Shipper Symposium 2015 – Day 1 Recap

We officially kicked off the 13th annual Shipper Symposium today and those lucky enough to attend had quite the fortuitous day. To start things off, many attendees took part in our yearly Charity Golf Classic, which was played at the famous TPC Four Season Las Colinas golf course. While our theme this year is, “Fortune Favors the Bold”, the golfers taking that approach for today’s game most certainly tempted luck. We thank all who participated and a big congrats to all the winners!

After golf, a networking cocktail hour allowed the many supply chain, economics and industry professionals to gather and mingle before George Abernathy, Transplace President and Chief Commercial Officer, welcomed attendees. He kicked things off by announcing the day’s golf winners and addressed a few housekeeping items including highlighting a 3D printing station and a brand new feature this year – the Shipper Symposium App. He closed out his welcome speech by introducing the evening’s keynote speaker saying, “My expectation is that everyone here will walk away with a tangible lesson.”

George Abernathy kicks off the 13th annual Shipper Symposium

George Abernathy kicks off the 13th annual Shipper Symposium

Attendees were then treated to a sensational opening keynote address by Jeffrey Ma, former member of the MIT Blackjack Team. Ma shared a wealth of information during his presentation, “The $100,000 Lesson: Business Lessons from the World of Blackjack.” His talk centered on using data and information to make decisions – sharing his experience with how he applied this thinking and approach to the game of blackjack and weaving a story of how he got to where he is today.  “I’ve made it my career to use data to make better decisions,” said Ma. He shared with the audience how his system of understanding the value of the past, focusing on the big picture, ignoring emotion and not being loss averse has helped him stay ahead. His final takeaway for attendees: “In the shipping world, you have to deal with a lot of struggles and challenges, but if you’ve got a good system – stick with it.”

Opening keynote speaker Jeff Ma

Opening keynote speaker Jeff Ma

Capping off the night was our welcome dinner and Casino Night under the Stars where attendees threw caution to the wind and tested their luck playing anything from craps and roulette to Texas hold ‘em and of course, blackjack. We can’t wait for what the rest of the 13th annual Shipper Symposium will bring!

Come back here to catch our Day 2 recap. You can stay up-to-date on all our Shipper Symposium activities by following us on Twitter, Facebook and Instagram, and join the conversation by using #TPSS15.

Have any bold predictions for Day 2 and 3 of the Shipper Symposium?  

Q1 Logistics Review

By Tom Sanderson, CEO, Transplace

The first quarter of 2015 has quickly come and gone. Given it was filled with some interesting ups and downs, I want to reflect back on what’s happened. Below you’ll find key highlights from the first three months of the year, which is based on certain economic data driving freight demand as well as legislative and regulatory issues affecting freight transportation. I’ll also share what I’ll be watching for in Q2. Now, on to this quarter’s recap.

A Promising Start to the New Year

January reports revealed the manufacturing index had declined, but although December’s Purchasing Managers’ Index was the lowest since June 2014, it was the 19th consecutive month of expansion.  December auto sales were very strong – in fact, the combination of low gas prices and low interest rates helped make December auto sales the best since 2004 with full-year sales total for 2014 up 6% year-over-year. Housing starts were steady in 2014 with 1.006 million overall, and December single family starts reached the highest of year – marking a post-recession high. This is promising, but there’s still quite a bit of ground to cover to get back to our average of just over 1.5 million housing starts per year, all of which impacts transportation due to freight demand for building supplies, appliances, furniture and other related items.

The end of January saw weekly retail on-highway U.S. diesel prices fall to an almost five-year low to $2.866 per gallon with the Energy Information Administration (EIA) predicting a $2.85 per gallon average for this year. In addition, dry van truckload capacity proved to be much more readily available than most of 2014, but remained tighter than normal by historical January standards. Meanwhile, refrigerated capacity was tighter than normal, which means rates will likely continue to rise faster due to steady rising demand. It’s important to note that demand for refrigerated transportation is less correlated to economic fluctuations than dry van or flatbed freight, so the future robustness of economic growth will not necessarily determine market demand.

