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www.inboundlogistics.com THE MAGAZINE FOR DEMAND-DRIVEN LOGISTICS • May 2015
2 SPECIAL SUPPLEMENTS
THE RAILSGREAT INTERMODAL SITES
A PALETTE OF
Switching on Technology • Managing a Diverse Workforce
Powering Up the Right Equipment
DRIVE NEW VALUE INTO
YOUR SUPPLY CHAIN.
Got 3PL challenges? Get free expert solutions at inboundlogistics.com/3pl
There’s no such thing as a routine
call for the highly trained customer
service specialists at Saia. Every time
the phone rings, it’s personal. With
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our experts can answer your questions,
address your needs, and resolve
potential challenges — and 97% of
requests are handled with a single
call. So whether we’re proactively
monitoring new accounts to ensure
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1-800-765-7242 / www.saia.com
SAI_0831 Superhero Ad_CSR_InboundLog.indd 1 3/10/15 11:30 AMsaia_ad0515.indd 1 4/30/15 10:10 AMGot 3PL challenges? Get free expert solutions at inboundlogistics.com/3pl
May 2015 • Inbound Logistics 1
May 2015 • Vol. 35 • No. 5
42 Building a Smarter Warehouse
Cloud computing, e-commerce, omnichannel
management, and last-mile logistics are reshaping
today’s warehouse. Make sure your facilities can
make the grade.
48 The Changing Face of the
How does a warehouse manager transform a
group of people with different backgrounds,
outlooks, and abilities into a high-powered
THE MAGAZINE FOR DEMAND-DRIVEN LOGISTICS
12 READER PROFILE Lori Harper: Running a Tight Ship
Lori Harper, vice president, supply chain management at Ingalls
Shipbuilding, is a natural leader who finds solutions to unexpected
89 IT TOOLKIT Awake at the
Wheel: Delivering Customer
When Sleepy’s customers got
tired of short notice and missed
deliveries, the specialty mattress
retailer brought in a technology
partner and dreamed up a solution
that put those problems to bed.
6 CHECKING IN
The walls come tumbling down.
The ongoing conversation.
10 10 TIPS
30 TIGHT MARKET FOR
INDUSTRIAL REAL ESTATE
MARKET IMPACTS SUPPLY
KnowledgeBase sponsored by WSI.
32 IMPROVING THE
Thought Leader sponsored by
34 THE DRIVER SHORTAGE—
NOT JUST A CARRIER
Thought Leader sponsored by Saia.
36 IT MATTERS
Finding an inventory solution that’s
just right for your small business.
38 THE FINE PRINT
How Amtrak’s Supreme Court case
affects freight shippers.
Five ways to mitigate a truckload
112 LAST MILE:
THE CHOPPER DROPPER
THE CHANGING FACE
OF THE WAREHOUSE
May 2015 • Vol. 35 • No. 5
2 Inbound Logistics • May 2015
59 SPONSORED CONTENT Riding the Rails
America’s great rail intermodal sites
serve as vital hubs in the logistics
71 TMS Buyer’s Guide
Inbound Logistics’ annual directory highlights
some leading TMS providers and solutions.
81 SPONSORED CONTENT
An Expanding Palette of
The seven trends you need to know before
you choose your next pallet system.
THE MAGAZINE FOR DEMAND-DRIVEN LOGISTICS
Martin Associates report points to
the importance of continuing U.S.
port investment; Freight Can’t Wait
program encourages Congress to
earmark funding exclusively for
freight infrastructure projects;
Henry Ford College introduces
associates degree in supply chain
China and Pakistan pave way for
new trade corridor; Trans Pacific
Partnership nears resolution;
Indonesia logistics industry fights
new capital requirement regulation;
European railroads partner around
92 WEB_CITE CITY
98 WHITEPAPER DIGEST
100 IN BRIEF
108 RESOURCE CENTER
4 Inbound Logistics • May 2015
2015 LOGISTICS PLANNER
Meet the leading logistics,
transportation, and supply chain
service providers; real estate
developers; port authorities;
materials handling equipment
companies; technology providers;
and more—all ready to help you
enhance your supply chain,
boost efficiency, cut costs, and
better serve your customers.
SUPPLY CHAIN NEWS
For up-to-the-minute information,
bookmark the IL news page.
Enjoy opinions, commentary, and
links to the latest news to help
you stay on top of your game.
The most comprehensive and
clutter-free online directory of
supply chain websites — organized
by category, cross-referenced,
and fully searchable. You can
browse by category or search
for companies by name.
Communication is Key When Optimizing
Logistics Networks bit.ly/1EUtwhQ
Jeff Vielhaber, Chief Operating Officer, TTS
The goal of optimization is to reduce costs while becoming more efficient.
But before you hire an analyst or invest in new technology to implement
your optimization plan, don’t forget about communication.
Improving Customer Satisfaction
With Consumer Engagement Apps bit.ly/1c1fSMM
Nate Henderson, Global Manager of BILT, SAP
Offering products with an accompanying app that provides interactive,
voice-guided assembly, repair, and installation instructions is a game
changer for manufacturers, and leaves retailers with satisfied customers.
Manufacturing Skills Gap Calls for New
Approaches to Talent Development bit.ly/1PeJZm2
Russ Rasmus, Managing Director, Operations/Manufacturing (pictured) and
David Smith, Senior Managing Director, Talent/Organization, Accenture Strategy
Manufacturers that invest in developing skills of new and incumbent
workers proactively position themselves to compete in today’s global
economy. Here’s a four-step process to stoke your pipeline with the talent
Support Tool bit.ly/IL3PLDST
Choose the services and capabilities you
need from a provider and the Decision
Support Tool will find matching companies.
You can even contact companies directly
through our linked RFP functionality.
3PL Request for
Describe your supply chain challenge, then
browse the list of top 3PLs. Select specific
companies to receive your RFP, and they’ll
provide free, no-obligation advice to meet
your logistics management needs.
Keep up to date with
the very latest:
Perform what-if analysis for
on freight terms
Explore alternate methods
to maximize utilization of
private or contract ﬂeets
Periodically realign static
routes to minimize travel,
and improve service levels
Determine whether your
network could improve
service by altering facility
TMS_Ad_PRINT_REV.indd 1 4/9/15 11:05 AM
Manhattan Associates Ad-PLACED 0415.indd 1 4/9/15 12:13 PMGot 3PL challenges? Get free expert solutions at inboundlogistics.com/3pl
by Felecia Stratton | Editor
Vol. 35, No. 5 May 2015
THE MAGAZINE FOR DEMAND-DRIVEN LOGISTICS
6 Inbound Logistics • May 2015
PUBLISHER Keith G. Biondo
EDITOR Felecia J. Stratton
MANAGING EDITOR Lauren Muskett
SENIOR WRITER Joseph O’Reilly
ASSOCIATE EDITOR Jason McDowell
Merrill Douglas • Lisa Terry
CREATIVE DIRECTOR Michael Murphy
ASSOC. ART DIRECTOR/
PUBLICATION MANAGER Sonia Casiano
CIRCULATION DIRECTOR Carolyn Smolin
PUBLISHER: Keith Biondo
(212) 629-1560 • FAX: (212) 629-1565
WEST/MIDWEST/SOUTHWEST: Harold L. Leddy
(847) 446-8764 • FAX: (847) 305-5890
(612) 234-7436 • FAX: (847) 305-5890
SOUTHEAST: Gordon H. Harper
(404) 229-9691 • FAX: (404) 355-2036
MIDWEST/ECONOMIC DEVELOPMENT: Jim Armstrong
(314) 984-9007 • FAX: (314) 984-8878
MOBILE, AL: Peter Muller
(251) 232-1920 • FAX: (251) 343-0541
NORTHEAST: Rachael Sprinz
(212) 629-1560 • FAX: (212) 629-1565
Inbound Logistics supports sustainable best
practices. Our mission is rooted in helping companies
match demand to supply, eliminating waste from
the supply chain. This magazine is printed on paper
sourced from fast growth renewable timber.
