ATA September Tonnage Report; AAR Rail Loadings

The ATA has issued their September tonnage report and the results are as expected - flat at best (increased.4% after an August decrease of .9%).  The most stunning statement in the report is:

"Compared with September 2011, the SA index was 2.4% higher, the smallest year-over-year increase since December 2009. Year-to-date, compared with the same period last year, tonnage was up 3.6%."

The smallest increase since 2009 is not a good story for the transportation industry.  Combine this with the fact that inventories are somewhat inflated - meaning no real inventory restocking is about to happen - and you realize this year ended very flat for freight and freight movements.  Of course, we have been seeing this all along in our "unofficial" indices which I use to gauge freight demand.  A couple of instructive trends to look at from the graph:

ATA 9/2012 Truck Tonnage Graph

Coming out of the recession you can see the truck tonnage rise but really since the beginning of 2012 it has flattened out substantially.  Further, there is a little blip at the end of 2011 which I believe was essentially a "fear trade".  A "fear trade" was the beginning of the industry pushing hard to put the "fear of God" into shippers telling them if they do not sign up for premium costs then "when the economy turns" the carrier will abandon their freight.   This worked (like all fear trades) for a very short period of time however ultimately rational economics took over and the results are what you see above.

Rail tells a bit of a different story and it is clear the migration from truck to intermodal is occurring at a fast pace.  Market share of intermodal v. truck has to be increasing as I personally believe it has become the preferred mode wherever it can be applied.  It used to be truck was preferred then people would "look at" intermodal and now I believe it is the exact reverse.  Logistics Management magazine said in interviews with shippers at the Council of Supply Chain Management Professionals (CSCMP) Conference - 2012 shippers where now calling intermodal the "go to" mode of freight.

AAR reports while carloads are decreasing in volume, intermodal (IM) is increasing for all major US railroads.  For week 42 (ending October 20, 2012) IM containers were up 6.1% yoy and 5.8% for the cumulative through week 42.  Trailer on Flat Car (TOFC) continues to show significant declines as the migration to containers continues.

Overall we are seeing a very flat freight market and one which shows no real signs of major pick up through the beginning of 2013. If GDP continues to rise at or around 2% and roughly 10% of that number is "non freight" (i.e., financial etc.) then we will see below 2% growth in freight for the foreseeable future.  This is far below the 3% most industry analysts believe is when the real "crunch" will occur.

Unless carriers decide to significantly shrink their business this will mean it will be far more about growing market share than it will be about grabbing more of a growing pie.

More On Same Day "Delivery Wars"

My readers know I have been blogging about this, with thoughts on what will work, for almost a week now.  I started with a post asking whether Amazon awakened the sleeping giant of Wal-Mart and also wrote about the inherent advantages of scale and dispersion that the United States Post Office possesses in this space.

Note: to follow this story on my blog as it develops make sure to click on the tag: Same Day Delivery.

SCdigest has now written about it (I must admit, I love when I "scoop" a professional journal!) and they are calling it the "same day wars".  Not sure I would use the war analogy but it is interesting they see it that way.

My experience has been same day shipping is more a "marketing gimmick" than reality.  How many people really cannot afford a quick trip to Wal-mart (which is open 24 hours a day mostly)?  Will they really pay $10 to avoid that trip?  I think same day shipping ads will draw eyeballs (which is good - creates sales) but when the customer is about to dispense with $10 or $20 extra dollars they will decide a quick car trip could be enjoyable!

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.

More on 3D Printing

I had recently written thoughts on 3D printing (3D Printing - Don't Reduce Costs - Eliminate Them) and how I thought this could revolutionize how products get to market.  There are a lot of great things about this technology which will improve our lives however I definitely had a logistics and transportation slant to my reporting.

Yesterday, Steve Faktor at Forbes wrote how 3D printing is also a big opportunity for HP to reinvent themselves [ and this technology].  Read more about this and keep abreast of this technology.  I assure you this technology will change our lives eventually.

