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 path for E. Hunter Harrison to become CEO of CSX Corp. was effectively cleared this morning when the eastern railroad giant said that Michael Ward, its chairman and CEO, and Clarence Gooden, its president, would retire on May 31.
Jacksonville-based CSX said Fredrik J. Eliasson, 46, has been named president, a post he assumed last week. Eliasson, who has been with CSX for 22 years, is currently chief sales and marketing officer. He will retain that post, CSX said. Gooden has been named vice chairman, a post he will hold until his May retirement, the company said.
There had been much speculation over the past several weeks about Ward's status, especially after Harrison, 72, abruptly quit last month as CEO of Calgary-based Canadian Pacific Railway and joined forces with Paul Hilal, head of New York-based hedge fund Mantle Ridge LP, in a bid to have Harrison installed as CSX's CEO. In language that was striking in its transparency, CSX said Eliasson's appointment is "not intended to preempt or otherwise affect any discussions" between its board and Mantle Ridge over Harrison's possible ascension to the CEO role.
Ward, 65, has spent nearly 40 years at CSX, the last 13 or so as chairman and CEO. He appeared confident he would remain in the top jobs, telling Trains magazine in an interview last week that the board has asked him to remain for three more years and that he planned to work until he was 68. However, CSX said in today's statement that today's changes were "part of an orderly transition of the company's senior leadership" that the board has been mulling for more than a year.
Mantle Ridge has accumulated a 4.9 percent equity stake in CSX, and has pressed its board to quickly make a change at the top. In a letter last Thursday to Edward J. Kelly III, CSX's presiding director, Hilal said the board and Mantle Ridge "owe it to our shareholders to get a deal done promptly."
Mantle Ridge had originally faced a Feb. 10 deadline to propose its slate of directors, but the deadline was postponed to this Friday to give both sides more time to negotiate an agreement. Hilal said he would be the only Mantle Ridge representative on the new board, attempting to allay CSX concerns that he would propose to install as many as six Mantle Ridge employees on the board. Harrison would be on the new board as well.
Hilal also sought to assure CSX's board that bringing in Harrison was not a precursor to a takeover battle for CSX. "This is not a 'battle for control,'" he wrote. The main sticking point now appears to be the length of Harrison's proposed contract. Mantle Ridge wants a four-year duration, while CSX's board had been leaning towards two years.
As chairman and CEO, Ward has presided over major changes at the railroad, notably a dramatic and secular decline in demand for coal, long the railroad's largest revenue source. Concerns about coal's environmental impact and competition from abundant, clean-burning natural gas have forced CSX to slash costs and reposition its infrastructure to focus more on faster-growing intermodal and merchandise traffic. CSX said it will lay off 1,000 managers, most of them in its Jacksonville corporate office and its subsidiaries. The layoffs are set to be completed by mid- to late March, the company said.
Ward has also been under pressure from analysts and investors to improve CSX's industry-lagging operating ratio, the measure of operating expenses compared to revenues, and a key metric of a railroad's efficiency and profitability. Last year, CSX's ratio stood at 69.4 percent after being in the 70s for several years. It has a long-term target of driving down its ratio to the mid-60s. By contrast, CP's 2016 ratio stood at 59.4 percent, a marked improvement from where it was when Harrison was brought in as CEO in 2012.
Harrison is a master at a practice known as "Precision Scheduled Railroading." Utilized by all railroads to some degree, the model drills down into shipment scheduling patterns so a railroad knows exactly which trains, yards, and connections are involved, as well as the precise time a shipment is to arrive at the customer or interchange location. Executed effectively, precision railroading allows a railroad to budget for the exact assets that are needed to fit the plan.
While at CP, Harrison approached CSX about a possible combination, but was quickly rebuffed. CP then launched a takeover bid of Norfolk, Va.-based Norfolk Southern Corp., the other main eastern railroad, only to be rejected there as well. Harrison has long pushed for consolidation of the North American railroad industry, maintaining it is the only path to reducing network congestion and sustainable service improvements. He has also called for less regulatory interference in the industry's affairs, saying railroads need the ability to maneuver freely if they are to deliver consistently cost-effective service.