Inbound Logistics welcomes comments and submissions. Contact us at
5 Penn Plaza, NY, NY 10001, (212) 629-1560, Fax (212) 629-1565, e-mail:
information, call (212) 629-1560, or e-mail publisher@inboundlogistics.
com. Inbound Logistics is distributed without cost to those qualified
in North America. Interested readers must complete and return the
qualification card published in this issue, or may subscribe online at
www.inboundlogistics.com/free. Subscription price to others: in North
America: $95 per year. Foreign subscriptions: $229. Single copy price:
No. Amer. $10, foreign $19, back issues $15. Periodicals postage paid at
New York, NY, and additional mailing offices.
The Walls Come Tumbling Down
t might sound like two things I did this month—traveling to
Phoenix for ISM’s annual conference and working on this
Warehousing issue—have nothing in common. Ah, but they do.
What happens in the warehouse, the orchestration of products coming
in and going out to where they need to be, hinges on the convergence
of many functions—purchasing, finance, transportation, logistics, and
technology. And that convergence in the warehouse reflects what’s
happening in the larger sense in enterprises all over the world.
It’s also why the editor of a logistics/supply chain publication attended the
Institute for Supply Management’s (ISM) annual conference. There, I observed
purchasing, supply management, production, and inventory control professionals
embracing cross-functional cooperation. For example, I met with the 30 Under 30
Rising Supply Chain Stars winners, many of whom say that if their responsibilities
are broadened across the entire supply chain, they feel they have a better opportu-
nity to contribute, make a difference, and beneficially impact enterprise operations.
Driving this increase in cross-functional cooperation is a growing recognition
that linking supply functions with demand will benefit overall enterprise
performance. The industry organizations serving functions such as purchasing,
production, and supply, which traditionally had little direct involvement in
logistics operations, are recognizing this by starting to bring their members logistics
information, research, and, in some cases, certification.
At the conference, ISM CEO Tom Derry introduced the ISM Mastery Model,
which outlines new global standards of excellence for the supply management
profession. The free model outlines what it takes to be an exceptional supply
management professional. “This was not an ivory tower exercise within ISM,” Derry
says. “It was built on the knowledge provided by practitioners in the field.”
What it now takes to succeed in supply management is far different from what
it was decades ago. The Mastery Model’s new standards recognize that. But ISM
is not the only association bringing more logistics and supply chain information
to members. The recent merger between APICS and ASTL also illustrates how
hard and fast barriers between functions are coming down in recognition of today’s
global business realities. If industry associations support convergence by providing
the right kind of tools, such as the Mastery Model, they will create new value by
cross-pollinating each supply chain function.
Behind this convergence and cooperation is understanding that you have to
better match demand to supply to stay globally competitive. Industry associations
are encouraging it, and providing tools such as the Mastery Model to help supply
chain professionals excel in multi-disciplinary ways. n
Timothy LePage @tplepage
13 APR 2015
Spotted a great @Staples program in
@ILMagazine’s “Trends” during some
light reading this weekend. bit.ly/1ciGslo
Inbound Logistics @ILMagazine
15 APR 2015
Traditional Supply Chain Models Will
Be Extinct in 2025, Thanks to These 10
Disruptors – bit.ly/1yxmNRI
VChain Solutions @VChain
Students looking to enter the field after
graduating, this is the future of the
supply chain. Will you be ready?
Inbound Logistics @ILMagazine
27 APR 2015
Offshore vs. Outsource for
Syed Qasim R Jafri @31Qasim
When offshore, it’s logical and cost
effective to outsource transport. Think
globally, but act locally.
27 APR 2015
Top 100 Logistics IT Providers Market
Research Survey: bit.ly/1ciKCK0
We are honored to be included on
30 APR 2015
Time flies. Here’s a photo of our 2015
Top 100 Logistics IT Providers issue
(left), with its counterpart from 1999,
the first time we published a Top 100
Logistics IT Providers list. Believe it or
not, a handful of IT companies had the
staying power to be on both lists!
Hot Topics | IL articles getting the most impressions on LinkedIn: Six Secrets to
Controlling Supply Chain Costs Without Sacrificing Service: bit.ly/1uPBRi2 • Five Customs
Compliance Tips for Aerospace Companies: bit.ly/1ciKhqu • What is Globalization Doing to
the World of Logistics? bit.ly/1ACvSej • Top 100 Logistics IT Providers Market Research
Survey: bit.ly/1ciKCK0 • Tracking Isn’t Just Tracking Anymore: bit.ly/1ciKEBs
Inbound Logistics @ILMagazine
14 APR 2015
What do these dudes have to do
with logistics? Dematic scores ZZ
Top for its September conference!
Know a Worthy
Supply Chain Student?
Pass this along. Inbound Logistics
and ASTL are now accepting
applications for their third-annual
Supply Chain Scholarship. As
part of the application process,
undergraduate students are
asked to submit a 2,000-
word essay on why they chose
logistics/supply chain as their
path of academic study, and how
they envision a career in the
industry impacting the company
they work for, as well as the U.S.
and global economy at large.
The winning student receives
a $2,500 scholarship. Inbound
Logistics will announce the
winner in our June 2015 issue.
For more information and an
application, email Laurie Denham
Drop us a line:
or send snail mail to
Dialog, c/o Inbound Logistics
5 Penn Plaza, NY, NY 10001
8 Inbound Logistics • May 2015
10 Inbound Logistics • May 2015
Improving Shipper/Carrier Relationships
rom shippers, receivers, and pur-
chasing agents to carriers and
third-party logistics companies,
everyone has an opinion on how to reduce
trucking costs. But they all agree that to
help save money, shippers should build
strong relationships with their less-than-
truckload (LTL) carriers. Mark Hamblin,
vice president of sales, west, for LTL car-
rier Saia, offers some advice on how to do
Work for a win-win. Work with your
carrier to determine which lanes and
freight work best. Carriers no longer
operate under the model of taking all the
freight offered to them. With the increase
of transportation management systems,
tighter driver availability, and growing
regulatory guidelines, it is essential to col-
laborate with carriers to ensure you are
adding profitable business to their network.
This will solidify a long-term relationship
that will save you from costly changeovers.
Follow through on commitments.
If you intend to hold your carriers to
their commitments, then you should
honor your commitments to them. Carriers
base their prices on the data you provide.
Supplying inaccurate data or not shipping
in the lanes and tonnages you commit to
could lead to renegotiation and changing
carriers sooner than you anticipated.
Provide data. Good data is impor-
tant to carriers during the bid process.
In addition to providing lane and ton-
nage data, you also need to provide freight
characteristic percentages and monthly
volumes. That information helps carriers
plan appropriately with regard to locations
and any specific freight characteristics, as
well as for seasonal changes in volume.
Share opportunities. When new
opportunities arise, bring them to your
partner carrier first. Everyone benefits
if you can come to an equitable agreement.
You benefit from a smooth transition and
save the time and expense of a formal RFP.
The carrier benefits by earning more of
Treat drivers well. Anything you
can do to make your facility more
driver-friendly helps your carriers
retain drivers, which reduces their operat-
ing costs to save money. A long-term driver
will know your business and your proce-
dures, and makes the pickup and delivery
process more efficient.
Mix it up. Talk to your carrier about
operational changes you can make
that won’t impact your operations. For
instance, if you already run a weekend shift,
why not offer weekend trailer swap options
to your carrier?
