BNSF to Test Natural Gas

Just received a number of alerts about the BNSF testing natural gas. Seems they believe this will be a large opportunity to switch which I fully support.

However, if fuel costs are not adjusted to the shipper then the economics of selecting intermodal over truck will not change. There has to be transparency to this decision and the current dominant fuel cost adjustment mechanism does not do the task well.

Mapping The Carbon Use Chain to The Value Chain

I am starting to do a lot of work and study on the impact of the complete value chain on the environment.  I think the argument over whether there is climate change occurring is absolutely over.  It is clear our environment is changing and changing rapidly.  The only question left is how much of this change is due to human interaction and how much is just natural cycles.  The answer, of course, is that it is due to both.

Given that I believe it is due to both I have to ask why would we ignore the portion we can impact just because there is a potion of it we cannot impact?  Further, if we know an activity is causing environmental issues why continue that activity?  Why not try to mitigate the impact of the activity or moderate our engagement in that activity?

A simple example is in fuel mileage of automobiles.  If we can get automobiles to 50mpg or higher (whether by better engineering of the internal combustion engine or moving to another energy source like electric) why not do it? The obvious answer is if there were some functionality we absolutely needed that the 50mpg car could not provide but I find that is few and far between.  Most users of large trucks (i.e.., Pick up trucks and SUVs) are using them because they "like big" more than any real functional use.  Some will say it is for better use in bad weather but as someone who drives a hybrid in Wisconsin during severe weather I can tell you I see as many big trucks / 4wd's in the ditch as I do anything.

So, the answer is we should do whatever we can to effect positively our impact on the environment.  In order to do this we first have to map out our impact (end to end) on the environment.  The best model I have seen (adapted from the Greenhouse Gas Protocol)  breaks it into the following segments:

1. Extraction of raw materials
2. Production of product
3. Transportation and distribution of product
4. Use of product 
5. Disposal of product

It is important that the entity which conducts the "pull" in this value chain be the one to impact the actual conduct of the entire chain.  We know the consumer is essentially the entity which pulls all the way through however the consumer is too fragmented to be able to make a consolidated impact.  This must be at the producer of the product level.  This leads us to the 3 Scopes which product producers need to measure if they are truly going to understand the environmental footprint of their product and their company.  

Some may ask why this "burden" should be put on the producer of the product and I think the answer is threefold.  First, virtually all the activities upstream would not occur if they were not "pulled" by the producer.  No one would mine for coal if there were not users who wanted to buy the coal to use.  It is really that simple. 

Second, the user of the product (downstream) does not have enough information to know the art of the possible.  They can conduct good comparisons of products which exist but it is hard for them to know what could exist and therefore they are working with imperfect and incomplete information.  The producer has that information. 

Third, the consumer of the product cannot impact end of life disposal beyond doing the right thing based on societal infrastructure.  For example, I can send my products to a recycle center but I do not actually recycle the product.  Knowing whether the product packaging and end of life product "carcass" is capable of being recycled is beyond the consumer's capability.  This must be put on the producer to execute. 

Ultimately, the cost will be put on the consumer and products will compete within a "sustainable" sandbox.  The choice to operate outside of the sustainable sandbox will very quickly disappear.  

In looking at the totality of the business case we see there are clear cost reducing and brand enhancing reasons to look at your entire value chain, map it it to the environmental / energy supply chain and make impact in each area. 

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Why I am Not Concerned About The "Driver Shortage"

The myth that has existed in trucking for over 15 years is some year we will get into such an acute driver shortage that freight will be at a standstill and you will be lucky if a truck shows up to pick up anything you have to ship.  In fact, many trucking company executives have parlayed that story into a reason why shippers should pay higher than market prices today for freight for fear that when that day comes only those who over paid in the past will be serviced.

