In most companies today, newly hired managers are asked to sign a noncompete agreement. While these agreements vary from company to company, the general thrust is that if the manager resigns, he or she cannot take a position in a competing company or one that's in a similar business to the one he/she left for a specified period of time. Theoretically, this protects the employer from the possibility that the former employee will use confidential or proprietary information against it. For the employee, however, particularly one who is highly specialized, it precludes him/her from taking a position in his/her chosen field.
In most cases, particularly if the employee leaves on good terms, these agreements are resolved to everyone's satisfaction. That is not always the case, however. From time to time, there are high-profile cases that warrant the attention of supply chain managers (or any manager, for that matter). Currently, there are two in our industry that bear watching. (Author's note: In commenting on these cases, I'd like to note that I have no legal or confidential insights but am relying solely on public information, court filings, and my own personal opinions.)
On March 21, Amazon filed suit against its former vice president of operations after his hiring by Target as its new chief supply chain and logistics officer. The executive in question had signed a noncompete agreement at Amazon that prohibited his joining a competitor for 18 months after his departure. Amazon claims that his knowledge of Amazon's operations can be used to its (Amazon's) detriment. It further alleges that he has already shared trade secrets in the interview process. Target has countered that it has taken every precaution to ensure that proprietary information remains confidential.
Earlier, on Feb. 3, XPO Logistics filed suit against YRC, claiming theft of trade secrets enabled by YRC's hiring of XPO executives that had signed "executive agreements." This action goes further than the Amazon suit in that it formally accuses the executives of absconding with XPO trade secrets. YRC has described the suit as meritless and stated that it was "fortunate to have created a culture [that] has attracted many industry professionals who want to work with proven leadership."
Up until these two actions, the best-known case of its kind in the supply chain was one that unfolded in 1999 and involved J.B. Hunt and Cardinal Carriers. Two executives left Hunt of their own accord, and neither had signed a noncompete agreement. They had, however, signed a confidentiality agreement. In filing suit against the ex-employees, Hunt complained that the knowledge they took with them about Hunt, its strategy, its plans, and its operations gave Cardinal an unfair competitive advantage. The Arkansas Supreme Court agreed and prohibited the executives from utilizing in their new position much of the knowledge and information they had gained at Hunt.
In such cases, the employer does not always win, but whatever the outcome, the individual and/or the new employer can incur significant legal fees.
Of course, a deeper philosophical question is how you would refrain from using knowledge you have. The Target COO described the employee in question as a "creative supply chain strategist." How can he ignore the experience he gained at Amazon? Are there really many secrets in the logistics business? I'm not sure there are.
While I would not condone the outright theft of trade secrets, I do not think that anyone should be deprived of the right to change jobs or work in his/her chosen field of endeavor. However, when individuals take a new job, they should be very careful about what they sign, how they conduct themselves in their positions, and the possible consequences of their actions.
The number of container ships waiting outside U.S. East and Gulf Coast ports has swelled from just three vessels on Sunday to 54 on Thursday as a dockworker strike has swiftly halted bustling container traffic at some of the nation’s business facilities, according to analysis by Everstream Analytics.
As of Thursday morning, the two ports with the biggest traffic jams are Savannah (15 ships) and New York (14), followed by single-digit numbers at Mobile, Charleston, Houston, Philadelphia, Norfolk, Baltimore, and Miami, Everstream said.
The impact of that clogged flow of goods will depend on how long the strike lasts, analysts with Moody’s said. The firm’s Moody’s Analytics division estimates the strike will cause a daily hit to the U.S. economy of at least $500 million in the coming days. But that impact will jump to $2 billion per day if the strike persists for several weeks.
The immediate cost of the strike can be seen in rising surcharges and rerouting delays, which can be absorbed by most enterprise-scale companies but hit small and medium-sized businesses particularly hard, a report from Container xChange says.
“The timing of this strike is especially challenging as we are in our traditional peak season. While many pulled forward shipments earlier this year to mitigate risks, stockpiled inventories will only cushion businesses for so long. If the strike continues for an extended period, we could see significant strain on container availability and shipping schedules,” Christian Roeloffs, cofounder and CEO of Container xChange, said in a release.
“For small and medium-sized container traders, this could result in skyrocketing logistics costs and delays, making it harder to secure containers. The longer the disruption lasts, the more difficult it will be for these businesses to keep pace with market demands,” Roeloffs said.
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.
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.