In the 1980s, the wind of change blew through the transportation industry in the form of deregulation. Thirty-five years later, more deregulatory moves are afoot.
Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.
Consider the extent to which your world has changed in the past 35 years. In 1980, you still did most of your banking with a teller, not an automated teller machine, and you certainly didn't do it online. In fact, you didn't even know what "online" meant—to say nothing of terms like "Internet" and "World Wide Web." Your desk didn't have a computer. Your phone was attached to the wall by a cord. If you came across a person with a cell phone, that person was no doubt quite wealthy and had the oversized biceps required to lug around one of those brick-sized "handhelds." Forget e-mail; facsimile machines were all the rage.
In the logistics world, pen and paper ruled. The emerging game-changing technology was the bar code. And it was a wonder indeed: Just point a beam of light at a package's shipping label and, boom, you knew everything about its contents, origin, and destination.
Logistics operations, though, were about to change and in a very big way, especially with respect to freight transportation. In 1980, Congress largely deregulated the trucking business with the Motor Carrier Act. Less than 24 months later, the rail industry was deregulated via the Staggers Rail Act.
The debate over the merits of deregulation went on for years. In the early days, opponents were both numerous and vocal. They decried the adverse effects on their companies and the economy at large, while bemoaning the loss of the price protection they had enjoyed under the Interstate Commerce Commission. They weren't entirely off base: Freeing motor carriers to compete on price and service resulted in an astounding number of casualties. Consider that of the top 200 motor carriers in the U.S. in 1980 (based on revenue), just five were still in business 15 years later.
Yet as time passed, the opposition voices grew fainter. Today, most acknowledge that deregulation was a very good thing. More motor carriers succeeded than failed. The rail industry consolidated and got itself back on solid financial ground. Shippers saw rates stabilize and service improve.
Still, even all these years later, there is more that can be done. Both the trucking and rail industries remain hobbled by regulations that, while profoundly less onerous than their pre-1980 counterparts, still keep carriers from operating at peak efficiency.
Two initiatives aimed at remedying the problem have been in the news lately. First, on June 10, the House of Representatives passed a $55.3 billion appropriations bill that includes language allowing twin 33-foot trailers to operate nationwide on the Interstate Highway System. Although the measure must still be reconciled with a Senate version of the bill, the momentum favors advocates of wider use of the twins, often referred to as "pups."
On the same day the House passed its version of the appropriations bill, the Transportation Research Board (TRB) issued a report, sponsored by the Department of Transportation, finding that policies designed to protect so-called captive rail shippers—businesses that lack economic alternatives to the railroads or in some cases, a single railroad—are "not working," and that current dispute resolution procedures must be reformed so shippers have adequate redress for their complaints over rate gouging. The TRB recommends development of a new formula that compares the disputed rates with those charged in competitive rail markets for comparable shipments. This would enable the Surface Transportation Board, the federal agency that regulates railroads, to more efficiently determine if a shipper paying an unusually high rate is entitled to some form of relief, according to the report.
While neither of these initiatives will unleash the gale force-level winds of change brought on by deregulation in the 1980s, they nonetheless bear watching. They are, at minimum, a pleasant and refreshing breeze to savor in this summer of 2015.
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.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.