Mid-Quarter Positive and Negative Changes  

Early February is impacted by the west coast port issues, which caused the east coast ocean spot rates to rise sharply. The pricing disparity spiked primarily due to diversions from west coast ports. We also saw an interesting white paper from the American Transportation Research Institute (ATRI) get released analyzing the age demographics of truck drivers. The bottom line: U.S. truck driver population is aging and there aren’t enough young drivers in the labor force to replace the drivers retiring. The driver shortage problem isn’t going away and isn’t going to be solved by one solution. I believe it’s going to take numerous actions to make an impact. I highly encourage to you read this thoughtful white paper.

According to Stephens Inc.’s Q4-2014 update on publically traded truckload (TL) carriers, rates per loaded mile increased, with the Q4 year-over-year gain the highest in 10 years as driver shortages, strong seasonal freight and west coast port issues pushed capacity-demand balance in favor of carriers. I agree with Stephens’ prediction of 2015 rates to be up 4-6%. And despite being below its prior year level, diesel prices rose steadily in February up to $2.900 per gallon and housing starts continue growth with the fifth straight month above a million unit pace.

FMCSA Taken to Task, Capacity Remained Steady Heading Into Spring

In early March, the FMCSA was reprimanded for ignoring the General Accounting Office (GAO) and for its lack of action and follow up on the Compliance, Safety, Accountability (CSA) system and Hours of Service (HOS). There needs to be more congressional scrutiny of the FMCSA, which continues to disregard science and hard facts while encouraging regulations that actually harm carriers and shippers and hurts highway safety.

Flatbed capacity was more readily available than normal last month according to Morgan Stanley’s flatbed freight index – similar to capacity-demand balance in Q1 2013. Along the same vein, refrigerated freight capacity tightness eased up. Since little capacity is entering the industry, refrigerated rates will most likely continue to increase. And so far, there’s been no dry van capacity crunch. As compared to March last year, van capacity is much more freely accessible.   

Q2 Forecasts & Expectations

Normally, in Q2 we see capacity start to tighten up as freight volumes grow, but that may not be the case this year. The combination of slow economic growth, relief from HOS restrictions and some added capacity may keep capacity-demand balance at current levels. Meanwhile, carriers continue to enjoy lower fuel prices, which may keep TL carriers from being as aggressive as was expected this year in raising rates. On the legislative front, we expect an extension of the existing highway funding bill in May after a lot of doom-and-gloom rhetoric. A longer term highway funding bill could happen this year, but Washington can’t agree on where the extra money will come from. The prospects of that money coming from fuel tax increases is remote, even though federal fuel taxes have not been raised since 1993. We continue to encourage shippers to focus on intermodal, as fuel prices will inevitably rise and TL driver shortages will eventually drive prices significantly higher.  

Want to dig into any of the topics mentioned above? Then check out my blog or follow me on Twitter: @TomSandersonCEO

What topic were you most interested in from Q1? Any surprises or areas of concern? What are you watching for in Q2?

Next-Gen Supply Chain Management: Making the Goal a Reality

By Brooks Bentz, President, Transplace Supply Chain Consulting 

Brooks Blogs.jpg

Conceptually, a next-gen solution that creates a more reliable, predictable supply chain is easy to envision, and the technology now exists to make it a reality. However, that’s where the simplicity in the process ends. The art and the science of getting a next-gen supply chain right is in the extensive groundwork laid for implementing a new or refreshed strategic roadmap.  Taking this on is unglamorous and gritty work that involves examining current operating and business practices and then utilizing that knowledge as a springboard to build new capabilities – using tools and technologies that simply weren’t available before.

Just like when building a house, if the blueprint is haphazard or the foundation is poorly executed, the balance of the structure will fail to meet expectations. It’s common knowledge that better construction, insulation and window manufacturing make for more energy-efficient homes that are more economical to operate. Similarly, boosting your supply chain capabilities with the best-of-breed solutions on the market, coupled with skilled implementation and execution, leads to better supply chain performance.

Unfortunately, all too often the vital upfront blueprinting and design is done without proper due-diligence. As one seasoned executive quipped: “We answer vast problems with ‘half-vast’ solutions!” There are no real short-cuts in this process, and the results of substandard efforts are predictable and undesirable.

To create a true end-to-end (e-2-e) supply chain, it’s important to plan well and expend the effort, resources and money necessary to do a comprehensive process-mapping and blueprint design exercise. This should be an outcome-based approach, not a memorialization of past practices using new software.

