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.
The nation's first quarter gross domestic product contracted by 0.7 percent. But the downturn was explained away by such anomalies as bad weather, slowdowns at West Coast ports, the impact of declining oil prices on the industry's capital spending patterns, and a strong U.S. dollar that weighed on exports.
Winter has turned to late spring, and the backlogs caused by the labor-management disturbance at 29 West Coast ports have largely been cleared. However, the economic picture, at least as painted by the recent spate of transport data, remains distinctly clouded. For the first time in several years, pundits skilled at finding silver linings in any cloud are leavening their analyses with sobering comments about the near-term outlook.
The American Trucking Associations' (ATA) monthly truck tonnage index, a closely watched measure of shipping and economic activity, declined 3 percent in April on a sequential, seasonally adjusted basis, following a 0.4-percent upward revision in the March data over February. Compared to April 2014, the index rose 1 percent on a seasonal basis, down from a 4.2 percent gain in March. The April numbers represent the smallest year-on-year gain in more than two years. Through April, tonnage is off 5.3 percent from its January high, the group said.
The data led Bob Costello, ATA's normally upbeat chief economist, to wax almost negative about the current quarter. Noting that truck shipping is a harbinger of broad economic activity, Costello said that unless tonnage recovers in May and June, GDP growth "will likely be suppressed in the second quarter." He also cautioned that any "significant jump from the first quarter is looking more doubtful." May data will be released around mid-June.
The segments of the trucking business that rely on strong freight traffic to drive demand for their products are also seeing a taper. Orders in May for medium- to heavy-duty trucks fell 8 percent from May 2014 levels, according to ACT Research. Net orders—orders minus cancellations—for Class 8 rigs hit their lowest levels since September 2013, according to the group.
Truck-trailer net orders in April declined 19 percent from March and 30 percent year over year, according to FTR, a consultancy. Orders for dry-van trailers, the most common type, were down 32 percent from March levels, with new builds down 6 percent sequentially due to a shrinking number of new-build slots available, FTR said. The firm said the numbers, on balance, were "disappointing" and said they reflect a reluctance by fleet managers to commit to equipment deliveries amid a slowing economy and a moderating freight market.
Over on the rails, the situation is spotty. Intermodal trailer and container traffic through April was up 3 percent year over year, according to the Intermodal Association of North America (IANA). International container volume led the way with a 4.2-percent gain, part of it due to a snapback from suppressed first-quarter volumes, which were due to the labor issues at West Coast ports. For the week ending May 23, intermodal traffic was up 4.3 percent from the year-earlier period, according to the Association of American Railroads (AAR). But carload volume, which is separate from intermodal, fell 9.1 percent in the May period, and is down 7.6 percent year over year, AAR data show.
Larry Gross, a senior analyst at FTR, said a new normal of sorts may be emerging in intermodal, with long-term growth settling at between 4 and 5 percent. Gross said he was most worried about the weak carload numbers because they extend beyond coal demand—which has its unique problems due to stiff competition from natural gas and tough federal environmental regulations on mining activity—to other commodities. "The declines are very widespread, with only autos showing a small increase," Gross said in an e-mail.
At the Port of Los Angeles, the nation's busiest seaport, containerized volumes, measured by 20-foot equivalent units (TEU), in April dropped 6.1 percent from the same period in 2014. Loaded container traffic dropped 11.8 percent year over year, while empty equipment, which accounts for a much smaller component of the overall total, increased by 12 percent, the port said.
Perhaps more tellingly from the standpoint of macroeconomic activity, there was surprisingly little problem clearing out the backlogs that built up during a nine-month impasse between dockworkers and ship management. The docks were swept at a much faster pace than originally expected, a reflection that dockworkers and management weren't overly burdened by fresh traffic simultaneously hitting the 29 West Coast gateways.
"I had expected to see more impact on the volume when the western ports cleared out, but if you blinked you missed it," said Rosalyn Wilson, an economist and author of the annual "State of Logistics Report," which will be released June 23. "The system was definitely not at capacity and it absorbed the extra load easily and quietly and without high rates."
GLASS HALF FULL?
At this time, folks are willing to give economic conditions the benefit of the doubt. The Federal Reserve today reported that economic activity in its 12 reporting districts expanded from early April to late May. Various economists expect the benefits of lower fuel prices to finally filter through the economy in the form of increased consumer spending, taking the pressure off an industrial sector that has carried much of the economic ball in the past couple of years but may now be out of gas. Truckload and less-than-truckload (LTL) rates are expected to continue rising, though the upward moves may have as much, if not more, to do with constrained supply than with percolating demand.
Wilson said she stands by her forecast from a year ago that the momentum which began in the second quarter of 2014 would carry forward through the balance of this year. The 2015 recovery is "taking time to build up steam," due to the dual effects of the strong dollar, which makes U.S. exports less competitive in world markets, and a still-stuttering global economy, Wilson said. But she sees the domestic economic picture brightening, with imports on the rise and consumers boosting their spending. "I see a couple of things that might trip us up, but generally I am still quite positive," she said.
Transport experts emphasize that the current numbers should be taken with a grain of salt. Second-quarter 2015 data will face tough comparisons, because the industry snapped back so strongly starting in the same period in 2014 following a brutal winter, they said. "The traditional summer slump arrived early this year," said Don Ake, FTR's vice president of commercial vehicles, commenting on the subpar truck-trailer data for April. "This is not surprising, considering the huge amount of orders placed late last year and the big backlogs." About 340,000 trailer units have been ordered in the past 12 months, creating a "still-healthy backlog," albeit 10 percent below the peak hit in January, Ake said.
As for truck orders, Jonathan Starks, the firm's director of transportation analysis, said that after a surge in the second half of 2014, activity is moderating to traditional levels. "So far it is following the typical ordering trend of slowing as we move into the summer months," Starks said. "If orders slow a lot further, say (by) low teens or (high) single digits, that would start to tell us something."
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.