Trucking Industry Teaming Up with President Obama

Excerpt from Logistics Management:

"Green logistics/trucking news: President Obama and trucking industry agree on new fuel standards"
By John D. Schulz, Contributing Editor
May 25, 2010

A fully loaded 80,000-pound tractor-trailer gets perhaps five miles per gallon of costly diesel fuel. If the truck is properly maintained. Going downhill. With a tailwind. Maybe.

President Barack Obama wants to change that. And, somewhat surprisingly, the American trucking industry largely agrees.

In a Rose Garden ceremony on May 21 with a handful of top U.S. trucking industry and heavy truck manufacturers on hand, President Obama signed a presidential memorandum that for the first time would set mileage and pollution limits for big trucks. The rules are set to take effect with the 2014 model year.

Although heavy trucks comprise just 4 percent of vehicles, they account for perhaps as much as 21 percent of air pollution from mobile sources. Heavy trucks consume 16 percent to 22 percent of this nation’s fuel, or about 54 billion gallons of fuel annually. When diesel reached its peak in 2008, the U.S. trucking industry had a fuel tab that exceeded $150 billion. Although this year’s figure cannot be determined precisely, the tab will approach that again.

After labor and equipment, fuel is the third-highest cost for a motor carrier. The average truckload carrier spends about 12 to 14 percent of its revenue on fuel, with the average LTL carrier spending perhaps 6 percent (The difference is because of the longer lengths of haul of a TL carrier, typically over 1,000 miles).

With the White House under pressure from environmentalists after the catastrophic BP oil spill in the Gulf of Mexico, the president chose to go the executive order route on truck mileage standards. That was an end-run around Congress, which could have been expected to dither for years (if not decades) on the issue. Instead, the presidential memorandum directs the U.S. Department of Transportation and the Environmental Protection Agency to develop national standards for fuel economy and greenhouse gas emissions for heavy- and medium-duty trucks.

“The nation that leads in the clean energy economy will lead the global economy,” Obama declared on May 18. “I want America to be that nation.”

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Why Hodges?

WHY HODGES:

Momentum: An object in motion will stay in motion.

Hodges is a Alabama third party logistics, warehouse, and distribution provider helping individual, corporate and government clients make and implement strategic logistics and warehousing decisions. With strategic locations in Montgomery Alabama and Dothan Alabama, our extensive experience in the logistics industry enables us to provide warehousing and distribution services that help improve your bottom line and eliminate a substantial part of your overhead.

Flexibility: Range of Motion.

Warehousing and Transportation: Inventory in Motion.

Please visit our website to get the full descriptions on how Hodges Warehouse and Distribution is the best logistics provider in Alabama.

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From Inbound Logistics' 3PL Excellence Survey page:

“Each year, in its July issue, Inbound Logistics publishes the most definitive resource on third-party logistics and the outsourced logistics market. If you are already a subscriber, you know that we ask our readers which third-party logistics companies provide excellent service, and publish the results. If you are not yet a subscriber, you can get a list of this year's Excellence Survey winners, as well as the Top 100 third-party companies in the world, by checking the box below.

We're now conducting next year's 3PL Excellence Survey. The results will be presented in the July 2010 3PL issue. Give us your input and we'll express our appreciation by entering you in a drawing for a free 18-carat gold Parker pen, which includes a coupon for free engraving."

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How to Select a Third Party Logistics Provider

We found a great article on steps to take when choosing a 3PL. Hodges Warehousing and Distribution offers great services if you need an Alabama warehouse or Alabama storage space!

Read the following article from Industry Week below:

1. Outline areas of opportunity.

One reason to outsource is to gain the ability to enter new markets or adapt to competitive forces without building out costly distribution infrastructure, Blanchard notes. "Establish a team to look at the current and future requirements of your business and critically assess your ability to meet those needs internally. This team should be comprised of key members from both your logistics organization and other areas like marketing and customer service. These additional departments can provide insight into future growth projections and shortcomings in the existing process and infrastructure."

