DEAR SANTA,
The long-anticipated midterm elections are behind us, and as
many expected, we will soon have a Republican majority in both
the House and Senate. As you know, in August, Congress once
again extended the then-current transportation infrastructure
funding legislation until May 2015, leaving that hot potato for the
new Congress to handle. Well, in January, it will be time to start
thinking about a permanent solution. Hopefully, you can help
bring some logic and sanity to the process. It is not at all clear that
the new Congress will be anxious to take up the matter, but at least
you will be dealing with a different cast of char-
acters. Some states are so pessimistic about the
prospects of a timely resolution that they have
delayed important projects until at least 2016.
A more immediate concern for both retailers
and their customers is the ability of retail distribution systems and package carriers to handle
this year’s holiday volumes. You remember, I am
sure, that last year, about 2 million packages did
not make it to their destinations by Christmas
morning. No doubt you were blamed for a lot
of this even though it wasn’t your fault. With
e-commerce volumes expected to rise, UPS and
FedEx are working hard to prevent a recurrence. They are hiring
so many seasonal workers that you may have trouble finding additional elves this year. Perhaps you could persuade the retailers to
be a little more cautious about what they promise. And watch out
for Amazon. It recently posted its biggest quarterly loss since 2003,
which puts it on a track to lose about $40 million this year. It may
try to pull out all the stops to minimize its 2014 losses.
While the impact on Christmas remains to be seen, several situations brewing on the West Coast could complicate things a bit.
Continuing logjams at the ports of Los Angeles and Long Beach,
caused by a shortage of trucking equipment, have slowed operations
to the point where it can take up to three weeks to get containers off
the docks. In addition, longshoremen have been working without
a contract since July. While negotiations are continuing, there has
been some evidence of work slowdowns at the ports of Tacoma and
Seattle. Finally, the huge increase in shipments of Bakken crude
oil from North Dakota has seriously taxed the resources of BNSF
Railway in the Northwest. While the impact is primarily on grain
shipments, some intermodal movements are being affected as well.
BY CLIFFORD F. LYNCH fastlane
My annual letter to Santa Claus
Bottom line, the entire West Coast needs some
attention.
I have written you several times about the
Mexican truck situation, but I am about ready
to give up on that one. The Motor Carrier
On a more positive note,
you are aware of the shift to
dimensional weight pricing
by UPS and FedEx, a system whereby shipments will
be priced based on weight and cube, rather
than weight alone. Hopefully, this will result
in some package design innovations that will
have a positive impact on your sleigh loadabil-ity. My guess is that you cube out before you
weigh out most years. On the other hand, you
don’t want to add too much weight. Having
to add and name another reindeer could play
serious havoc with a time-honored Christmas
tradition.
Merry Christmas!
Cliff Lynch
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.
