If supply chain stories appearing on the front page of the Wall Street Journal and other newspapers isn’t proof enough that the industry has gone mainstream, then here is Exhibit B:
You know supply chain and logistics have reached broad awareness when even The Onion does a post about it!
Moving on, here are some other supply chain and logistics headlines that caught my attention this week:
- High shipping costs to push up global inflation, UN warns (Financial Times)
- California Increases Truck Weight Limits to Ease Port Snarls (Bloomberg)
- Truckers Steer Clear of 24-Hour Operations at Southern California Ports (WSJ – sub. rq’d)
- 40% of America’s trucking capacity is left on the table every day, MIT expert tells Congress (MarketWatch)
- Pitney Bowes boosts in-house trucking fleet to avoid spot market (Supply Chain Dive)
- Ford and GM are getting into chip development to help deal with the shortage (The Verge)
- Uber Freight Completes Acquisition of Transplace
- Convoy Opens Up Digital Freight Network to Truckload Brokerages
- Orderful raises $19M to simplify EDI integrations for the logistics community
- UPS will make deliveries using Waymo’s autonomous Class 8 trucks (The Verge)
- Cardinal Health Teams Up with Zipline for Automated, On-Demand Delivery to Retail Pharmacies
- Companies Push Suppliers to Disclose More Climate Data (WSJ – sub. rq’d)
- Cass Transportation Index Report October 2021
Surge in Freight Rates and Consumer Price Inflation
Back in August, in a survey we conducted with our Indago supply chain research community, more than three-quarters of our member respondents (77%) said that they were “Very” or “Extremely” concerned about rising inflationary pressures across their supply chains; the balance were “Moderately” concerned (see “Inflation Across The Supply Chain”).
This week, as reported by Harry Dempsey in the Financial Times:
The UN has warned that elevated shipping costs resulting from the global supply chain crunch will further fuel inflation around the world and disproportionately hit developing nations’ economies.
The surge in freight rates is likely to push up global consumer prices by an additional 1.5 per cent should they remain high for the next year, according to estimates by the United Nations Conference on Trade and Development in a report on Thursday.
For those of you just learning about supply chain and logistics, here’s something that might surprise you: there is no such thing as “free” shipping or delivery. Somebody has to pay the transport providers, and with transportation costs soaring beyond what most companies are willing to absorb, that somebody is you in the form of higher prices for just about everything.
A few months ago, “delayed” was my pick for “Word of the Year” for 2021. But now “inflation” is a strong contender too. Which would you pick?
More Truck Drivers or Better Planning and Execution?
Add 80,000 truck drivers or add 18 minutes of driving time to every existing truck driver’s day? Which can best relieve the current capacity problem?
The latter is what David Correll, a research scientist at MIT’s Center for Transportation and Logistics, suggested in testimony he gave before the House Transportation and Infrastructure Committee this week. As reported by Victor Reklaitis in MarketWatch:
“This chronic underutilization problem does not seem to be a function of what the drivers themselves do or don’t do, but rather an unfortunate consequence of our conventions for scheduling and processing the pickup and delivery appointments,” said David Correll [in his testimony]. Long-haul, full-truckload drivers spend an average of 6.5 hours every workday driving ,even though federal safety regulations let them drive for 11 hours a day, Correll said.
“This, of course, implies that 40% of America’s trucking capacity is left on the table every day. This is, of course, especially troubling during times of perceived shortage and crisis, like we find ourselves now,” he told the House panel. Adding just 18 minutes of driving time to every existing truck driver’s day “could be enough to overcome what many of us feel is a driver shortage,” the MIT expert said.
There is no doubt that there is a lot of waste and inefficiency in transportation operations, and dwell time/driver detention is a big symptom. In a survey conducted by the Owner-Operator Independent Drivers Association (OOIDA) in 2019, drivers who comply with the 60-hour Hours of Service rule “spend approximately 18% to 33% of their possible compensated drive time in detention.”
There are many reasons why truck drivers get detained at facilities, but the top three cited by our Indago members in a September 2019 survey (see “Trucking Detention Fees: Insights From Indago Members”) are product not being ready to ship (43%), poor integration/synchronization of processes (43%), and understaffing at facilities (38%).
So, I agree with David Correll, and I go back to a post that I wrote back in March 2013 titled, “Forget Innovation, Just Execute Better.” It begins with these words:
Have we reached the point where we should just focus on executing better with the systems and processes we have than chase the next technological or process innovation?
Translation: There’s still plenty of juice to squeeze in the fruit we currently have, so why go pick more fruit when our hands are already full?
Yes, we can (and probably should) add more truck drivers, but if we don’t focus on improving our planning and execution processes too, then we’re not really fixing the bigger problem.
And with that, have a happy weekend!
Song of the Week: “Bitter Taste” by Billy Idol