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.
Large accounts are a less-than-truckload (LTL) carrier's bread and butter, and with about 55 percent of its $3.4 billion
in annual revenue coming from big users, Con-way Freight is no exception.
But for the Ann Arbor, Mich.-based carrier, pricing those accounts had come to resemble the application of peanut butter.
Historically, rates have been slathered evenly across a large piece of bread, with little thought as to whether the pricing on
any given lane made sense for the shipper or the carrier.
To change the spread, Con-way Freight in late 2012 launched what it coined its "360" program to introduce lane-based
pricing to its top 360 accounts that bring in more than half of its business. Framed as a network optimization initiative,
"360" was designed to bring together both the shipper and the carrier to analyze the unique dynamics of each lane and use the
results to price Con-way's services on that lane. The rates would be loaded into a shipper's transportation management system
(TMS), and the technology would determine where Con-way stood in relation to its rivals.
As Con-way sees it, the approach gives shippers deeper insight into their rate structure with the carrier and provides the
carrier with greater clarity on how profitable—or unprofitable—a customer's freight is on a particular lane and if that business
is worth shedding.
An ancillary, though critical, benefit from the program, in Con-way's eyes, comes from transforming a traditionally
transactional relationship into a strategic exercise. The program does this by encouraging collaboration between the parties
and making the shipper—which is allocating time and resources to undertake the effort—put skin in the game.
Stephen L. Bruffett, executive vice president and chief financial officer of Con-way Inc., Con-way Freight's parent, said last
month that the LTL unit will "revisit" the program with its top 360 accounts during 2014 while also extending it to its mid-size
customer tier. Con-way has said the program will impact about $900 million in revenue from the mid-tier segment.
"It's the same thing we've been doing. We're just applying it to a larger piece of our customer base," Bruffett told an annual
transportation and logistics conference held by investment firm Stifel, Nicolaus & Co.
Lane-based pricing is a familiar and often-effective concept in the truckload world because it is relatively easy to price
loads moving point-to-point without intermediate stops. It is a trickier exercise for LTL because of the added complexity of
breakbulk terminals that make load balances in general more difficult to calibrate.
William Wynne, Con-way Freight's vice president of marketing, acknowledged that the program takes Con-way Freight out of its
comfort zone. "What we feel we are doing is fairly unique," he said.
Bruffett told the Stifel conference that the program has been successful and is gaining momentum. Yet data points to quantify
its success have been hard to come by, at least for those outside the company.
Con-way executives shed little light on the program's status during the company's mid-February conference call with analysts to
discuss fourth-quarter and full-year 2013 results. W. Gregory Lehmkuhl, Con-way Freight's president, may have come the closest to
spilling the beans by saying that "we anticipate our revenue management activities to roughly offset all of our investment costs"
and that the revenue increases along with efficiency gains "should provide our year-over-year profit improvement."
WEAK FOURTH QUARTER
Con-way can use all the help it can get. In mid-January, it took the unusual and unwelcome step of warning the investment
community ahead of time that fourth-quarter results would come in well below prior estimates. The company blamed the shortfall
on higher-than-expected expenses at Con-way Freight for cargo claims and employee benefits, bad weather in December, and a hit
at its Menlo Worldwide Logistics global logistics and supply chain management unit due to losses at two new warehousing accounts
and a write-off of bad debt following a bankruptcy filing by a third customer. Con-way would not identify any of the customers.
For the year, revenues fell to $5.4 billion from $5.5 billion, due in part to the fourth-quarter revenue drop at the logistics
unit. Operating income in 2013 fell year-over-year by $20 million to $208.9 million, due to a $6 million income drop at Menlo, the
company said. Con-way Freight posted a 10-percent year-over-year gain in fourth-quarter operating income, well below the 50-percent
increase it had telegraphed to analysts.
"These results were not indicative of the overall progress made in 2013 to position our company for long-term success, notably
at Con-way Freight and Menlo Logistics," Douglas W. Stotlar, Con-way's president and CEO, said when the results were released in
early February.
Throughout 2013, Con-way's revenue per hundredweight—a key metric of its pricing power and yield management efforts—
declined in each quarter relative to the same period in 2012. In addition, Con-way Freight's fourth-quarter tonnage rose by 1
percent year-over-year, below that of rivals Old Dominion Freight Line Inc., ABF Freight Systems Inc., and Saia Corp.
Benjamin J. Hartford, transportation analyst at Robert W. Baird & Co., an investment firm, said in a mid-January research note
that after two years of internal initiatives, there has been little progress made in improving Con-way Freight's margins. Hartford
added that management has done a poor job of communicating its expectations to the investment community.
Still, the analyst is bullish on the company's outlook, saying that the fourth-quarter weakness should not affect full-year
2014 results and that he expects an improving profit picture this year at the LTL unit.