Why Transportation Stocks Are So Important

In my last post I reported (and linked) to an article about transportation stocks and what the "warnings" mean which have been issued recently.  The graph below from the Wall Street Journal and this article really define why it is so important and why we need to follow these stocks not just because we are logisticians but because we follow the economy in general.

Graph from Wall Street Jounal

Macroeconomic Monday® - Mixed Results Last Week

Last week could have been a "Seinfeld" week where it was the week about nothing.  It was a very bad week (worst since June) for the stock market as people continue to anticipate poor earnings and forecasts for even slower earnings.  It then had some nuggets of macroeconomic data which essentially said things were "flat".

I do want to start with the Producer Price Index.  The PPI went up by 1.1% ("Core" PPI held flat) v. an expected value of .7%.  As can be seen in the graph below, this is a bounce back from the beginning of a decline.  It is difficult to see how a recession could be in the near future when there is such inflation at the PPI (unless you think the increase is due to speculators hoarding commodities:

FRED® PPI Index

This will be an interesting trend to watch to see if we continue to have inflationary pressure at the PPI level which ultimately will need to come into the CPI or will be a drag on corporate earnings.

Inventory to Sales Ratio:

The vaulted inventory to sales ratio was released on Monday October 15 so I thought I would include it in this week's report.  First, why is this number so important?  What it shows is whether companies are building inventory or are they lowering inventory.  If they are building inventory it is a signal that the economy is slowing since it usually takes a few months for companies to adjust to lower sales.  There is seasonality to these numbers and for sure they are not adjusted for prices (if prices go up the value  of the inventory goes up but the quantity does not) but it is still a great indicator to watch.

FRED® Inventory to Sales Ratio

The graph shows this has increased over the last few months and it had started coming down but this month it actually increased ever so slightly.  This is a clear indication the economy is "tilting" to slowing down and inventory is building.  What do companies do when inventory starts building?  They lay people off, slow down factories and slow down 2d and 3d tier purchases.

This is a key metric to follow and if you are not sure why just look at what happened during the recession - it ballooned.

Jobless  Claims:

Initial jobless claims came in lower than expected (339K v. 370k expected) however I am going to let these numbers "mature" before I make any conclusions.  There has been a lot of "noise" in these numbers lately so I am going to see some trends.  By the way, I do not subscribe to the conspiracy theories related to these numbers but rather understand there are real statistical reasons why the numbers are moving around.  Let's see how it develops in the next few weeks.

Transportation Data:

In the last couple of weeks many indices have shown the transportation freight is slowing dramatically and rates have not only stabilized but in some cases are showing year over year declines.  Transportation executives have "warned" already about slowing freight volumes and the inventory to sales ratio reported above would support the decrease in freight volumes in the future.  All in all the story is not great for the near future for freight volumes.  This report from Reuters a few weeks ago titled Dow Transports Raise Warning Flag For US Economy says it best:

"Transportation and logistics companies are also worried. At least seven of them - FedEx, Norfolk Southern, UTi Worldwide (UTIW.O), Swift Transportation Co (SWFT.N), Arkansas Best Corp (ABFS.O), XPO Logistics Inc (XPO.N) and Werner Enterprises Inc (WERN.O) have scaled back their profit forecasts in recent weeks. United Parcel Service Inc (UPS.N) led the pack when it cut its outlook in July."  

Morgan Stanley, Bank of America and others who follow the transportation industry clearly are indicating a slowing transportation spend and all the macroeconomic data would support that theory.

Advantage:

Clearly the data is showing a continued advantage for the shipper.  This is another week of Slight Advantage: Shipper®.  Last week also reported this measurement so it is clear the extreme tightening of capacity and drivers and its effects on rates is being offset by the slowing economy and the potential for a slowing economy (yes, the negative feedback loop actually will effect this even more).

Could The Post Office Be The Big Winner in Same Day Delivery?

