much better off. The prices we pay are lower than they would otherwise be because the logistics cost component of the things we buy is lower than it would otherwise be.
Q: How would you rate the Obama administration in its handling of transport issues up to now? A: One point of frustration is that they are reopening a rulemaking on truck drivers' hours of service. [The regulations] have already been through three iterations. There is a great danger they will go through several more now that they've reopened it.
That said, the challenges the administration has inherited are very substantial. We are in an extraordinarily difficult and somewhat unprecedented period in the history of the federal role in transportation. Before [DOT Secretary] LaHood got there, the highway trust fund collapsed. Today, we are seeing multibillion dollar transfers of funds from the general treasury because fuel tax and excise tax receipts aren't enough to fund existing programs.
Secretary LaHood also arrived just as President Obama said he wouldn't consider an increase in fuel taxes because of their regressive nature. This has put the secretary in a very difficult position.
Q: Highway funding reauthorization is living on a series of short-term extensions. Do you think it's possible that we may not have a multiyear reauthorization bill by the end of President Obama's term in office? A: I started saying a year ago that we were facing four years of short-term extensions of existing programs, and I'm sorry to say this is a prediction that I believe will come true. It will be especially difficult for the Obama administration and Congress to agree on a solution to the trust fund crisis if the political environment holds in November and we have more Republicans occupying both Houses who are skeptical of higher taxes of any kind.
What worries me is that the whole concept of the trust fund is breaking down. You can't make the argument with a straight face that the trust fund should be spent just on transportation programs and that it should be walled off from the appropriations process while at the same time getting huge sums of money from general revenues. That is a corrosive process. By 2013, we could find the whole notion of the trust fund obsolete.
Q: The conventional wisdom is that the controversial "cap and trade" provision contained in House-passed climate change legislation has been killed by the election of Massachusetts Republican Scott Brown to fill the late Edward M. Kennedy's Senate seat. Do you see new language emerging from Congress with the same carrot-and-stick approach as cap and trade? A: No. I think you may have legislation that has carrots in it, but not the sticks. The real inequity with cap and trade was that about one-third of revenues were going to come from transportation, but not a dime of that money would go to the Highway Trust Fund. Cap and trade is nothing more than a huge floating excise tax increase. That said, I think Congress will continue to work on incentives to drive us toward greater energy independence.
Q: What advice are you giving your clients on how to manage through the current legislative and regulatory environment? A: This is an administration with very few senior officials who have any experience in the private sector. And that's across the board, not just at DOT. The business community has realized that pretty quickly. It is spending a lot of time and effort educating officials on the real-world impact of the policies they want to put in place. Look at the proposal to reopen the hours-of-service debate. DOT has said it will reopen the rulemaking, but it hasn't put a proposal out there. The department has been listening to stakeholders to determine what the practical implications [of reopening the case] might be.
Q: Do you have a feel from your clients that they are concerned about what is coming out of DOT? A: Any time you have an activist administration—and this one certainly is—and you are in the regulated community, you have to be concerned about this. But it was the same way in the Reagan administration. We were very active, and we had a lot of ideas. And the people we regulated were very outspoken about the real-world impact of those ideas.
I will say that the DOT today has an extraordinarily dedicated and talented group of career leaders. The department has a remarkable track record of holding on to really talented career civil servants at the senior level, because they love what they do. I think of people like (Rosalind) "Lindy" Knapp, who was deputy general counsel when I joined DOT in 1983 and is still in that role. These are the people who are the backbone of the department. They are the most talented cadre of senior civil servants that I know of in the entire federal government.On the political level, the department's leadership is also very impressive. Ray LaHood knows what he's doing. He's been involved in public policy issues his entire adult life. The bottom line is that DOT is well led at the political and career levels.
This story first appeared in the September/October issue of Supply Chain Xchange, a journal of thought leadership for the supply chain management profession and a sister publication to AGiLE Business Media & Events’' DC Velocity.
For the trucking industry, operational costs have become the most urgent issue of 2024, even more so than issues around driver shortages and driver retention. That’s because while demand has dropped and rates have plummeted, costs have risen significantly since 2022.
As reported by the American Transportation Research Institute (ATRI), every cost element has increased over the past two years, including diesel prices, insurance premiums, driver rates, and trailer and truck payments. Operating costs increased beyond $2.00 per mile for the first time ever in 2022. This trend continued in 2023, with the total marginal cost of operating a truck rising to $2.27 per mile, marking a new record-high cost. At the same time, the average spot rate for a dry van was $2.02 per mile, meaning that trucking companies would lose $0.25 per mile to haul a dry van load at spot rates.