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.
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.
Krish Nathan is the Americas CEO for SDI Element Logic, a provider of turnkey automation solutions and sortation systems. Nathan joined SDI Industries in 2000 and honed his project management and engineering expertise in developing and delivering complex material handling solutions. In 2014, he was appointed CEO, and in 2022, he led the search for a strategic partner that could expand SDI’s capabilities. This culminated in the acquisition of SDI by Element Logic, with SDI becoming the Americas branch of the company.
A native of the U.K., Nathan received his bachelor’s degree in manufacturing engineering from Coventry University and has studied executive leadership at Cranfield University.
Q: How would you describe the current state of the supply chain industry?
A: We see the supply chain industry as very dynamic and exciting, both from a growth perspective and from an innovation perspective. The pandemic hangover is still impacting decisions to nearshore, and that has resulted in a spike in business for us in both the USA and Mexico. Adding new technology to our portfolio has been a significant contributor to our continued expansion.
Q: Distributors were making huge tech investments during the pandemic simply to keep up with soaring consumer demand. How have things changed since then?
A: The consumer demand for e-commerce certainly appears to have cooled since the pandemic high, but our clients continue to see steady growth. Growth, combined with low unemployment and high labor costs, continues to make automation a good investment for many companies.
Q: Robotics are still in high demand for material handling applications. What are some of the benefits of these systems?
A: As an organization, we are investing heavily in software that will allow Element Logic to offer solutions for robotic picking that are hardware-agnostic. We have had success deploying unit picking for order fulfillment solutions and unit placing of items onto tray-based sorters.
From a benefit point of view, we’ve seen the consistency of a given operation improve. For example, the placement accuracy of a product onto a tray is far higher from a robotic arm than from a person. In order fulfillment applications, two of the biggest benefits are reliability and hours of operation. The robots don't call in sick, and they are happy to work 22 hours a day!
Q: SDI Element Logic offers a wide range of automated solutions, including automated storage and sortation equipment. What criteria should distributors use to determine what type of system is right for them?
A: There are a significant number of factors to consider when thinking about automation. In my experience, automation pays for itself in three key ways: It saves space, it increases the efficiency of labor, and it improves accuracy. So evaluating which of these will be [most] beneficial and quantifying the associated savings will lead to a “right sized” investment in technology.
Another important factor to consider is product mix. With a small SKU (stock-keeping unit) base, often automation doesn’t make sense. And with a huge SKU base, there will be products that don’t lend themselves to automation.
With any significant investment, you need to partner with an organization that has deep experience with the technologies that are being considered and … in-depth knowledge of the process that is being automated.
Q: How can a goods-to-person system reduce the amount of labor needed to fill orders?
A: In most order picking operations, there is a considerable amount of walking between pick faces to find the SKUs associated with a given order or set of orders. Goods-to-person eliminates the walking and allows the operator to just pick. I have seen studies that [show] that 75% of the time [required] to assemble an order in a manual picking environment is walking or “non-picking” time. So eliminating walking will reduce the amount of labor needed.
The goods-to-person approach also fits perfectly with robotic picking, so even the actual picking aspect of order assembly can be automated in some instances. For these reasons, [automation offers] a significant opportunity to reduce the labor needed to fulfill a customer order.
Q: If you could pick one thing a company should do to improve its distribution center operations, what would it be?
A: Evaluate. Evaluate the opportunities for improving by considering automation. In my experience, the challenge most companies have is recognizing that automation is an alternative. The barrier to entry is far lower than most people think!
Toyota Material Handling and its nationwide network of dealers showcased their commitment to improving their local communities during the company’s annual “Lift the Community Day.” Since 2021, Toyota associates have participated in an annual day-long philanthropic event held near Toyota’s Columbus, Indiana, headquarters. This year, the initiative expanded to include participation from Toyota’s dealers, increasing the impact on communities throughout the U.S. A total of 324 Toyota associates completed 2,300 hours of community service during this year’s event.
The PMMI Foundation, the charitable arm of PMMI, The Association for Packaging and Processing Technologies, awarded nearly $200,000 in scholarships to students pursuing careers in the packaging and processing industry. Each year, the PMMI Foundation provides academic scholarships to students studying packaging, food processing, and engineering to underscore its commitment to the future of the packaging and processing industry.
Truck leasing and fleet management services provider Fleet Advantage hosted its “Kids Around the Corner Foundation” back-to-school backpack drive in July. During the event, company associates assembled 200 backpacks filled with essential school supplies for high school-age students. The backpacks were then delivered to Henderson Behavioral Health’s Youth & Family Services location in Tamarac, Florida.
For the past seven years, third-party logistics service specialist 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.