An interesting development in the "same day delivery wars" which has been brewing as of late with Amazon and Wal-Mart.  The key question is who is going to do this from a delivery standpoint and who can do it at a very low cost?

Already, the USPS gets something to you for about .45 cents which FEDEX may charge you $5.00 or more.  Granted, they get it faster however with just a small amount of pre-planning you can change that $5.00+ charge to .45.  Most of what FEDEX is charging us for is a premium for our inefficiency and lack of planning.

Enter the USPS in the same day shipping.  As we know, the infrastructure costs for same day shipping are massive (advantage Wal-mart over Amazon since Wal-Mart has essentially 4500 distribution centers) and thus usually make it economically impractical. The USPS has some interesting, already in place, advantages:

1. Huge infrastructure - generally an office in every town regardless of size
2. Already mandated to go to just about every house every day in the Country
3. Will pick up as well as delivery and usually without an appointment. 
4. If you are not home, the trip to the USPS is generally very short (FEDEX for example has pulled out of my small town.  If I am not home when a FEDEX shipment comes and I want it I have to drive 1/2 hour to get it.. my post office is less than 1 mile away)

With some sophisticated routing tools, the USPS could, in a town, sweep the town to pick up the deliveries, bring to their "cross dock" then conduct the deliveries at night.  In some cases they can incorporate the delivery into their already established routes and in others they can utilize the equipment which is just sitting anyway.

This should be fun to watch!

"The Logistic Failures Will Not Be Repeated" - Part 1

Note:  This is Part 1 of a Two Part Series Concerning Logistics Lessons Learned in The Israeli National Defense Forces (IDF)

I came across the this fascinating article which chronicles the poor performance of the logistics group within the Israeli National Defense Forces (IDF) during the 2d Lebanon war in 2006.  Literally, Israeli soldiers were suffering from dehydration due to a lack of drinking water in the Country right next to their own and one which they easily can beat militarily.  Brigadier General Itzik Cohen, the head of the Logistics Branch for the IDF's Technology and Logistics Division said the following about this horrendous situation:

"During the Second Lebanon War, there was no shortage of logistic items. We had sufficient inventories of food, water and ammunition. The problem was that the items did not reach the forces that needed them."

Translate this into a business problem which we see all the time:  The company has a better product and can readily produce it but the problem is they cannot get it through distribution to the customers who need it when  they need it (Availability of product is at least two dimensional:  Quantity and time).  Think about this in relation to the infamous "Black Friday" events.  There is a lot of demand, there is a lot of promotion (think of promotion as the invasion) but the company cannot get the product to the market.  Last year, one company even canceled orders admitting they would never get the product to market.

Why did this happen to a one of the most proficient militaries in the world?  We learn the issue is very similar to the problem in business. Here are some reasons cited in this article:

"In the summer of 2006, the IDF disbanded the divisional logistic groups that were responsible for resupplying combat divisions... The issue of logistics, so it seemed, was of low priority for commanders, and the result was reports of hungry and thirsty troops deep inside hostile territory."

Does that sound familiar?  Logistics is a "low priority" for commanders?  Translate this into business and think how many times logistics is an "afterthought" to  the people who generally run a consumer company (sales, marketing, finance and merchandising).  Of course, there are great companies, like Wal-Mart who fully understand logistics is in fact core to the success of the company.

The life cycle of a company's organizational structure relative to logistics is very similar to the experience cited in this article with the IDF.  This life cyle looks like the following:

1. Business is Going Well - All is in Balance
2. Times get tough - Cut "Non Core", Logistics is seen as "Non-Core"
3. Things start getting better
4. Product has high demand, logistics is under developed, sales and marketing say "If only logistics was better we could sell the product"
5. Company invests in logistics

After 5, the cycle starts all over again.  This is a common life cycle of a company and it appears a very common life cycle of a defense force. 

