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.
CSA 2010, the federal government's far-reaching initiative to remove unsafe commercial drivers from the nation's roads, has rolled into its second full year of operation generating as much controversy, frustration, and hope as it did in its first.
Implemented by the Department of Transportation's Federal Motor Carrier Safety Administration (FMCSA), CSA uses a complex methodology to rate the nation's motor carriers on safety. Short for "Compliance, Safety and Accountability," CSA incorporates a "Safety Measurement System," or SMS, that assesses a trucker's on-road performance over the most recent two-year period and indicates whether the assessment should prompt the agency to dig deeper into the carrier's operational fitness.
The SMS includes seven "Behavior Analysis and Safety Improvement Categories" known as "BASICs." Embedded in the seven categories are more than 640 infractions that a driver and vehicle can be cited for. CSA replaces SafeStat, the government's prior safety measurement system.
The SMS database is populated by data generated from roadside inspections triggered by infractions such as speeding on an interstate or state highway. A speeding violation gives law enforcement "probable cause" to pull a truck over and conduct what is known as a walk-around inspection of the vehicle and driver. Any infractions that are then found will accumulate as points on a company's safety "scorecard," which is updated monthly.
Should the point total exceed the FMCSA's threshold for safety compliance, government inspectors will conduct an in-house audit of the company's operations. From there, a determination will be made if the driver is fit to continue behind the wheel.
Ripple effects
CSA's impact, which is relatively muted for now, will likely intensify in the years to come. Many experts believe it will lead to as many as 10 percent of licensed commercial truck drivers being removed from their cabs or quitting the business altogether, exacerbating what is expected to be a growing shortage of qualified drivers to move the nation's growing freight volumes. (There are currently between 3.5 million and 4 million licensed commercial drivers.) As a result, shippers and freight brokers are bracing for a multiyear rise in freight rates as the supply of drivers and rigs lags behind the projected demand for freight services.
In 2012, rates are forecast to rise between 5 and 12 percent, depending on whether the carrier is a truckload or less-than-truckload hauler, the type of service being provided, and if a user is under contract or relying on the spot market to secure a freight hauler.
CSA could also change the calculus between truckers and the insurance companies that underwrite their operations because the scores are expected to become an important criterion in determining premiums and coverage levels. And it could expose shippers and freight brokers to enormous legal risks in the event of a fatal or serious accident involving a carrier they've selected and if a jury finds that they failed to give CSA scores sufficient weight when evaluating the driver and carrier.
Concerns over legal liability seem to be playing a role in carrier choice. A late 2011 shipper survey conducted by Morgan Stanley & Co. found that 55 percent of those polled were afraid to use a carrier if even one of its seven BASIC scores came in above the CSA threshold. If those shipper attitudes become more entrenched, carriers with a positive safety history but a CSA-related ding or two may be blackballed and pushed out of business, according to the program's critics.
A work in progress
CSA is considered a "work in progress" by critics and supporters. But no one expects it to be rolled back, and whether it gets improved to its critics' satisfaction is an open question.
In addition, even those with serious doubts about the process still endorse the program's overarching objective of yanking the bad actors off the highway stage.
"Even the carriers that don't like CSA know it's important to get unsafe drivers off the road. As long as bad drivers are out there, it is bad for the industry," said Jim Angel, a former driver, fleet owner, and manager who is now product manager for PeopleNet Communications Corp., a Minnetonka, Minn.-based company that provides automated fleet monitoring services and is active in CSA compliance work on behalf of carrier clients.
Angel, a supporter of CSA, said it will play a critical role in keeping the roads safer. However, he is sensitive to the worries of shippers and third-party logistics service providers (3PLs) that a jury could find them "vicariously liable" for damages resulting from an accident involving a carrier that they thought was in good safety stead.
"I agree with those who say that this sucks," he said. "But our legal system has brought us to this point."
