What is all the Fuss About With chatGPT? My Conversation WITH it…

Yes, I am saying my chat WITH it as I had a very interesting chat about the trucking business. I have a lot to think about relative to chatGPT and one thing is for sure. This is real and I can already think of many use cases for this tool. So, if you are not using it, you may want to think about it. A couple of observations from my conversation below:

1. Think of this as another version of a search tool but rather than giving me a list of websites to go to, this actually answers questions for me in conversational English. 
2. Notice my somewhat random follow on questions. I asked about trucking, then a follow up question on drivers, then e-commerce and then the impact on climate. The responses were perfect and very conversational. 
3. It is not just a screen scrape of another website as it brought disparate information together. 

NOTE: This post is about the viability of this new technology and I am sure people will take exception with some of its answers. That is not the point. The point is that the world is changing and you need to understand it. 

Here is my recent conversation with my new friend:

Me: Is trucking a viable business?

ChatGPT: Trucking can be a viable business, as it is an essential industry for the transportation of goods and materials. However, like any business, it can have its own set of challenges and obstacles to overcome, such as competition, regulation, and fluctuating demand. Additionally, the industry is currently facing a shortage of drivers, which can make it more difficult for trucking businesses to operate efficiently. It is important for those interested in starting a trucking business to conduct thorough research and have a well-crafted business plan in place to increase their chances of success.

Me: Why are they short drivers (I did not use a question mark so apparently punctuation is dead).

ChatGPT: The trucking industry is currently facing a shortage of drivers for a few reasons. One reason is that the job can be physically and mentally demanding, which can deter some people from pursuing it as a career. Additionally, the lifestyle of a truck driver, which often involves long periods of time away from home, can be unappealing to some.

Another reason for the driver shortage is the aging demographic of current drivers. Many experienced drivers are nearing retirement age, and not enough new drivers are entering the industry to replace them.

In addition, the industry has been facing a significant increase in demand due to the e-commerce boom, which has led to an increase in shipping and logistics, putting further strain on the limited pool of drivers.

Finally, the pandemic has also played a role in driver shortage, as many drivers were forced to stay home due to quarantine restrictions, and trucking companies were forced to limit the number of drivers on the road.

All these factors have contributed to the current driver shortage in the trucking industry.

Me: How big is the e-commerce boom (again, no punctuation):

ChatGPT: The e-commerce boom has been significant in recent years. According to recent data, global e-commerce sales are projected to surpass $4 trillion by 2020 and continue to grow rapidly in the coming years. This growth is being driven by factors such as increasing internet penetration, the proliferation of smartphones, and the convenience of online shopping.

In the US specifically, e-commerce sales as a percentage of total retail sales have been steadily increasing, reaching 16.1% in 2021. Online sales growth has accelerated during the pandemic, as many consumers were forced to shop online due to store closures and social distancing measures.

This e-commerce boom has also led to a significant increase in demand for shipping and logistics services, as more goods are being purchased online and need to be delivered to customers. This has put pressure on the trucking industry, which is a key component of the supply chain for e-commerce businesses.

Overall, the e-commerce boom is having a big impact on the economy and the way we shop, and it is expected to continue to drive growth in the coming years.

Me: What are the global warming issues related to e-commerce (The question mark is dead):

ChatGPT: E-commerce has several global warming-related issues associated with it.

1. Increased transportation emissions: The increase in e-commerce has led to an increase in the number of delivery trucks on the road, which contributes to air pollution and greenhouse gas emissions.

2. Energy consumption: Online retailers and delivery companies consume a lot of energy to power their warehouses, data centers, and transportation. This energy consumption can lead to higher carbon emissions.

3. Packaging waste: E-commerce often generates a lot of packaging waste, especially from the use of single-use packaging materials such as plastic bags, bubble wraps and cartons. These materials are not easily recyclable and end up in landfills and oceans, releasing methane, a potent greenhouse gas.

4. Returned goods: A large percentage of e-commerce purchases are returned, which can lead to additional transportation emissions and packaging waste.

5. Air freight: Some e-commerce companies rely on air freight to meet fast delivery expectations, which generates high carbon emissions and contributes to climate change.

To address these issues, e-commerce companies are exploring ways to reduce their environmental impact, such as investing in electric delivery vehicles, implementing more sustainable packaging materials, and increasing the efficiency of their warehouses and data centers.

This is where I ended the conversation.

More thoughts later on the use case for this but let this sink in a bit. The biggest use case I can think of right now is the threat to the google search engine. Rather than me asking for and getting a list of sites that I may have been able to get this information from, the system returned to me, in natural language, the answer to my question.