My next post will discuss how the IDF solved this problem with what appears to be some real "10X Solutions".

Has Amazon Awakened The Sleeping Giant? - Walmart Same Day Delivery

I think one thing a lot of industries and companies have regretted is taking on Walmart.  Circuit City tried, Toys 'R Us tried and others continue to try.  Little 'ole Amazon was sitting very nicely with a great business dealing with parcel delivery in a few days.  However, that was not good enough.

They now want to turn their vast and sophisticated network of distribution centers into same day fulfillment centers.  There are pros and cons to this and clearly it is a very expensive proposition.  Except for the most densely populated areas, same day delivery is cost prohibitive.  It is especially prohibitive if you have a normal central distribution point system.  Distribution centers like Amazon has are designed to service large service areas - like 250 mile radius and are too big to blanket the Country with them.

Enter Walmart and their "test" of same day delivery.

Walmart sees the Amazon plans and basically says, "I see your same day delivery and I raise you by 4,500 stores / "Distribution Centers".  The interesting part of a Walmart store is the consumer sees it as a retail store yet the smart people in Bentonville see them all as distribution centers.  Let's say the average radius around a store is 15 miles before you hit another store.  Given this (and I am sure the statistic is available.. this is my guess.. not counting the outlands / badlands etc) you can see the advantage Walmart has and will always have over Amazon in same day delivery.  This will remain true unless Amazon wants to go on a mind boggling spree of capital investment to build out stores.  My bet is if there truly is a market for same day delivery (which is very questionable) then Walmart wins before Amazon even gets on the field.

A lot of people have lost a lot of money betting against Amazon over the years however this endevor may be a "bridge too far" even for Amazon.  My advice:  Don't take on Walmart.  Find the white space between you and Walmart (as Amazon has done so nicely over the years) and dominate that space.

The war of final mile delivery is about to begin!

Visit NBCNews.com for breaking news, world news, and news about the economy

Ryder Launches a New Blog - Called "Exchange"

One of the goals of the 10xLogistics® forum is to create an "open-source" for logistics and supply chain knowledge.  To do that I try to keep up with new Blogs and sources of information and then actively advertise them.

Ryder has launched a new blog called "Exchange".  While I am very skeptical of "corporate" blogs because I believe they generally are marketing gimmicks versus true open source sharing, I am willing to give this one a shot.  I would just say "buyer beware" as I cannot imagine they would ever blog openly about something which is not in their best interest even if it was in the reader's best interest to know.

Let's follow it and see where it leads us.

A Definition of Logistics Gone Bad

I recently came across the video which I think is supposed to talk about the huge benefits logistics plays in our economy. And, by this the video defines logistics as transportation (it is a lot more than that but for the most part, this video deals with transportation).

It is a good description of how things get from point A to point B however I could not for the life of me think of a worse example to use:  Shipping bottles of water!!  Unless you are shipping water from a location of plenty to a drought stricken area, this is the worst example I can think of (except for maybe shipping concrete over long distances).



 Bottled water is a perfect example of something which should be created extremely close to the point of consumption ( I even think this video shows a route from Chicago to the West Coast).  Whenever a supply person sees that type of route they should be asking why are we shipping this in the first place.

Get the water locally, filter it, and bottle it locally and get it to local stores!  It is as simple as that! It is cost effective, it is "green" and it is simple.

As I have always said, don't just reduce costs, eliminate them!

September CASS Freight Index - Year over Year Decline

I will take a day to digest these numbers however the CASS Index is out for September and the results are mixed.  Increase month over month is attributed to a bump in activity to avoid a potential longshoreman's strike and even with that the Year over Year numbers for shipments has declined.

Another tidbit in the report is the feeling that inventory levels are elevated and the retailers are sitting on a lot of product which supports my assertion in my last post Macroeconomic Monday® that the sales to inventory levels will go down and will continue to show advantage to the shipper for freight rates and bidding.  (Of course, in reality, it advantages no one as lower sales to inventory means sales are down and the shipper's business is less healthy - I use these terms only in relation to the carrier - shipper relationship).

