This Week in Logistics News (March 6-10, 2017)

By Adrian Gonzalez

It’s snowing outside. My boys have their first baseball games in two weeks. What’s wrong with this picture?

Anyway, I’m on borrowed time again this morning, so let’s go straight to the supply chain and logistics news that caught my attention this week:

Earlier this week, I shared my thoughts on the Kewill-LeanLogistics rebranding, so I won’t repeat myself here. But to me the significance of the news is less about the new name (BluJay Solutions) and more about the prominent role its global trade network will play in its strategy and value proposition.

I wondered aloud a few weeks ago whether IBM is the only company working on blockchain solutions for supply chain management. Every time there’s a press release about blockchain, you can almost bet IBM is attached to it. And that was the case again this week, with IBM and Maersk announcing “a new collaboration to use blockchain technology to help transform the global, cross-border supply chain.” Here are some details from the press release:

The solution will help manage and track the paper trail of tens of millions of shipping containers across the world by digitizing the supply chain process from end-to-end to enhance transparency and the highly secure sharing of information among trading partners. When adopted at scale, the solution has the potential to save the industry billions of dollars.

In order to prove the potential value of a commercial trade digitization solution, IBM and Maersk have worked with a number of trading partners, government authorities and logistics companies. For example, goods from Schneider Electric were transported on a Maersk Line container vessel from the Port of Rotterdam to the Port of Newark in a pilot with the Customs Administration of the Netherlands under an EU research project. The U.S. Department of Homeland Security Science and Technology Directorate, and U.S. Customs and Border Protection are also participating in this pilot. Damco, Maersk’s supply chain solutions company, supported origin management activities of the shipment while utilizing the solution. The international shipment of flowers to Royal FloraHolland from Kenya, Mandarin oranges from California, and pineapples from Colombia were also used to validate the solution for shipments coming into the Port of Rotterdam.

As reported in a related New York Times article this week, the value proposition in this case is centered less on the tracking of containers and more on improving the flow and chain of custody of trade documents:

For Maersk, the problem was not tracking the familiar rectangular shipping containers that sail the world aboard its cargo ships — instead, it was the mountains of paperwork that go with each container. Maersk had found that a single container could require stamps and approvals from as many as 30 people, including customs, tax officials and health authorities.

While the containers themselves can be loaded on a ship in a matter of minutes, a container can be held up in port for days because a piece of paper goes missing, while the goods inside spoil. The cost of moving and keeping track of all this paperwork often equals the cost of physically moving the container around the world.

Is blockchain a better mousetrap than existing technology for supply chain visibility and tracking? Are the benefits it provides so much greater than today’s platforms to justify everybody moving to it? Those are the ongoing questions raised by many in the industry today. In my opinion, the strongest business case for blockchain lies in supply chain processes where traceability and chain of custody are very critical, such as the food supply chain or the transport of high-value, highly-regulated, or highly-dangerous goods. I’ll repeat what I said a few weeks ago: Yes, there continues to be a lot of buzz and hype about blockchain technology, but if Walmart, Toyota, and USPS (among other companies and entities) are taking a serious look at leveraging this technology to improve their supply chain processes, you can’t afford to ignore it completely.

Moving on to trucking news, a platooning demonstration was conducted this week at Long Beach. According to the Long Beach Post Telegram:

The first live display of automated truck platoons in Southern California appeared to roll without a hitch. The demonstration stretched from the Los Angeles Port Headquarters to the 110 Freeway’s Sepulveda Boulevard exit and back again, about a 12-mile loop.

The project is part of a collaboration between UC Berkeley Partners for Advanced Transportation Technology and Volvo Group of North America, sponsored by Caltrans and the U.S. Department of Transportation.

Using what’s called “cooperative adaptive cruise control,” the heavy trucks drive tightly together, responding to one another and their surroundings with computerized sensors, saving fuel and releasing fewer emissions. Well-plotted trips would also ease congestion, experts believe.

I wrote about platooning and driverless trucks in last week’s post, so check out my comments there.

Finally, driver shortage (and whether it truly exists or not) is a never-ending discussion in the trucking industry. Lauren Webber at the Wall Street Journal wrote an interesting article on the topic this week, highlighting the work of Steve Viscelli, a sociologist and fellow at the University of Pennsylvania’s Robert A. Fox Leadership Program, who says “the shortage is the product of an industry labor model that relies heavily on inexperienced drivers and independent contractors.” Here’s more from the article:

Mr. Viscelli, who worked as a truck driver for several months while researching his 2016 book, “The Big Rig: Trucking and the Decline of the American Dream,” says upward of 25% of long-haul truck drivers are independent contractors, also known as owner-operators. They are attracted by promises of being their own bosses, but the arrangement often saddles them with unsustainable debt and high expenses, he adds.

Drivers typically receive training from big trucking companies or schools affiliated with them. Those who become independent contractors sign lease-to-own deals to purchase their vehicles, often with those same companies. But the terms are onerous, and drivers owe so much that they may end up working 70 or 80 hours a week just to pay back what they owe and cover expenses such as fuel and insurance. Drivers are suing some companies that use this model, saying they should be classified as employees rather than contractors.

The industry could fix its labor shortage, Mr. Viscelli says, by raising pay enough to compensate for the hardships of the job or improving the terms for independent contractors.

I wrote about this topic back in July 2014 (“Driver Shortage in Trucking: Time for Plan B”). I encourage you to read the post for my perspective on the matter, but here’s what I concluded:

The only way to solve the driver shortage problem is through innovation. It’s already happening on the equipment side with the development of self-driving trucks. The time has also come, I believe, to innovate the trucking industry business model and processes. I’m not smart enough to know how to do it exactly, but as drivers become more of a scarce resource, I do know that maintaining the status quo will become untenable.

What do you think? Post a comment and share your perspective.

And with that, have a happy weekend.

Song of the Week: “Reverend” by Kings of Leon