Attendees of SMC3’s Jump Start 2015 Conference have left Atlanta with the feeling that there may be no easy answers to the manifold concerns facing the U.S. freight transportation industry. At the event, held January 19-21, a diverse range of speakers pointed to a slew of issues but couldn’t posit an equal number of solutions. Bruce Carlton, president and chief executive officer of the National Industrial Transportation League, which represents the interests of U.S. shippers, said he believes shippers are caught in an “infernal triangle” between Congress, regulations and the economy. Carlton said supply chain problems stretch across a spectrum of modes. While the trucking industry fears reinstatement of suspended hours-of-service provisions and a likelihood Congress will fail to pass a long-term highway funding bill by May expiration of the current extension, rail service is “in a meltdown situation” and marine terminal congestion has U.S. port facilities taking on a “Third World” look. “There’s no magic bullet,” Carlton said of efforts to resolve port congestion even after a West Coast labor resolution. “There’s no end in sight for the chaos and confusion.” Nancy O’Liddy, director of government affairs for the Transportation Intermediaries Association, the professional organization of the third-party logistics industry, said trucking is plagued by many concerns, from lack of a national hiring standard for motor carriers to troubling Federal Motor Carrier Safety Administration regulations to employee misclassification of drivers. In addition, O’Liddy said, all U.S. shipments of refrigerated goods as well as dog food are threatened by a rule on sanitary transportation being advanced by the Food and Drug Administration, which, she said, “really doesn’t understand the movement of products.”
Randy Mullett, Con-way’s VP of government relations, says supply chain efficiencies must be maximized to meet demands of growing freight volumes. (Photo by Paul Scott Abbott, AJOT)
Randy Mullett, Con-way’s VP of government relations,
says supply chain efficiencies must be maximized
to meet demands of growing freight volumes.
(Photo by Paul Scott Abbott, AJOT)
Randy Mullett, vice president of government relations at multifaceted trucking and logistics provider Con-way Inc., cited projections that U.S. freight volume will rise 62 percent between now and 2040 and called for a maximizing of supply chain efficiencies, opining, “We cannot build ourselves ahead of that curve.” In the face of criticisms leveled by Carlton, Arthur Adams, director of intermodal sales for CSX Transportation, in a later discussion, said he believes billions of dollars of investments by Class I railroads are leading to improved service, while the average length of intermodal rail hauls has shrunk to fewer than 800 miles from about 1,200 miles just a decade ago. “The last 15 months have been very challenging,” Adams said, putting last winter’s brutal weather at the top of the challenge list, “but we’re recovering.” David L. Marsh, chief supply chain officer at Hub Group Inc., a leader in offering intermodal freight, truck brokerage and logistics services, said some intermodal lengths of haul are now as few as 500 miles, and he projects intermodal volumes will keep increasing, including those over shorter distances. Marsh said that, six years ago, 21 percent of Hub Group loads moved via intermodal rail, and now that share is more than 35 percent, with projections that it will top 50 percent by five years from now. He said he expects the cost of rail transport to increase, but not as much or as fast as that for truckload shipments on highways. In another session, Dr. Walter Kemmsies, chief economist for the infrastructure advisory firm of Moffatt & Nichol, said he believes the 4 percent to 5 percent shift of cargo to U.S. East and Gulf coast ports from the congested West Coast will not be reversed, commenting regarding the U.S. export position, “I think there’s permanent damage that’s going on right now.” Kemmsies added that restrictive FMCSA regulations have done nothing to make trucking a more attractive occupation – a major concern as driver shortages worsen. Jeff McCandless, president of Santa Fe Springs, Calif.-based premium less-than-truckload provider SHIFT Freight LLC, said he sees “a bigger need than ever” for economy LTL providers, particularly for less-time-sensitive, lower-value loads. He said the economy providers already make up between $3 billion and $6 billion of the total annual LTL market of between $38 billion and $40 billion. In a financial outlook session, Ben Hartford, senior equity research analyst covering transportation and logistics for Robert W. Baird & Co., said he sees “real pricing growth” for the trucking industry in 2015, to be led by a year-over-year increase of 5 percent for truckload carriers. Hartford said he believes regulations and demographics will be key drivers of higher rates and also will spur more industry consolidations. As for how pricing will be determined in the future, Brian Thompson, vice president for pricing and yield management at less-than-truckload carrier YRC Freight, said he believes the industry is very slowly shifting toward deploying pricing based on shipment dimensions and density as opposed to using the traditional National Motor Freight Classification, or NMFC, standard. “We’re kind of nibbling at the edges,” Thompson said, noting that freight forwarders and expedited shippers are among those leading the shift. “We’re looking at years to decades before it replaces NMFC, if it ever does.” Jerry Stoll, transportation and logistics market manager for the Americas for scale-maker Mettler-Toledo International Inc., noted that dimensional pricing began three decades ago in the parcel industry and that laser-based technology is offering the best current mechanism for density-based price determination. But Stoll added that he does not see NMFC going away, commenting, “It’s going to be a slow process.” Not surprisingly, Donald Newell, a member of the Commodity Classifications Standards Board at the National Motor Freight Traffic Association, which maintains the NMFC pricing tool, said he remains a staunch supporter of the NMFC system. The conference also provided a forum for SMC3 to hand out its third annual Alliance Awards. This year’s winners: School furniture supplier Virco Manufacturing Corp. and partners Averitt Express Inc., Land Air Express Inc. and Pitt Ohio, for a program for direct deliveries to schools; Dick’s Sporting Goods and its largest less-than-truckload provider, Estes Express Lines; and health and wellness product retailer GNC Holdings Inc. and its partners, DHL Global Mail and Spend Management Experts. (See page 27 for the Jump Start 2015 reception photo spread.) ​