Transportation challenges
Peter Bradley, Editor in Chief -- Logistics Management, 7/1/2001
Just a few weeks ago, an executive for one of the largest trucking companies in the United States told me that his company had seen the first signs of an uptick in business activity. That's good news for logistics managers, who have had to manage through a downturn that was swifter and deeper than many imagined it would be.
Getting through the last few months has not been easy. But Robert Delaney, the Cass Information Systems vice president who prepares an annual report on logistics spending, gives logistics managers relatively high grades for their performance in a faltering economy. (Our Annual Report contains key details of his study as well as assessments of how carriers fared during the year. See Steering through the storm ) As inventory costs began to rise, logistics managers did a good job of moving excess inventory out of the pipeline, he says. But that eventually hurt carriers because once the excess was gone, shipments better reflected weak economic demand.
The next challenge for logistics managers and their companies will be to position themselves to react when the economy does pick up speed. In theory, at least, the development of supply chain management capabilities and efforts to create visibility across supply chain partners should allow markets to adjust quickly to growing demand. Those who have actually developed and implemented true supply chain strategies will be ready. Others may not be.
Every day, logistics managers face the short-term challenges of fine-tuning logistics operations to meet the real demands of the marketplace. Many are also responsible for the longer-term efforts to build effective supply chains. At the same time, logistics managers should not lose sight of some larger issues that will almost certainly affect their businesses for many years to come.
For instance, a report issued this spring by the Texas Transportation Institute on the costs of traffic congestion to the nation outlines the real challenges logistics managers and their carriers face in providing reliable on-time delivery. Likewise, the continuing disputes that simmer between shippers and the nation's railroads—not to mention the arguments over rail regulation—have serious implications for the role that the railroad system will play in the movement of freight. Similarly, demands for a cleaner environment, as we reported last month, will almost certainly increase logistics costs as new and costly engine and fuel technologies come into widespread use.
Many of the challenges facing the nation were outlined in a report to President Bush earlier this year. Vision 2050: An Integrated National Transportation System suggested in broad terms some of the key issues and the costly and time-consuming efforts needed to address them. That report, prepared by the Federal Transportation Advisory Group, set the stage for a national discussion about how best to meet the nation's future transportation needs. Forward-looking logistics professionals are already taking part in that discussion.
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