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.
William J. Logue knew the whole world wouldn't be watching when FedEx Freight, the less-than-truckload (LTL) unit of FedEx Corp. that he heads, rolled out its revamped service on Monday.
But he knew one person would be watching intently: Fred Smith, FedEx's founder, chairman, and CEO, and Logue's direct boss. As far as Logue and his team were concerned, it might as well have been the whole world.
A year in the planning, the reconstituted FedEx Freight took the field one week before Super Bowl XLV with the goal of forever changing the LTL game. To do so, the unit seeks to take a page from the playbook used so successfully by the parent's air express business: leverage a dual-use network design and robust information technology to give LTL shippers choices and service levels they've never had before.
The new services "reflect a unique approach to the LTL arena," Logue said in a late December e-mail interview with DC Velocity. "In general, the LTL industry [has] focused on the number of miles a shipment traveled instead of the type of service needed."
The rollout also represents FedEx's most ambitious effort yet to wring profitability from a unit that has struggled with an economic downturn, a severe freight recession, and destructive price wars that took their toll on the entire LTL field. However, the launch comes amid encouraging signs for truckers that the years of margin-denting rate discounts may finally be abating. In its fiscal second-quarter results released in mid-December, FedEx reported mid-single-digit gains in base rates for both its regional and national freight units, citing an improving overall pricing environment.
FedEx Freight's two new services—"priority" for expedited shipments that require delivery within two days, and "economy" for less-urgent deliveries (typically three days or more)—are the byproducts of extensive research into what LTL shippers want in 2011 and beyond, according to Logue.
But even as the operation gets its sea legs, the question being asked is how unique it really is. One trucking industry veteran, speaking on condition of anonymity, said shippers already have their pick of carriers offering a menu of transit times regardless of the shipment's characteristics or the length of haul.
For example, LTL carrier ABF Freight System Inc. says it has operated a dual-system network for regional and long-haul deliveries for five years. ABF launched its network in 2006 along the Eastern Seaboard, expanded it to the eastern two-thirds of the United States several years later, and will soon take it coast to coast, according to Roy Slagle, the trucker's senior vice president of sales and marketing.
"It's a proven model that meets the customer's requirements, no matter the distance," he says.
How it works
The new FedEx unit fuses the former regional and national LTL units into a single operation with one point of contact, one driver, and one truck. For the first time in its history, FedEx Freight will tap into the railroads' intermodal network to support its "economy" service, though Logue stressed it would just be for a small fraction of its moves.
Here's how it works for a hypothetical load moving from Boston to Jacksonville, Fla.: A shipment booked as "priority" is routed through a dedicated sorting facility in Newburgh, N.Y., about 50 miles north of New York City. The next morning, the cargo is loaded on the company's relay network for delivery to a dedicated hub in Valdosta, Ga. From Valdosta, the shipment is delivered to a service center in Jacksonville for two-day delivery to the consignee. The same shipment moving via "economy" service is routed through a sorting facility in Harrisburg, Pa., and then shipped to a hub in Orlando, Fla., where it is prepped for delivery on the third day to Jacksonville.
At each shipment's origin point, the cargo will be sorted and segregated based on the delivery level requested by the customer. Once the shipment arrives at the origin facility, the cargo will be scanned by on-dock computers to determine how the shipment should be loaded and the appropriate departure times.
A key distinction between the two service levels is that shipments booked for the slower deliveries will be handled in daytime sort shifts, while the expedited cargoes will move through nighttime sorts. That parallels the network design that the company's air express unit has used for decades.
The operation has hubs dedicated to each service level in addition to dual-use hubs like the one in Orlando. Logue says the dual-use hubs are located to "maximize efficiency and density as well as [to provide] access to rail facilities." The dual-use model is a "critical component" of the program's success, he adds.
As part of the restructuring, FedEx Freight shuttered 100 freight terminals, nearly 20 percent of the unit's 470 terminals. In the process, about 1,700 of the unit's 34,000 jobs were eliminated. FedEx estimates the restructuring will cost between $140 million and $170 million by the time it's completed.
No room for fumbles
As for how the new service will fare in the marketplace, a lot will depend on the execution.
Charles W. Clowdis Jr., managing director, transportation and supply chain advisory services for consultancy IHS Global Insight, says the new FedEx service could make market inroads as long as it focuses on careful and near-flawless segregation of each shipment.
In fact, Clowdis foresees a day when the network's reliability allows FedEx to offer services that "segment [shipments] by specific delivery dates and times, accompanied by appropriate pricing." From this could evolve a spate of products that guarantee deliveries before 10 a.m., by 12 noon, and the next afternoon, service levels long available to air express users but virtually unheard of in the LTL category, he says.
From an operations standpoint, it would be hard to find someone inside FedEx more qualified to quarterback the new game than Bill Logue. A 22-year FedEx veteran, Logue has held top operational positions throughout the company; before being named FedEx Freight's president in late 2009 (he added the CEO title in the spring of 2010), Logue was executive vice president and COO of FedEx Express's U.S. operations, responsible for all of the unit's air, ground, and domestic support services.
According to sources, Logue sold top management on the combination not just as a way to cut costs and improve efficiency, but to reshape the way LTL is sold in the United States and how shippers perceive its value.
Management agreed. Now, for Logue, it's game time. Mr. Smith is watching from the luxury box.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills 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.