Now is not the time to stop fuel-saving innovations

By David Maloney | January 19, 2015 | 8:15 PM | Categories: Transportation

As of today, the average gallon of gasoline in the United States is $2.06. It is even much less in some regions of the country. In New Jersey, drivers are spending only $1.69 a gallon. That is the lowest cost to fuel a car since 2009.


Diesel prices have also seen a drop with the average at $3.09 a gallon, down 83 cents from the same week a year ago.


Americans are saving millions of dollars each week on fuel costs. But if history tells us anything, we should not expect it to last. Fuel prices are highly volatile.  Companies would be wise not to make important decisions based on their current low fuel bills. That is especially true of firms that have programs designed to reduce their energy spend. Now is not the time to change course.


I recently visited Burris Logistics, a company that has made it a mission to reduce its fuel consumption significantly. Working with Ryder, Burris has redesigned its trucks, including modifications in engine design, gear ratios, and automatic transmissions to reduce fuel usage. They have also changed the body designs of the cabs and trailers to make them more aerodynamic and able to slice through the wind. They have added low resistance tires and mud flaps that allow air, but not road spray to pass through them. All of these innovations have increased the miles per gallon on Burris trucks by 50 percent since the campaign began.


My hope is that companies such as Burris do not stop innovating, even though diesel prices have dropped. The fuel nirvana we are now experiencing will not last. Innovations will still provide a reasonable return on investment, now and in the future.

Bill Logue’s Legacy

By DC Velocity | January 06, 2015 | 9:47 AM

William J. Logue walked into the fire when he was named to run FedEx Freight, FedEx Corp.’s LTL unit, in 2010. The LTL sector was flat on its back, hammered by freight and economic recessions, and by ill-conceived rate-cutting moves designed to defend market share and to try—unsuccessfully as it turned out—to force YRC Freight, the then-market leader, out of business.

 But Fred Smith, FedEx’s founder, didn’t build a $44 billion colossus by getting the big personnel decisions wrong. Smith knew that Logue, who ran air and ground operations at the parent’s main “FedEx Express” unit, was a master operator who grasped the trucking industry and how to apply processes long used in the express business to improve LTL’s value proposition. In addition, with more than two decades at FedEx, Logue had the corporate savvy to maneuver through the cultural maze to get things done.

Last Wednesday, Logue retired, leaving behind a healthier and profitable FedEx Freight for his successor, Michael Ducker, who, not coincidentally, comes to the job from the same role that Logue had when he was tapped. More significantly, Logue leaves having positioned FedEx Freight to be the type of operation Smith wants as he leads a vastly revamped FedEx into the balance of the century’s second decade.

One of Logue’s first tasks was to undo the disastrous scorched-earth rate strategy that was implemented before he got to FedEx Freight by people at higher levels than him. Then he engineered the most important step in the unit’s history: A dual-use network design to support a "priority" service for shipments that required delivery within two days, and an "economy" option for deliveries of three days or more.

Logue reasoned that LTL shippers accustomed to paying for services based on miles driven would gravitate to a model that offered choices based on transit times. He had to fight consultants who doubted that shippers would pay for slower times for shipments moving less than 600 miles. In the end, though, the customers got it, even if the consultants didn’t.

The service’s success depended on flawless execution utilizing the same type of tracking technology that made FedEx famous. It also depended on an increasing use of rail intermodal to keep the service economical. Today about 18 percent of all shipments—and about one-quarter of traffic moving over the “economy” network—travels via intermodal, according to a source close to FedEx. So far, the model has worked, with the “economy” service generating an especially strong following.

Logue (who was not available to be interviewed prior to his retirement) leaves with an industry that has become quite profitable, and is poised to become even more so. But he also leaves with one objective undone: Migrating FedEx Freight away from "classification" pricing, where rates are determined by the characteristics of commodity classes, to a structure based on shipment dimensions and density.

The approach, long used by FedEx's parcel customers, would be a "game-changer" for LTL if adopted, Logue said in early 2012. Logue departs as LTL is on the cusp of such a profound change. Though he won’t be around to see it, he was around to get FedEx Freight to the point where it appears to be set for years to come. For that, the company owes him a huge debt of gratitude

—Mark Solomon
Senior Editor

It's the most volume-filled time of the year

By David Maloney | December 15, 2014 | 1:35 PM

Sometime this week, UPS, FedEx and the United States Postal Service will likely reach an all-time high for the most packages shipped in one day. FedEx is predicting that 16 million packages will ship today alone (it is Monday, December 12 as I write this).

In an interview with CNN, Chuck Vookies, a senior station manager at the FedEx facility in Marietta, Ga. said that today’s volumes is higher than last year and about 30 percent more than a normal day’s volume. He attributed the increase to more online shopping.

