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.
To hear shippers tell it, third-party logistics service providers (3PLs) need to come to the table with fresh and innovative ideas they could proactively implement to improve service levels, response times, and overall efficiencies.
To hear third-party logistics providers tell it, shippers need to open their upstream organizational channels so 3PLs can glean the strategic intelligence they need to proactively implement fresh and innovative ideas.
It's the logistics world's version of "cognitive dissonance." And while it hasn't kept freight from moving, it has become a source of frustration on both sides.
In the 2010 edition of the annual "Third Party Logistics Study" by the noted academic C. John Langley Jr. with Capgemini Consulting, the Swiss 3PL Panalpina, and the U.K. publication eyefortransport, only 68 percent of shippers surveyed said their 3PL partners were delivering "new and innovative ways" to improve logistics effectiveness. By contrast, 95 percent of 3PLs said they were bringing new ideas to the shipper relationship. Despite the apparent disconnect, nearly 90 percent of shippers said they were generally happy with their 3PL relationships.
Two years later, some shippers say little has changed. Speaking on a panel earlier this month at the Georgia Logistics Summit in Atlanta, Mark Holifield, The Home Depot Inc.'s senior vice president, global supply chain, declared that 3PLs "need to rise to the challenge to bring real value and solutions" to shippers.
Holifield is not alone in that assessment. An executive of a large consumer products manufacturer, who asked not to be identified, said at the conference, "we're looking to 3PLs to bring new ideas to the relationship. But innovation has been lacking from the 3PL space."
Both executives said they take pains to bring their 3PLs into the strategic loop. The consumer products executive said the company's senior management meets regularly with high-level 3PL counterparts and provides a 23-point checklist that outlines its strategy for its 3PL partners. Holifield said Home Depot annually holds two-day meetings with its leading 3PL partners to discuss strategy and execution.
A different view
Not surprisingly, 3PLs take a different view. In a white paper issued late last year, Scranton, Pa.-based Kane is Able Inc. said 3PLs understand the consequences of broad strategic decisions because of their experience working in and around the customer's business, yet shippers don't capitalize on the insights the providers can offer. Shippers "often don't leverage this understanding, and limit 3PL involvement to execution, not problem solving," according to the Kane paper.
The paper cited an example of a large consumer goods company that designed a point-of-purchase display that initially took 28 hours to assemble and was inefficient to ship. The firm's 3PL—which the paper did not identify—then suggested changes that would cut assembly times in half and would improve the truck loading process for better cube utilization, all the while preserving the basic look of the display.
The changes, which were adopted, saved the shipper hundreds of thousands of dollars, according to the paper. "But these dollars could have been saved from the outset with a zero investment by inviting a 3PL representative to participate in early-stage meetings," the paper said.
The solution, according to the Kane paper, lies in more widespread implementation of the "vested outsourcing" model developed several years ago by the University of Tennessee's Center for Executive Education. Under the model, a contract between a shipper and service provider is structured to clearly articulate the relationship's objectives and the mutual rewards for achieving them. The goal is to give the provider the freedom to determine the best way to solve the customer's problems. To do that, the shipper must invite the 3PL to embed one or more of its employees at a customer's designated site.
"An onsite relationship manager 'embedded' within the client is a good start for building a stronger relationship and can lead to better results from the 3PL," supply chain guru Kate Vitasek, a major proponent of the vested outsourcing concept, said in the Kane white paper. "There's a fear factor that must be overcome in relation to sharing forward-looking plans. But companies that have invested to become more strategically and structurally aligned with their partners are seeing the benefits of that investment."
Roadblocks to change
Shippers may say they want their 3PLs to offer innovative solutions, but as David Howland, vice president of land transport services for APL Logistics, has seen, the shipper's own organization often resists the kinds of changes 3PLs propose.
Howland once suggested to a customer, a U.S.-based manufacturer, that it could save about $300 per southbound container by utilizing a new route that linked Los Angeles and Mexico City through Mexicali, located near the U.S. border and a relatively short hop from Mexico's capital. No longer would the customer need to use the traditional southbound gateway of Laredo, Texas, which would require a circuitous move east before heading into Mexico.
But Howland ran into a roadblock trying to convince the shipper's Mexican employees to execute the strategy because it resulted in a change in the way traffic would be cleared and handled once it entered Mexico. After much back and forth, he brokered a deal where the two geographies would split the $300-per-container savings.
Howland said APL Logistics' strategy could have been implemented more quickly and cleanly if he could have proposed it to the customer's top executives instead of going through the shipping department. And it is not an isolated case, he said. Many traffic departments are resistant to change because it could impact their jobs and, in Howland's words, "disrupt their world."
In an e-mail to DCVELOCITY, Howland said, "we had to find a way to break through their current thinking to find a way to satisfy all parties." At some shippers, he added, "there is a layer of protectionism of a group, department, or individual that keeps you from getting to what would ultimately be a better solution for the customer, and you have to keep working to find a way around or through that roadblock to success."
Third-party logistics executives know that when it comes to this issue, they need to tread lightly for fear of angering the customers that are their bread and butter. "Why would I question the customer's motives?" asked Jim Butts, senior vice president of C.H. Robinson Worldwide, Inc., a major 3PL. "Our customers are really smart and they make rational decisions. We have to assume that what they do in this area is a rational decision."
Butts surmises that shippers may not want to let 3PLs get too close out of concern that they will lose the objectivity that comes with being a third party. He also said that the reason may be as basic as "us not being welcome in someone else's organization, because it is someone else's organization."
Still, Butts doesn't believe 3PLs like C.H. Robinson are cast out in the wilderness with virtually no visibility into the strategies of their customers. "I don't think we are on the outside looking in," he said.
States across the Southeast woke up today to find that the immediate weather impacts from Hurricane Helene are done, but the impacts to people, businesses, and the supply chain continue to be a major headache, according to Everstream Analytics.
The primary problem is the collection of massive power outages caused by the storm’s punishing winds and rainfall, now affecting some 2 million customers across the Southeast region of the U.S.
One organization working to rush help to affected regions since the storm hit Florida’s western coast on Thursday night is the American Logistics Aid Network (ALAN). As it does after most serious storms, the group continues to marshal donated resources from supply chain service providers in order to store, stage, and deliver help where it’s needed.
Support for recovery efforts is coming from a massive injection of federal aid, since the White House declared states of emergency last week for Alabama, Florida, Georgia, North Carolina, and South Carolina. Affected states are also supporting the rush of materials to needed zones by suspending transportation requirement such as certain licensing agreements, fuel taxes, weight restrictions, and hours of service caps, ALAN said.
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
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.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.