Hundreds of transportation and supply chain management executives attended the many sessions during the transportation track at the annual conference of the Council of Supply Chain Management Professionals in Denver, Colo., in early October. NASSTRAC, the National Shipper's Strategic Transportation Council, sponsored the transportation track, which was chaired by Gail Rutkowski of Wabash Worldwide Logistics and Lanny Fleming of FedEx Freight. What issues emerged from the sessions as top-of-mind for transportation and supply chain decision-makers?
Concerns for the nation's infrastructure clearly topped the list of most urgent issues. Time and again conference participants pointed out that the U.S. transportation and infrastructure system, once a marvel of the modern world, has been stretched beyond its capacity and has fallen into disrepair. In fact, a decaying transportation system costs our economy more than $78 billion annually in lost time and fuel. One-third of our major roads are in poor or mediocre condition, and a quarter of our bridges are structurally deficient or functionally obsolete. By 2020, every major U.S. container port is projected to at least double the volume of cargo it was designed to handle. Our inland waterways and railroads also need serious attention and new capital.
The consensus was that the consequences of inaction are unacceptable, and that something must be done — now. But the question is: With such a complicated issue, what could be done to tackle such a looming challenge? Janet Kovinoky, director of transportation and infrastructure at the U.S. Chamber of Commerce, shared her insights on this complicated issue and how her organization currently is advocating for a comprehensive approach to solving the nation's transportation infrastructure crisis. Specifically, the Chamber believes that a multimodal and intermodal vision must increase capacity, reduce congestion and improve the efficient, safe, sustainable movement of goods and people throughout the country and world.
Infrastructure concerns also were top-of-mind among leaders of the nation's major motor carriers. During a CEO panel discussion featuring leading less-than-truckload (LTL) carriers, Doug Duncan, president and CEO of FedEx Freight, emphasized the need for action and underscored many of Kovinoky's observations. Other concerns challenging carrier operations, as identified by the panel participants, included fuel costs, state-driven privatization, infrastructure, congestion, legislative and labor issues.
In fact, labor issues were weighing heavily on the mind of David VanderPol, president of Oak Harbor Freight Lines, a regional LTL carrier serving the Northwest and recipient of NASSTRAC's Carrier of the Year award for the past three years. VanderPol said that although his company was 100 percent operational despite an ongoing strike by the Teamsters union, the company was working hard to offer guaranteed services — including standard and hour-specific deliveries. VanderPol said at least 95 union members had already crossed the picket line and returned to work.
"We continue to grow our business back in all of our districts throughout the system," he said. In a formal statement, Oak Harbor said it had hired at least 40 permanent replacement drivers at that time. The strike by about 600 members at Oak Harbor began September 22. Labor issues continue to be a primary concern for many carriers operating in a union-based environment.
Global trade's impact on U.S. transportation and infrastructure was also a hot topic, as discussed by Paul Bingham, principal with Global Insight and an economic and trade forecasting expert, and Chris Norek, Ph.D., senior partner with Chain Connectors. They spoke about trends in global trade, domestic challenges and ways to cope. In particular, they pointed to consequences of growth for available capacity. What are we likely to see without more capacity?
- Worsening congestion while urban slack capacity is used up.
- Deteriorating travel times and delivery time reliability.
- Increasing costs (e.g., freight rates, ancillary fees, etc.).
- More community NIMBY opposition to freight activity.
- Inadequate public finance and investment in freight infrastructure building, operations and maintenance.
- Increasing mismatch in scope and scale of shipper and carrier networks and government jurisdiction/interests.
What can we see from government? More mileage-based or ton-mileage fees for highway use as more toll roads, including potential truck-only lanes. For all modes, ever tighter emissions limits, alternative fuel equipment mandates, new operating restrictions, new taxes and more user fees. You can also expect to see further logistics workforce regulations in security and safety. Also, higher productivity equipment, including higher truck size and weight with perhaps user fees. Lastly, you may see subsidies and tax benefits for environmental reasons alone.