Harrison's views are not shared by other U.S. railroads, unions, lawmakers, and many shippers, who argue the industry has already consolidated enough.
The way that shippers and carriers classify loads of less than truckload (LTL) freight to determine delivery rates is set to change in 2025 for the first time in decades, introducing a new approach that is designed to support more standardized practices.
But the transition may take some time. Businesses throughout the logistics sector will be affected by the transition, since the NMFC is a critical tool for setting prices that is used daily by transportation providers, trucking fleets, third party logistics providers (3PLs), and freight brokers.
For example, the current system creates 18 classes of freight that are identified by numbers from 50 to 500, according to a blog post by Nolan Transportation Group (NTG). Lower classed freight costs less to ship, ranging from basic goods that fit on a standard shrink-wrapped 4X4 pallet (class 50) up to highly valuable or delicate items such as bags of gold dust or boxes of ping pong balls (class 500).
In the future, that system will be streamlined by four new features, NMFTA said:
standardized density scale for LTL freight with no handling, stowability, and liability issues,
unique identifiers for freight with special handling, stowability, or liability needs,
condensed and modernized commodity listings, and
improved usability of the ClassIT classification tool.
The new changes look to simplify the classification by grouping similar articles together and assigning most classes based solely on density – the most measurable of the four characteristics, he said. Exceptions will be handled separately, adding one or more of the three remaining characteristics in cases where density alone is not adequate to determine an accurate class.
When the updates roll out in 2025, many shippers will see shifts in the LTL prices they pay to move loads, because the way their freight is classified – and subsequently billed – might change. To cope with those changes, he said it’s important for shippers to review their pricing agreements and be prepared for these adjustments, while carriers should prepare to manage customer relationships through the transition.
“This shift is a big deal for the LTL industry, and it’s going to require a lot of work upfront,” Davis said. “But ultimately, simplifying the classification system should help reduce friction between shippers and carriers. We want to make the process as straightforward as possible, eliminate unnecessary disputes, and make the system more intuitive for everyone. It’s a change that’s long overdue, and while there might be challenges in the short term, I believe it will benefit the industry in the long run.
Business leaders in the manufacturing and transportation sectors will increasingly turn to technology in 2025 to adapt to developments in a tricky economic environment, according to a report from Forrester.
That approach is needed because companies in asset-intensive industries like manufacturing and transportation quickly feel the pain when energy prices rise, raw materials are harder to access, or borrowing money for capital projects becomes more expensive, according to researcher Paul Miller, vice president and principal analyst at Forrester.
And all of those conditions arose in 2024, forcing leaders to focus even more than usual on managing costs and improving efficiency. Forrester’s latest forecast doesn’t anticipate any dramatic improvement in the global macroeconomic situation in 2025, but it does anticipate several ways that companies will adapt.
For 2025, Forrester predicts that:
over 25% of big last-mile service and delivery fleets in Europe will be electric. Across the continent, parcel delivery firms, utility companies, and local governments operating large fleets of small vans over relatively short distances see electrification as an opportunity to manage costs while lowering carbon emissions.
less than 5% of the robots entering factories and warehouses will walk. While industry coverage often focuses on two-legged robots, Forrester says the compelling use cases for those legs are less common — or obvious — than supporters suggest. The report says that those robots have a wow factor, but they may not have the best form factor for addressing industry’s dull, dirty, and dangerous tasks.
carmakers will make significant cuts to their digital divisions, admitting defeat after the industry invested billions of dollars in recent years to build the capability to design the connected and digital features installed in modern vehicles. Instead, the future of mobility will be underpinned by ecosystems of various technology providers, not necessarily reliant on the same large automaker that made the car itself.
Regular online readers of DC Velocity and Supply Chain Xchange have probably noticed something new during the past few weeks. Our team has been working for months to produce shiny new websites that allow you to find the supply chain news and stories you need more easily.