That was 15 years ago and the time has yet to come and if you bought into the story you have "overpaid" for 15 years and the crunch (and your perceived promised reward) has yet to come.   Of course, as always, the story has other aspects to it.  I do not doubt that the driver pool is shrinking and people do not want to drive long haul trucks.  However, the good news is the market is taking care of this problem in 4 ways:

Miniaturization:  This phenomenon is everywhere whether it be in packaging, the product itself or the actual and complete disappearance of the the physical product.  I bought a stereo for a new place I have and it consisted of a Jabra® Soulmate and my iphone.  The entire thing can fit in the palm of my hand and it gives off as much sound as a stereo that came in 3 boxes 10 years ago.  This would not be seen if you looked at GDP numbers or sales numbers of companies because from a revenue and profit standpoint, the company did as well as when they were selling massive boxes.  However, from a freight standpoint, they can fit a months sales into 3 trucks. Or, better yet, it is all sent via UPS.

Of course, we all know this is happening in packaging and other aspects of the freight.  And, the disappearance of freight is becoming very real with iPods, Kindles and now 3D printing.

Focus on Profit v. Revenue Growth of Shippers:   I keep hearing that once the GDP gets to 3% we will have a massive shortage and I am not convinced.  If you look at the financials of the major shippers you will find they are doing very well (as are the transportation companies).  Why are they doing well? It is generally not a growth in product sales / revenue story but more of a growth in profit story. They are managing costs and increasing prices (despite the Government telling us there is no inflation).  This means you cannot equate a great quarter to increased freight.  It is not as connected as it was at one time.

Intermodal:  This, of course, is the grandaddy of them all.  The movement to intermodal continues and seems to be picking up speed.  Shippers who were afraid of it just two years ago have capitulated and even segments of supply chains (i.e. inbound) which historically shunned this mode are now buying into it.  Bottom line:  This is the major counterweight to any type of driver shortage.  This is gone beyond a nice "substitute" for truck freight and has now become the "category killer" for truck freight.  Acceptable length of hauls (LOH) are decreasing (one bid wanted intermodal rates on lanes 400 miles or greater), service is increasing and overall people are moving so much freight over to intermodal that truck is really just catching the local P&D and interplant moves.  P&D and interplant moves are nicely served by local niche players and the need for a nationwide network for a truckload carrier diminishes dramatically.

Economics 101: This is the final reason I am not worried.  If the driver shortage becomes very acute and the demand exists driver wages will increase bringing more drivers into the market.  I am a firm believer in market equilibrium and market clearing prices.  Yes, driving is a hard job.  However, as we have seen in the oil fields in North Dakota, people will do hard jobs if the pay is right.  So, bottom line is, no need to pay "extra" today because if needed, you will absolutely have to pay extra tomorrow.  And any sales person who tells you that because you paid extra now you won't have to pay extra later is either lying to you or just does not understand economics.

My conclusion:  Watch the economy, watch the market, and watch your freight but do not buy into the scare of "pay up now" to be serviced later.  It makes no economic sense and it makes no sense given the current situation of transportation companies.

The Logistics of Defending Against Asteroids

A respite from working on how to get a package from point A to point B is to think about the meteor which hit Russia a few weeks ago.  Then think whether it was just pure dumb luck that it did not hit Chicago or are we really safe from this?

Unfortunately, it turns out, it is just pure dumb luck.

Which makes the fact that my fraternity brother from college, Dr. Ed Lu (and space shuttle astronaut),
is working on how to defend the earth from asteroids with his non profit B612 a good thing.  It makes me sleep better at night.

So, for a break, watch this quick Tedx video... You will enjoy it and be fascinated.

Should Cost Modeling Comes to Logistics

I wrote back in January, embedded in another article about why people should do "should cost" modeling prior to negotiating rates.  This has caused me to do a lot more thinking about this topic and after doing some analysis I have come to the realization this is the best way to get to what the true cost of freight should be.

It also eliminates all the emotion, speculation and hype of the industry when you read about capacity constraints, driver shortages and other macro economic issues.  Here are the basics:

1. Break down your suppliers costs into the big driving buckets.  For transportation it is clearly fuel, driver wages and equipment.
2. Make sure you have calculated in offsets to costs.  For example, the industry is very prone to discuss how much more the acquisition cost  of equipment is with new emissions requirements and other adds.  However, they very rarely (unless you conduct deep research) discuss the vast reduction in operating costs due to better maintenance and fuel consumption.  Each element has to be accounted for. 
3. Ask what is really going on with driver wages (not what "could" happen).  Many will say the driver shortages will lead to higher driver wages however this has not really panned out.  So, find out what is really going on with the driver wages. 