More to follow after I look at this in more depth.

Source: CASS FREIGHT SYSTEMS

Macroeconomic Monday®

Last week was a heck of a week for the macroeconomic outlook for both the world and the US economy.  As everyone who reads this blog knows, I report on this as I firmly believe the macroeconomic outlook is at least as much, and probably more, impact on the logistics industry than just about any other factor.

Unemployment:

First, there is good news on the unemployment front. Conspiracy theories aside, it is clear unemployment is coming down and participation is going up.  The good news, for the younger workers, is the long term demographic trend is more people retire which opens up more jobs for the younger workers.

As provided by Northerntrust.com

The graphs on the left from the BLS and provided by Northerntrust show the unemployment rate going down and the long term unemployment rate going down.

Both the ISM manufacturing and the ISM non-manufacturing indices were up above expectations  which show the economy is still "limping" along but it is, in fact, moving forward.  Most expect GDP to grow by less than 2% this year and be somewhere close to 1.25% to 1.75%.

GDP Analysis
This GDP number is very instructive as most in the transportation industry have said the "big capacity crunch" will come when GDP is at 3% or over.  These GDP predictions show we are far from this capacity crunch "red line" and therefore shippers should be fairly aggressive in their purchasing methodology.  FTR had reported coming into the year that they expected GDP to be 2.5% to 3% and at 3% we would hit a major capacity crunch.  Clearly, we will be 1/2 of that number.

Using these numbers, Truckgauge.com is using this data to say the driver shortage and the somewhat fabricated capacity shortage will remain not at a high enough level to "cause undo stress on the transportation system".

Consumer Credit
The most surprising number in the reports last week was the consumer credit number.  It looks like people have started feeling comfortable running up the debt levels again (which is not a good thing).  Consumer credit was up over $18bl which was significantly more than expected.  I say this is not a good thing because I read two things into this number:

1. People are living on the edge.  A little slow down here or there and they have to go to credit to make things work.
2. If people are already using credit to this level, a bit more of a slowdown (which is likely) will result in a collapse of household balance sheets which was a core driver of the 2008 financial crisis. 

The slowing of the economy and the fact that it never seems to get off of first base is partly due to the repair of household balance sheets.  Give a family an additional $1,000 and in the past few years most would use it to pay off debt.  That helps balance sheets but does nothing for the economy.  It is a short term hit but a good long term trend.  These consumer credit numbers, if they continue, show that good long term trend is reversing.  We shall have to see how it continues. 

ADVANTAGE?

One of my additions to this report will be a simple rating deciding which side the numbers favored.  we will have 5 potential ratings:  Advantage carrier, Slight Advantage carrier, Neutral, Slight Advantage Shipper, Advantage Shipper.   While people may argue where we are today, I think it is clear the arguments are centered around a Neutral rating.  It swings a little here and there but for now things are balanced,  Even the top executives in the trucking industry will say the capacity crunch is coming versus is here.  So, we start essentially in the middle.

This week's statistics show "Slight Advantage: Shipper"® (I will start summarizing the data concerning which direction the economic numbers move the shipper / carrier needle).  A GDP number below 2%, the growth of credit (which eventually will need to be paid off) are showing the economy slowing.  The one positive is the jobs report so that is why this week was only a slight advantage in the direction of the shipper.  

Look Ahead:

We will soon get the new sales / inventory numbers which will really be telling concerning the potential of a "restocking" of inventory levels (which we in transportation love even though it is a temporary boost).  As a reminder, below was the last release graphed.  It shows we have flopped around the 1.25 level for most of this recession and had a bit of an increase at the beginning of this year. 