Here are some key tips to help you along your way:

  • Find out how many solution architects you have. If the answer is none, then make it a priority to get some or retain consultants who have those skills and the necessary experience.
  • You may consider outsourcing to help de-risk the effort and also to tap the skills and expertise of those who have blazed the trail before you.
    • This can be done through an RFI/RFP process, but it really only works if you have done the upfront design work so you can explicitly and accurately enumerate what you want potential partners to respond to.
    • Failure to be complete and accurate will lead to incomplete and inaccurate responses based on incorrect assumptions, which will inevitably cause pain further down the path.
  • Conducting rigorous evaluations of potential partners and their responses is vital. Even better, doing so in a work-shop format rather trying to replicate the Spanish Inquisition will make the exercise beneficial for all parties. Together, you can work toward a more powerful solution that can be operationalized with the least amount of disruption.

Those who jump out in front of the pack with true e-2-e capabilities for managing their supply chain in a unified, holistic way will trump the competition in terms of supply chain reliability and efficiency, cost take-out, inventory reduction and ultimately by improving the customer experience – which is really what counts most!

Are you ready to take the leap to next-gen supply chain management? What will be a key part of your process?

Don’t Miss Shipper Symposium 2015!

Our 13th annual Shipper Symposium is right around the corner (May 4-6), and you don’t want to miss what we have in store this year. From well-known keynote speakers to thought-provoking breakout sessions (as well as fun activities interspersed throughout), attendees will gain a wealth of industry knowledge and have the opportunity to expand their network.

Did you know that the Dallas skyline was voted #1 in USA Today’s Reader’s Choice Contest? A bold event held in an even bolder city, see why this year’s Shipper Symposium shouldn’t be missed! You can find the latest agenda here.

Need to register? Fortunately, there’s still time left to attend. Find out all you need to know to be at this worthwhile event here.

And keep up with all our Shipper Symposium activities by following our Twitter account -  @Transplace - and event hashtag #TPSS15

Next-Gen Supply Chain Management: There is No Single Solution

By Brooks Bentz, President, Supply Chain Consulting, Transplace

Major transformational change in supply chain and logistics is certainly not a frequent occurrence, but it has happened with regularity throughout history. For example:

  • The advent of the steam engine and the related rise of railway and steamship lines.
  • The invention of diesel and turbine engines resulting in the supplanting of steam-powered vehicles with oil-fueled locomotives, trucks and airliners.
  • The construction of limited-access super highways and the rise of trucking services.

And now, the new-age supply chain will take the next leap forward through integrated technology-enabled solutions.  Because unlike the earlier examples listed above, 'Next-Gen' productivity improvement and optimized supply chain performance will actually come from technology-enabled solutions rather than mechanical or engineering inventions.

In the recent film The Theory of Everything, Steven Hawking sets a goal of finding a "single, elegant equation that explains everything" in relation to the universe. And although supply chain certainly faces a somewhat less complex, and less daunting task, it still needs a fully integrated, systemic approach to managing the business. And while marvelous in concept and exciting in theory, true end-to-end (e-2-e) supply chain management has lagged behind the technological ability to deliver it. Unfortunately, there is no single, unifying solution or “silver bullet” that supply chain professionals can turn to.

Unlike Dr. Hawking, supply chain management doesn’t need a single, elegant solution. But, if we are to truly transform it, we do need the ability to envision, design and blueprint a solution for operationalizing e-2-e transportation management, if not for the entire supply chain. And transportation now accounts for about 63% of total supply chain cost, so it is vital to get this right!

The critical capabilities stem from the ability to see what is going on across the entire patch - from the shipper’s dock all the way to the store shelf - with SKU-level visibility. Then, and only then, will a supply chain professional and his or her internal customers be able to get a comprehensive picture of the inventory of the products they are responsible for, including what's on the shipper's dock, at the consolidator, on the ocean vessel or stack train or truck, in the DC and on the store shelf.

Two significant benefits stem from this next-gen, comprehensive picture:

  1. The ability to manage inventory much more efficiently because it all can be seen, down to the individual SKU-level.
  2. The analysis, evaluation and tweaking of roadblocks and delay points in the supply chain can be done on a continuous-improvement basis to enhance performance.

The end goal, of course, is a more reliable, predictable supply chain, which in turn relates directly to the ability to reduce safety stock and overall inventory. But how exactly do we meet this goal, and what are the steps to achieving a true next-gen supply chain?

Stay tuned for part 2 of this series to find out.

What are some best practices for next-gen supply chain management that you’ve seen in your organization?