In e-mailed comments to DC Velocity, an FMCSA spokeswoman said the agency's mission "does not include providing business direction to private industry." She added that legal issues such as vicarious liability and negligent hiring "are outside of the agency's area of responsibility."
Ignoring the scores
One large 3PL, Dallas-based Transplace, is coping with CSA by—on the advice of its attorneys—largely ignoring the scores in evaluating its carriers' safety record. Tom Sanderson, Transplace's president and CEO, and a leading critic of the CSA, said the company could still face legal risks even if it uses a carrier's scorecard as tabulated by the SMS.
Sanderson said Transplace instead relies on a "disclaimer" shown on FMCSA's website stating that carrier data shown in the SMS should not be used to "draw conclusions about a carrier's overall safety condition." The disclaimer says that unless a motor carrier in the system has received an "unsatisfactory" rating or has been ordered by FMCSA to discontinue operations, the carrier is "authorized to operate on the nation's roadways." A carrier with no rating is considered safe to operate, the agency has said in the past.
Sanderson said the FMCSA website's language provides sufficient legal protection for Transplace to go about its business independent of the CSA scorecarding quagmire—which, in Sanderson's eyes, is a good thing.
Angel of PeopleNet said that while he understands the frustration felt by Sanderson and others, he takes issue with that approach. He warned that their logic will be of little value if plaintiffs' attorneys pursue a shipper or broker for damages in the wake of a truck-related accident. "The first thing a plaintiff's lawyer will look at is the CSA scores, then the driver's history and his cell phone records," he said.
He added that a courtroom with a jury sympathetic to the plight of a victim's family is the last place a shipper or broker wants to be arguing the statistical validity of CSA.
Angel advised carriers to work within the CSA guidelines by focusing on their most frequent and severe infractions, rather than addressing all of their violations. In vetting their carriers, shippers and 3PLs should concentrate on what carriers are doing to address those primary violations, he added.
Rating system under fire
Much of the criticism leveled at the CSA centers on the way it is currently administered. Sanderson, for one, said the CSA methodology rates carriers in an arbitrary manner and is misleading and incomplete. According to Sanderson and other critics, only 12 percent of 797,000 companies regulated by the Department of Transportation (DOT) were graded as of mid-December. Of those graded, about half were placed under what the agency calls an "alert" status in one or more of the BASIC categories. An alert under BASIC means the FMCSA could target a trucker for what the agency calls a "safety intervention" into the carrier's operations.
"You mean to tell me that half of the carriers under DOT authority that have been graded under CSA are unsafe to operate?" he asked.
Perhaps CSA's most grievous shortfall in Sanderson's eyes is that it frames its findings in relative terms by comparing carriers against each other. "We think safety is an absolute measure, not a relative one," he said. "A carrier is either safe to operate on the roads, or it isn't."
Sanderson, who heads a group called the Alliance for Safe, Efficient and Competitive Truck Transportation, sent a letter to Congress co-signed by 67 companies asking lawmakers to confirm if the FMCSA's publication of what the group called "an arbitrary statistical ranking" was indeed Congress's intent in fostering sound national transportation policy. So far, there has been no reply from Capitol Hill.
The FMCSA defends its progress to date. The agency's spokeswoman said the FMCSA has collected enough roadside data on approximately 200,000 DOT-licensed carriers to "assess" them under at least one BASIC. "Those carriers represent nearly 40 percent of all active carriers but have been involved in 93 percent of the crashes reported nationwide," she said.
The FMCSA spokeswoman added that those looking to investigate a carrier's safety record should also rely on the agency's "Safety and Fitness Electronic Records System," or SAFER, which officially rates a carrier based on its most recent on-site compliance review, as well as the agency's "License & Insurance Website," which confirms that a carrier has active operating authority and adequate insurance.
The agency said that by combining all three resources, users can get an "informed, current, and comprehensive picture of a motor carrier's safety and compliance standing with FMCSA," the spokeswoman wrote in the e-mail. She said the agency has cautioned users not to rely solely on CSA/SMS data to judge a carrier's fitness to operate. The information is "only one of many possible pointers that the public can use to assess a motor carrier's safety performance record," she wrote.