Plan. When you begin a new part-
nership, give the carrier time to get its
system ready and trained to take on the
new lanes and freight. Not doing so can get
the relationship off to a costly, rocky start.
Communicate. Shippers should hold
quarterly meetings with their carriers
to review performance metrics, and
new services and options, and to strengthen
the relationship. Business review meetings
should include discussions on high-cost
drivers, so strategies can be implemented
that reduce costs as opposed to raising rates.
Working together prior to renegotiation will
improve and solidify the partnership.
Use technology. Shippers expect
carriers to provide real-time data on
shipments, and carriers have gone
to great expense to do so. In return, ship-
pers should be willing to use programming
options that provide a smooth, accurate
transfer of data without requiring addi-
tional manual work on either side.
Monitor interactions. Ensure
you provide accurate information
and that customers are treated with
respect. A good relationship at all levels of
the organization is the best way to ensure
the shipper/carrier partnership is strong
and healthy, which reduces costs and
improves service. n
as told to Merrill Douglas
R E A D E R
12 Inbound Logistics • May 2015
Running a Tight Ship
HE MAIN CHALLENGES I FACE IN MY WORK AT
Ingalls Shipbuilding are probably the same ones faced by
professionals in my role throughout the world: how to add
value to your enterprise. Ingalls Shipbuilding builds war ships for the
U.S. Navy and Coast Guard. Our most important goal is to give our
war fighters the products they need. And we’re continually seeking
to deliver those products more affordably.
Ingalls Shipbuilding procures materials
and components mainly from suppliers in
the United States. We transport this prod-
uct via ocean, air, rail, and truck to our
manufacturing facility in Pascagoula.
One current project I find exciting is
an effort to improve material tracking.
Tracking raw materials and loose parts
in a ship yard is hard because there’s so
much steel in the environment. That
metal interferes with radio signals, making
it difficult to implement a radio frequency
identification system, as you would in a
warehouse. I can’t give details on the solu-
tion we’re developing, but if it’s successful,
I believe it will be a game changer.
A highlight of my career has been my
work to support the construction and
delivery of one of our amphibious assault
ships, LHD 8. Not only did I take part in
Lori Harperis vice president,
supply chain managementat Ingalls
Shipbuilding, a division of Huntington
Ingalls Industries (HII), Pascagoula,
Miss. HII was spun off from Northrop
Grumman Corp. in 2011. Harper has
served in this position since 2012.
Sourcing, procurement, receiving,
warehousing, inventory, distribution, cost
control, and analytics.
Subcontract management specialist,
material site manager—Gulfport operations,
subcontracts section manager—DDX
Program, manager—supply chain compliance,
director—LHD 8 program material, director—
LPD 17 program material, Northrop Grumman
B.S., business administration, Southwestern
Oklahoma State University, 1993; MBA,
organization and operations management,
William Carey College, 1997.
Named one of the Top 10 Business Women of
2015 by Mississippi Business Journal.
The Big Questions
What one characteristic do you
believe every leader should
To be an effective leader, you have to
be willing to go against the flow when
necessary. It takes courage to speak
up professionally and respectfully, and
then to act on it.
If you could go back to school
for fun and personal enrichment,
what would you study?
I’d love to learn a foreign language—
probably Spanish. I would also like to
What advice would you give to
your 18-year-old self?
Life will throw some challenges at you,
but you will be OK. Just keep getting
What is your passion in life?
My passion is helping people—in my
community, and in my professional
and personal environment. I’m on the
executive board of the Boys and Girls
Clubs of the Gulf Coast, and I’m the
executive sponsor for an employee
resource group at Ingalls called Women
in Shipbuilding Enterprise.
Learn more at nﬁindustries.com
ROM FOOD AND beverage to
industrial and retail, NFI has
the capabilities and expertise
to manage your products throughout
the entire supply chain. Since 1932,
we’ve been delivering innovative
services to the world’s biggest
companies. Whether you need to
import, transport, or warehouse your
goods, NFI will work with you to
engineer solutions that best address
your supply chain goals.
Your supply chain is complex and
you’ll need a logistics partner you can
count on. NFI is that partner.
WHEREVER YOU NEED US,
22+M SQ. FT OF CONTRACT AND PUBLIC WAREHOUSING SPACE
Trim Edge Warning-NFI.indd 1 5/4/15 9:11 AMGot 3PL challenges? Get free expert solutions at inboundlogistics.com/3pl
May 2015 • Inbound Logistics 15
NOTEDThe Supply Chain In Brief
UP THE CHAIN
Craig Marton is joining
3PL Sunset Transportation
as president, and COO and
founder Jim Williams will
transition to chairman and
CEO. Marton leads day-to-day
business operations, strategic
planning, and implementation,
while Williams advises
on strategic decisions
and focuses on business
development and acquisitions.
Crowley Maritime provided
shipping for a donated mobile
health clinic from the Blood
Alliance of Northeast Florida
to Haiti. The mobile health clinic
will serve more than three million
Materials handling company The
Raymond Corporation donated
16 pallets of nonperishable
food and personal care items
to the Addison Community
Switchboard – an Addison, Ill.-
based non-profit organization that
provides emergency assistance to
Beverage supply chain management
provider Satellite Logistics Group
(SLG) purchased AnotherRound Apps
(ARA), a cloud-based, mobile software
provider. The companies worked
together to integrate ARA’s KegID
asset-tracking technology with SLG’s
Kegspediter service to provide brewers
and beverage distributors real-time
visibility, which optimizes equipment
use and improves accountability.
Transportation logistics provider XPO
Logistics will acquire logistics company
Norbert Dentressangle SA. Norbert
Dentressangle’s transportation and
logistics services complement XPO’s
contract logistics, freight brokerage, and
global forwarding offerings.
Software provider Llamasoft
bought IBM’s LogicTools suite of
strategic supply chain optimization
software, which includes LogicNet Plus,
the Inventory and Product Flow Analyst,
and the Transportation Analyst.
Third-party logistics provider
Echo Global Logistics purchased
Command Transportation LLC,
a truckload broker and non-asset-
based transportation provider. The
transaction increases scale and adds
density to Echo’s national footprint to
better serve the truckload brokerage
Automation solutions provider
Swisslog acquired FORTE Industries,
a warehouse automation systems
integrator. FORTE’s conveyor systems,
case and piece picking, and sortation
solutions expertise will help strengthen
Short-distance transportation provider
Ninebot Limited and personal
electronics transportation supplier
Segway Inc. combined companies to
focus on research and development,
manufacturing, sales, and service in
short-distance transportation. The goal
is to promote rapid development and
create mobile robotics solutions.
Ocean carrier Evergreen
Shipping Agency (America)
Corporation named CN its
2014 Railroad Company of
the Year. CN was recognized
for its consistent high level
of performance and excellent
quality, service, and support.
Kristy Knichel, president
of Knichel Logistics, was
presented the inaugural
Distinguished Woman in
Logistics award. Established
by the Women in Trucking
Association, the award
promotes the achievements
of women in transportation.
APL Logistics VASCOR
Automotive, a specialist
provider of automotive
logistics services in India,
was presented with the Best
Emerging Player award
from the Indian Chamber
of Commerce. The award
recognizes APL for its multi-
modal logistics solutions for
the distribution of finished
vehicles across India.
Union Pacific Railroad
received 2014 Logistics
Excellence Awards in
customer service and
service performance from
Toyota Logistics Services.
