Trade groups applaud executive order on rail talks
Effort will help keep freight flowing, but West Coast dock worker negotiations and labor laws affecting California truckers remain key concerns, industry leaders say.
Victoria Kickham started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for DC Velocity.
Supply chain industry trade groups are praising the Biden administration’s efforts to address ongoing railway labor negotiations, calling it an important step to avoid disruptions that would slow trade and add to inflationary pressures.
President Biden signed an executive order Friday establishing a Presidential Emergency Board (PEB) to help resolve labor disputes between freight railroads and rail labor organizations. The move came ahead of a deadline to intervene in the nationwide talks covering 115,000 workers or risk a strike or lockout. The PEB has 30 days to investigate the dispute and issue a report on how it should be resolved.
Talks between major freight railroads and labor unions have dragged on for more than two years; Friday’s executive order begins a cooling-off period aimed at helping both sides reach a settlement.
The National Retail Federation (NRF) and the American Trucking Associations (ATA) said the PEB is an essential step to avoiding disruptions that would hamper trade as peak shipping season gets underway.
“Now that we are in the peak shipping season for back-to-school and winter holiday merchandise, it is critical that both parties come back to the table to reach an agreement without any kind of rail service disruption this fall,” NRF’s David French, senior vice president of government relations, said in a press release Friday. The association had sent a letter to President Biden earlier this month asking the administration to intervene.
ATA President and CEO Chris Spear echoed those sentiments.
“In order to move past our supply chain challenges and reduce the inflationary pressure that’s hurting American families, we must continue to steer clear of the kinds of avoidable, unnecessary disruptions to the movement of freight that this strike would have caused,” Spear said in a statement Friday. “Our nation’s supply chain has faced a wide range of stress factors during the past several months. We are glad the White House recognizes the importance of keeping freight rail running, one of the key modes of freight transportation that is highly interconnected with the trucking industry in delivering goods nationwide.”
The threat of a rail slowdown was adding to a host of other economic and supply chain pressures, including ongoing labor negotiations between shipping lines and dock workers on the West Coast, and the ramifications of California’s Assembly Bill 5 (AB5), a labor law that requires companies to compensate certain independent contractors as full employees, including truck drivers. Legal proceedings had kept the law from being applied to the trucking sector, but the issue is in the spotlight again following a June Supreme Court decision essentially allowing the law to take effect.
Dawn Tiura, CEO and president of Sourcing Industry Group (SIG), agreed that the rail issue is compounding the other problems occurring on the West Coast, but said the situation is expected to improve sooner than the dock worker talks. Combined with the complications of AB 5, she said the issues are a “perfect storm” affecting the supply chain, with the effects on trucking a key factor moving forward.
“We’re still down 85,000 drivers,” Tiura said in an interview Friday, referring to industry statistics citing a lack of available truck drivers nationwide.
SIG represents executives in sourcing, procurement, and risk at Fortune 500 and Global 1000 companies. Tiura pointed to recent efforts to relax guidelines for obtaining a commercial driver’s license (CDL) as a helpful step, but said that finding ways to attract more workers to the trucking industry is essential to avoiding the disruptions and delays that have plagued supply lines the past few years.
“We have to start incentivizing people to drive,” Tiura said, adding that she expects further action on AB5, which she said will affect freight capacity in California. “Getting this solved is going to be so important.”
Independent owner-operator truck drivers blocked the Port of Oakland earlier this week in protest of AB5, which they say will put them out of business by increasing their costs—in the form of additional fees and higher insurance, for instance—or forcing them into full-time employment.
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.
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.