newsworthy
top supply chain executives
remain wary on economy
THERE IS A LIGHT SOMEWHERE ON THE HORIZON, BUT THE
tunnel remains a very long one.
That was the prevailing view of top supply chain executives of two of
the nation’s biggest retailers and a multinational consumer goods manufacturer speaking at the National Industrial Transportation League’s
annual meeting in Fort Lauderdale, Fla.
“We keep bouncing along the bottom,” said Joseph “Mike” Mabry, executive vice president, logistics and distribution for home improvement
giant Lowe’s Companies Inc., when asked about the outlook for the economy and retailing. The time frame for an economic recovery “keeps getting pushed out,” Mabry said.
His comments were echoed by Richard Wallace, vice president, supply
chain operations at retailer J.C. Penney Co. Inc. “It’s still a tough market
out there,” he said.
Brian Hancock, vice president of supply
chain for Whirlpool Corp.’s North American
division, said elevated unemployment levels
and a still-weak residential housing market
have kept consumers wary about buying
big-ticket items like household appliances
unless the price tag represents a significant
markdown. Retailers have been very willing
to oblige the end customer, Hancock said,
leaving manufacturers to do whatever’s necessary to maintain market share.
“You are only as good as your crazy competitor,” Hancock said.
In such a brutal environment, it has never been more important for the
supply chain to effectively manage transportation spending, the executives said. “Transportation costs are the trump card,” said Mabry.
The executives said they expect to ramp up their use of intermodal,
especially as transit times and delivery reliability continue to improve the
mode’s value proposition. “Intermodal service has become so good that
we are using it more,” said Hancock.
“We want to use intermodal more frequently,” added Wallace. In an
unscientific poll of attendees at the panel discussion, respondents—many
of whom were shippers—said they expected the shipping community to
boost spending on intermodal services in 2011.
Wallace of Penney sang the praises of Vancouver’s Port of Prince
Rupert, through which the company’s ocean-freight consignments from
Asia reach the Midwest four days faster than via the traditional transloading off the U.S. West Coast. “Prince Rupert is a real winner for us,” he said.
Despite the transit time improvements, Wallace said moving freight in
a timely manner through Chicago to Penney’s East Coast distribution
centers or direct to its stores remains the company’s biggest sup- p. 14
shippers see truck rates,
capacity as top challenges
in 2011
A shortage of truckload capacity—and the rate
increases that could result from it—will be the
biggest challenges facing shippers next year,
according to comments heard at the National
Industrial Transportation League’s annual
meeting in Fort Lauderdale, Fla.
When asked in an informal poll at the conference which of the major transport modes
will experience the fiercest pricing pressure
next year, 44 percent of the respondents said
“truckload,” by far the highest percentage of
any of the modes. Shipper executives interviewed at the meeting said truck rate
increases would be problematic for their
businesses next year. The informal poll, as
well as off-the-record comments by shippers,
did not indicate that rate increases would be
a problem with other modes.
Driving those concerns is what many fear
will be a reduction in the driver pool once
the federal government’s new trucking safety initiative, known as CSA 2010, kicks in fully
early next year. The program’s goal is to identify drivers with spotty safety records and, if
necessary, remove them from the road.
While many in the transportation industry
laud the program’s intentions, they worry
that it will only aggravate an ongoing shortage of qualified drivers.
Appearing on a panel of three chief executives, Christopher B. Lofgren, president and
CEO of trucking and logistics giant Schneider
National Inc., said CSA 2010 could lead to
the removal of up to 10 percent of the current driver workforce. Next year’s mission
“will be about finding drivers,” said Lofgren,
adding that supply is likely to remain constrained as truckers work to build up driver
forces depleted by the regulations.
Lofgren predicted a slow improvement
in the economy during 2011, indicating
that the absence of a full-blown economic
recovery might actually help shippers and
truckers mitigate the looming capacity
issues brought on by driver shortages. ;