The awards were based on
the railroad’s commitment
to service, ranging from
customized logistics to
16 Inbound Logistics • May 2015
INFOCUS NOTEDThe Supply Chain In Brief
The U.S. Environmental
Protection Agency honored
Penske Truck Leasing as a
SmartWay Affiliate Challenge
award winner for the third
straight year. The award
recognizes organizations that
participate in SmartWay, and
actively support sustainable
UPS plans to build 15 compressed
natural gas (CNG) fueling stations
to support the deployment of
1,400 CNG vehicles over the
next year. Twelve stations will be
in new locations, and three will
replace existing CNG stations
with more robust, higher capacity
Dental products manufacturer
Sunstar selected warehouse
technology provider Numina
Group to provide a warehouse
control system (WCS) for its
manufacturing and distribution
center. The WCS helps Sunstar
control order fulfillment,
pick and pack, and shipping
Reusable pallet supplier iGPS
Logistics began providing
Worley McCullough, a
potato grower-shipper, with
sustainable plastic pallets.
Worley McCullough switched
from wood to plastic pallets
as part of its sustainability
Jaguar Land Rover (JLR)
automated its global priority
warranty parts returns service
in partnership with SEKO
Logistics. SEKO organizes
the transportation of priority
parts returns from JLR’s global
dealerships to the UK with full
visibility from pre-shipment
Global 3PL OHL has renewed
its license of Amber Road’s
Management solution. OHL
uses the solution to manage
international service contracts,
service agreements, rate
sheets, and variable carrier
Footwear retailer The Walking
Company deployed software
provider Epicor Software’s
Retail CRM 7.0 and Retail
Clienteling across its retail
stores. The software solutions
will help The Walking Company
launch a loyalty program and
support improved customer
Grocery retailer Coop
Denmark selected global
logistics provider Damco as its
logistics partner for inbound
shipments from Asia. The
partnership includes integrated
supply chain management,
advanced EDI connectivity, and
improved freight control in key
parts of Coop’s Asian supply
TRENDSSHAPING THE FUTURE OF LOGISTICS
May 2015 • Inbound Logistics 19
by Joseph O’Reilly
U.S. Ports Critical
To Sustained Economic Growth
Transportation budgeting at the state and federal levels has become a contentious battleground
as politicians and private sector lobbyists search for new funding mechanisms to execute much-
needed infrastructure upgrades. One point of consensus is that U.S. ports are key to sustained
economic growth—and therefore should be a priority on a very long legislative to-do list.
Martin Associates’ latest report, the 2014 National Economic Impact of the U.S. Coastal Port
System, documents the contributions of America’s seaports to the nation’s economy over the
past seven years.
From 2007 to 2014, the total economic value that U.S. coastal ports provided in terms of rev-
enue to businesses, personal income, and economic output rose 43 percent to $4.6 trillion. This
accounts for 26 percent of the nation’s $17.4-trillion economy in 2014, up from 20 percent of its
$16.1-trillion economy in 2007. Growth was robust in spite of the global recession, which damp-
ened cargo volumes between 2008 and 2012.
INFOCUS TRENDSSHAPING THE FUTURE OF LOGISTICS
Among other notable gains since 2007:
■■ Federal, state, and local tax revenues
generated by the port sector and importer/
exporter revenues rose 51 percent to
■■ Jobs generated by port-related activity
jumped 74 percent to 23.1 million.
■■ Personal wages and local consump-
tion related to the port sector doubled to
$1.5 billion, with the average annual salary
of those directly employed by port-related
businesses equaling $53,723.
“The growth in jobs and economic
importance of America’s seaports reflects
the fact that the value of international
cargo handled at these ports increased by
$400 billion since 2007, reaching about
$1.8 trillion in 2014,” says John Martin,
president of the transportation consultancy.
“It’s important to emphasize that the key
growth in our international trade is in U.S.
exports, which saw a 60-percent increase
in value over the past seven years,” he adds.
Each dollar increase in the value of
export cargo supports significantly more
jobs in the United States than does a dol-
lar value of growth in imports.
“The growth in the contributions of our
ports to the nation’s economy underscores
the need to invest in infrastructure and
technology to support and foster good jobs,
national security, international trade, and
our standard of living,” adds Martin.
To that end, the American Association
of Port Authorities forecasts that ports need
to invest upwards of $30 billion by 2025
to maintain U.S. competiveness on today’s
The U.S. transportation and logistics
sector, and business interests in general,
have long been challenged by a public sec-
tor that continues to siphon transportation
revenues for other purposes. While some
states are cracking down on wandering
funds and specifically earmarking capital
for infrastructure projects, others remain
mired in pork barrel wheeling and dealing,
even as gas-tax revenues dry up.
To raise awareness of this problem, the
Washington, D.C.-based Coalition for
America’s Gateways Trade Corridors
(CAGT) has introduced a “Freight Can’t
Wait” campaign to encourage Congress to
pass a surface transportation law that con-
tains a fully funded freight grant program.
“Freight infrastructure needs dedicated
funding. Establishing a competitive grant
program with broad, multimodal project
eligibility throughout the United States is a
priority for our coalition, and should be for
Henry Ford College Produces
Supply Chain Professionals
he past decade has seen a renaissance in supply chain and logistics
curriculum—a trend that continues today unabated. But as the
manufacturing and supply chain sectors encounter a growing labor
shortage, a widening gap is looming on the logistics frontline.
Increasingly, there is a move to bring supply chain education and career
development to high schools, vocational schools, and community colleges—
introducing a new generation of students and workers to an industry brimming
with job opportunities.
Henry Ford College, a public two-year college in Dearborn, Mich., is
seizing upon the legacy of its namesake to create an associate
degree program in supply chain management, as well as
a new SCM technician certificate through its business
and computer technology division. The new
curriculum will begin during the fall 2015
True to its mission, the college has
traditionally offered training and apprenticeship
programs for students involved in skilled trades. The
supply chain program will expand upon this foundation, as well as augment the
scope of its career development offerings.
“The purpose of this supply chain management program is to create job
opportunities for our students,” says Henry Ford College business instructor
Douglas Langs, a 22-year veteran of General Motors. “It prepares students to
obtain a job once they graduate with either their associate degree or certificate.”
Alternatively, it also provides a pathway for associate degree graduates to
continue their supply chain education elsewhere.
Case in point: Henry Ford College alumnus Ben Topping is currently studying
supply chain management at Wayne State University. Topping’s interest was
sparked by Langs’ capstone business course, which featured supply chain
“During the first day of class, Professor Langs placed a small piece of chocolate
in front of each student, and we spent the entire 90-minute class discussing
where every ingredient of that chocolate—cacao, sugar, milk, aluminum for the
wrapper, paper for the tag—originated, as well as how it arrived in Hershey, Pa.,”
“Because I was already familiar with the basics of logistics, purchasing,
warehousing, and distribution, I was able to dive deeper into the field, enhancing
my learning,” he adds.
20 Inbound Logistics • May 2015
Untitled-2 1 5/12/15 10:53 AMkenco_proof_ad0515.indd 1 5/12/15 11:26 AMGot 3PL challenges? Get free expert solutions at inboundlogistics.com/3pl
INFOCUS TRENDSSHAPING THE FUTURE OF LOGISTICS
our country also,” explains Leslie Blakey,
the coalition’s executive director.
The campaign features 36 gateway and
corridor projects of national significance
that would improve freight hubs, and sea
and land gateways, and augment roadway
capacity to ease freight chokepoints.
As part of this call to action, coalition
members are voicing their support for
the Economy in Motion: The National
Multimodal and Sustainable Freight
Infrastructure Act (H.R. 1308), a bill
introduced by U.S. Rep. Alan Lowenthal
(D-Calif.) that would dedicate $8 billion
per year to freight-related infrastruc-
The legislation prioritizes multimodal
projects, in addition to projects that help
relieve bottlenecks in the freight transpor-
Moving Fast—in 1D
In the world of disruptive technology, 3D
printing might be the most unsettling
innovation to come down the pipeline
since radio-frequency identification—unset-
tling in the sense that industry is still
debating how much and to what degree
additive manufacturing will revolutionize
supply chains. Like RFID, 3D printing has
a lot of hype to live up to.