This does not mean you are trying to ensure the supplier does not make a profit. What it does ensure is you fully understand the true costs driving the pricing, it ensures you understand what the reasonable profit margin is and it ensures you understand what the market is for the products you are buying. 

This process has been used by direct procurement people for years.  Also, I can assure you this is the process your transportation suppliers are using to decide how much to pay for a truck, trailer or container.  There are different components to measure but the process of "should cost" modeling is exactly the process they follow.  You should not be afraid of it nor should you be ashamed of using it. 

J.C. Penny Slows RFID Rollout

I will not go into the details here except to say that an "all or nothing" strategy on almost anything does not usually work and this is no exception.  What J.C. Penny is finding is there are some  applications which make sense and some which do not.

The other big learning is technology is moving fast and for some reason this RFID technology has never been able to deliver on its promise.  What people may find is by the time they figure it out, we will be on to the next bigger, more promising and less costly technology.

Robots and Other Supply Chain Trends - Kevin O'Marah

Believe it or not there is a Kevin O'Marah out there (yes, he spells his name differently than I do) and he is in the supply chain field.  Actually, a very accomplished person in this field.  I have been in a few meetings with him and it is fun to see who the moderator really means to call on (hint: it is usually him).

I write this because I wrote a piece over the weekend entitled "A Drone Delivers Your Package". The article discusses how the use of drones may come to package delivery.  Kevin retweeted this and made a reference to an article he wrote just last week about 5 big supply chain trends.  One of these trends was "Robotics takes off".  While he does not reference drones he clearly articulates, rightfully so, that robotics will take off in the logistics field and the trade off of capital versus labor is starting to favor capital in a big way.

Robots, like the drones I mentioned, are becoming incredibly cheaper at the same time they are also becoming more dexterous and mobile.  Here are the 5 predictions:

1. Amazon stumbles - A bold but insightful prediction and one which is not so much predicated on them failing but on the brick and mortar guys learning to compete very quickly. 
2. Africa Becomes Your Most Important Growth Partner -  It is essentially the "final frontier".
3. The Carbon Tax Happens -  I could not agree more.  A tax, cap and trade or whatever form it takes, we will soon pay for destroying the environment. 
4. Robotics Takes Off - Enough said.
5. CSCO becomes the CEO - While this has already happened the rise of logistics and supply chain as the core differentiator makes those who hold this important position more likely to take over the company (see my article: Logistics Eats Strategy for Lunch).

So, we agree... Great predictions here and they are refreshing because they are bold and not the same old thing just warmed over.  Kevin is someone I have followed from back in his AMR days and I highly encourage you all to do the same.  You can read his writings at his blog: Beyond Supply Chain. 

Kevin's tweet is below:

"RT @logisticsexpert drones and robots in supply chain!!: dld.bz/cd2hg -see 5 predicts tinyurl.com/b2ld7z3
— Kevin O'Marah (@komarah) February 4, 2013"

As a side note this is also why people are guarded about all the optimism on the return of manufacturing to the United States.  One has to ask if it is because labor is getting expensive in China relative to labor in the US (when accounting for transportation costs) or is it because robotics have become so good and cheap that you reshore manufacturing in the US to save logistics costs AND you do not employ many people due to automation.

Paul Krugman is even weighing in on this. 

Does Logistics Eat Strategy for Lunch?

An interesting review of two books about World War II entitled: "When Logistics Beats Strategy". The review states:

"Disciples and devotees of "strategic thinking" might find both books humbling. They should. In wartime, logistics eats strategy for lunch"

Given how many companies develop "War rooms" and discuss business using "going to war" metaphors it is fascinating how many of them refuse to learn the importance of logistics and the role logistics has played in the big battles of our time.

I wrote about this in previous installments about the Israeli Defense Forces (IDF).