Inventory / Sales ratio: US Census

 Remember, going into this year most had thought it was the year of a recovery and 2.5% to 3% was the expected GDP.  Given this it was natural to think the inventories would increase in preparation for future sales.  This is the second year in a row where the forecasters were wrong and so I anticipate people will not get fooled again and this number will actually decrease as businesses will be a bit timid to increase inventory in anticipation of any future sales.  If the restocking does not occur (as I anticipate) then the advantage will continue to swing to the shipper. 

Value Chain or Supply Chain

A fantastic discussion over at Supply Chain Index on the measurable differences between a "Supply Chain" and "Value Chain" (Value Chain vs Supply Chain).  Most use these terms interchangeably and this blog post really has given me cause for thinking about these terms. I even realized I did not have a tag or label for "Value Chain" which shows I thought of them as synonyms; Which they clearly are not.

Abby Mayer

Just as "logistics" has morphed into "supply chain" "supply chain" is now morphing into "value chain" in our industry lexicon.  However this blog post makes us think this over.

I am starting to think we have to reemphasize that these three terms are three distinct elements of the overall "cash to cash" cycle and getting goods to market.



Great job by Abby Mayer. Twitter: @indexgirl.

Supply Chain Index - A must read Blog and Twitter Handle: @SCInsightsLLC

CSCMP 2012 Was A Huge Success - On to CSCMP 2013 in Denver

My blogging has been slow to non existent this week due to the great Council of Supply Chain Management Professionals (CSCMP) 2012 Annual Global Conference in Atlanta.  However, I did "burn up" the twitterverse this week (see tweets for logisticsexpert and search for #cscmp2012) as I tried to keep everyone up to date on the happenings at the conference.

It was a fantastic conference and I really enjoyed running track 6 - Energy and Infrastructure.  We had great presentations from Walter Zimmermann, the Kansas City Southern Rail, the Environmental Defense Fund, The Port of Long Beach, Smartway (EPA Partnership with Industry) along with case studies on natural gas implementations which occurred at two major shippers.  These successful implementations are truly the "win-win-win" where the companies have lowered costs, done great things for the environment and have contributed to our nation's move to a domestic fuel source.

Two highlights of the conference were to hear T. Boone Pickens speak (Read about the Pickens Plan here) and I actually was able to attend a luncheon with him.  What a fantastic person and his work to get this country an affordable domestic fuel source should be praised by everyone in the country.

I also was thrilled and excited to see Erik Wahl (The Art of Vision) motivate us about creativity and innovation in a very unique way - he paints incredible pictures during his talk!  Below is a Youtube video of him (not the one at CSCMP) and you will immediately see what I mean.

I have been attending these conferences for years and this was the best one I have ever been too. The energy, excitement and pertinent topics were all fantastic.  I am already looking forward to Denver 2013!

3D Printing - Don't Reduce Costs - Eliminate Them!

You have heard me say over and over again that the ultimate goal is not just cost reduction it is the actual elimination of costs.  Think e-books and iTunes® and think of all the costs which just were  totally eliminated.  No one figured out how to "reduce" the costs of shipping books rather they just eliminated the shipment all together.

An early trend I am watching now is the idea of 3D printing.  This may even be too early to call it a "Mega-trend" however I think it is something we should be aware of.  Just like the elimination of shipments of things which have been digitized (books and music) the next frontier are physical "hard" parts.

At the end of this post is a neat little video which explains this technology.  Think of it this way:  If you need to make something which is made out of one material you could just load the material, load the digital specs and the printer does the rest. The key for Logistics people is the part is printed at the point of use and on demand.  This has two implications.

First, as this gets better and better and costs come down for the machines more and more product will be made this way.  This means less product is made at some far away factory and shipped.  This will result in a continued headwind on shipping volumes.

Second, this will also dramatically reduce or even eliminate inventory.  No need to stock 30 days supply of something when you can "print on demand".  This also puts downward pressure on freight demands as less and less distribution will be needed (also has huge implications for warehousing).

