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 leaders of the North American intermodal industry convened in sunny, steamy south Florida today to discuss what their industry can be, and what it can't.
It can be an alternative to over-the-road dry-van trucking, judging by data from consultancy FTR Associates. which estimates that 0.1 percent of all dry-van traffic is converted to intermodal each calendar quarter, a reflection of rail's reputation as a cleaner and more fuel-efficient transport mode, as well as shipper concerns over truck-driver shortages and never-ending road congestion.
But it is unlikely intermodal will ever supplant trucking in the budgets of shippers. Intermodal gets elevated in the conversation when oil prices rise and regulators and lawmakers appear to be clamping down on truck safety. However, the talk dies down when the opposite occurs. Today, diesel prices nationwide hover around $2.49 a gallon, the lowest level since June 2009 and far away from the $4-a-gallon-plus levels the conventional wisdom two or three years ago thought would be the case by now. In addition, Congress' 2014 decision to table a controversial provision in the Department of Transportation's governing the hours a driver must be idle before returning to the road has freed up capacity that would have otherwise been lost.
Larry Gross, senior consultant at FTR, told the Intermodal Association of North America's (IANA) annual meeting in Fort Lauderdale that Congress' actions effectively led to a 4- to 5-percent increase in truck capacity by allowing drivers and rigs more time on the road. That may explain why FTR pegs domestic intermodal traffic to grow just 1.6 percent in 2015, while international traffic, which has lagged somewhat recently, will rise by 6.3 percent.
For now, truck capacity is no longer in what Noel Perry, another FTR analyst, called "crisis mode." Like many observers, Perry sees the capacity crunch raging anew two or three years out, as the cost of increased government safety regulations puts many smaller fleets—the backbone of the U.S. truck fleet—out of business, and companies continue to struggle to find applicants who want to drive a truck.
What this means for intermodal is that while it makes great sense for resolving shipper-specific challenges, it does not auger a wholesale shift from truck, nor is it a panacea for the still-looming mother of all truck-capacity crunches. "We are a long ways away for truck capacity to be shifting to intermodal," Gross said.
That hasn't stopped the railroads from trying. William Clement, vice president, intermodal, for CSX Transportation, a unit of Jacksonville-based CSX Corp., said on a separate panel that CSX still "sees great opportunity for conversion from over-the-road (trucking), especially on the East Coast." Clement said intermodal accounts for up to half of CSX's overall growth. Tim Roulston, director, sales and wholesale intermodal for Canadian National Inc., the giant rail, said on the panel that CN would move relentlessly toward converting truck users because, frankly, that's what intermodal folk do. The fuel factor, Roulston said, is just one component of the strategy, and other qualities will be brought to the table to showcase intermodal's benefits. Intermodal accounts for about one-quarter of CN's traffic.
Shippers appearing on a panel with executives from CN, CSX, and Union Pacific Corp. said the intermodal supply chain, which includes dray drivers trucking goods to and from intermodal ramps, must focus on service consistency above all else. Denis Marion, director of U.S. transportation for the U.S. arm of Korean electronics giant LG Electronics, said it doesn't help if a box containing hundreds of thousands of dollars in high-value goods arrives at the destination ramp two days earlier than scheduled and must be moved to a yard because LG's customer isn't ready to take delivery. Marion, whose unit moves about a quarter of its goods via intermodal, said consistently hitting transit-time metrics is essential in satisfying end customers, who expect flawless delivery performance because they don't want to hold inventory.
"Don't make me micromanage every single box," Marion said.
That said, LG USA will spend more for intermodal service than for trucks on some lanes, because the company's needs justify it.
Ben Ball, director, transportation services, corporate freight, for Dalton, Ga.-based Shaw Industries Group Inc., the world's largest carpet manufacturer and a big flooring producer, said Shaw would like to devote more budget to intermodal—about 18 percent of Shaw's loads move via rail—if the service were to improve. "The service got bad and there was no hint as to when it would get better," Ball said.
Ball didn't specify a time frame, but he was likely talking about the disastrous period in 2014 when bad winter weather in the first quarter paralyzed the nation's rail system and threw intermodal service into chaos. The nightmare was compounded by what intermodal users said was the rails' inability to provide them with visibility into when things would improve.
Paul Boothe, director of transportation, TSP Development for Miami-based Ryder System Inc., said intermodal in 2014 accounted for $85 million of Ryder's $5.1 billion in transport spend. Boothe said Ryder will likely boost its intermodal spend to $100 million by the end of 2015, though he added that with a current on-time rate of 83 percent, intermodal's delivery performance needs to improve before more truck users make the switch.
Virtually everyone at today's sessions acknowledged that after a one- or two-year breathing spell, the trucking industry could face a capacity crisis that could bring trucking services of varying types to their knees. This could mean a great opportunity for the intermodal segment, as long as its executives recognize that their business, too, cannot survive without drivers and rigs.
Marion of LG said that many companies, including his, behaved badly toward drivers by taking them for granted, forcing them to sometimes wait hours to load and unload freight, and then blithely expecting the goods to be delivered on time. That mindset has changed, he said. "Everything we do today is about drivers," he said. He added, "We have to be the shipper of choice."
Shippers of choice would also do well with Clement of CSX. "We have to treat customers who are behaving the best," he said, noting that the railroad has created scorecards to encourage good behavior. One of the carrots, Clement added, is that more equipment will be reserved for better customers.
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.
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.
After years in the military, service members and their spouses can find the transition to civilian life difficult. For many, a valuable support on that journey is the U.S. Department of Defense (DOD) SkillBridge program. During their final 180 days of service, participants in the program are connected with companies that provide them with civilian work experience and training. There is no cost to those companies while the service member continues receiving military compensation and benefits.
Both sides benefit from the program. “We’re proud to work with SkillBridge to give back to our military veterans for the bravery and sacrifices they’ve made for all of us,” Troy Pederson, director of training and development at LiftOne, a Hyster-Yale dealer and established SkillBridge employer, said in a release. “In the last year, we’ve helped 10 SkillBridge interns transition from military to civilian life, and the value and positive impact of the program can’t be overstated. At LiftOne, we’ve gained so much from the experience and diverse mix of technical and leadership skills of our SkillBridge candidates.”