Macroeconomic Monday® - Data Mixed, Market Up, Consumers Feel Worse

What a combination of data!  We knew last week was going to be a "big data" week and it sure did not surprise however it certainly was mixed.  It required a view one level down to even try to make sense of what was going on.

First, the market closed over 14,000 for the first time in a long time and for those of you who mistook the economic data over the last 3 years you have really missed a hell of a ride in the stock market.  There are all sorts of reasons why this has happenned and the only thing that matters really is that it did happen and it is now at a frothy level. So, here are the highlights:

1. GDP - Shrunk by .1%: This is one which requires you to dig down a bit.  The core reason for this is the massive decrease in defense spending in anticipation of the sequester cost reductions.  Yes, government spending does matter and if this does not get resolved we will take 2% - 3% out of GDP.  This was a small glimpse.
2. Durable Goods Orders - Increased by 4.6%:  Great news showing investment by businesses which generally implies they see a good 2013 coming.  Some of this may have been due to trying to second guess any changes in depreciation rules but overall, it is a good sign.
3. Consumer Confidence - 58.6 v expectations of 64: The consumer continues to feel the blues and is just not feeling good.  We will need to watch this closely because if this translates to lower spending and the sequester cuts cause the government spending to continue to decrease at the rate it is going, the likelihood of recession will increase dramatically. I am not going so far as to blame the expiration of the payroll tax holiday as I do not think people can even calculate that for the most part.  The bottom line is while the market is growing dramatically people still feel they are one hiccup away from losing their job, losing their house and general economic problems. This causes them to feel bad and hoard cash.  This caused personal spending to miss expectations by .1%. 
4. Unemployment - 7.9%: While this ticked back up by .2% the number of jobs available has increased and a general feeling is we are rebounding in jobs.  
5. ISM Index - 53.1:  This was the big news.  Manufacturing clearly continues an increase and had a robust January.  That was really good news. Now if we can get this to improve the employment numbers we may have a real economy going here.  However, the data as one economist sees it says we could get this rebound without a big move in jobs numbers because companies have figured out how to have machines do more and more of the highly skilled work. The old argument in economics always is the trade off of capital and labor and it appears capital may be winning in "The Rise of The Robots". (note: Ignore the politics in the linked post: Just read the facts on labor v. capital)

Overall, I would say it was a great start to 2013 and the data appears like a fairly decent economy.  The risks which are very clear are:

1. Government pulls back on defense spending for real and takes with it almost the entire GDP.
2. Employment numbers truly do start decreasing and unemployment never decreases.
3. Consumer confidence never comes back. A danger to all types of recessions is you never get to "take off" speed because of hoarding and hoarding occurs when people just feel bad about the future.  

That is it for now.. Happy February!!

A Drone Delivers Your Package?

Missy Cummings
Boston Globe

Recently, I watched a fascinating show on Nova entitled:  "Rise of the Drones" and as usual, I never expected to get a logistics thought out of the show however, as usual, one develops.  A key scientist (Missy Cummings, former F/18 fighter pilot and now MIT Scientist) being interviewed for the show had actually said "imagine a drone delivering your FEDEX package...".  Now that got me thinking.

First, I had no idea how far the technology for drones has developed in the last 10 years. What they can do and what they are doing is absolutely amazing.  A scary item is they are readily available with a quick search on Amazon you can find many "drones" for less than $1,000 which can do a lot of things (not the least of which from a privacy concern standpoint is take pictures). Here is one I found which I found especially intriguing for less than $750 and it advertises itself as having everything you need to "start aerial filming".  It is called the DJI Phantom Aerial UAV Drone.

So, what is the implication for logistics?  Well, just like what I have been discussion relative to 3D Printing, there is a chance this could revolutionize air freight delivery in the package space.  Think of these key items:

• It is easy and cost effective for the package delivery companies to continue doing what they do today for big population centers.
• The costs increase tremendously for servicing small, less densely populated areas. 
• They cannot afford the pilots and complex planes just to service a town of 10K and the drivers and trucks are very expensive as well. 