A hybrid approach
C. Thomas Barnes, president of Con-way Multimodal, the brokerage arm of Con-way Inc., takes what could be called a hybrid approach toward CSA. His company monitors carriers' performance under the CSA BASICs to ensure the vendors remain within the acceptable thresholds. However, the CSA scorecard is just one part of what Barnes called a "weighted average" calculation in determining if a carrier is fit for service. Other factors include historical performance, meeting contractual commitments, financial viability, strategic capabilities, and perhaps most critical, how a carrier addresses defects, he said.
"I would need to get a lot of additional information [beyond the CSA scores] before I choose not to use a carrier," said Barnes, whose company buys about $150 million worth of transportation services outside of the Con-way fleet each year.
Barnes is also a strong backer of CSA. "I think it has very positive benefits. If used the right way, it can drive continuous improvement in our industry," he said.
Compliance at a cost
Like Barnes, Joshua Dolan, director of global logistics and customs compliance for Philadelphia-based auto parts and service giant The Pep Boys - Manny, Moe & Jack, considers CSA scores to be a "component" of the carrier selection process. Pep Boys also uses other criteria and is not shy about dropping a carrier that doesn't measure up and lacks a way to get up to speed, according to Dolan.
"If we have companies that are not meeting our requirements and can't provide us with plans to improve, we cut them," said Dolan. Almost all of the carriers used by The Pep Boys are large-scale operations, with more than 500 power units in their fleets.
Dolan advises companies to use outside services like Carrier411, a Norcross, Ga.-based provider that monitors CSA scores and creates quarterly alerts for customers to keep track of carrier performance. Separate from that, Dolan advises supply chain players to stay informed about carrier safety issues and put an increased focus on sharing information before an incident occurs.
Dolan said CSA will force shippers and 3PLs to care more about carrier choice than they have in the past, adding that "there is an expense associated with that." Safe and experienced drivers will be able to command higher salaries and benefits, and driver wages in general are likely to rise from current levels, he said.
"It will become a strategic goal on the part of companies to keep drivers," he said. "Drivers will be picking and choosing companies, not the other way around."
Unlike others, however, Dolan believes CSA is not a positive force but an unwarranted intrusion into industry affairs by bureaucrats who purport to know more about the trucking industry than the companies they govern.
"The industry's safety record is as good as it's ever been. Carriers are already doing a good job of managing their risk. I don't necessarily think that more bureaucracy was needed," he said.
For the past seven years, third-party service provider ODW Logistics has provided logistics support for the Pelotonia Ride Weekend, a campaign to raise funds for cancer research at The Ohio State University’s Comprehensive Cancer Center–Arthur G. James Cancer Hospital and Richard J. Solove Research Institute. As in the past, ODW provided inventory management services and transportation for the riders’ bicycles at this year’s event. In all, some 7,000 riders and 3,000 volunteers participated in the ride weekend.
Photo courtesy of Dematic
For the past four years, automated solutions provider Dematic has helped support students pursuing careers in the STEM (science, technology, engineering, and mathematics) fields with its FIRST Scholarship program, conducted in partnership with the corporate nonprofit FIRST (For Inspiration and Recognition of Science and Technology). This year’s scholarship recipients include Aman Amjad of Brookfield, Wisconsin, and Lily Hoopes of Bonney Lake, Washington, who were each awarded $5,000 to support their post-secondary education. Dematic also awarded $1,000 scholarships to another 10 students.
Motive, an artificial intelligence (AI)-powered integrated operations platform, has launched an initiative with PGA Tour pro Jason Day to support the Navy SEAL Foundation (NSF). For every birdie Day makes on tour, Motive will make a contribution to the NSF, which provides support for warriors, veterans, and their families. Fans can contribute to the mission by purchasing a Jason Day Tour Edition hat at https://malbongolf.com/products/m-9189-blk-wht-black-motive-rope-hat.
