DC Velocity - February 2011

Get your ProMat news
fresh from the show floor

There’s no substitute for being at ProMat and seeing every imaginable kind of warehousing equipment in action. But if you can’t get to Chicago next month for North America’s largest material handling trade show, then watch your inbox for our “e-Show Daily” electronic newsletters. On Tuesday, March 22; Wednesday, March 23;

and Thursday, March 24, DC VELOCITY’S editors will be sending out newsletters with reports from the show floor.

We’ll let you know what keynote speakers had to say and summarize some of the many educational sessions that will run concurrently with the show. We’ll also clue you in on some of the special events we attend, including press conferences, new product demonstrations, and exclusive interviews with exhibitors.

For more information about ProMat 2011 and its educational sessions, all presented by the Material Handling Industry of America (MHIA), see the special ProMat 2011 Show Planner included with this issue of DC VELOCITY. For updates on new exhibitors and events or to register to attend, go to www.ProMatShow.com. ;

High-flyin’, cargo-carryin’ bird

Unmanned, remote-controlled aircraft, popularly known as “drones,” have proved a success in some battlefield operations in Iraq and Afghanistan. Soon they’ll be flying through U.S. skies, too, mostly for law enforcement and disaster-relief missions. According to a Jan. 14, 2011, article in USA Today, the Federal Aviation Administration (FAA) is expected to propose regulations for operating the small aircraft for those purposes later this year in response to requests from local governments. But they might also be suitable for carrying cargo, says one expert in military logistics and supply chain management.

The article quotes Wesley Randall, assistant professor of supply chain management at Auburn University and a 2010 DC VELOCITY Rainmaker, as predicting that police departments will use the unmanned aircraft in five to 10 years. That’s not surprising, given the drones’ military heritage. But the “birds” could also serve a business purpose. Randall, who spent 20 years as a logistician in the Air Force, goes on to forecast that large, unmanned aircraft will be used to transport cargo within 15 or 20 years.

The potential benefits of unmanned cargo flights in high-risk areas are obvious, and military and defense contractors have been testing various aircraft since 2007. (For more on the military’s use of the aircraft for delivering cargo, see “Military tests unmanned helicopters to reduce supply risks” at www.dcvelocity.com.) But what about commercial applications? Some possible uses include deliveries to work sites in remote areas, carrying supplies to regions that have been hit by natural disasters, and carrying hazardous or volatile products. ;

inbound
What keeps 3PL chiefs
up at night?

What’s the most important problem facing the third-party logistics (3PL) industry in North America? Continued downward pressure on pricing, according to chief executives at 16 of the largest contract logistics service providers. The CEOs’ responses were outlined in a new report, “The North American Third Party Logistics Industry in 2010: The Provider CEO Perspective,” by Northeastern University professor Robert C. Lieb and Emerson College professor Kristin Lieb. The report is part of a long-running multi-part study of the outsourced logistics services market.

Although 10 of the 16 executives said they believed that the economic recovery was already under way, they expected continued resistance by customers to attempts to raise prices. But price hikes could be a matter of survival for some: Only three CEOs described their companies as “very profitable,” 10 termed them “marginally profitable,” two said they “broke even,” and one said the company was marginally “unprofitable.” Their average projected revenue growth for 2011 was 10. 4 percent.

The second most important problem facing the 3PL industry, in the CEOs’ view, is a shortage of professional talent at a time when contract logistics service providers are starting to rebuild their work force. Nearly all— 15 of the 16 CEOs—said they had begun rehiring workers. Only 7 percent of the new hires were former employees, and 43 percent were former employees of other 3PLs. Another 20 percent were recent college graduates, and consulting firms furnished an additional 5 percent. The remaining 25 percent were hired from such sources as customers, the military, and other industries.

As for the future of the third-party logistics industry, most of the CEOs still think that it has not fully stabilized and are predicting further consolidation. ;