This Week in Logistics News (September 12-16, 2016)

By Adrian Gonzalez

Are you attending the Council of Supply Chain Management Professionals (CSCMP) Annual Conference later this month (September 25-28 in Orlando, FL)? If so, I invite you to attend two of the sessions that I am participating in, both related to transportation management:

TMS 4 SMB: A Case Study with Carhartt
Date: Monday, September 26, 2:00-3:15 pm
Room: Sun 3-4
Speakers: Sharon Perry, Vice President of Logistics, Carhartt; Gregg Lanyard, Director, Product Management, Manhattan Associates; Adrian Gonzalez, President, Adelante SCM

TMS solutions recently evolved to not only solve complex transportation problems for large shippers, but to also better meet the needs of the SMB market. Explore these advancements, including providing more targeted feature sets, more intuitive and easy-to-use user interfaces, and quick cloud deployment with faster ROI.

Not All Optimizers Are Created Equal: The Top 5 Features to Gain Maximum Value from Your Shipment Optimizer
Date: Tuesday, September 27, 3:45-5:00 pm
Room: Osceola 3-4
Speakers: Brian Nichols, Vice President, Solutions, Knight Transportation; John Martin, Director of Sales Engineering, MercuryGate International, Inc.; Adrian Gonzalez, President, Adelante SCM

Many products are within the category of optimizers for supply chain needs. Learn the top 5 features that deliver on the ambitious promises of improved efficiency and reduced costs and how leading edge companies leverage advanced technology solutions to reduce costs, improve efficiency and minimize environmental impact.

I am also excited for the induction ceremony for the Supply Chain Hall of Fame, which CSCMP announced last month. I had the privilege of being part of the planning committee, and seeing an idea I put forth more than three years ago in a blog post become a reality is going to be really cool.

I hope to see you at the conference! In the meantime, here’s the supply chain and logistics news that caught my attention this week:

The fallout from Hanjin’s bankruptcy continues, with $14 billion of cargo still stranded at sea. According to a Reuters report:

As of Wednesday, of Hanjin’s 97 container ships, 36 were waiting outside of overseas ports, according to South Korea’s finance ministry. Of the remainder, 37 had yet to unload and planned to return to Korea, and 24 had unloaded in Korea and elsewhere, the ministry said.

Cargo owners such as consumer products maker Dorel Industries Inc and the U.S. unit of musical instrument maker Yamaha Corp complained they were the hostages. They said they were forced to make additional payments to get their cargo or were forced to retrieve it from the wrong location.

What is the financial health of your key suppliers? How many of them are close to bankruptcy? And the most important question most companies overlook: Are you contributing to their financial woes? If you’re not continuously asking these questions and modelling/simulating “what if” scenarios to develop responses, you’ll keep finding yourself in these situations.

In the trucking realm, the Owner Operator Independent Drivers Association (OOIDA) asked a federal appeals court panel to bar the government from requiring drivers to install electronic logging devices (ELDs) on their trucks. As reported in the Wall Street Journal:

On Tuesday, the Owner Operator Independent Drivers Association argued that e-logs would violate the privacy of millions of drivers by allowing employers and the government to track their movements. Employers would also be able to use data generated by e-logs to force truckers to drive in unsafe conditions if they hadn’t hit their hours limits, lawyers for the group said.

Many large fleets already use e-logs to make sure drivers comply. Some smaller fleets and independent drivers who own their own trucks have balked at buying the devices, which can cost $500 per truck. They say they can track drivers’ hours by having them manually enter their start and stop times on paper.

If the ELD regulations are upheld, will it cause many owner operators to exit the market? How much will ELDs impact productivity? Here’s what FTR economist Noel Perry said at the 2016 FTR Conference this week, as reported by Commercial Carrier Journal:

Though the coming electronic logging device mandate, slated to take effect next December, will cut industry capacity, the productivity hits won’t be as large as some have predicted, Perry says. He pegs the productivity cuts at around 3-5 percent — much lower than the predictions of 10 percent some analysts have warned of. Many large carriers have already adopted ELDs and will adopt the devices well ahead of the mandate, meaning the productivity losses will be slower and more easily accounted for.

But the mandate will still be significant costs to carriers, Perry says. “To keep margins good, carriers are going to have to get prices up. I’m forecasting prices to go up at the end of this year and into next year.” Perry says rates will climb between 5-7 percent by the end of 2017.

Meanwhile, according to a survey conducted by Transplace:

ELDs have caused drivers to exit the industry. In fact, 51 percent of carriers indicated that they have lost drivers who did not want to operate under ELDs. While most indicated that they only lost a few drivers, one carrier reported losing 50 percent of its drivers. According to another, “We have 110 trucks and lost 29 drivers when we switched them over to e-logs.”

What does your crystal ball say? Post a comment and share your perspective.

And with that, have a happy weekend!

Song of the Week: “Good Grief” by Bastille