3D Printers from Tasman Machinery

To the left you can see what these machines look like.  I just found these off the Tasman Machinery website (no endorsement just a good picture).  Like all electronic machines during their infant stage there is a lot more development to happen and I am sure it will happen.

Here is a picture of actual wearable shoes made with 3D printers and above is a picture of a model / replica of a ship made with 3D printers.

You may look at these products and say there is nothing to worry about as it will take a long time for these types of products to be brought into production.  Of course, I would have to remind you this is what people say about all disruptive and new technologies at the beginning.

 I think this will develop rapidly and this could be the "new normal" for a lot of manufacturing of sub assemblies and parts.  As I said above, this will eliminate the need to ship this product and, of course, lessen the demand for transportation.  One can clearly imagine a day when you walk into a store, need a basic product and rather than the hassle of inventory and distribution, the store clerk will just "print on demand" for you in the store.  Huge implications for freight costs and demand, inventory and warehousing and S&OP processes. 

According to a blog post by Richard Gottlieb at Global Toy News we may be at a tipping point as it relates to the use of 3D printing in the toy industry.  He rightfully highlights the implications and benefits of this technology by saying:

• If you own enough 3D printers, why would you need to own any inventory?  You could print out on demand.  It’s JIT (Just in Time) in its truest sense.
• If you can print out small batches without the need for molds or factories?  Anyone can enter the marketplace with a new item.  The only cost is for the material.  
• If the need for factories and engineers declines, what happens to people who currently hold those jobs?

Again, this is pre "mega trend" stage but watch it closely as these types of technologies have a way of taking off.

Below is a great little video explaining what this is all about:

Truckload Capacity "Readily Available"

Over at the Transplace blog they provide some analysis on the most recent Morgan Stanley release.  The words which caught my eye were they now expect truckload capacity to be "readily available" for the remainder of the year.

This has been the trend for a few months with some artificial "greenshoots".  While I have been predicting this for the better part of the summer I still believe the issue is companies are really reluctant to bring back inventory.  They would much rather error on the side of "running out" than stocking too much and that means less freight is moving.

Get Ready for "Macroeconomic Monday®"!

I will be starting a new feature this week called "Macroeconomic Monday®" where I will be reviewing the macroeconomic trends from the previous week and what is up coming.  I will also add commentary as it relates to the logistics industry.  Hopefully this will become a "must read" for you every Monday morning.

You can always search for it on my blog by going to the label "Macroeconomic Monday®" and look for it on twitter at #macmonday® (without the ®).

Getting Natural Gas Right from The EDF

The Environmental Defense Fund really puts out good science.  They are truly non partisan and report the facts as they are known.  I just read this posting called "Getting Natural Gas Right" and I was both intrigued and encouraged.  The conclusion is simple (and those who take ideological positions on science will not like it):  If large amounts of methane are released into the atmosphere due to leakage, the use of Natural Gas will be worse, not better, than what we are doing today.

However, there is great news. If prudent measures are taken to ensure the proper drilling, transportation, storage and combustion then natural gas becomes a fantastic fuel to help us move to a low carbon future.

I like science.

Elena Craft Will Be Speaking At Track 6 - CSCMP 2012

As my readers know I am hosting Track 6 (Click on Track 6 here and see the tracks objectives)  at the Council of Supply Chain Management Professionals annual conference in Atlanta next week.  This track will cover all aspects of Energy and Infrastructure issues facing both our industry and the globe.  We have expert speakers from all facets of the discussion and I can assure you we will challenge the status quo thinking!

I am especially excited to announce to have Elena Craft on our panel. Elena Craft has had a stellar career as a health scientist for the Environmental Defense Fund (EDF) and I am proud to have her on our panel.  I have linked to her biography above and I would also encourage you to read her great blog postings at The EDF News and Blogs Section.  She will challenge us to think differently about what we are accomplishing.

Her presentation is on Monday afternoon, October 1, 2012 in Track 6 at 4:45.

I am looking forward to seeing you all there!!