An interesting article trying to quantify what driver wages would have to hit to be at the equilibrium point. However, this data is meaningless unless you determine what the target price is for transportation services? At what point to shippers move to substitutes to offset transportation increases?
Some may think substitutes are only in the mode of transportation however that is the least efficient way to substitute. Shippers are always tweaking around the edges with mode transfers etc. however the most efficient and biggest impact areas for shippers to evaluate are activities such as mfg site selection, load ability, inventory trade offs etc.
At what point do transportation rates get so high that the shipper changes their operational methodologies? Until you know the answer to this question it is hard to determine what wage rate will be the equilibrium / market clearing wage rate.
A 25 year veteran of the supply chain and logistics industry blogs on all things logistics. Experience in 3PL, automotive and consumer goods logistics help bring a unique insight to this topic
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Monday, March 26, 2012
Sunday, March 25, 2012
Is The Trucking Industry Rebounding?
There is anecdotal evidence based on an informal count of trucks on the NJ turnpike showing an increase in truck traffic. I warn you, this informal study reported on CNBC is about as informal and non scientific as you can get however when you tie it to other evidence (i.e, FEDEX financial results - profit doubles) you see some coalescing evidence that the economy is picking up and trucks are moving.
However, if you take the comments by FEDEX CFO Alan Graf at his word, evidence is the economies of the world are not growing fast enough to offset things such as high unemployment
There is a mixed bag I guess. I chose to believe the former rather than the later.
However, if you take the comments by FEDEX CFO Alan Graf at his word, evidence is the economies of the world are not growing fast enough to offset things such as high unemployment
There is a mixed bag I guess. I chose to believe the former rather than the later.
Monday, March 19, 2012
Diesel to $4.14.. Highest since the record setting 2008
Yikes! Perhaps we will now get serious about alternative energies. As a reminder, this is not a supply problem. It is a world market and the price is going up.
Penn Wells Considered Safe by EPA - Fracking Politics
The politics around fracking, the way we are getting natural gas out of the ground, has been somewhat unbearable. Here is the first time I have read good "science" behind the argument and it looks like the politics were much ado about hype than anything.
Keep an eye on this. Natural Gas is the way our Country will get off our addiction to foreign oil. I fully support a strict and detailed EPA enforcement to ensure we do not fix one problem and cause another. However, I want to also ensure we use science and not politics to solve the problem.
Keep an eye on this. Natural Gas is the way our Country will get off our addiction to foreign oil. I fully support a strict and detailed EPA enforcement to ensure we do not fix one problem and cause another. However, I want to also ensure we use science and not politics to solve the problem.
Apple and iPad 3 Put Strain on Airfreight Rates and Capacity
As is being reported by multiple sources, airfreight rates are going up if you can find the capacity at all. This, mostly, is due to Apple and the launch of the iPad 3.
Amazing that one company and just one product can do this but when it is Apple anything is possible. My sources tell me this could continue for 3 - 12 weeks depending on sales. Given that sales are already being pushed out if you order on line (indicating they are already in a backorder situation) my guess and money is on the bigger number.
Amazing that one company and just one product can do this but when it is Apple anything is possible. My sources tell me this could continue for 3 - 12 weeks depending on sales. Given that sales are already being pushed out if you order on line (indicating they are already in a backorder situation) my guess and money is on the bigger number.
Sunday, March 18, 2012
UPS In Tentative Deal to Buy TNT Express
As reported on CNBC, looks like UPS will buy TNT Express after all. My guess is this is all about taking on DHL in Europe however I do not know for sure. I have never been a big fan of logistics companies purchasing others unless there is underlying technology you need.
My guess is UPS does not need any technology TNT has. It is dangerous to buy just for a "customer list". Acquisitions are generally not a "10X idea". They usually occur when management is out of ideas.
My guess is UPS does not need any technology TNT has. It is dangerous to buy just for a "customer list". Acquisitions are generally not a "10X idea". They usually occur when management is out of ideas.
Tuesday, March 13, 2012
The Case for Sustainable and Ethical Supply Chains
For most of my readers it will not come as a surprise I am a bit of liberal when it comes to ownership for the sustainability of your supply chain. It is just a fact that companies must take ownership of this and your customers, more and more, are becoming "sustainable aware" of what it takes to get them your product. Further, they are going to punish you for not caring for the environment.
But, what about ethics? This is the next area and it is more difficult as it is harder to measure. We know slavery is wrong and we know if we see great working conditions that is good. However, what about in between? Does $2 per day seem unethical even though when you account for purchase power parity it may not be too bad? This is the dangerous area and precisely why companies have to take control of their entire supply chain and ensure there is nothing which can even be perceived as being unethical or immoral in how things are made, how people are treated and how the Earth is treated.
This article in Forbes on Sustainable and Ethical Supply Chains sums it up well. Two big examples of problems and then fixes. Nike in the '90s had real issues with this and Apple does today. Both moved and are moving aggressively to tray to stop the unethical behavior and both have brand names that allow them a bit of latitude. Bottom line: They have provided so much value to the customer that the customer will forgive a transgression as long as they actively fix it and fix it fast.
The key question for you is whether your brand is that strong? Most are not. Most will be dead on arrival if they are seen to be exploiting people or the environment for financial gain.
