Category Archives: Logistics

Provider Damnation 68: Carriers

In our last, and only Provider Damnation post to date, we talked about how 3PL Firms were a damnation because in exchange for cost savings obtained by the 3PL, the organization gets IT headaches. In exchange for flexibility, the organization gets a loss of visibility. And in exchange for focus, the organization gets a complete loss of control.

At this point, carriers might have thought they got overlooked because we chose to focus in on the 3PL that wants to take over part of your business and make you as dependent on them as an addict on meth (which is one of the most physically addictive drugs ever created) and seemingly overlook them. But like an elephant, the doctor never forgets that all they do is hide yet another layer of damnation – the carriers themselves.

Thanks to the outsourcing craze that began in the 80’s, no one makes their own stuff anymore which means that they are dependent on logistics carriers to get the products to the warehouses and then again to get the product to the retail stores. And these carriers know that, to use a common expression, they got you by the balls. Now it’s true capacity isn’t always at full capacity, especially in off season, and at these times there is some negotiation room, but at peak season when the holiday rush is closing in and half (or more) of your annual sales are at stake, and they’re at peak capacity, they’re in control and they know it.

Fuel surcharges pile up. Overtime charges pile up more. And you’ll pay because if you don’t, your product won’t arrive on time, putting your sales, and profits, at risk. But this isn’t the biggest problem.

It’s bad enough that they can put you over a barrel at any time, but it’s even worse when you can’t even get your product delivered. There has been a shortage of drivers for the past decade, and it’s only getting worse. According to a recent article over on JOC.com, not only is the US truck driver shortage getting worse, the driver shortage in the US alone is now an estimated 40,000 drivers with a turnover rate of 96%. But this is just the tip of the iceberg. With so many drivers set to reach retirement age over the next 5 to 10 years, the global driver shortage could reach into the millions in the next decade.

According to a joint report just released by the U.S. Department of Education, the U.S. Department of Transportation, and the U.S. Department of Labor entitled Strengthening Skills Training and Career Pathways across the Transportation Industry, more than 2 million jobs in the trucking subsector will need to be filled within the 2012-2022 time frame and nearly half will be in the trucking sub-sector as more than half of the current truck drivers will reach retirement age by 2022!

Soon it might not be a matter of how many ridiculous overcharges and surcharges you have to pay at peak season to get your product delivered, it will be a matter of if you can even get your product delivered at all! (Let’s put it this way, unless you’re ready to embrace Uber-like delivery services, this is likely going to be a reality very soon.) Carriers have you over a barrel, and soon, from lack of good planning, they’re going to lose that barrel, leaving you stranded on a bare dirt road. The only upside is at least you’ll be in the right place to summon a crossroads demon should you choose to embrace the damnation that is coming for you.

At this point, SI has to ask, do you still doubt this is the year of damnation?

Two Hundred and Forty Years Ago Today

Benjamin Franklin was named as the First Postmaster General of the United States, during the second continental congress in Philadelphia, an office that is older than tooth the US Constitution and the Declaration of Independence. In the beginning, the postal system mainly carried communications between Congress and the armies. This was the beginnings of the modern postal system in the US, which was later officially organized as the Post Office Department in 1792, and then replaced by the independent Postal Service in 1971 (by the Postal Reorganization act which was signed into law by Nixon, one of America’s lesser loved Presidents).

Even though the postal system is far older than many essential services we use on a daily basis, it is still a vital service and one we often take for granted. Direct mail, Magazines, and even invoices in and cheques out still flow the mail in the millions on a daily basis. We might be in the digital age, but we still haven’t given up our paper.

R.I.P. Route 66, Long Live Historic Route 66

Thirty years ago today, U.S. Route 66 was officially removed from the United States Highway System, 59 years and 58 days after being named. This highway, which even today is still one of the most famous roads in America, originally stretched for 2,448 miles (3,940 km) from Chicago, Illinois through Missouri, Kansas, Oklahoma, Texas, New Mexico, and Arizona before ending at Santa Monica, California. It was one of the major routes of westward migration and business along the route tended to prosper and do well before it was bypassed by the Interstate Highway System. And it is still so iconic that portions of the route have been designated a National Scenic Byway and some states are adopting bypassed sections into the state road network as State Route 66.

For decades this was a main route for the movement of military equipment in the USA and, especially before the introduction of the interstate highway system, was a major route for trucking companies shipping goods from the coast to the mid-west (as one could get from Los Angeles to Chicago going down only one road). The route was so central to US logistics that there is even a TMS (Transportation Management Services) company that goes by the name Route 66 Logistics.

The history of this route, before, during, and after service and of the historic associations trying to preserve it over the last 30 years is fascinating (and goes well beyond what the younger generation, whose entire knowledge of the route might be from Cars, will remember). If you have the time, check out the linked Wikipedia article and related resources.

Before Panama, There Was Kiel

The Panama Canal might be the best-known man-made artificial waterway, but before the Panama Canal, there was the Kiel Canal, which is the busiest artificial waterway in the world that is a 98km long freshwater canal in the German state of Schleswig-Holstein that was officially opened 120 years ago today (even though it wasn’t really finished until the widening project was finished in 1914) and connected the North Sea to the Baltic Sea. This was, and is, an important canal because it saves an average of 460 km and allows ships to avoid dangerous storm-prone seas.
As a point of comparison, the Panama canal, which was initially started in 1881, was put on hold until 1904 when the US took over the project abandoned by France and not opened until August 15, 1914, almost twenty years later.
In shipping and logistics, we take these canals for granted, but most are rather new in the grand scheme of global trade.