Now, imagine the following scenario:

• A major population hub is where the large plane from a central sorting site lands. This plane has packages for both truck delivery at the major population center and also packages for all the small little towns that are within a 150 mile radius. 
• Rather than send linehaul trucks to these small towns (which many have some kind of air strip - there are over 5100 paved runways in the United States), the package company launches 20 drones with packages on board - unmanned and controlled via GPS (One learning from the NOVA show was they are starting to eliminate even the pilot on the ground and go 100% automated GPS flying)
• A person in the town, local person with a local delivery truck, takes the packages off the drone and sends it back on its way to the central location (perhaps even with returns).
• This local person does simple pick up and delivery.

While I would have said this is far in the future 2 days ago, now that I have watched this show I am not sure how far it is.  Once again, another technology which not only reduces miles driven, reduces demand for drivers and reduces costs but it actually eliminates many of them completely.  

2012 Was A Good Year for Shippers Who Used Analysis Over Emotion

Despite all the noise about how CSA, regulations and a surging economy would create a massive deficit in capacity, what we saw in 2012 was a very shipper friendly environment for those shippers who did not let their emotions runaway with them.  If you stood fast, watched the data and understood the market you were able to reap some pretty good rewards in 2012.  The ATA truck tonnage report even showed a reduction year over year in December.

Bob Costello, economist for the ATA was even quoted as saying in 2013 the outlook is for a sluggish truckload environment.  My personal believe is the rules of good transportation management and procurement management don't change much.  Some highlights are:

• Always conduct should costing before talking rates.  Understand the costs of every component (Equipment, driver wages, fuel etc.) and the best in class purchasers will know those costs as well as the person across the table. 
• Don't let emotions and the industry hype sway you.  Stay focused with the data.
• Understand your personal procurement situation.  Even if the market is "on fire" if you have counter freight to the prevailing freight flows you are in the driver's seat. 

I had one person tell me a long time ago that transparency and accuracy will always prevail in costing and I believe them to be right. 

Why I Thought FEDEX Was Best For My 3D Printing Model

I received a lot of comments about my post yesterday concerning 3D printing and how I think FEDEX is really set up to exploit this opportunity.  Many of the comments pointed out there are other similar companies to FEDEX (such as DHL) who could do the final mile delivery.  However, I have not found the discussion compelling as none of them possess the extensive storefronts which are set up as printers already.

Yes, UPS purchased Mailboxes etc. to try to do something similar however there is a big difference.  The FEDEX Office (formerly Kinkos) locations are set up to print and produce where the UPS offices are essentially private post offices.  The keys to being able to exploit the advent of 3D printing are:

1. Locations which are local and already established to do the printing.
2. A brand which is already very trusted.
3. A process which people are already familiar with such as sending your documents for printing. 
4. An integrated final mile delivery network to do the final delivery of the "printed" material. 

Think of the FEDEX office location as the "transporter room" in the enterprise for Star Trek.  In the United States, no one has such an extensive and integrated network.

I have no idea if FEDEX is thinking of this however my speculation is they are keeping a good eye on the developments. 

Big Economic Week Ahead

Macroeconomics drives everything.  I am reading Warren Buffett's new book "Tap Dancing to Work" and he is fond of saying a fantastic manager cannot do much with a lousy business.  That is true, I believe, of the macro economy as well.  It sets the field of play and in that business, this week is a big one.  Watch out for:

Monday:  Durable Goods Reporting
Tuesday:  Consumer confidence
Wednesday:  First estimate of Q42012 GDP and statement by the FOMC
Thursday:  Wages and Personal Income
Friday: Construction Spending, Employment and Manufacturing activity.

Let's hope for a great week!  Good luck.

More Impact of 3D Printing - Nokia Gets in The Game

I have written about 3D printing many times and its impact on the transportation industry (read:  Soon a lot less will need to be transported).  Of course, this is a way away and most people I talk to aren't overly worried about it.  "Not in my lifetime" is what I hear most.  This reminds me of the discussions people had in the '80s when we said email will take over communications.  And, we all know what happened there.

