Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
The coronavirus pandemic may have hamstrung the nation’s economy, but as opposed to imposing a unilateral recession, its impact has created broad imbalances in freight capacity, transportation sector leaders say.
Even as some sectors are nearly idled by travel restrictions and social distancing—such as tourism, movie theaters, and restaurants—other businesses have seen steep spikes in demand, such as those providing e-commerce, beer and wine, and hygiene products.
“Certain industries have literally shut down and others are booming,” Doug Waggoner, the chairman and CEO of freight broker and third-party logistics provider (3PL) Echo Global Logistics, said. “But right now we’re seeing a resupply bubble, because a lot of small companies were shut down in April, and now they have opened up in the last couple months and their suppliers have opened up.”
For example, inventory is currently low across the food and beverage and the industrial sectors, so businesses are working to stock up again using support from the $2.2 trillion federal stimulus bill called the CARES Act, an acronym for Coronavirus Aid, Relief, and Economic Security.
“Carriers, manufacturers, and shippers seem to be pretty healthy, in part because there’s been a lot of stimulus money pumped in to the economy,” Waggoner said. “The freight economy feels pretty good right now, and we’re hoping it maintains. It may be hard to understand because of everything going on with the pandemic, but the fact of the matter is that freight is moving.”
That uneven distribution has even triggered shortages of capacity in certain areas because networks are out of balance, and many trucks and transportation assets aren’t where they’re “supposed to be” during typical trade patterns, he said. To compensate, Echo has made recent investments in its network, such as obtaining three new ISO certifications and expanding its use of technology to match available truck drivers with loads, including the company’s EchoDrive and EchoShip products, the company says.
The supply chain software provider BluJay Solutions offers a similar assessment of the Covid-era transportation market. “Everybody’s buying everything online now,” Chris Timmer, BluJay’s chief revenue officer, said. “So some components of the marketplace are just looking for survival, at the same time that some components of the marketplace are looking for greater scale.”
For example, businesses in the 3PL sector and the food and beverage industry are “thriving” right now as they see demand for inventory volumes go “through the roof,” Timmer said. To handle those bursts of demand and to prepare for a broader recovery in the long term, BluJay has also made recent technology investments, announcing partnerships with the payment platform TriumphPay, railroad logistics management company Raven, and third-party parcel shipping and LTL solutions NMB.
Providing further metrics on the boom and bust cycles that have whipsawed the market in recent weeks, BluJay cited its “Freight Market Index” report. Each edition compiles key performance indicators (KPIs) from the $18 billion in annualized freight under management transacting within BluJay's Global Trade Network. The report’s July edition showed that freight volumes initially spiked, then dropped significantly under the impact of Covid-19. Next, fuel prices and consumption rebounded quickly as social restrictions eased in June, leading to a jump in spot market rates and hints of a pending capacity shortage, even as the nation approaches the holiday peak shopping season in November.
Likewise, several other sectors of the transportation economy say they have seen similar challenges in coping with the feast-or-famine impact of the pandemic. Negative signals flashed brightly in the past week when the shipping consulting firm Drewry forecast that container port capacity-expansion plans could contract at least 40% over the next five years and when the International Air Transport Assn. predicted that air passenger traffic may not return to pre-Covid-19 levels until 2024.
However, other transportation groups have reported positive results in the same period, including Ohio’s regional Rickenbacker airport setting June records for freight volumes thanks to a surge in personal protection equipment (PPE) imports and the Logistics Manager’s Index (LMI) reporting a steady climb in its growth ratings for July since sinking to an all-time low in April.
Editor's note: This article was revised on August 7 to include more information from BluJay.
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.