More to come…

Why Are People Using The Driver "Crunch" as An Excuse for Poor Service?

Ok, no more webinars or explanations of how to be a "shipper of choice... please.  I think we all get it that there is a driver problem and there is a capacity problem.  However, as I think about this there are two real issues I just cannot reconcile with the problem.  The two are 1) Lack of delivering on commitments and 2) Lack of investment.

First, lets deal with commitments.  This word really lacks meaning in this industry but I will try to define it. The definition is simply "Do what you say you are going to do" and regardless of tight capacity or not, this is something everyone should be able to do.  Why is freight being left on docks after companies have made commitments (through tender acceptances) to pick up the freight?  If there are no drivers to pick up the freight be up front and honest with the shipper.  Tell them that.  I fear too many companies are just "sweeping up" tenders then, over time, figuring out what they will do and what they won't do (sometimes by just not delivering at all).  I cannot figure out if this is purposeful or if it is just horrible execution. 

This also brings me to the idea that we are blaming ELDs for this crisis which seems ridiculous to me.  Essentially, when someone says that, they are saying they used to operate illegally but now that there is an electronic device they can no longer be illegal. Oops.. that type of argument gets you in trouble.

So, this brings me to my second and final point:  Don't listen to what the sales people tell you, listen to what the CEO's of the companies tell the investors.  The key question you should be asking carriers when they say they need higher rates to offset the capacity crunch is what are they going to do with that money?  If they are plowing back into driver investments then I am all in.  If they are increasing dividends and or buying back stock then you have to wonder who is kidding who. 

My fear is this issue is going to be a circular problem that will never be solved.  Let's follow this logic:

1) How is leadership compensated?  Increasing stock price.

2) How do you increase stock price in a tight market with raising rates?  Buy back stock and raise dividends. 

3) Will the stock price go up as much if you invest the money in driver pay versus doing #2 above?  No. 

This says we likely will not see driver investment or productivity investment.  Rather, we likely will see shareholder investment which will make the problem much worse.

Please prove me wrong by doing the right thing. 

The Week in Review - ELDs, Amazon (again), Foxconn, Border Adjustment Tax - Dead, and Drivers

Another week down in 2017 and amazingly just a few more weeks before those in the retail supply chain will be going crazy getting ready for black Friday.  A lot of topics to discuss from this week so let's get going:

1. Foxconn - Beside being a great job growth engine what does this really mean for those in the supply chain?  As you probably heard, Foxconn, the mammoth supplier for Apple and other electronics companies has decided to put a large plant in SE Wisconsin.  This will clearly generate jobs, will bring sub suppliers to the region and will make the drive from Chicago to Milwaukee a nightmare given the number of trucks that will move from the Chicago intermodal yards North.
   
   But, the real finding here is that the cost of production in the US is starting to come in balance with the equation of foreign manufacturing.  The "equation of foreign manufacturing" includes the following components:  Cost of MFG + Cost to move to port + cost of ocean / air + Cost to move from Port inland + GLOBAL GEOPOLITICAL RISK + SPEED + INVENTORY CARRYING COST.  The last few I have capitalized because these are normally considered "soft costs" (and therefore get ignored by many at their own peril).
   
   More will come and the "heartland" of America is where they will go due to transportation and now labor costs.  If you are a cartage company and haul boxes out of the Chicago rail yards, this is a happy day for you!
   
2. The Border Adjustment Tax is Dead - This was sold and designed to adjust the cost of goods coming over the borders to be roughly equal to the cost of manufacturing in the US.  It was to penalize those companies who move out of the US for the purpose of evading items such as labor laws, environmental laws etc.  When it was first proposed the stocks of those supply chain companies benefiting from cross border activity tanked.  Well, as they say, if you wait long enough good things will come.  The border adjustment tax is dead.  If you make your money moving products across borders and from the ports your money is safe.
   
3. ELDs are Dead, No They are Alive, No They Are Dead...    This continues to be a back and forth.  For the the life of me, I cannot understand why the industry is against this as it will level the playing field between those who cheat and break the law and those who try to run a lawful company.  But, alas, it appears a lot of people are against it.  Despite 21 Congressman co-sponsoring a bill to delay the mandate for one year,  the prevailing wisdom this week is the delay is dead and ELDS will go in as mandated.  
   
4. Amazon Files Patent for Underwater Warehouses -   I am going to leave this alone and just say nothing amazes me anymore.  I will need to have a lot more thought about this and conversation before I fully understand why you would want to put stuff underwater.  Is land that expensive?  Are the rich going to start moving to offshore locations which will need to be serviced from the sea?  Who knows.
   