Now we see Nokia is issuing standards so people can print their own covers using 3D printers.  This has massive implications.  First, a lot less product will need to be shipped.  Yes, I know these are small but soon it will be bigger and bigger product.  "Designed in California" will be printed and the item will be made on the spot and on demand. Transportation demand will decrease dramatically.

Second, it truly will mean "mass customization".  Mass customization has been a dream for a long time where people have predicted the benefits of large scale batch production coming to products which are made for a consumer of one.  In effect, this will be what 3D printing does.

Finally, it will put a lot of manufacturers out of business in total.  I essentially will make the product myself and will have no need of a "conversion" partner - i.e., the manufacturer.

The big winner in all this could be FEDEX and their acquisition of Kinkos many years ago could be a fantastic application for this.  Imagine the following the next time I want a case for my iPhone:

1. I download plans for the case I want.  I customize logos, words etc. on the case.  Perhaps I pay $1.99 for the plans for "one time use" and I get them right off the Apple store. 
2. Once completed I send them to FEDEX (like I do a document today) who routes it to the local FEDEX store (formerly Kinkos). 
3. The local FEDEX store "prints" the case for $5.00. 
4. I choose at this point whether to have FEDEX deliver it to my house through their "final mile" network or I pick it up.  

Voila!  No (or very limited raw material) inventory; customization for me specifically, made locally and ready to pick up in 1 hour.  Soon, just like we are used to "1 hour photographs" at Walgreens, we will have "1 hour manufacturing" and FEDEX may be in the best spot for this.  

(Note:  I have never seen anything saying FEDEX is planning this but I just think it makes sense.  In this very in depth and good article from 2011 entitled "3D Printing: The Future is Here" the author says "imagine a time when 3D manufacturers are as common as Kinkos offices completely ignoring the idea that for a lot of items Kinkos / Fedex office could be the manufacturer. ). 

Cost Control Gone Bad..Subway Agrees to Make all "Footlongs" well.. A Foot Long

We have all seen it in just about everything you buy; packaging is thinner (resulting in more damaged product), metal is replaced with plastic, minor features just no longer exist, what was 4oz is now 3.8oz (same price)... well, you get the picture.  To "manage costs" just about every company eventually goes too far.  What is that limit you ask?  It is when the brand promise is violated to save a few cents.

This is the case of the "Footlong" sandwich which it turns out was not a footlong.  At first the company declared that the word "footlong" was more of a trade name and not intended to imply the sandwich was actually a foot long.  Yea right.  And now the company finally comes out and agrees they will make all future sandwiches a foot long.  

I bring this up because all who run companies have to realize there is an unwritten brand promise to customers which cannot be violated or you risk huge backlash.  Virtually every company's single largest asset is its brand and the brand is based solely on trust.  The only reason any brand would command any premium over a commodity price is that the consumer believes somehow the people behind that brand name are doing something no one else is.  So, without knowing what that is (i.e, they trust) people will pay a premium.

When the consumer realizes the trust has been violated they turn on the brand fast and furiously.

This is the reason why there is virtually no intrinsic brand loyalty in air travel.  Most (not all with Southwest being a notable exception) have decided the best way to make money from customers is to declare war on them.  Every consumer of air travel knows it does not cost the company $150 to change a flight.  Yet, the airlines charge it because they are exerting quasi-monopoly power.  Because of this there is no trust and therefore the brand is essentially meaningless.

So, don't forget:  The brand is built on trust and as we see here when the trust is violated, the wrath will come down.

The Data Behind The Data on The Housing Market

A lot has been mentioned recently about the housing market and how quickly it appears to be rebounding.  It feels as if the entire country woke up in unison and decided to all go buy a house.  Feels like 2006 all over again right?

Well, not so fast.  It is important to understand where we are coming from and what the possibilities really are.  The graphs below from Northern Trust tell an interesting story:

Home sales, while increasing are still very anemic as compared to the "go-go" days of 2006.  I would never expect it to get back to that level so those who are saying, "when will housing come back" should be asking themselves, "back to what".  Further, you can see existing sales are increasing faster which generally does not have the same multiplier effect on the economy as new construction.