During the last holiday season, higher volumes led to many packages shipped by the three services not reaching their destinations in the time promised. This led them to take steps to assure that their systems can now handle added capacities. Few employees are allowed vacation time between now and Christmas. More trucks were added to their networks and extra workers brought in to sorting centers as well.

We will see yet if these steps fix the volume crunch. All three services are confident they will shine this year.

Another step that both FedEx and UPS have taken to address their capacities is a plan to begin dimensional-weight pricing on small parcels. That won’t affect this year’s volume, but it is still essential to understand if you are a shipper. I wrote an extensive explanation of dim-weight pricing in a story in DC Velocity that appears in this month’s issue:


The article explains how you might be able to keep from seeing huge boosts in small package shipment costs that will now fall under dim weight pricing.

The reason for the change is that a lot of the volume that UPS and FedEx ships is air – packages that are much too big for their contents. These packages, which contain a lot of empty space, have until now taken a lot of the cube capacity from airplanes and trucks. Starting in January, customers will now pay a premium for not right-sizing their shipments with the correct amount of packaging.

By the way, if you are doing some last minute shipping and still want your packages to arrive by Christmas Eve, FedEx recommends you ship ground packages by this Friday, December 17. The company will accept next day packages by December 23 and still get them there by December 24. At least that is the plan.

I wish you all a very happy holiday season.

Truck Driver Shortage: 100+ Years War

By Mitch Mac Donald | December 08, 2014 | 12:34 PM | Categories: Transportation

The driver shortage has been a topic of seemingly endless discussion and debate in the logistics industry for at least 100 years, as evidence by the citation below.

The question, then: Should we stop talking about solving it and recognize the reality of its ever-presence and instead focus on how to best cope with it?

Consider this: "Practically all truck manufacturers and nearly all employers complain of the great difficulty of securing driver who are competent and who will work handling freight."   -- Source: Traffic World, December 12, 1914

AWOL on Infrastructure

By Mark Solomon | December 01, 2014 | 11:15 AM

A couple of Sundays ago, the “60 Minutes” news program devoted its lead segment to the problems confronting the nation’s transportation infrastructure. For those in the field, the segment didn’t break much new ground (no pun intended). But it was interesting that not only was there no on-air interview of Transport Secretary Anthony Foxx, but the reporter, Steve Kroft, didn’t even mention if Foxx was asked to comment.

Perhaps it was a good thing for the Obama Administration that no current official spoke on the subject. It’s unlikely they would have much to boast about. Nearly six years into its tenure, the Administration deserves a solid “F” for the way it has led (or not led) in the effort to fund improvements to the nation’s transportation infrastructure. The failing grade is amplified by the amount of rhetoric President Obama has spilled in touting infrastructure spending as a vehicle for job creation and for boosting the nation’s economic competitiveness.

Congress, of course, has played an important role in this mess. Yet transport funding is traditionally one area both parties can agree upon, especially when so much has been at stake since the Great Recession. It takes Presidential leadership to manage the process. However, it has not been delivered. The $787 billion stimulus bill signed in 2009 allocated a mere $48 billion to transport funding. For the next five years, the Administration effectively sat on its hands as Congress enacted stopgap bill after stopgap bill to keep road projects alive. In early 2012, efforts by Rep. John Mica (R-Fla.) to craft a long-term spending measure were criticized by then-Transport Secretary Ray LaHood as the worst bill he’d ever seen in all his years in public life. Yet the White House failed to come up with legislation of its own. When Congress, against all odds, sent a multi-year bill to President Obama’s desk in July, it was legislation fashioned with no executive branch input.

Finally in early 2014, the White House proposed funding legislation. It has, to this point, gone nowhere. This fall, the can was kicked down the road again, this time until May when the current short-term funding law expires. It what might mark a new low in legislative legerdemain, the stopgap funding was financed in part by the financial “smoothing” of corporate pension contributions, allowing companies to forego pension contributions on the front end so more taxable revenue would be available to capture and funnel into the Highway Trust Fund.

The Administration wrings its hands about how to pay for transport projects. The answer is in front of its face: Raising the federal fuel tax for the first time since 1993. Shippers and truckers support it. Big and small businesses support it. Road builders support it. Even the AFL-CIO supports it. But Congress is too scared to act, and the Administration shows no courage to lead because it is just as scared.

The clock will inexorably tick towards May. Facing no more election cycles, President Obama should put the hammer down and persuade Congress to pass at a minimum a four-year spending bill that includes a sizable increase in the federal fuels tax that has been a long time in coming. With a Presidential election cycle set to start in earnest in late 2015, the spring and summer may be as far as the window will remain open.

If the President needs inspiration, he should harken back to 1956. Then, President Dwight D. Eisenhower, in the face of predictions that in a Presidential election year a Democratic Congress would never approve a plan sought by a GOP president to create an interstate highway system, continued to urge approval and worked with Congress to reach compromises that made it work. The President signed the “Federal-Aid Highway Act of 1956” into law on June 29.