The bottom line: Take control of your supply chain, have a good code of conduct, demand compliance and put in strict audit systems to ensure compliance is occurring. Trust but verify is the name of the game.
Don't let your zeal to jump on the outsourcing bandwagon cause you to put your brand and your entire company's future in jeopardy.
But, what about ethics? This is the next area and it is more difficult as it is harder to measure. We know slavery is wrong and we know if we see great working conditions that is good. However, what about in between? Does $2 per day seem unethical even though when you account for purchase power parity it may not be too bad? This is the dangerous area and precisely why companies have to take control of their entire supply chain and ensure there is nothing which can even be perceived as being unethical or immoral in how things are made, how people are treated and how the Earth is treated.
This article in Forbes on Sustainable and Ethical Supply Chains sums it up well. Two big examples of problems and then fixes. Nike in the '90s had real issues with this and Apple does today. Both moved and are moving aggressively to tray to stop the unethical behavior and both have brand names that allow them a bit of latitude. Bottom line: They have provided so much value to the customer that the customer will forgive a transgression as long as they actively fix it and fix it fast.
The key question for you is whether your brand is that strong? Most are not. Most will be dead on arrival if they are seen to be exploiting people or the environment for financial gain.
The bottom line: Take control of your supply chain, have a good code of conduct, demand compliance and put in strict audit systems to ensure compliance is occurring. Trust but verify is the name of the game.
Don't let your zeal to jump on the outsourcing bandwagon cause you to put your brand and your entire company's future in jeopardy.
Monday, March 12, 2012
CASS Freight Indices
I should have remarked on this earlier although I have been busy, busy, busy! Looks like freight rates have leveled off from the somewhat aggressive increases over the last few months. Intermodal seems flat while truck rates are up a bit. This is what the CASS data would suggest although I personally think generalizing about this is a very dangerous game.
Depending on your freight flows and freight characteristics you may or may not see this trend. If you are a "mega shipper" then perhaps the averages apply however most have specific and unique freight patterns. My advice is to dive deep into those patterns and understand, in depth, regional movements along with nuances in the areas you operate.
Depending on your freight flows and freight characteristics you may or may not see this trend. If you are a "mega shipper" then perhaps the averages apply however most have specific and unique freight patterns. My advice is to dive deep into those patterns and understand, in depth, regional movements along with nuances in the areas you operate.
What Makes Tomorrow's Leaders
I am reading a lot about this subject and I suppose the driving force is I now have a son in college. I wonder what he will want to do ultimately with his life. As I read I see some common threads in tomorrow's leaders no matter what discipline they are in (so, these apply to supply chain people).
First, learn languages! This is an absolute must and one which is tough for Americans to get their arms around. If you cannot speak at least one other language other than English you are essentially toast. Two or three are even better. The best people I see in business today are very comfortable moving between languages.
Second, be prepared, willing and excited about moving globally. I met a person the other day who had run an operation in Russia, is now in China, travels frequently to the US and is a German national. OK, you may not be able to do all that but understand that is who you are competing with. Unfortunately, most people elsewhere in the world are far more comfortable doing this than Americans are.
Third, be a leader. It just does not matter what you do (unless you are going to be a highly skilled technocrat / individual contributor your entire life. No matter what you do in life, you will need to be a leader.
Fourth, never stop learning! When I interview people I ask what book they most recently read and you would be amazed how many really cannot remember one or if they did read it, it is clear they just skimmed it. Reading things such as the Harvard Business Review, The Economist, The NY Times and The Wall Street Journal are a must. Put down the remote, turn off the T.V. and read!
These are just a few of my thoughts on this topic. There are a lot more I know. I wanted to get these out fast.
First, learn languages! This is an absolute must and one which is tough for Americans to get their arms around. If you cannot speak at least one other language other than English you are essentially toast. Two or three are even better. The best people I see in business today are very comfortable moving between languages.
Second, be prepared, willing and excited about moving globally. I met a person the other day who had run an operation in Russia, is now in China, travels frequently to the US and is a German national. OK, you may not be able to do all that but understand that is who you are competing with. Unfortunately, most people elsewhere in the world are far more comfortable doing this than Americans are.
Third, be a leader. It just does not matter what you do (unless you are going to be a highly skilled technocrat / individual contributor your entire life. No matter what you do in life, you will need to be a leader.
Fourth, never stop learning! When I interview people I ask what book they most recently read and you would be amazed how many really cannot remember one or if they did read it, it is clear they just skimmed it. Reading things such as the Harvard Business Review, The Economist, The NY Times and The Wall Street Journal are a must. Put down the remote, turn off the T.V. and read!
These are just a few of my thoughts on this topic. There are a lot more I know. I wanted to get these out fast.
Welcome to SupplyChainBrain: Who’s to Blame for Ocean Carriers’ Losses?
Welcome to SupplyChainBrain: <font size=2>Who’s to Blame for Ocean Carriers’ Losses?</font>
Incredible that this group has allowed this to continue. However they continue to miss the "boat" per se. They talk about exchanging rates for service however most do not provide service levels needed. No value exchange there.
Overall, good article about the state of the container shipping industry.
Incredible that this group has allowed this to continue. However they continue to miss the "boat" per se. They talk about exchanging rates for service however most do not provide service levels needed. No value exchange there.
Overall, good article about the state of the container shipping industry.