Manufacturers are privately toying and
tinkering with prototypes they believe will
eventually change the way they do busi-
ness. Many are keeping their progressions
close to the vest. Intellectual property
rights remain an unexplored minefield for
this nascent technology.
But as companies continue to proto-
type 3D printing technology, some are
discovering an unexpected and welcome
benefit. They are learning how to engineer
improved products, with different materials
and less waste.
For example, Fiat Chrysler Automobiles
(FCA) is using 3D printing to better under-
stand axle design and development. At
the Chrysler Technology Center (CTC)
in Auburn Hills, Mich., engineers are
using additive manufacturing to print see-
through plastic parts exclusively for test
purposes. When evaluating oil flow inside
axles, engineers traditionally had to cut
out two-dimensional windows in compo-
nents to visually inspect performance—but
this process often provided unsatisfac-
The CTC is the auto industry’s only
headquarters where a vehicle design can
go from a napkin sketch to production pro-
totype to advertising campaign under one
roof, according to FCA officials.
“The Chrysler Technology Center is a
key competitive advantage for FCA US,”
says John Nigro, vice president, prod-
uct development. “We have more than
14,000 people under one roof, including
7,900 engineers. That speeds the collab-
orative process, which is the lifeblood of
Chrysler’s example provides a good
idea of how 3D printing is likely to make
an initial step-change impact within the
manufacturing supply chain—helping
to hasten the process from design to the
McDonald’s Serves Up
New Sustainable Sourcing
ood safety, quality, and accountability have long been
a challenge for restaurant chains—especially those that
prioritize economy. Increasing social media exposure,
and the threat of product recalls and brand integrity, are
shared risks. But some chains are addressing these issues
head on to appeal to consumer tastes for sustainability and
McDonald’s has long touted sustainable sourcing as a
core principle within its supply chain. The Oak Brook, Ill.-
headquartered restaurant chain recently upped the ante with a pledge to lessen
its global impact on deforestation. The effort will cover all McDonald’s products
with a specific focus on beef, fiber-based packaging, coffee, palm oil, and poultry.
The company will continue working collaboratively with a broad range of
stakeholders, including suppliers, governments, and NGO partners, to develop
long-term solutions designed to combat deforestation around the world.
As part of this commitment, McDonald’s will apply several guiding principles
and practices across its supply chain:
■■ No deforestation of primary forests or areas of high conservation value.
■■ No development of high carbon stock forest areas.
■■ No development on peatlands, regardless of depth, and the utilization of best
management practices for existing commodity production on peatlands.
■■ Respect human rights.
■■ Respect the right of all affected communities to give or withhold their free,
prior, and informed consent for plantation developments on land they own
legally, communally, or by custom.
■■ Resolve land rights disputes through a balanced and transparent dispute
■■ Verify origin of raw material production.
■■ Support smallholders, farmers, plantation owners, and suppliers to comply
with this commitment.
22 Inbound Logistics • May 2015
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GLOBALTHE WORLD AT A GLANCE by Joseph O’Reilly
China Picks Pakistan for Trade Corridor
China’s “global diplomacy” holds few
bounds. From Central and South America
to Africa, the country has been aggressively
asserting its influence and injecting capi-
tal into new infrastructure developments
that also pave the way for further commod-
But China’s impact in Asia is far greater,
especially as it relates to intra-regional
trade development. The country’s most
recent quarry is Pakistan, where Chinese
President Xi Jinping recently paid a visit.
Pakistan is seeking Chinese investment
(upwards of $46 billion) to help fund
needed infrastructure projects—notably
the Karakoram Highway connection to the
southern port of Gwadar and a cross-border
rail route between the two countries. Like
others before, Pakistan believes Chinese
money, clout, labor, and reputation for get-
ting things done quickly will help spur and
The outlay China is willing to invest in
Pakistan is more than twice the amount
of all foreign direct investment the coun-
try has received since 2008, according to
BBC reporting. Such an immediate infu-
sion of capital has Pakistan officials bullish
on making the partnership work.
Opening up a southwestern trade
corridor similarly benefits China. As man-
ufacturing moves westward, Pakistani
ports provide a more efficient and eco-
nomic means to move product. China is
also looking to forge a new Silk Road that
extends to the Middle East and Europe.
Pakistan is the world’s sixth-largest
country in terms of population. China
may similarly see Pakistan’s tenuous and
contentious relationship with India as
an opportunity to make new inroads as
competition between the two global jug-
gernauts stiffens. Pakistan, for its part, will
also benefit politically by having a closer
ally in China.
Still, the development plan is not with-
out considerable roadblocks. Provincial
politics in Pakistan, and the threat of sepa-
ratist insurgency, have cast shade on the
proposal. The Gwadar port is located in
Balochistan, which is Pakistan’s poorest
China is funding a construction
project to renovate a stretch
of the Karakoram Highway,
which is currently the only
overland connection between
China and Pakistan.
May 2015 • Inbound Logistics 25
INFOCUS GLOBALTHE WORLD AT A GLANCE
and most volatile province. Government is
already steering corridor routing away from
the area, which has only fueled criticism
from Balochistan officials who argue the
more affluent Punjab Province will invari-
ably receive special privilege.
What’s It All
Transportation in Indonesia is a fore-
most challenge for shippers, given its
unique geography as an archipelago
comprising 18,000 islands. Keeping logis-
tics costs in check has been a recurring
problem that has beset Southeast Asia’s sec-
ond-largest economy. Poor infrastructure
and overreaching regulations have further
conflated costs of doing business.
While the country appeared to be mak-
ing progress under the leadership of new
President Joko Widodo—“A New Hope” as
branded by Time magazine—optimism is
beginning to wane. The commodity-driven
economy has taken a big hit because of
global oil price volatility.
To make matters worse, a new govern-
ment regulation has raised the minimum
capital for logistics companies to oper-
ate from US$15,000 to nearly $2 million,
much to the consternation of local logis-
tics service providers. Consequently, the
Indonesian Logistics and Forwarders
Association (ALFI) plans to file a lawsuit.
“We previously proposed to the transpor-
tation ministry an increase in minimum
total assets from $15,000 to approximately
$100,000,” says ALFI chairman Yukki
Nugrahawan Hanafi. “We don’t under-
stand the reason why the minister later
decided to increase the capital require-
ment to $2 million.”
Because of its transportation constraints,
and the costs therein, Indonesian eco-
nomic development is highly dependent
on the growth of its emerging logistics
industry. ALFI contends such regulation
would shut down many of the small and
mid-sized forwarders and service providers
that operate across the country, contribut-
ing to thousands of lost jobs. It estimates
that the transportation and logistics
industry in Indonesia employs about
534,000 people. Moreover, such a draco-
nian capital requirement would disrupt the
flow of cargo moving through the country,
while increasing costs.
The government is committed to
European railroads Bombardier Transportation, SNCF, and Deutsche Bahn are
among the founding members of the Railsponsible initiative.
European Railroads Partner
European railroads have a one-track mind when it comes to growing
sustainable supply chain best practices. A group of six carriers—Alstom
Transport, Bombardier Transportation, Deutsche Bahn, Knorr-Bremse,
Nederlandse Spoorwegen and SNCF—recently partnered to promote
sustainable procurement in the railroad supply chain.
The initiative, titled “Railsponsible,” endeavors to create more ethical,
social, and environmental business practices among suppliers. The railroads
will encourage supplier participation in assessment campaigns, as well as hold
quarterly membership meetings to share best practices, analyze data, and
identify opportunities for supply chain improvement.