5. Drivers - Hire Felons?  -  My guess is when you first saw this you figured I had lost my mind and this is the craziest thing you have heard of.  I now ask you to take your emotion hat off and put on your thinking cap.  Forget the social arguments, the fact is we have millions of non violent felons in this country who are no longer incarcerated.  There is a shortage of almost 200K drivers.  The solution seems like a match made in heaven.  That courier driver you had who just delivered a package to your door?  Today, he could absolutely be a prior felon.  Why not allow a non violent felon deliver to a warehouse dock?

A lot going on in logistics and I will be writing shortly about the growth of silicon valley's influence in the logistics and supply chain world.  Just as Detroit has learned their "center of gravity" is moving West, so too is the supply chain industry.  

Housing - Good News Bad News for Transportation

First, I want to be clear that one month's data does not make a trend however we all have to be very pleased with the housing numbers yesterday.  According to the Wall Street Journal,

"On Wednesday, the government reported that new home-building levels surged to a four-year high last month, amid a nearly 12% rise in new building permits. "

As we all know, housing drives a lot of activity or "velocity" in the economy because along with a house comes a lot of other ancillary purchases such as appliances, furniture, drapes etc.  Housing also is a "mood" indicator because, generally speaking, people do not buy houses unless they feel fairly stable about their economic situation.  For these reasons, and I am sure a lot more, having housing move like this is a fantastic sign.  The Wall Street Journal even went so far as saying this movement may vindicate all the maligned recent activity by the Fed.

This is also good for transportation - in a way.  Transportation always gains from housing.  It is that simple and quite frankly housing is almost a singular metric for transportation companies to look at when determining the macro movement of the economy.  The last huge "boom" in trucking came when the housing market was at a froth of excitement in 2004 - 2006.

Now, for the "bad news". Housing is also right up there with manufacturing as one of the highest employment substitutes for drivers.  Drivers can migrate from construction to semi-skilled manufacturing to driving pretty easily and when construction jobs jump, drivers tend to want to move to those jobs.  Why do that and not just stay with trucking?

Two reasons help explain this migration between careers.  First, the time at home factor is big.  If a driver can even come close to replicating their driving income while staying at home they will do that.  Second, there really is no "penalty".  Most jobs and careers there is a penalty for hopping around such as loss of seniority, pay or other benefits.  For the most part (yes there are a few perks for being senior but not many and they are not highly valued relative to time at home) a driver loses nothing by pivoting to construction as they know they can move back to driving anytime they want and they will be welcomed back with a hug and a thank you.

Keep your eyes on these numbers as they develop.  If this is the beginning of a real sustained increase in construction and we get anywhere near close to 800K to 1M starts next year then the driver shortage will exacerbate really quickly.

Reflections on Labor Day

Our industry, the logistics and supply chain industry, should reflect more on this great day than just about any other industry.  We are built on the benefits of the work labor does every day.  The number of truck drivers, loaders at rail and air ramps, workers at ports, warehousemen etc. etc. really do drive this industry.  I have not done the analysis however the ratio of labor (stereotypical "blue collar") to "management" or managers has to be one of the largest of any industry.   Think of it, for every truck there is at least one driver!

This industry also is what moves America.  Nothing is built, bought, imported or exported without going through some channel in this industry; and most go through multiple channels in our industry.

So, with that I do reflect on this great industry and the great people who work in it.  I hope they get to spend time with their families - although the nature of the industry is many will not.

Thank you for all you do for your companies, this industry and the United States of America!

December Cass Index report shows signs of improvement but points to slow Q4 growth overall - Article from Logistics Management

As I have predicted for a while, freight was very soft in Q4. Shippers have reset inventory levels at very low points and unless they see a large swing in macro economic indicators, I doubt they will increase volumes (Don't pray for a "restocking" initiative).

I believe also shippers are starting to take advantage of improved technology driving actions such as back haul sharing, co loading and other joint initiatives. This, of course, takes sophisticated software. There may be a convergence going on: Sophistication of software and the willingness of shippers to accept a bit more complexity to offset the higher per unit costs. Key metrics to measure will be:

Loaded revenue per mile, revenue per tractor / trailer and the amount of idle equipment.

While everyone is complaining about the driver shortage, no carrier that I have seen has been willing to raise wages. The "windfall" of revenue due to tightened capacity appears to be flowing to company bottom lines and not to the driver.

December Cass Index report shows signs of improvement but points to slow Q4 growth overall - Article from Logistics Management