2. Critically assess your strengths and weaknesses.

Determining what you're good at, and more importantly, those areas where your company needs the most help, will enable you to find a complimentary partner, Blanchard says. Keep in mind, though, that potential partners will have their own distinct strengths and weaknesses. "Some 3PLs are better at warehousing than transportation and vice versa. Others are great at managing the import process, but have less to offer in functional areas like inventory and order management. Merging your strengths with those of your partners will help ensure a robust result."

3. Decide what is on the table.

Once you've identified opportunities for partnering with a 3PL, determine which of these you are actually willing to pursue. "Logistics functions like warehousing and transportation influence how your customers view your ability to execute," Blanchard points out. "The decision to include some or all of these functions in your outsourcing project should be informed by a clear understanding of your company's willingness to turn over mission critical processes to a logistics partner." The success of your outsourcing project, he observes, will depend on how comfortable you are with the idea of a third party operating on your behalf.

4. Identify a shortlist of providers that meet your requirements.

At this point in the process, you should consider initiating a logistics network optimization study to "identify optimal locations for import or export gateways, assembly, merge-in-transit and other specific operations," Blanchard suggests. "Your geographic needs may require a nationwide or global network or be more focused on specific regions. Create and distribute a concise request for information (RFI) designed to ask potential partners about their capabilities. From this, develop a list of providers that have experience in your industry and markets, as this process will reduce the number of potential partners quickly." Then, examine the network infrastructure of the remaining companies and compare your requirements with the capabilities of potential providers. It's also important that you assess the technological infrastructure of potential partners, especially as it applies to such applications as warehouse management systems, order management systems or transportation management systems.

5. Consider the human element carefully.

"Cultivating relationships between key personnel on both sides throughout the outsourcing process is critical," Blanchard notes. "Ensuring not only a fit between corporate cultures, but individuals will contribute greatly to success. This is especially important during implementation and ongoing operations, but if you wait until this stage to identify issues, it will be too late. Remember you will be trusting your chosen partner with your livelihood."



To view the entire article by D. Blanchard, click here.

Logistics and business news: Indicators present "mixed bag" for economic outlook and recovery

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As has been the case in recent months, many leading economic indicators continue to present a "mixed bag," when it comes to determining how strongly the economy is recovering. This is particularly acute when looking at retail figures released by the National Retail Federation and the Department of Commerce earlier today.

The NRF reported that October retail sales-excluding automobiles, gas stations, and restaurants-were flat compared to September and down 1.3 percent year-over-year. Meanwhile, the Department of Commerce had a rosier outlook, reporting that total retail sales-including both retail and food services-were up a seasonally-adjusted 1.4 percent compared to October and down 1.7 percent unadjusted year-over-year.

While the flat and 1.4 percent respective gains may portend some optimism for economic recovery as holiday shopping season begins to kick in, NRF Chief Economist Rosalind Wells noted that belief may be somewhat premature.

Consumer spending remains the main driver of the domestic economy-accounting for roughly two-thirds of all economic activity. And based on sluggish retail numbers, coupled with the lack of a meaningful uptick in freight volumes, analysts have told LM it may take nine months until a true recovery takes hold.

"Though the October numbers show some signs of optimism for retailers, the industry is still not out of the woods," said Wells in a statement. "While categories like apparel, sporting goods, books, music and personal care fared well, housing-related categories such as furniture and home improvement continued to struggle."

This cloudy scenario is also evident in other economic data and freight trends, too, including last week's Commerce Department report that the U.S. trade deficit expanded 18.2 percent in September to $36.5 billion for its biggest deficit since January, as well as a 0.5 percent dip in consumer spending in September, and The Reuters/University of Michigan preliminary consumer sentiment index decreased to a three-month low of 66 from 70.6 in October.

Other recent data include:

* the Institute for Supply Management's manufacturing index topping 50.0 percent (which indicates positive growth) for the last three months;
* the October Cass Freight Index declining 12.3 percent year-over-year and flat growth from September to October;
* durable goods orders in September were up 1.4 percent and September inventories were down 0.4 percent from August and 13.4 percent year-over-year, according to the Department of Commerce; and
* the Association of American Railroads reporting that as of Thursday, November 12 volumes are down 17.8 percent year-to-date, and the Intermodal Association of North America's recent report that third quarter volume is down 16.4 percent.