The group’s first priority is to promote supplier assessments, which will
be conducted by EcoVadis, a Paris, France-based supply chain sustainability
integrator. Partners will be required to submit one common questionnaire,
and will have full control over who can see their information and assessment
results. They can opt to share this information with any of the Railsponsible
members who are their customers.
26 Inbound Logistics • May 2015
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INFOCUS GLOBALTHE WORLD AT A GLANCE
moving forward with the new regulation—
a policy change that it believes will raise
the quality and reliability of the country’s
logistics sector. Companies will be given
three years to comply. The regulation is
currently with the Law and Human Rights
Ministry for further assessment.
Even with such a grace period for com-
pliance, ALFI argues that most companies
won’t be able to meet that requirement.
Instead it has suggested that the govern-
ment should classify logistics companies
by size rather than applying one set of reg-
ulations across the entire industry.
The United States and Japan are still
at loggerheads over automobile and agri-
culture export terms, which is delaying
progress toward reaching a landmark Trans
Pacific Partnership (TPP). But both sides
indicate a deal is within reach, according
to a recent Associated Press report.
The talks between Japan and the United
States are part of negotiations among 12
nations participating in the U.S.-led Trans
Pacific Partnership. The goal of the part-
nership is to create a free trade zone in the
A hangup over increased exports of
U.S. rice to Japan, and Japanese auto-
mobiles and auto parts to the United
States, appears to be nearing a resolution,
although negotiations continue.
In April 2015, U.S. lawmakers proposed
new legislation that would allow President
Barack Obama to negotiate trade accords
for overall congressional review. This is
helping to push forward negotiations, the
Associated Press reports.
Japan’s protectionist policies have long
favored agricultural products—nota-
bly rice. The country’s aging population
and changing tastes have contributed to
less rice consumption, which has created
a surplus. [ ]
Global Container Trade
Floats on Optimism
An uptick in ocean trade suggests that the global economy is showing
positive and sustainable signs of recovery. But an enduring capacity
imbalance still threatens steamship line profitability.
Demand for container shipping is expected to grow upwards of five percent
in 2015, even as freight rates continue to decline due to a surplus of capacity,
according to Lars Mikael Jensen, chief executive of Maersk Line’s Asia Pacific
region. As ships ordered several years ago are just now coming online, supply
growth is anticipated at five to seven percent.
The average revenue per TEU is dropping as rates vary in different trades,
which is attributed to supply-demand imbalance. This places additional
pressure on shipping lines to reduce costs on a per-box basis.
“We are working in a scenario where there won’t be a massive upward
return of the average revenue per box, so cost savings and efficiencies are
important,” says Jensen.
The recent financial results of most steamship lines suggest revenues and
profit margins are under pressure, he adds, especially those generated from
the east-west trades.
Maersk needs to invest in new ships to keep up with global growth, and to replace
older ships that are coming to the end of their efficient life span, notes Lars Mikael
Jensen, chief executive of Maersk Line’s Asia Pacific region.
28 Inbound Logistics • May 2015
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Q: What trends are you seeing with customers and
their warehousing needs?
A: We are seeing a larger number of existing and prospec-
tive customers looking for space in short time frames.
They might be looking to outsource their warehousing at
the end of an existing lease or they may have short-term
warehousing needs. Customers do not want to sacrifice
visibility, even for a short time frame, to their invento-
ries while transitioning to a new warehouse. They do not
want to incur higher costs of labor to track the inventory
during the transition period or have a manual process
while their product is in a short-term warehouse space.
Q: What are the challenges, costs, and time
involved in traditional warehouse start-ups?
A: Warehouses can traditionally take anywhere from 30
days to 60 days to get started from a radio frequency
(RF) technology perspective. Challenges include: instal-
lation of wiring, access points, switches and dedicated
data lines. Dedicated data connectivity often takes the
longest period of time (minimum of 15-20 days) depend-
ing on the location and age of the warehouse even when
using expedited solutions. The cost of expediting can
vary greatly depending on the providers used and the
amount of effort needed to install the circuit; especially
with a new warehouse facility the provider has not pre-
viously serviced. Product often needs to be moved to the
new warehouse, prior to establishing all the technology
connections, leading to manual efforts by the warehouse
personnel to track the inbound and outbound inven-
tory. The cost can add up quickly for a customer with
the additional labor hours needed to track inventory
and expedited technology solutions. Additionally, there
tends to be a substantial sunken cost for the wiring that
is often left behind for a temporary warehouse solution.
Q: What alternatives are available to improve the
warehouse start-up process?
A: Recent improvements in wireless cellular technology
and mesh networks are being used in a variety of indus-
tries such as hospitals and remote construction facilities.
These improvements now provide us with solutions that
can be adapted for warehousing space. Wagner has
recently deployed an “IT-in-a-Box” solution in multi-
ple locations, which allows for a virtually wireless/mesh
solution that can have a warehouse fully up and run-
ning in 7-14 days. This solution provides customers with
immediate tracking of inbound and outbound inventory
using full RF technology and Warehouse Management
Systems. In addition to the rapid start-up, the entire solu-
tion can be quickly removed and reused for sites needing
the space for only short periods of time during peak sea-
sons. We typically see a savings of 20-30 percent based
on the decreased amount of labor needed at time of
start-up and the reduction in expediting costs.
Wagner Logistics | 800-817-1264
firstname.lastname@example.org | www.wagnerlogistics.com
Improving the Warehouse Startup Process
32 Inbound Logistics • May 2015
Got 3PL challenges? Get free expert solutions at inboundlogistics.com/3pl
The Driver Shortage—Not Just a Carrier Issue
Q: The transportation industry’s nationwide driver
shortage is getting worse. What is the cause?
A: Tougher regulations, a lack of interest by younger
workers, and the graying of today’s drivers are contrib-
uting to the driver shortage. The problem will continue
to grow over the next several years—especially as freight
Despite the fact that carriers are implementing
dock-to-driver programs, increasing pay, and offering
hiring bonuses and better benefits to attract drivers, the
American Trucking Associations recently reported that
turnover at truckload carriers remained very high in the
fourth quarter of 2014—an overall industry indicator of
the driver shortage.
Q: What new solutions can carriers implement to
attract new drivers?
A: Aside from the programs and incentives carriers are
already implementing, another solution that is gaining
traction is for carriers to work with their customers to
make sure they are treating drivers like team members.
Not only do drivers deserve to be treated with respect
by their employers, they also want to be respected by
Relationships matter more and more in today’s work
environment. And, while many shippers might think the
partnership with their carrier begins and ends with the
corporate office or their sales representative, it is impera-
tive they foster a relationship with their drivers.
Shippers can help by making their facilities more
driver-friendly, which, in turn, helps carriers retain
drivers. Not only does it make the pickup and deliv-
ery process more efficient for both parties, shippers can
benefit from having a long-term driver who knows their
business and procedures. It also reduces operating costs
for both carriers and shippers. Additionally, Hours-of-
Service regulations, along with electronic logging, make
it more important than ever for drivers to get in and out
of a facility quickly. Having a driver-friendly warehouse,
office, or dock helps make that possible.
Q: What else can shippers do to help ease the
A: Another way shippers can help mitigate the driver
shortage is to expand their pickup and delivery windows.
Offering a delivery window that is convenient for their
operations, as well as the carrier’s, would go a long way
toward providing relief for trucking companies as they
schedule their drivers and routes each day.
Drivers are the backbone of the industry and its most
valuable resource. Operating a commercial vehicle now-
adays is more challenging and demanding than ever,
and overcoming the driver shortage will take a concerted
effort on the part of the transportation industry and ship-
pers who depend on it to haul their products, and deliver
them on-time and damage-free.