These high costs have placed a significant burden on the operations of trucking companies, challenging their financial sustainability over the last two years. As a result, 2023 saw approximately 8,000 brokers and 88,000 trucking companies cease operations, including some marquee names, such as Yellow Corp. and Convoy, and decades-long businesses, such as Matheson Trucking and Arnold Transportation Services.
More so than ever before, trucking companies need to get better at efficiently using their assets and reducing operational costs. So, what is a trucking company to do? Technology is the answer! Given the nature of the problem, technology-led innovation will be critical to ensure companies can balance rising costs through efficient operations.
One technology that could be the answer to many of the trucking industry’s issues is the concept of digital twins. A digital twin is a virtual model of a real system and simulates the physical state and behavior of the real system. As the physical system changes state, the digital twin keeps up with the real-world changes and provides predictive and decision-making capabilities built on top of the digital model.
DHL, in a 2023 white paper, suggests that—due to the maturation of technologies such as the internet of things (IoT), cloud computing, artificial intelligence (AI), advanced software engineering paradigms, and virtual reality—digital twins have “come of age” and are now viable across multiple sectors, including transportation. We agree with this assessment and believe that digital twins are essential to radically improving the processes of fleet planning and dispatch.
THE NEED TO AUTOMATE
Outside of attaining procurement efficiencies, trucking companies can achieve lower costs by focusing on critical operational levers such as minimizing deadheads, reducing driver dwell time, and maximizing driver and asset utilization.
However, manual methods of planning and dispatch cannot optimally balance these levers to achieve efficiency and cost control. Even when planners work very hard and owners strive to improve processes, optimizing fleet planning is not a problem humans can solve routinely. Planning is a computationally intensive activity. To achieve fleet-level efficiencies, the planner has to consider all possible truck-to-load combinations in real time and solve for many operational constraints such as drivers’ hours of service, customer windows, and driver home time, to name just a few. These computations become even more complex when you add in the dynamic nature of real-world conditions such as trucks getting stuck in traffic or breaking down or orders getting delayed. This is not a task humans do best! For these sorts of tasks, technology has the upper hand.
When a company creates a digital twin of its trucking network, it has a real-time model that factors in truck locations, drivers’ hours of service, and loads being executed and planned. Planners can then use this digital model to assess possible decisions and select ones that increase asset utilization, improve customer and driver satisfaction, and lower costs.
For example, a digital twin of the network can offer significant insights and analysis on the state of the network, including exceptions such as delayed pickups and deliveries, unassigned loads, and trucks needing assignments. Backed by AI that takes business rules into account, digital twins can allow companies to optimize their fleet performance by finding the most efficient load assignments and dynamically adjusting in real time to changes in traffic patterns and weather, customer delays, truck issues, and so on.
With a digital twin, carriers can optimize the matching of assets, drivers, and freight. Typically, an investment in this innovative technology results in a 20%+ increase in productive miles per truck, while also improving driver pay and significantly decreasing driver churn. Drivers get paid by the miles they run, so when they run more, they are able to make more money, resulting in less need to chase the next job in search of better pay.
ADDITIONAL BENEFITS
Digital twins also combat deadheading, another source of driver dissatisfaction and cost inefficiencies. On average, over-the-road drivers spend 17%–20% of road miles driving empty. Using a digital twin, a company can search across several freight sources to find a load that perfectly matches the deadhead leg without impacting downstream commitments. These additional revenue miles will help drivers to maximize their earnings on the road and carriers to maximize their asset utilization and profitability.
The traditional manual dispatch planning model is becoming increasingly outdated—each planner and fleet manager tasked with overseeing 30 to 40 vehicles. Carriers try to manage this problem by dividing the fleet into manageable chunks, which results in cross-fleet inefficiencies. Such a system isn’t scalable. A digital twin acts as an equalizer for small and mid-sized fleets. It enables carriers to expand by venturing beyond the fixed routes and network they were forced to run out of fear of additional logistical complexity.
A digital twin can also give an organization the transparency and visibility it needs to find and fix inefficiencies. A successful carrier will leverage the technology to learn from the hitches in its operations. While this visibility is beneficial in its own right, it also provides the first step toward a seamless, digitized operation. “Digital revolution” is a buzzword frequently heard at transportation conferences. Yet not too many organizations are dedicated to digitizing their operations past the visibility stage. The end goal should be using decision-support systems to automate key elements of the system, thus freeing up planners from their daily rote tasks to focus on problems that only humans can solve.