It is always good for a media brand to undergo a refresh every once in a while. We certainly are not alone in retooling our websites; most of you likely go through that rather complex process every few years. But this was more than just your average refresh. We did it to take advantage of the most recent developments in artificial intelligence (AI).
Most of the AI work will take place behind the scenes. We will not, for instance, use AI to generate our stories. Those will still be written by our award-winning editorial team (I realize I’m biased, but I believe them to be the best in the business). Instead, we will be applying AI to things like graphics, search functions, and prioritizing relevant stories to make it easier for you to find the information you need along with related content.
We have also redesigned the websites’ layouts to make it quick and easy to find articles on specific topics. For example, content on DC Velocity’s new site is divided into five categories: material handling, robotics, transportation, technology, and supply chain services. We also offer a robust video section, including case histories, webcasts, and executive interviews, plus our weekly podcasts.
Over on the Supply Chain Xchange site, we have organized articles into categories that align with the traditional five phases of supply chain management: plan, procure, produce, move, and store. Plus, we added a “tech” category just to round it off. You can also find links to our videos, newsletters, podcasts, webcasts, blogs, and much more on the site.
Our mobile-app users will also notice some enhancements. An increasing number of you are receiving your daily supply chain news on your phones and tablets, so we have revamped our sites for optimal performance on those devices. For instance, you’ll find that related stories will appear right after the article you’re reading in case you want to delve further into the topic.
However you view us, you will find snappier headlines, more graphics and illustrations, and sites that are easier to navigate.
I would personally like to thank our management, IT department, and editors for their work in making this transition a reality. In our more than 20 years as a media company, this is our largest expansion into digital yet.
We hope you enjoy the experience.
Keep ReadingShow less
In this chart, the red and green bars represent Trucking Conditions Index for 2024. The blue line represents the Trucking Conditions Index for 2023. The index shows that while business conditions for trucking companies improved in August of 2024 versus July of 2024, they are still overall negative.
FTR’s Trucking Conditions Index improved in August to -1.39 from the reading of -5.59 in July. The Bloomington, Indiana-based firm forecasts that its TCI readings will remain mostly negative-to-neutral through the beginning of 2025.
“Trucking is en route to more favorable conditions next year, but the road remains bumpy as both freight volume and capacity utilization are still soft, keeping rates weak. Our forecasts continue to show the truck freight market starting to favor carriers modestly before the second quarter of next year,” Avery Vise, FTR’s vice president of trucking, said in a release.
The TCI tracks the changes representing five major conditions in the U.S. truck market: freight volumes, freight rates, fleet capacity, fuel prices, and financing costs. Combined into a single index, a positive score represents good, optimistic conditions, and a negative score shows the opposite.
A coalition of truckers is applauding the latest round of $30 million in federal funding to address what they call a “national truck parking crisis,” created when drivers face an imperative to pull over and stop when they cap out their hours of service, yet can seldom find a safe spot for their vehicle.
According to the White House, a total of 44 projects were selected in this round of funding, including projects that improve safety, mobility, and economic competitiveness, constructing major bridges, expanding port capacity, and redesigning interchanges. The money is the latest in a series of large infrastructure investments that have included nearly $12.8 billion in funding through the INFRA and Mega programs for 140 projects across 42 states, Washington D.C., and Puerto Rico. The money funds: 35 bridge projects, 18 port projects, 20 rail projects, and 85 highway improvement projects.
In a statement, the Owner-Operator Independent Drivers Association (OOIDA) said the federal funds would make a big difference in driver safety and transportation networks.
"Lack of safe truck parking has been a top concern of truckers for decades and as a truck driver, I can tell you firsthand that when truckers don’t have a safe place to park, we are put in a no-win situation. We must either continue to drive while fatigued or out of legal driving time, or park in an undesignated and unsafe location like the side of the road or abandoned lot,” OOIDA President Todd Spencer said in a release. “It forces truck drivers to make a choice between safety and following federal Hours-of-Service rules. OOIDA and the 150,000 small business truckers we represent thank Secretary Buttigieg and the Department for their increased focus on resolving an issue that has plagued our industry for decades.”