Read the rest of the logisticsmgmt.com article here.

New Study Highlights Role of Third-Party Logistics Providers in Helping Shippers Adapt to Economic Challenges

The fourteenth Annual Third Party Logistics (3PL) Study examining the current global market for logistics outsourcing was recently released. The study surveyed shippers and logistics service providers in North America, Europe, Asia Pacific and Latin America. Key findings included:

* The economic downturn has created significant challenges for both shippers and third-party logistics providers (3PLs) – 82% of shippers are employing cost-cutting tactics and 60% are rethinking their supply chains and relationships with 3PLs
* 88% of shippers feel that IT-based logistics services are important, but only 42% are satisfied with the capabilities of their provider – as a result of this IT capability gap, shipper respondents reported a lack of the key performance indicators, alerts and visibility required for an adaptive supply chain and 3PLs reported similar difficulties in getting the data and commitment they need from shippers
* There are significant differences between how 3PLs evaluate their role in the supply chain and how they are viewed by shippers – 59% of shippers feel their use of 3PLs has a positive effect on customer service compared to 88% of 3PL respondents
* Shipper respondents devote an average of between 47% (in North America) and 66% (in Europe) of their total logistics expenditures to outsourcing and this is expected to increase in the next five years.

“Shipper-3PL relationships are being impacted significantly by the prevailing uncertainty and economic volatility in global markets,” said Dr. C. John Langley Jr., Professor of Supply Chain Management, Georgia Institute of Technology. “It is very important for 3PLs to mitigate or reduce any financial risk or service level impact that this may cause.”

Economic uncertainty and the use of 3PLs
Economic volatility has challenged shippers and 3PLs alike to contend with factors such as unpredictable demand, instability in fuel costs and currency valuation, and excess inventory. In response, not only are shippers attempting to cut costs, 77% are also seeking to improve forecasting and inventory management.

Cost reduction and improved reliability in services are the main factors likely to increase shipper respondents’ use of 3PLs. This includes converting fixed to variable costs (59%), expanding to new markets or offering new products (56%), and restructuring the supply chain network to improve financial performance (48%).

Read the rest of the mhia.org article here.

Logistics and transportation news: Forecast calls for another slow peak season

As freight volumes are in their fourth consecutive year of decline, it is not a stretch to admit “Peak season”—as we once knew it—is significantly different from what it was in past years.

This view is corroborated by the findings of a recent LM reader survey, coupled with analyst and shipper analysis, which indicates the lack of a true peak is, in fact, “the new normal.”

Major takeaways of the LM survey found that a cumulative 82 percent—or 373 of the 448 respondents— think this year’s Peak Season will be similar or less active compared to last year, with a mere 18 percent—or 85 respondents—contending it will be more active.

Reasons cited by respondents for another slow peak included: less demand, a need for lower inventory levels, the recession, sluggish consumer spending, and low import volumes, among others.

“There are no positive signs that customer demand has increased to previous year’s levels, or even close to them,” said a shipper. “Our customers are requesting Just-In-Time shipments instead of building inventory in their warehouses. And retailers still have excess inventory and with the recession ongoing, they are not ramping up their inventories.

The lack of meaningful inventory build-up is not likely to fade anytime soon, considering the Department of Commerce’s recent report that U.S. business inventories decreased 1.0 percent in July from June at $1.333 trillion and were also down 11.8 percent from July 2008. A Wall Street Journal report noted this reflects how businesses are slowly getting rid of excess goods that accumulated during the recession.

A lack of inventory build up and lack of meaningful consumer spending are also reflected in the low volumes at the Ports of Los Angeles and Long Beach—the two highest volume ports in the U.S.—which have been down for more than two years, due to the economy, changes in order patterns by shippers, and capacity continuing to be routed away from these ports. Year-over-year volumes at both ports are down, with total containers at the Port of Long Angeles, year-to-date through August at 4,374,818, which is down 18.3 percent compared to last year. And at the Port of Long Beach, total containers handled through August are 3,259,427, which is down 25.1 percent from last year.

Read the rest of the logisticsmgmt.com article here.