Finally incorporating a digital twin can also help trucking companies work toward the broader trend of creating greener supply chains. Because they have lower deadhead and dwell times, trucking companies that have adopted a digital twin can be more attractive to shippers that are looking for more efficient operations that meet their environmental, social, and governance (ESG) goals.
THE FUTURE IS HERE
It is important to note that the benefits described here are not dreams for the future; digital twin technology is already here. In fact, choosing a digital twin can seem daunting because there are already a spectrum of options out there. First and foremost, an organization must ensure that the digital twin it selects aligns with both the goals and the scope of its operation.
Additionally, the ideal digital twin should:
Operate in near real time. A digital twin should be able to refresh as often as the network changes.
Be able to factor in specific customer delivery requirements as well as asset- and operator-specific constraints.
Be computationally efficient and comprehensive as it considers thousands of permutations in milliseconds. The digital twin should be able to reoptimize an entire fleet’s schedule of multi-day routes on the fly.
Before implementing a digital twin, carriers need to make sure that they have robust data management processes in place. Electronic logging devices (ELDs), customers’ tenders, billing, shipments, and so on are already inundating carriers with a glut of data. However, the manual nature of operations in many carriers leads to poor data quality. Carriers will need to invest in data management approaches to improve data quality to support the generation and use of high-fidelity digital twins. Otherwise, the digital twin will not be representative of reality and companies will run into an issue of “garbage in, garbage out.”
REINVENTION AND TRANSFORMATION
While data management is critical, change management through the ranks of dispatch operations is often a harder task. In fact, the largest roadblock carriers face when undergoing a digital transformation is the lack of willingness to change, not the technology itself. Many carriers cling to outmoded planning methods. Planners, used to operating based on well-worn business rules and tribal knowledge, could be wary of the technology and resistant to change. They may need to be assured that, while it is true that every trucking network is uniquely complex, digital twins can be set up to model the intricacies of their specific dispatch operations and drive value to the network. A significant amount of time and resources will need to be expended on change management. Otherwise even though trucking companies may invest in cutting-edge technology, they won't be able to fully capitalize on the added value it can provide.
As the truckload industry works through the current freight cycle, it is important to realize that change is inevitable. Carriers will need to reinvent their operations and invest in technologies to ride through the busts and booms of future freight cycles. Recent global events point to the many ways that wrenches can be thrown into global transportation networks, and the fact that such volatility is here to stay. Digital twins can provide companies with the visibility to navigate such changes. But above all, an operation that uses the digital twin to drive decisions can make customers and drivers happy, and help the carriers keep their heads above water during times such as now.
Regular online readers of DC Velocity and Supply Chain Xchange have probably noticed something new during the past few weeks. Our team has been working for months to produce shiny new websites that allow you to find the supply chain news and stories you need more easily.
It is always good for a media brand to undergo a refresh every once in a while. We certainly are not alone in retooling our websites; most of you likely go through that rather complex process every few years. But this was more than just your average refresh. We did it to take advantage of the most recent developments in artificial intelligence (AI).
Most of the AI work will take place behind the scenes. We will not, for instance, use AI to generate our stories. Those will still be written by our award-winning editorial team (I realize I’m biased, but I believe them to be the best in the business). Instead, we will be applying AI to things like graphics, search functions, and prioritizing relevant stories to make it easier for you to find the information you need along with related content.
We have also redesigned the websites’ layouts to make it quick and easy to find articles on specific topics. For example, content on DC Velocity’s new site is divided into five categories: material handling, robotics, transportation, technology, and supply chain services. We also offer a robust video section, including case histories, webcasts, and executive interviews, plus our weekly podcasts.
Over on the Supply Chain Xchange site, we have organized articles into categories that align with the traditional five phases of supply chain management: plan, procure, produce, move, and store. Plus, we added a “tech” category just to round it off. You can also find links to our videos, newsletters, podcasts, webcasts, blogs, and much more on the site.
Our mobile-app users will also notice some enhancements. An increasing number of you are receiving your daily supply chain news on your phones and tablets, so we have revamped our sites for optimal performance on those devices. For instance, you’ll find that related stories will appear right after the article you’re reading in case you want to delve further into the topic.
However you view us, you will find snappier headlines, more graphics and illustrations, and sites that are easier to navigate.
I would personally like to thank our management, IT department, and editors for their work in making this transition a reality. In our more than 20 years as a media company, this is our largest expansion into digital yet.
We hope you enjoy the experience.
