Released: May 4, 2012
Shippers, Providers Converge in Orlando This Week at NASSTRAC
Nearly 500 transportation executives have been meeting in Orlando for the past three days discussing transportation challenges and opportunities, and their impact on shippers' overall supply chains. This year's conference had broad-based educational content but had a particular emphasis on shipper advocacy as well as supply chain best practices.
Carrier Challenges Significantly Impact Shipper Supply Chains
Clearly, over-the-road trucking issues have an impact on shipper supply chains – particularly when it comes to efficiencies and costs. LTL motor carrier CEOs provided high-level discussion on current conditions of the marketplace and the impact a growing but still uncertain economy has on it. Panel participants included Rob Estes, President and CEO of Estes Express Lines; Jack Holmes, President, UPS Freight; Bill Logue, President and CEO of FedEx Freight; and Roy Slagle, President and CEO of ABF Freight. In addition, truckload CEOs weighed in on the unique issues their market segment is facing. Panel participants included Derek Leathers, President and COO of Werner Enterprises; and John White, President of U.S. Xpress.
"A common theme among all carrier executives is that a big concern on their radar is over-regulation and advocacy issues that will have a negative impact on their productivity, efficiencies, and pricing," says Brian Everett, NASSTRAC's Executive Director. "Throughout these sessions—and throughout the entire conference—I heard conversations quickly turn to shipper and carrier concerns about issues like infrastructure and hours of service that have a significantly negative impact on the transportation and supply chain efficiencies.
"On the changes to the hours of service rules, we were fortunate enough to keep eleventh hour," said Leathers, "but next year when this goes in effect, it will have an effect, especially on irregular route carriers. We'll see utility drop 3 to 5 percent."
The 34-hour reset that was part of the latest hours-of-service rules puts more trucks on the road at 6 a.m. on Monday morning, said Roy Slagle, CEO of ABF. "We need the rule-makers to become engaged with the industry," he said.
During the "Washington Update," NASSTRAC's Advocacy Chairman Mike Regan agreed that the 34-hour restart provision was estimated to eliminate 3 to 5 percent of industry capacity. He said this is added to a long list of challenges facing motor carriers that promises to ultimately add cost for shippers.
While the economy seems to be recovering, there is still gridlock in congress due to this year's election. "It is not anticipated that next year will improve much," said John Cutler, NASSTRAC's Legal Counsel, who discussed the significant shipper advocacy issues along with Regan, NASSTRAC's Chairman of the Advocacy Committee. One of the biggest concerns continues to be infrastructure and the lack of a long-term plan and funding to support it.
"Everyone knows we need to spend more," said Cutler. "Fuel taxes have not been increased since 1993 and are not indexed for inflation. The DOT reported U.S. should spend $101 billion annually for 20 years to maintain highways and transit, and more than $150 billion for needed improvement. A Treasury Department study says we waste 2 billion gallons and spend $100 billion annually due to congestion. Yet Congress can't get this done, and it remains to be seen if passing a highway bill is even possible before the elections." Judging by conversations throughout the conference, this is a significant concern and frustration among shippers and providers alike.
On the topic of tolling, Estes had noted that a proposal to add tolls to a stretch of Interstate 81 could add 31 cents per mile for trucks. Carriers are willing to pay for the infrastructure they use, and ABF's Slagle said they have offered to pay higher fuel taxes, but legislators won't agree.
Along with infrastructure, tolls, and changes to the hours of service rules, other advocacy issues on the radar for shippers include MAP-21 provisions, port drayage appeal, independent contractor and misclassification, and NAFTA-related issues.
Despite many challenges in overregulation, capacity, and rising logistics costs, shippers are rolling up their sleeves and getting creative on re-engineering their processes or supply chains to generate efficiencies and cost savings. NASSTRAC's conference highlighted several of these. For example, Gregg Sayers, Director of Supply Chain-Transportation at major retailer Stein Mart, explained how his company recently transformed their supply chain and network in three segments: vendor performance, operations and transportation. This effort resulted in $20 million in logistics savings each year, creation of vendor performance accountability, improved on-time delivery performance, and more control and visibility on what's moving and when. For a full case study, NASSTRAC Members click here.
Outside the retail market, the consumer electronics industry has experienced dramatic growth and change over the past five years, and supply chains have become more global and complex as companies expand their sales into emerging economies and face aggressive competitive pressure in more established markets. Bill Hutchinson, Vice President of Global Logistics and Fulfillment at Dell, talked about his company's dramatic supply chain transformation his company has gone through in the past 3 years. Hutchinson said this transformation has resulted in a segmented supply chain model that has driven significant reduction in complexity, cost and cycle time.
Click here for a summary of the 2012 NASSTRAC Conference & Logistics Expo, as well the ability for NASSTRAC members to download presentations.