Shippers making simple, but meaningful, changes
can go a long way in helping carriers attract and retain
drivers—now and in the future.
Saia | 800-765-7242
email@example.com | www.saia.com
34 Inbound Logistics • May 2015
ReadyVice President of Human Resources
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BY Brian Sutter
Director of Marketing, Wasp Barcode Technologies
firstname.lastname@example.org | 866-547-9277
Finding an Inventory Solution That’s
Just Right for Your Small Business
nventory management, put simply, is ensuring you have the right
amount of product in the right place at the right time. It helps
you determine which items sell well, and which do not, giving
you the ability to adjust product levels accordingly.
As such a crucial step in the supply
chain, the importance of good inven-
tory management seems obvious, but
for small and medium-sized enterprises
(SMEs), choosing the best inventory
solution can seem daunting. How do
you ensure that you’re purchasing the
best inventory solution for your work-
flow? Which inventory solution features
are 100 percent required?
Know What to Look For
To help answer that question, find
an inventory solution that includes
these five important inventory-track-
1. Automation. Using Excel spread-
sheets for inventory management is
outdated in today’s environment. Excel’s
limitations in tracking inventory can
cause your business to lose money and
Avoid cumbersome manual pro-
cesses by looking for an automated
system. Employees who manually input
data into a spreadsheet—or worse, who
track using pen and paper—increase
the potential for errors. Automating as
much of your process as possible using
bar codes and scanners eliminates signif-
icant inventory mistakes. An automated
system also helps you find critical data
quickly and efficiently.
2. Small business accessible. Big
businesses with big budgets have the
money to invest in an enterprise-level
solution, and the staff necessary to
implement such a large-scale inven-
Solutions aren’t often one-size-fits-
all, so consider a software provider that
has experience assisting small businesses
with inventory needs. Resources such as
guides, a help desk, and classes, should
be readily available, as well as training
that covers the initial software setup, and
an overview of how employees need to
use it. Your business should be able to
quickly use the new solution to improve
profitability and purchasing efficiency.
3. QuickBooks integration. Millions
of small businesses use QuickBooks
as their accounting software pack-
age. Because of that popularity, find
an option that allows customers to take
advantage of integrated financial solu-
tions, ensuring that data flows directly
into accounting records.
4. Mobility. Being mobile lets you
accomplish more throughout the day.
Many wireless devices allow users to
create, edit, move, or remove inven-
tory items on the go, while updating
inventory control software accordingly.
Wireless communication enables real-
time inventory data updates from your
warehouse, stockroom, or supply closet,
so you always know exactly what is in
stock and where items are located.
5. Security. Data breaches can
expose important organizational and
consumer information. Your solution
should help you maintain mission-crit-
ical data by providing feature-based
privileges that ensure data integrity.
Feature-based security gives the soft-
ware administrator the ability to create
group privileges and assign the appropri-
ate individuals to each group. Therefore,
users only access the functions they need.
In today’s fast-paced, omni-channel
world, companies have to know where
their products are at all times, and
that can be stressful. But if you find a
solution that covers these five areas,
inventory management might not seem
so intimidating. n
36 Inbound Logistics • May 2015
BY Kathryn C. Thomas
Partner, Litigation Practice Group Transportation Team,
Freeborn Peters LLP
email@example.com | 312-360-6520
How Amtrak’s Supreme Court
Case Affects Freight Shippers
rack-sharing among railroads has long been a complicated
issue. The U.S. Supreme Court recently reviewed a case
determining whether Amtrak has the authority to regulate
privately owned freight railroads with which it shares rail.
The Rail Passenger Service Act of
1970 was supposed to reinvigorate a
national passenger rail system. The leg-
islation created Amtrak to “fully develop
the potential modern rail service in
meeting the nation’s intercity passen-
ger transportation requirements.” The
act also let railroad companies shed the
obligation of intercity passenger service
in exchange for allowing Amtrak to use
their tracks and facilities.
Today, freight railroads own nearly
97 percent of the track over which
Amtrak runs service. Because of track
coordination problems, Congress pre-
scribed that, absent an emergency,
Amtrak’s passenger rail takes preference
over freight transportation.
The Passenger Railroad Investment
and Improvement Act of 2008 (PRIIA)
addresses these coordination concerns.
Section 207 of PRIIA requires the
Federal Railroad Administration (FRA)
and Amtrak to jointly develop stan-
dards to evaluate the performance of
Amtrak trains. In light of this mandate,
the FRA and Amtrak issued on-time
performance (OTP) metrics and stan-
dards, the final version of which took
effect in May 2010.
Understanding the Lawsuit
In 2011, the Association of American
Railroads (AAR) filed suit on behalf of its
Class I freight railroad members against
the Department of Transportation and
others, challenging the constitutionality
of Section 207 of PRIIA and requesting
that the court vacate the OTP metrics
and standards. The AAR asserted that
■■ Unconstitutionally delegates
authority to Amtrak to regulate other
■■ Amtrak’s regulation of its competi-
tors violates the Fifth Amendment’s Due
The District Court ruled in favor of
the Department of Transportation, but
the U.S. Court of Appeals reversed the
District Court’s decision, finding that
Amtrak was a private entity and thus, its
regulatory authority was unconstitutional.
The Department of Transportation
appealed the decision and the U.S.
Supreme Court granted certiorari.
Where Are We Now?
The Supreme Court, in a March 2015
decision, ultimately upheld Amtrak’s sta-
tus as a governmental entity, overturning
the Court of Appeals decision. The case
was remanded to the Court of Appeals to
decide three constitutional issues:
1. Whether appointing Amtrak’s pres-
ident violates the law requiring election
of governmental officials.
2. Whether PRIIA violates the Due
Process clause by granting Amtrak power
to control freight trains.
3. Whether the current arbitrator
selection procedures for settling disputes
over use of railroad facilities violate the
constitutional rule that Congress cannot
delegate its own legislative powers.
Rail shippers should pay close atten-
tion to these pending determinations.
The outcome of DOT v. AAR will sig-
nificantly impact the rights and power
of Amtrak and/or the freight railroads
going forward, and potentially impact
the cargo those freight railroads carry.n
Kathryn C. Thomas co-authors The Freeborn
Dispatch Blog and has extensive business
litigation experience in matters involving
intellectual property, products liability, and
general commercial litigation.
38 Inbound Logistics • May 2015
• Public Warehousing
• Inventory Management
• Food Grade DC’s
• Alcohol Permitted (ABC)
• FDA ASI regulated
• Separate Hazardous
Material and Chemicals
DC (NACD Members)
• Extensive Retail/Import,
• In-house Drayage
• Freight Consolidation
• Direct Store Delivery
• Co-pack Packaging
• UCC Labeling
• Custom wrapping
• Carton Packaging
• Floor displays
• Client Specific Solutions
• EDI Services
• RF Inventory Systems
• Web Based Reporting
You need Paciﬁc Coast Warehouse Company.
When safety, security, and compliance
matter most, you need a reliable partner
with a proven track record.
www.pcwc.com | 909.545.8100 x237 | firstname.lastname@example.org
DEDICATED CUSTOMER SERVICE
FORTUNE 500 MANAGEMENT
Paciﬁc Coast Warehouse Company
Moving Product to Market Better Since 1927
PCW provides chemical manufacturers with
safe, secure, and compliant storage and
transportation of products within the western U.S.
