fastlane
my annual letter to Santa Claus
DEAR SANTA,
Well, this has been a tough year for many of us. I’m
sure you have seen hard times reflected in the more
modest toy requests you’ve received for this year. We
certainly have seen the stress reflected in the supply
chain through bankruptcies, closed facilities, job loss-es, and excess capacity. While we all hope for a quick
turnaround, it has become clear that it will be well
into 2010 before we see any major relief. Because of
that, I’ve scaled back my requests a bit this year. Even
so, they may prove tough to fill. All I can ask is that
you do the best you can.
I don’t know whether you’re a Democrat or
Republican, but whatever side you’re on, my first
request will require some artful dodging and weaving.
I think we all agree that we need a new, comprehensive highway bill, but what we don’t agree on is
how to pay for needed improvements. There are huge
differences of opinion between House and Senate,
Democrats and Republicans, and heaven knows who
else. Will you please see if you can bring some cohesiveness to the situation and get everyone on the same
page with a well-funded plan for improving the
nation’s transportation infrastructure? I realize this is
a tall order—you might want to consider a threat to
ban scotch and brandy in congressional stockings.
Last year, I asked for access to U.S. highways for
Mexican truckers, and as you well know, the situation
is even worse now. Because of our stubborn refusal to
abide by the terms of NAFTA, the Mexicans have
slapped tariffs on $2.4 billion worth of products we
export to Mexico. Maybe this year you could assign a
couple of your smartest bilingual elves to the project.
We really need to get this fixed.
Another thing I wish you would look into is the
new “cap and trade” legislation. While I’m not clear on
all of the details, it does seem that the legislation will
raise carrier (and other) costs. I am not opposed to
protecting the environment, but the last thing we
need in the industry today are increased expenses.
Please make sure Congress understands the impact of
its actions on the supply chain.
This next one is a repeat from last year, but it’s
nonetheless important. Right now, fuel prices are
down from the historic highs of July 2008, due to the
economic slump. But even with all the pricing volatil-
ity of the last few years, the overall trend has been
undeniably upward. For example, today, diesel fuel is
running between $2.30 and $2.50 per gallon. While
this is far better than, say, $4.00, in 2003, it averaged
about $1.60. Certainly, more emphasis is being placed
on hybrid and other fuel-efficient automobiles, but
we need some work on trucks and tractors.
Alternative energy sources are the only real solution
to the problem. The elf who has been working on this
has made some progress, so keep him humping.
There is a bill lurking in
the Senate that could
restore some of the rail regulation that was removed in
1980. Proponents of the bill
argue that some rail carriers
are exercising monopolistic
power over shippers that
are served by only one railroad and engaging in other
predatory practices. Please
keep an eye on this one. We
have 100 years of proof that
rail regulation doesn’t
work, and since 1980, when many restrictions were
lifted from the railroads, rates have declined, productivity has increased, and there has been a tremendous
amount of capital investment.
I am for fair treatment of all shippers, but we must
be very careful not to restore the stifling regulation
that existed for so long. There are good arguments for
both sides, but please keep this on your watch list and
move in if it starts to get out of hand.
This is a tough list, Santa, but I feel certain you can
have some impact.
A very Merry Christmas to you, Mrs. Claus, and all
the elves.
Cliff Lynch
Clifford F. Lynch is executive vice president of CTSI, a supply chain solutions firm; author of
Logistics Outsourcing – A Management Guide; and co-author of The Role of Transportation
in the Supply Chain. He can be reached at cliffl@ctsi-global.com.