Behind the numbers of the existing sales also includes investors buying homes or blocks of homes to rent.  That element further reduces the multiplier effect.  And, finally, the drag on the economy of incredibly tight lending criteria means it will be a long time, if at all, that we get back to even 75% of the growth days.

Watch this closely, it is good to finally feel good, but don't get burned with unreal expectations.

A Fascinating Discussion of "Vehicle Miles Traveled" (VMT), Implications for the Auto Industry and Implications for Automotive Logistics

It is so interesting that the human mind almost always takes previous history and subconsciously projects it out into the future.  It is a real danger when conducting business analysis.  For example, I have always said to those who say GDP is the best indicator concerning transportation volumes that they should not assume a 1% move in GDP 20 years ago is the same as today.  Why? It is because the make up of GDP is not nearly as "freight intensive" now as it was 20 years ago.  Finance, services, health care etc make up a lot more of the GDP now than does industrial production which is the real mover of freight volumes. 

In reading this article concerning Vehicle Miles Traveled - VMT (for automobiles) I am fascinated by the same type of scenario.  We all think that auto sales will move in roughly the same proportions as it has in the past with GDP.  However, what we really need to be looking at is whether driving behaviors are remaining constant.  Once could easily envision an economy growing dramatically yet VMT actually going down which would put a damper or even downward pressure on automobile sales relative to the economy in general.  Here are some key factors:

• Movement to cities - Less number of miles traveled as people walk and/or use public transportation.
• Smaller households - As families shrink the need for the infamous "third and fourth car" shrinks as well. 
• Move to "shared" transportation  - A fascinating development is the growth of people "crowdsourcing" and borrowing each other's items.  A car stays still for a vast majority of the time it is owned and as people share their assets more, less cars get purchased. 

And, the chart below shows some of this happening:

In the end, it is very possible we could have a growing and robust economy yet have far fewer automobiles on the road.  This, of course, has big implications for transportation in the long run because automotive manufacturing consumes a lot of truck and intermodal transportation miles. 

This will clearly not happen overnight and you may say it won't happen in your working lifetime however there is a good chance it will happen and is already started to happen. One thing I have learned about these types of trends (call them "Mega-trends") is they aren't noticed until it is too late and they generally go a lot faster than you expect. 

Clay Christensen: How Will You Measure Your Life

I am going to use today's posting to refer you to one of the most brilliant people I have ever met and had the pleasure to listen to: Clay Christensen.  When I attended the General Management Program at the Harvard Business School he taught two class sessions for us and was mesmerizing.  Many of you have probably (hopefully) read his various classic books on innovation starting with "The Innovators Dilemma"  (note: if you are in a leadership position in a company and have not read this book, you do so at your own peril).

He has now written a business / life book entitled "How Will You Measure Your Life".  I am attaching two videos here.  The first is him speaking about this book and the innovation topics in a detailed, entertaining and profound talked at the Linkedin Headquarters.

The second video is his much shorter but also impactful "Tedx Talk" in Boston on this topic.

I will be back to logistics later and I wanted to ensure I did my part to share the wealth of this brilliant man.

Blue and Brown Make Green... Sustainability for The Final Mile

I have written before about the complexity of the final mile in the logistics network.  This includes both the final mile of the delivery and also the first mile of the reverse logistics networks created by final mile deliveries (i.e., Customers tend to order one size too big, one too small knowing they can return.. for example).   What I had not thought about was the unique nature of the sustainability challenges of the final mile network.

Thank goodness there are a lot smarter people than me in this world!

The Post Office (USPS) and United Parcel Service (UPS) have partnered together to share information and build out this carbon information for the final mile in the United States.  This is good news and I look forward to seeing more about this in the coming years.  The sheer volume of vehicles possessed by both of these entities and the fact they are working to reduce carbon gives me hope for continued sustainability initiatives.

Wholesale Inventories Climb More Than Expected

I will have more on this later tonight however my fear about inventories seems to be coming true.  Inventory appears to be building in the supply chain which means the "great restocking" transportation companies tend to expect after the holidays may very well not happen.  

Wholesale Inventories Jump 0.6%, Top Estimates