As NACD members, PCW utilizes Responsible
Distribution Processes (RDP) and industry best
practices to warehouse, store and deliver a
full range of chemicals, flammables, oxidizers,
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PCWC Ad 0614-V4.indd 1 6/12/14 2:41 PMGot 3PL challenges? Get free expert solutions at inboundlogistics.com/3pl
BY Kevin Zweier
Vice President of Transportation, Chainalytics
email@example.com | 770-450-6581
Five Ways to Mitigate
A Truckload Capacity Crunch
any factors have led to increased costs for truckload
services, and created challenges to the freight pricing
status quo for shippers. In the wake of the disruptions
caused by the current capacity crunch, many are asking: “Am I
overpaying? And if I am, what can I do about it?”
To avoid paying too much for truck-
load services during periods of tight
capacity, consider the following tactics
to help you maintain your firm’s long-
1. Know if you are overpaying
and where opportunities exist in
your network. Some shippers pay above
market for truckload capacity; others pay
below. Those who lack visibility into
actual truckload market rates become
likely targets for carrier overcharges, and
often don’t recognize carriers that pro-
vide great value at a great price.
Industry benchmarks and services
are available to help you understand
the nuances on each of your lanes, and
model market rates based on actual
carrier rate data from hundreds of the
world’s most active shippers. Developing
a competency in the transportation mar-
ket allows shippers to develop successful
procurement strategies that can outlast a
2. Conduct regular truckload capac-
ity procurement events. Shippers often
end up overpaying for truckload capac-
ity simply by accepting annual rate
increases from incumbent carriers over
a number of years. Both shipper and car-
rier networks change from year to year.
Holding a well-timed procurement event
each year should be part of a shipper’s
transportation spend strategy.
3. Make your freight attractive
to truckload carriers. When capac-
ity tightens, truckload carriers become
more selective about the shippers they
choose. Become a carrier-friendly ship-
per by driving efficiency and helping the
carrier keep its trucks and drivers mov-
ing and making money. Carriers need
to turn freight quickly, so shippers with
drop-and-hook programs gain preference
over those using live unload freight. In
addition, carriers view shippers who pro-
vide driver perks that improve carrier
productivity in a favorable light.
4. Institute reasonable truckload
carrier payment terms. Many shippers
push payments to carriers far beyond
the typical 30-day payment term policy.
But the primary costs carriers incur are
driver salaries and fuel charges—costs
that can’t wait 60 or 90 days to be paid.
As a result, carriers often find themselves
strapped for liquid cash. Reducing pay-
ment times goes a long way toward
fostering goodwill, and shippers who pay
their bills the fastest often receive pref-
erential treatment from carriers when
5. Expand your truckload carrier
base or reconsider your modal options.
There are more than 100,000 North
American truckload carriers. Modern
transportation management systems are
designed to help manage a large pool of
carriers, so most shippers are equipped
to effectively deal with a diverse base.
Shippers who have not secured required
truckload capacity from their incumbent
carriers should waste no time in expand-
ing their carrier pool.
For shippers with enough freight vol-
ume on competitive lanes, a private
fleet can also be a viable alternative.
Reconsidering your modal mix may also
prove beneficial. Intermodal transporta-
tion has become an appealing force on
many lanes, and is worth exploring.
In the end, passivity is a shipper’s
worst enemy. A proactive transportation
strategy pays dividends in all markets,
but especially when capacity is tight. n
40 Inbound Logistics • May 2015
42 Inbound Logistics • May 2015
arehouse perceptions have changed
considerably over the past two
decades. It wasn’t long ago that users
perceived the four walls as just that—
a fixed, immovable force that served as the nexus for
any distribution network.
Today, such representations are increasingly
obsolete largely because of forces beyond the four
walls. Cloud computing, e-commerce, omnichan-
nel management, big data, and last-mile logistics
are reshaping today’s distribution facility.
The warehouse is still core. But its role in the
supply chain is much more fluid. The modern
DC is molded by countless external pressures that
are eroding convention and shaping invention.
Technology and materials handling innovation
have become important catalysts in the evolution
of smarter warehouses.
SMART BY DESIGN
The intelligent warehouse features three crit-
ical traits—visibility, mobility, and flexibility.
Technology, ultimately, is the means to those ends.
“Warehousing is no longer an unsophisticated
business. Operators need to embrace technology
and understand it,” says John Watkins, CEO of
Manhattan Beach, Calif.-based cloud WMS solu-
tions provider 3PL Central.
“Two things come to mind when we talk about
smart warehouses,” says Mike Howes, vice presi-
dent, software engineering and services at Forte
Industries, a Mason, Ohio-based materials handling
May 2015 • Inbound Logistics 43
engineering and systems integrator. “The
first consideration is visibility into the
operation. This includes the ability for
users to get to information they need in an
approachable and intuitive way.
“Secondly, it’s not just about data,” he
says. “The cornerstone of an intelligent
warehouse is real-time actionable infor-
mation. Traditional systems typically bring
good data to the screen. But you have to
use the secret decoder ring to figure out
what it’s trying to tell you.”
Real-time visibility is contingent on
accessibility, which raises the importance
of mobile solutions. There’s no shortage of
rugged RF devices, smartphones, tablets,
and wearable technology, as well as the req-
uisite software and applications to support
a more dynamic workflow and workforce.
Gathering and vetting information is
one thing. Users also need to be empow-
ered to act on real-time data. The tactical
pressures omnichannel places on a ware-
house, whether a shipper facility or 3PL,
cannot be minimized.
“We’re not necessarily seeing a reliance
on big data, but rather on systems talking
to one another. This doesn’t naturally hap-
pen,” says Steve Katz, vice president of
sales and marketing at 3PL Central.
That’s why the growth of e-commerce
and the emergence of omnichannel
management frame the importance of
intuitive DCs. Change is the operative
word in any B2C supply chain. Consumer
proclivities are a moving needle. Inventory
ebbs and flows. Managing exceptions is
an expectation. All the while, SKU diver-
sity and availability, customer service, and
economy demands endure.
“Omnichannel is the new normal,”
says Chris Castaldi, director of business
development at WH Systems, a mate-
rials handling systems integrator based in
Carlstadt, N.J. “There is a presumption
that a retailer will always be in stock on
the items the consumer wants to buy, and
that product can be delivered quickly.
“In the omnichannel world, retailers
have a holistic view into inventory, allow-
ing them to fulfill orders from any location
or ship inventory to other locations where
inventory is needed or sells better,” he adds.
“The goal of omnichannel is to give retail-
ers a 360-degree view of customers, orders,
Whether consumers opt for same-day
delivery, click and collect/return at store,
shop and “showroom,” or even pick up
e-commerce shipments at specified locations,
order and inventory systems need to iden-
tify demand variances and react. Warehouse
optimization becomes paramount.
While DC infrastructure is evolving,
the level of functionality is consistent.
“Conveyors are conveyors,” says Howes,
who contends warehouses are looking
more at technology, and less at equipment.
“Users want adaptive architecture—a
way to layer information technology over
materials handling systems and automa-
tion that allows them to optimize what they
have now and moving forward,” he adds.
GET OUT THE CRYSTAL BALL
The rapidity of change is a challenge
for businesses as they try and adapt exist-
ing infrastructure and technology systems.
Whether it’s identifying automation needs
or picking the right warehouse manage-
ment system (WMS), operators have to
account for the future.
Over the past few years, this has proven
to be a real concern. Many businesses
made educated warehouse technology buys
to enhance their e-commerce operations
only to see the omnichannel trend catch
fire and change requirements. Inventory
traditionally resides in the warehouse. But
now companies are pulling and positioning
product from countless different touch-
points in the supply chain, whether it’s in
a brick-and-mortar backroom, directly from
the manufacturer, or from other DCs and
depots. So technology and systems in the
DC have to adapt.
Cloud computing, omnichannel management, and big data
are the questions. Can your warehouse supply the answers?
WAREHOUSEBY JOSEPH O’REILLY