If President Obama can follow in Ike’s footsteps, then the sorry neglect of the previous six years will largely be forgotten.

River Rouge Revisited?

By DC Velocity | November 20, 2014 | 12:28 PM

About a month and a half ago, I had the opportunity to tour forklift company MCFA's newly expanded manufacturing facility in Houston. My generous hosts/tour guides were buzzing about the continuing growth of the electric lift truck market and innovative manufacturing techniques. But what struck me the most was the amount of welding and iron bending going on there and just how many of their components were made, if not in MCFA's own plant, than at least nearby.

I found that interesting because when I began covering the supply chain space, I spent many hours in dimly lit conference rooms looking at old, black-and-white photos of Henry Ford's River Rouge Complex and being told that we were moving past that kind of vertical integration to a world of outsourced supply chains that span the globe.

But MCFA is far from being a maverick. Instead the pendulum of change seems to be swinging back. Now companies are talking about regional manufacturing, and the buzz about offshoring has been transformed into a buzz about reshoring or near shoring. I guess everything that was old is new again. MIT, for one, suggests that this is less about a revival in American manufacturing and more about changes in the supply chain.

Are forklift manufacturers on the forefront of this trend? MCFA's efforts to manufacture more lift trucks and parts in the United States is certainly fairly new, but Crown Equipment Corp. has a long history of "vertically integrated manufacturing" that it's quite proud of. I will be interested to hear if this trend is evident in other parts of the material handling industry.

—Susan Lacefield
associate editor

Preparing the workforce of the future

By David Maloney | November 10, 2014 | 6:01 PM | Categories: Material Handling, Warehousing

Those who attended the MHI Fall conference in San Diego last month heard one theme repeated through many of the sessions - how difficult it is becoming to find quality people. And the situation is expected to become even worse in the future.

Colleges are just not turning out enough skilled managers to fill the ranks of the future supply chain. The colleges and universities themselves say that they do not have enough qualified instructors to teach budding supply chain practitioners. The lure of industry is keeping many from pursuing PhD's and entering the world of academia. 

Supply chain technicians - those who install and repair warehouse technology - are also becoming rare at a time when automation is seeing dramatic growth rates within facilities.

While many companies are bemoaning the dirth of talent coming into the pipeline, one company is doing something about it. Baldor is investing in its future by helping to develop the robotics program at the University of Arkansas-Ft. Smith campus.

I attended the Baldor Publishers event last week at Baldor headquaters in Fort Smith, Ark. It was a gathering of editors and publishers from magazines that cover the various industries that use Baldor motors, drives, and robotics. During the meeting, we were bussed to the U of A campus to meet with some of the students of the robotics program and to experience their enthusiasm. The classes meet in the Baldor Technology Center building on the campus, further evidence of the company's support of education.

The eighteen students in the class worked in teams of two, with each team manning one of nine small tabletop robots supplied by ABB, the parent company of Baldor. The students had programmed the robots to do a number of tasks, some of which could simulate warehouse or manufacturing operations, such as picking up objects on one part of the table and moving them to a process represented at another spot on the tabletop.

One pair of students had programmed their robot to move ping pong balls from one set of egg cartons to another, simulating a picking operation. Another pair had their robot draw with a pen. And one more pair had attached a child's golf club to the robot and programmed it to put a ball across their worktable.

The range of student ages was also encouraging. While most were of the usual student age of around 20, several students were older and in their 40s or 50s. These were obviously workers retraining for new job skills.

A steady stream of skilled designers and technicians graduate the program every year, with many of them finding a home at nearby Baldor. Baldor is making an investment in the future that pays dividends over and over again.


By Mark Solomon | October 27, 2014 | 7:56 AM
Move the STB Needle, Please!

In July 2011, the National Industrial Transportation League proposed rules to give captive rail shippers the opportunity to have their traffic switched to another carrier if certain conditions were met. The proposal, to us, seemed reasonable: Shippers would have to prove they could not be served by other modes or another railroad.And the switch would not occur if the originating railroad could prove the practice was unsafe, or if it harmed existing rail service.

This post, though, is not about the proposal's merits. Rather, it questions why, after nearly 3 1/2 years, the Surface Transportation Board, the federal agency that oversee the rail industry, has done nothing with this other than assign the case a docket number and ask for initial comments. There has been no rulemaking, nor has there been a decision by the STB to even determine if one should begin.

The STB's inaction has drawn the attention of Sens. Al Franken (D-Minn.), David Vitter (R-La.), and Tammy Baldwin (D-Wis.), who in early October sent a letter to Chairman Dan Elliott asking to explain its foot-dragging. As of this post, STB has not replied to our request for an explanation, nor has it commented on if it responded to the letter.