MTS Logistics Inc., a New York-based freight forwarding and logistics company, raised more than $120,000 for autism awareness and acceptance at its 14th annual Bike Tour with MTS for Autism. All proceeds from the June event were donated to New Jersey-based nonprofit Spectrum Works, which provides job training and opportunities for young adults with autism.
The logistics process automation provider Vanderlande has agreed to acquire Siemens Logistics for $325 million, saying its specialty in providing value-added baggage and cargo handling and digital solutions for airport operations will complement Netherlands-based Vanderlande’s business in the warehousing, airports, and parcel sectors.
According to Vanderlande, the global logistics landscape is undergoing significant change, with increasing demand for efficient, automated systems. Vanderlande, which has a strong presence in airport logistics, said it recognizes the evolving trends in the sector and sees tremendous potential for sustained growth. With passenger travel on the rise and airports investing heavily in modernization, the long-term market outlook for airport automation is highly positive.
To meet that growing demand, the proposed transaction will significantly enhance customer value by providing accelerated access to advanced technologies, improving global presence for better local service, and creating further customer value through synergies in technology development, Vanderlande said.
In a statement, Nuremberg, Germany-based Siemens Logistics said that merging with Vanderlande would “have no operational impact on ongoing or new projects,” but that it would offer its current customers and employees significant development and value-add potential.
"As a distinguished provider of solutions for airport logistics, Siemens Logistics enjoys a first-class reputation in the baggage and air-cargo handling areas. Together with Vanderlande and our committed global teams, we look forward to bringing fresh impetus to the airport industry and to supporting our customers' business with future-oriented technologies," Michael Schneider, CEO of Siemens Logistics, said in a release.
The initiative is the culmination of the companies’ close working relationship for the past five years and represents their unified strength. “We recognized that going to market under a cadre of names was not helping our customers understand our complete turn-key services and approach,” Scott Lee, CEO of Systems in Motion, said in a release. “Operating as one voice, and one company, Systems in Motion will move forward to continue offering superior industrial automation.”
Systems in Motion provides material handling systems for warehousing, fulfillment, distribution, and manufacturing companies. The firm plans to complete a rebranded web site in January of 2025.
I recently came across a report showing that 86% of CEOs around the world see resiliency problems in their supply chains, and that business leaders are spending more time than ever tackling supply chain-related challenges. Initially I was surprised, thinking that the lessons learned from the Covid-19 pandemic surely prepared industry leaders for just about anything, helping to bake risk and resiliency planning into corporate strategies for companies of all sizes.
But then I thought about the growing number of issues that can affect supply chains today—more frequent severe weather events, accelerating cybersecurity threats, and the tangle of emerging demands and regulations around decarbonization, to name just a few. The level of potential problems seems to be increasing at lightning speed, making it difficult, if not impossible, to plan for every imaginable scenario.
What is it Mike Tyson said? Everyone has a plan until they get punched in the mouth.
It has never been more important to be able to pivot and adjust to challenges that can throw you off your game. The report I referenced—the “2024 Supply Chain Barometer” from procurement, supply chain, and sustainability consulting firm Proxima—makes the case for just that. The company surveyed 3,000 CEOs from the United Kingdom, Europe, and the United States and found that the growing complexities in global supply chains necessitate a laser-sharp focus on this area of the business. One example: Rightshoring, which is the process of moving business operations to the best location, means companies are redesigning and reconfiguring their supply chains like never before. The study found that large numbers of CEOs are grappling with the various subsets of rightshoring: 44% said they are planning to or have already undertaken onshoring, for instance; 41% said they are planning to or have undertaken nearshoring; 41% said they are planning to or have undertaken friendshoring; and 35% said they are planning to or have undertaken offshoring.
