fastlane
Top 10 challenges for 2012
WHAT ISSUES BEAR WATCHING IN 2012? ONCE AGAIN, I’VE
put together a list of 10 developments that supply chain executives
should keep a close eye on over the next 12 months. They are as follows:
1. The economy. First and foremost has to be the economy.
Although the recession was declared officially over in June 2009, it
appears to me that at best we are in a very slow recovery. With unemployment fluctuating between 8 and 10 percent, supply chain costs
increasing, and resources decreasing, managers will be challenged
throughout 2012, and no doubt beyond.
2. The price of diesel. According to Department of Energy forecasts,
diesel fuel will average $3.73 per gallon this year.
Although this is down slightly from 2011 levels, it
is still 25 percent higher than it was in 2010. We
will see upward and downward fluctuations, but
the end result will be higher transportation costs.
3. Rising truck rates. High fuel costs and further
regulation of engine emissions and carbon footprints, as well as possible driver shortages, will
result in higher truck rates. Some increases have
already been taken or announced. Look for more
in the coming months.
4. Capacity. Despite rising rates, the threat of
capacity shortages remains. Many truckers sold off
equipment during the downturn, and continuing battles over the
newly revised driver hours-of-service regulations and safety initiatives like CSA 2010 could exacerbate the problem.
5. Infrastructure. The infrastructure continues to deteriorate, and
Congress is in seemingly hopeless turmoil and conflict over jobs,
spending, and other issues that are all tangled up with infrastructure.
I can’t imagine this getting a lot better within the next year.
6. Ocean shipping. With the Panama Canal expansion proceeding
on time and on budget, look for continued expansion and retrofitting
at Gulf and East Coast ports in order to accommodate the new post-Panamax ships. Many industry observers believe we will also see port
expansion in the Caribbean, where large ships will be unloaded and
their loads dispatched on smaller vessels to various U.S. ports.
7. Security. Efforts to tighten security in the supply chain will continue, but the idea of guaranteeing that every package and every container is safe boggles the mind. It will be impossible to plug every leak,
but the government and carriers will likely scramble to do so every
time one develops.
8. The green movement. We can expect to see
continuing efforts by shippers, carriers, and service providers to store, handle, and transport
goods in environmentally responsible ways.
These will not always be the least expensive
methods in terms of capital outlay, but they will
pay off in the long run.
9. Increased truck weight limits. Many shippers
and carriers back an initiative that would
increase truck weight limits on certain roads to
Senate recently approved higher limits for
Vermont and Maine, where tests have been under
way, but the hope is that each state will be given
the option to increase weight limits on its own
portion of the interstate highway system.
10. The election. We can expect action on infrastructure, the new Keystone XL pipeline project,
and other important supply chain initiatives to be
delayed until after the November election. In spite
of the need to move swiftly on some of these issues,
Congress will almost certainly place the election
agenda ahead of that of the supply chain. ;
Clifford F. Lynch is principal of C.F. Lynch & Associates, a
provider of logistics management advisory services, and author of
Logistics Outsourcing – A Management Guide and co-author of The Role of
Transportation in the Supply Chain. He can be reached at
cliff@cflynch.com.
