By Brian Everett
The face of North American businesses is in a very different state than we've had even in the past few years — particularly now that it's fueled by a global marketplace. Amazingly, the marketplace continues to expand in a global economy regardless of the challenges and complications that such an economy brings. One driving factor in this evolution is that the transportation and logistics industries have been innovative in tightening the supply and demand chain and tying it all together.
But trade growth drivers go far beyond pure demand in the marketplace. Global logistics sourcing by industry is dramatically rising, global trading blocks are emerging, regional trade facilitation is growing, trade and regulatory policies are becoming more harmonized, and trade security standards and information flows are becoming more fluid.
These trends hit home during NASSTRAC's recent Logistics Conference & Expo in Orlando in April, where more than 300 transportation and logistics professionals gathered. One session in particular, which addressed cargo trends and how they're changing the face of the U.S. and Canadian economies, resonated for many of the logisticians in attendance. Presenting key observations was Joe Bryan of Global Insight, a worldwide economics analysis firm with a practice in trade and transportation, who highlighted top cargo trends that are having the greatest impact:
1. Transportation and Logistics Are Drivers in World Trade. Bryan says the quality of logistics stimulates more trade than otherwise possible. The importance of logistics, trade and the business enterprise is a whole lot more significant than you think. It's the driver of world trade and the glue in your company — no doubt a strong argument for job importance.
2. Domestic Is No Longer Domestic. It's hard not to notice Asia. The charts and stats showing incredible increases in trade to and from that region of the globe prove it. Bryan says shippers have to place a major emphasis on international activity. Historically, the trend was mostly domestic, but now there's no such thing as "domestic." You can't just be domestic or think of yourself in that way. Everything is a global network.
3. Capacity Is Strained Everywhere…Longer Term. When it comes to modal capacity constraints, there is high growth overall. When you look at growth on infrastructure like highways, ports and rail, it flows right through the bottlenecks into the pits of congestion. It will just get harder as we move forward. Logisticians are the glue in their companies — and they need to think creatively to overcome the challenges of capacity constraints.
4. The United States Needs to Invest in Capacity — and Your Company Should Support It. The highway system is running out of money. Why? The U.S. hasn't raised taxes adequately to fund it. Bryan urged shippers to perceive the fuel tax as an investment rather than a tax. "We all know you don't want to see prices to go up," he told the audience, "but why not step up and urge your company to financially support our infrastructure?" Highway funding is a tough and controversial topic, but one that we absolutely must address — and soon.
5. Ways to Mitigate Fuel Costs…Following Wal-Mart's Lead. This big shipper has big goals. Wal-Mart is exploring fuel efficiencies for its own fleet. "They've set a goal," says Bryan. "Expect that they'll meet their target, and turn to their vendors to do the same." This could mean a big trend in ammunition for shippers.
6. Become A Service Chain. What is the future of the carrier going to look like? Like a supply chain — or more like a service chain, Bryan says. "What you get is a coalition of companies closely aligned and integrated with systems and people, but without one company trying to own everything. It won't be a modal conglomerate, but there will probably be a dominant partner." Judging by the discussions at NASSTRAC between shippers and carriers, the future may be now.
About the Author: Brian Everett is the executive director for NASSTRAC, a shipper's association that provides education, advocacy, provider relations and networking for professionals involved in all areas of transportation, ranging from full truckload, LTL, and rail/intermodal to containerization and global logistics. For more information, visit www.NASSTRAC.org.