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2012:
Looking back and ahead
By John A. Gentle, DLP
here’s what my colleagues and i saw this year in
logistics and transportation management and what
we expect next year—along with some suggested
actions on important issues.
Not unlike 2011, rising fuel, equipment, health
care, and driver wages generally pushed over-the-road
freight rates higher. While bidding did not disappear,
the more prudent shippers chose to work closely with
their carrier and 3PL business partners to protect
capacity. While demand was occasionally tight in
the first half of the year, the quest for resources in
the third and fourth quarters—apart from hurricane
Sandy—did not tax the system.
Jeffery Brashares, senior vice president of sales for
TTS and foremost industry expert, says that intermodal
continues to be the bright spot in rail growth and forecasts
that it should continue into 2014, albeit at a slower
pace. Service excellence, more shippers going green, box
capacity, and competitive price have all helped drive this
growth and have provided savvy shippers with savings
opportunities this year and into the future.
Albert Saphir, principal at ABS Consulting, reports
that for shippers that negotiated reasonable base rates
for longer-term stability on ocean freight, not much
changed on major lanes—although rates did go up and
down again a few times based on a number of factors.
However, Asian ocean rates tied to spot market or lowend
margin pricing did see a significant jump after the
first quarter of 2012. Saphir feels that 2013 should be
pretty much the same. With mixed economic forecasts,
ocean carriers will try to manage available capacity, especially
on refrigerated containers, to improve their ROI.
Over the past year, shippers continued to look to
third party logistics providers (3PLs) to reduce headcount
as well as cut fixed warehouse and transportation
assets while improving service. The 2012 3PL
Study, headed up by Penn State University’s John
Langley, suggests that 65 percent of the shipper participants
in the study increased their use of 3PLs with
86 percent success. Notably, most participants sought
3PLs for traditional operational and repetitive activities
such as transportation and warehousing, freight
John A. Gentle is president of John A. Gentle & Associates, LLC,
a Supply Chain consulting firm assisting shippers, carriers, 3PLs,
and distribution centers in the management of their Logistical
disciplines. A recipient of several industry awards, he has more
than 40 years of experience in transportation, warehousing, and
materials management. He can be reached at jag@RelaTranShips.
forwarding, and customs brokerage. To a lesser extent,
shippers turned to 3PLs for value added services
such as reverse logistics, transportation planning and
management, inventory cross docking, packaging, and
labeling.
Taking all of this into consideration, this is what I
believe will take place in 2013:
and non-critical areas to relieve pressure on their company’s
working capital.
to retain CSA qualified drivers and upgrade their
equipment. They will be even more selective about
their customers. If you think any old carrier will do,
think risk mitigation….and think again.
ala carte rate structure will be
expanded with accessorials that are fair to both parties,
and shippers will urge their sales team to offer
new delivered options to clients.
via third parties will continue to create and maximize
carrier productivity and control costs.
3PLs will need to monitor carrier BASICs rigorously
and consistently. Supporters of the new administration
will pressure CSA to eliminate the 34-hour restart
and reduce HOS. While implementation would be
delayed, begin looking at the impact on your backhauls
and recognize where shifts in shipper networks
could leave you vulnerable. Continue to support
NITL, NASSTRAC, and the ATA as they push for a
reasonable ruling.
Savvy shippers will also spend more time on contingency
planning for extraordinary natural factors, unanticipated
distribution shifts, and systems outages that
have the ability to stretch and break supply chains. If
you can’t do this in-house, seek outside help.
The big difference between my thoughts and yours
is that I get to write and lament about them. As for you,
this is your livelihood. Your job is strategic, not transactional.
Work hard to understand the elements that your
carriers and customers value, and measure your effectiveness
in meeting and exceeding their expectations.
Work aggressively to make sure your customers, carriers,
and your boss can’t afford to operate without you.
112 LOGISTICS MANAGEMENT WWW.LOGISTICSMGMT.COM | December 2012