We are not fully privy to the robustness of the STB docket. But it's hard to imagine it being so busy as to be unable to render a decision on a rulemaking in 27 months. It even has a model to go by: In Canada, switching rules are required by law and have been in place for decades.

The STB's action only reinforces the perception that it, like its predecessor the Interstate Commerce Commission, is little more than a handmaiden of the railroads. The knee-jerk reaction of the powerful rail lobby, meanwhile, is to warn of re-regulation and, for the most part, give the shipping community the back of its collective hand. The rails have behaved like this for 120 or so years. It was this arrogant attitude, combined with their refusal to give shippers relief from their transport monopoly, that drove President Theodore Roosevelt to ram rail regulation through Congress in the early 1900s.

Our advice for the rails is to tread lightly. Folks on Capitol Hill are well aware of the industry's year-long service problems, and their stubborn refusal to work with NIT League on competitive access rules isn't likely to sit well. The STB may be in the rails' corner, but if Congress decides to act, the support of a small federal agency won't matter very much.

Forget leaning in, we all need to look up

By Mitch Mac Donald | September 29, 2014 | 9:33 AM | Categories: Transportation

As so often noted, the deluge of business information that streams to us (or at us) everyday has never been greater or more daunting to manage. It will be, though. As technology advances and the means by which we invite and accept information grows, so too will the ferocity of the content deluge.

 From websites to magazines to mobile apps to social media, the content streams are multiple and it seems multiplying. This is all well and good if you have a strategy in place to filter through all the content to find that which you really like, and want, and need. But even with such a strategy in place, there’s still going to be something missing. Something all our technology and all our devices can’t replace.

This comes to mind while reflecting on a phenomenal four days last week in San Antonio at the Council of Supply Chain Management Professional’s Annual Global Conference. The preeminent association for supply chain thought leadership did it again. It provided nearly 3,000 attendees an unparalleled bounty of some of the best content available.

One comment, though, from a bright young supply chain professional, made me wonder how many folks today “get it,” and I don’t mean get content, I mean really “get it.” This young professional noted that the event was good, but they were still looking for information (content) that the conference and show afforded that they couldn't get with a quick search on the Internet. 

Wondering how many others in San Antonio, and all those others who didn’t attend this year’s AGC, shared this young person’s view, I realized that in today’s hyper-connected world, many folks don’t “get it.” It’s not because they aren’t smart. It’s not because they don’t want to succeed. And it is certainly not because they don’t want it. They just don’t “get it.”

They don’t get it because they have lost sight of the value of looking someone in the eye rather than at their LinkedIn profile. They don’t get it because even when at the ultimate gathering of supply chain executives, thought leaders, and subject matter experts, they spend the majority of their waking hours nose down, eyes fixed on their phones, tablets, and other devices. They don’t “get it,” and they are missing something important. In fact, they may be missing what in the modern business day might be the single greatest value a gathering like CSCMP’s annual conference and show brings: live, real-time, actual human-to-human interaction.

While discussing this with some other attendees, one actually brought up one of my own Outbound columns in DC Velocity from February of 2013 wherein I asked, "Are you connecting or just connecting?"

Another suggested a YouTube video that makes the point particularly well. It’s called “Look Up,” and it is possibly the single best piece of advance anyone will offer you this year. Watch it here and let me know if you agree: "Look Up."


- Mitch Mac Donald,

Group Editorial Director

DCV editors will begin blogging

By Peter Bradley | September 15, 2014 | 3:00 AM | Categories: Material Handling, Transportation, Warehousing

    Since 2003, DC Velocity has brought its readers stories designed to help material handling, logistics, transportation, and supply chain executives do their jobs better. Whether its the latest on transportation regulation, the newest developments in warehousing management systems, news on the innovative products for distribution efficiency, or leading thinking on issues like network design or business resilience, our editors have brought news and information to keep readers ahead of the game.

We've also changed with the times, offering a robust web site and a series of e-newsletters to bring news and information far more frequently than the monthly magazine. Now, in the latest extension of our effort to engage readers, our editors will begin blogging. One or more of our editors will post a blog on what they have seen, heard, or read--or what they consider vital or just plain interesting about the areas we cover--every week. We trust that this effort will add greater value to our readers and deepen the trust we've spent more than a decade working to develop.

This is a timely week to begin. Next week, the Council of Supply Chain Management Professionals will hold its annual conference in San Antonio. We'll have a full team of editors there to bring you news of some of the latest thinking we hear at seminars, on the show floor, or in conversations along the way. Stay tuned.

-Peter Bradley, Editorial Director, DCV Velocity and CSCMP's Supply Chain Quarterly


The opinions expressed herein are those solely of the participants, and do not necessarily represent the views of Agile Business Media, LLC., its properties or its employees.

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