What issues bear watching in 2012? Once again, I've put together a list of 10 developments that supply chain executives should keep a close eye on over the next 12 months. They are as follows:
1. The economy. First and foremost has to be the economy. Although the recession was declared officially over in June 2009, it appears to me that at best we are in a very slow recovery. With unemployment fluctuating between 8 and 10 percent, supply chain costs increasing, and resources decreasing, managers will be challenged throughout 2012, and no doubt beyond.
2. The price of diesel. According to Department of Energy forecasts, diesel fuel will average $3.73 per gallon in 2012. Although this is down slightly from 2011 levels, it is still 25 percent higher than it was in 2010. We will see upward and downward fluctuations, but the end result will be higher transportation costs.
3. Rising truck rates. High fuel costs and further regulation of engine emissions and carbon footprints, as well as possible driver shortages, will result in higher truck rates. Some increases have already been taken or announced. Look for more in 2012.
4. Capacity. Despite rising rates, the threat of capacity shortages remains. Many truckers sold off equipment during the downturn, and continuing battles over driver hours-of-service regulations and safety initiatives like CSA 2010 could exacerbate the problem.
5. Infrastructure. The infrastructure continues to deteriorate, and Congress is in seemingly hopeless turmoil and conflict over jobs, spending, and other issues that are all tangled up with infrastructure. I can't imagine this getting a lot better within the next year.
6. Ocean shipping. With the Panama Canal expansion proceeding on time and on budget, look for continued expansion and retrofitting at Gulf and East Coast ports in order to accommodate the new post-Panamax ships. Many industry observers believe we will also see port expansion in the Caribbean, where large ships will be unloaded and their loads dispatched on smaller vessels to various U.S. ports.
7. Security. Efforts to tighten security in the supply chain will continue, but the idea of guaranteeing that every package and every container is safe boggles the mind. It will be impossible to plug every leak, but the government and carriers will likely scramble to do so every time one develops.
8. The green movement. We can expect to see continuing efforts by shippers, carriers, and service providers to store, handle, and transport goods in environmentally responsible ways. These will not always be the least expensive methods in terms of capital outlay, but they will pay off in the long run.
9. Increased truck weight limits. Many shippers and carriers back an initiative that would increase truck weight limits on certain roads to 97,000 pounds from 80,000 pounds for vehicles equipped with six axles, rather than the usual five. Truck size would not be affected, but the extra axle would enable the vehicle to handle the additional weight without any negative effects on highway infrastructure, safety, fuel costs, or the environment. (In fact, there is strong evidence that just the opposite would be true.) The Senate recently approved higher limits for Vermont and Maine, where tests have been under way, but the hope is that each state will be given the option to increase weight limits on its own portion of the interstate highway system.
10. The election. We can expect action on infrastructure, the new Keystone XL pipeline project, and other important supply chain initiatives to be delayed until after the November election. In spite of the need to move swiftly on some of these issues, Congress will almost certainly place the election agenda ahead of that of the supply chain.
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 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.