Keep ReadingShow less
In this chart, the red and green bars represent Trucking Conditions Index for 2024. The blue line represents the Trucking Conditions Index for 2023. The index shows that while business conditions for trucking companies improved in August of 2024 versus July of 2024, they are still overall negative.
FTR’s Trucking Conditions Index improved in August to -1.39 from the reading of -5.59 in July. The Bloomington, Indiana-based firm forecasts that its TCI readings will remain mostly negative-to-neutral through the beginning of 2025.
“Trucking is en route to more favorable conditions next year, but the road remains bumpy as both freight volume and capacity utilization are still soft, keeping rates weak. Our forecasts continue to show the truck freight market starting to favor carriers modestly before the second quarter of next year,” Avery Vise, FTR’s vice president of trucking, said in a release.
The TCI tracks the changes representing five major conditions in the U.S. truck market: freight volumes, freight rates, fleet capacity, fuel prices, and financing costs. Combined into a single index, a positive score represents good, optimistic conditions, and a negative score shows the opposite.
A coalition of truckers is applauding the latest round of $30 million in federal funding to address what they call a “national truck parking crisis,” created when drivers face an imperative to pull over and stop when they cap out their hours of service, yet can seldom find a safe spot for their vehicle.
According to the White House, a total of 44 projects were selected in this round of funding, including projects that improve safety, mobility, and economic competitiveness, constructing major bridges, expanding port capacity, and redesigning interchanges. The money is the latest in a series of large infrastructure investments that have included nearly $12.8 billion in funding through the INFRA and Mega programs for 140 projects across 42 states, Washington D.C., and Puerto Rico. The money funds: 35 bridge projects, 18 port projects, 20 rail projects, and 85 highway improvement projects.
In a statement, the Owner-Operator Independent Drivers Association (OOIDA) said the federal funds would make a big difference in driver safety and transportation networks.
"Lack of safe truck parking has been a top concern of truckers for decades and as a truck driver, I can tell you firsthand that when truckers don’t have a safe place to park, we are put in a no-win situation. We must either continue to drive while fatigued or out of legal driving time, or park in an undesignated and unsafe location like the side of the road or abandoned lot,” OOIDA President Todd Spencer said in a release. “It forces truck drivers to make a choice between safety and following federal Hours-of-Service rules. OOIDA and the 150,000 small business truckers we represent thank Secretary Buttigieg and the Department for their increased focus on resolving an issue that has plagued our industry for decades.”
“While there have been some signs of tightening in consumer spending, September’s numbers show consumers are willing to spend where they see value,” NRF Chief Economist Jack Kleinhenz said in a release. “September sales come amid the recent trend of payroll gains and other positive economic signs. Clearly, consumers continue to carry the economy, and conditions for the retail sector remain favorable as we move into the holiday season.”
The Census Bureau said overall retail sales in September were up 0.4% seasonally adjusted month over month and up 1.7% unadjusted year over year. That compared with increases of 0.1% month over month and 2.2% year over year in August.
Likewise, September’s core retail sales as defined by NRF — based on the Census data but excluding automobile dealers, gasoline stations and restaurants — were up 0.7% seasonally adjusted month over month and up 2.4% unadjusted year over year. NRF is now forecasting that 2024 holiday sales will increase between 2.5% and 3.5% over the same time last year.
Despite those upward trends, consumer resilience isn’t a free pass for retailers to underinvest in their stores by overlooking labor, customer experience tech, or digital transformation, several analysts warned.
"The 2024 holiday season offers more ‘normalcy’ for retailers with inflation cooling. Still, there is no doubt that consumers continue to seek value. Promotions in general will play a larger role in the 2024 holiday season. Retailers are dealing with shrinking shopper loyalties, a larger number of competitors across more channels – and, of course, a more dynamic landscape where prices are shifting more frequently to win over consumers who are looking for great deals,” Matt Pavich, senior director of strategy & innovation at pricing optimization solutions provider Revionics, said in an email.
Nikki Baird, VP of strategy & product at retail technology company Aptos, likewise said that retailers need to keep their focus on improving their value proposition and customer experience. “Retailers aren’t just competing with other retailers when it comes to consumers’ discretionary spending. If consumers feel like the shopping experience isn’t worth their time and effort, they are going to spend their money elsewhere. A trip to Italy, a dinner out, catching the latest Blake Lively and Ryan Reynolds films — there is no shortage of ways that consumers can spend their discretionary dollars,” she said.
Editor's note:This article was revised on October 18 to correct the attribution for a quote to Matt Pavich instead of Nikki Baird.