But that’s not all. CEOs are also struggling to deal with the rise of artificial intelligence (AI) and its application to business processes, the potential for abuse and labor rights issues in their supply chains, and a growing number of barriers to their companies’ decarbonization efforts. For instance:
Nearly all of those surveyed (99%) said they are either using or considering the use of AI in their supply chains, with 82% saying they are planning new initiatives this year;
More than 60% said they are concerned about the potential for human or labor rights issues in their supply chains;
And virtually all (99%) said they face barriers to decarbonization, with 30% pointing to the complexity of the work required as the biggest barrier.
Those are big issues to contend with, so it’s no surprise that 96% of the CEOs Proxima surveyed said they are dedicating equal (41%) or more time (55%) to supply chain issues this year than last year. And changing economic conditions are adding to the complexity, according to the report.
“As inflation fell throughout last year, there were glimmers of markets stabilizing,” the authors wrote. “The reality, though, has been that global market dynamics are shifting. With no clear-set position for them to land in, CEOs must continue to navigate their organizations through an ever-changing landscape. Just 4% of CEOs foresee the amount of time spent on supply chain-related topics decreasing in the year ahead.”
Simon Geale, executive vice president and chief procurement officer at Proxima, added some perspective.
“It’s fair to say that the complexities of global supply chains continue to have CEOs around the world scratching their heads,” he wrote. “The results of this year’s Barometer show that business leaders are spending more and more time tackling supply chain challenges, reflecting the multiple challenges to address.”
Perhaps the extra focus on supply chain issues will help organizations improve their ability to roll with the punches and overcome resiliency challenges in the year ahead. Only time will tell.
Investing in artificial intelligence (AI) is a top priority for supply chain leaders as they develop their organization’s technology roadmap, according to data from research and consulting firm Gartner.
AI—including machine learning—and Generative AI (GenAI) ranked as the top two priorities for digital supply chain investments globally among more than 400 supply chain leaders surveyed earlier this year. But key differences apply regionally and by job responsibility, according to the research.
Twenty percent of the survey’s respondents said they are prioritizing investments in traditional AI—which analyzes data, identifies patterns, and makes predictions. Virtual assistants like Siri and Alexa are common examples. Slightly less (17%) said they are prioritizing investments in GenAI, which takes the process a step further by learning patterns and using them to generate text, images, and so forth. OpenAI’s ChatGPT is the most common example.
Despite that overall focus, AI lagged as a priority in Western Europe, where connected industry objectives remain paramount, according to Gartner. The survey also found that business-led roles are much less enthusiastic than their IT counterparts when it comes to prioritizing the technology.
“While enthusiasm for both traditional AI and GenAI remain high on an absolute level within supply chain, the prioritization varies greatly between different roles, geographies, and industries,” Michael Dominy, VP analyst in Gartner’s Supply Chain practice, said in a statement announcing the survey results. “European respondents were more likely to prioritize technologies that align with Industry 4.0 objectives, such as smart manufacturing. In addition to region differences, certain industries prioritize specific use cases, such as robotics or machine learning, which are currently viewed as more pragmatic investments than GenAI.”
The survey also found that:
Twenty-six percent of North American respondents identified AI, including machine learning, as their top priority, compared to 14% of Western Europeans.
Fourteen percent of Western European respondents identified robots in manufacturing as their top choice compared to just 1% of North American respondents.
Geographical variances generally correlated with industry-specific priorities; regions with a higher proportion of manufacturing respondents were less likely to select AI or GenAI as a top digital priority.
Digging deeper into job responsibilities, just 12% of respondents with business-focused roles indicated GenAI as a top priority, compared to 28% of IT roles. The data may indicate that GenAI use cases are perceived as less tangible and directly tied to core supply chain processes, according to Gartner.
“Business-led roles are traditionally more comfortable with prioritizing established technologies, and the survey data suggests that these business-led roles still question whether GenAI can deliver an adequate return on investment,” said Dominy. “However, multiple industries including retail, industrial manufacturers and high-tech manufacturers have already made GenAI their top investment priority.”