Written August 2007
by Keith Biondo
Publisher Inbound Logistics Magazine
Folks in our business didn't need the Minneapolis I-35 bridge collapse to serve as a wake-up call; we talk about maintaining infrastructure constantly.
Just one morning before the collapse, I exchanged e-mails with Doug Grane, president of Central States Trucking, who, in a recent guest editorial, wrote: "Most trucking company owners would agree that as long as taxes and fees continue to rise, earmarking those dollars specifically for infrastructure improvements is critical to their future well-being. Unfortunately, transportation funds are too often diverted by politicians eager to support other initiatives and pet projects." (Squeaky Wheel Gets the Political Oil, July 2007).
Grane recently testified before Congress about how infrastructure relates to our economic well-being. DOT estimates show the United States loses $168 billion annually from highway congestion, and the nation's trucking system in 2004 lost 243,032,000 man hours due to traffic delays.
Grane and I agreed that certain state and local governments, such as Nebraska, understand the economic and job creation impact of maintaining and expanding our transport infrastructure. But many do not.
Later, at lunch, I had a spirited discussion with some Maersk executives about the reasons government pays so little attention to transportation infrastructure.
The Maersk crew and I agreed that many federal, state, and local-level leaders seem to suffer from a special type of attention deficit disorder - their focus is one mile wide and one millimeter deep on the evening news' topic du jour.
The next day, we all watched the news coverage of the bridge collapse. Reports focused first on the personal tragedies, but soon shifted to asking, "why did it happen?" and "what do we do now?"
The cause of the collapse may have been design-related, neglect-related, or a little of both. But the question of what to do next is limited to putting rebuilding on the fast track, and trying to diagram alternative routes. (Go to www.inboundlogistics.com/35bridge for an aerial view of I-35, showing workarounds are limited.)
This latest wake-up call has focused attention on the infrastructure issue. "U.S. Transportation Secretary Mary Peters and several governors ordered safety reviews for thousands of bridges, especially those similar to the steel-deck truss span that collapsed in Minneapolis," reported USA Today. "New Jersey Governor Jon Corzine went further, promising evaluations of all 6,400 local, state, and federal bridges in his state, regardless of owner."
Some politicians are apparent converts to the transport infrastructure issue. But why did we have to pay a price as high as the I-35 bridge failure to attract their attention?
I can't help but wonder if our leaders will treat this wake-up call the same way they treated past reminders. Will they hit the snooze button, resume their infrastructure somnambulism, and wake only when the next alarm sounds?
You can take action. Continually remind your representatives and local media of the importance of infrastructure. Make sure no one dozes off again.
Sunday, November 23, 2008
Monday, June 23, 2008
Mid-Size 3Pls: What does not Kill You Makes You Stronger
Written July 2007
by Keith Biondo
Publisher Inbound Logistics Magazine
Ah, conventional wisdom. Not long ago, observers of the third-party logistics segment predicted the demise of many Tier II and Tier III 3PLs. Smaller players could not keep up with the increasing complexityrequired to serve customer demands, they said. In addition, they predictedmerger and acquisition activity would create a pool of large 3PLs dominatingthe segment and forcing smaller players out of the game.
Neither has happened.
Contradicting what observers expected, mid-size brokers, warehouses, andeven carriers successfully evolved into logistics solutions providers, and havenot only survived, but are prospering. Why? Here are five reasons.
1. the economy stays strong. We are experiencing the “greatest global economicboom in history,” according to a recent Fortune article. That economicexpansion creates opportunities for all 3PLs. And, even when economies cooldown, companies look to 3PLs to help them slash inventory.
2. smaller players have capacity. As big as the national players are, they representonly a small portion of distribution center capacity in the United States.
3. companies spend more money on 3pL services. In the United States, 3PLusers currently direct 48 percent of total logistics expenditures to outsourcing,which is lower than the overall global average of 55 percent, accordingto a Georgia Institute of Technology study. If the United States follows theglobal trend, the market will continue to grow domestically. In fact, IL’s latestresearch shows continuing growth in the size of the 3PL market (see page99 for details).
4. the outsourcing concept enjoys growing acceptance, for at least some oftoday’s transportation and logistics challenges.
5. inbound logistics creates opportunity. Domestic 3PLs are benefiting fromthe growth in what ProLogis calls “import-driven warehousing” and we callinbound logistics. Following an inbound logistics philosophy creates overallsavings, scalability, and growth opportunities. But along with that createdvalue comes greater logistics complexity, which 3PLs can – and do – help disentangle.
Tier II and smaller 3PLs also spur growth by creating market sub-segmentsthat the larger logistics players do not or cannot excel at. One example is inthe financial niche, where some 3PLs act as banks for their customers for longerperiods than the more financially sophisticated players. By paying carriersquickly when shippers pay slowly, they are able to command capacity when itis scarce. Customers appreciate the float, and that makes them loyal.
Bottom line: if the demand is there, 3PLs – large, mid-size, or small – willcontinue to grow. For details, check out our expanded 3PL coverage starting on page 63 or here and here.
by Keith Biondo
Publisher Inbound Logistics Magazine
Ah, conventional wisdom. Not long ago, observers of the third-party logistics segment predicted the demise of many Tier II and Tier III 3PLs. Smaller players could not keep up with the increasing complexityrequired to serve customer demands, they said. In addition, they predictedmerger and acquisition activity would create a pool of large 3PLs dominatingthe segment and forcing smaller players out of the game.
Neither has happened.
Contradicting what observers expected, mid-size brokers, warehouses, andeven carriers successfully evolved into logistics solutions providers, and havenot only survived, but are prospering. Why? Here are five reasons.
1. the economy stays strong. We are experiencing the “greatest global economicboom in history,” according to a recent Fortune article. That economicexpansion creates opportunities for all 3PLs. And, even when economies cooldown, companies look to 3PLs to help them slash inventory.
2. smaller players have capacity. As big as the national players are, they representonly a small portion of distribution center capacity in the United States.
3. companies spend more money on 3pL services. In the United States, 3PLusers currently direct 48 percent of total logistics expenditures to outsourcing,which is lower than the overall global average of 55 percent, accordingto a Georgia Institute of Technology study. If the United States follows theglobal trend, the market will continue to grow domestically. In fact, IL’s latestresearch shows continuing growth in the size of the 3PL market (see page99 for details).
4. the outsourcing concept enjoys growing acceptance, for at least some oftoday’s transportation and logistics challenges.
5. inbound logistics creates opportunity. Domestic 3PLs are benefiting fromthe growth in what ProLogis calls “import-driven warehousing” and we callinbound logistics. Following an inbound logistics philosophy creates overallsavings, scalability, and growth opportunities. But along with that createdvalue comes greater logistics complexity, which 3PLs can – and do – help disentangle.
Tier II and smaller 3PLs also spur growth by creating market sub-segmentsthat the larger logistics players do not or cannot excel at. One example is inthe financial niche, where some 3PLs act as banks for their customers for longerperiods than the more financially sophisticated players. By paying carriersquickly when shippers pay slowly, they are able to command capacity when itis scarce. Customers appreciate the float, and that makes them loyal.
Bottom line: if the demand is there, 3PLs – large, mid-size, or small – willcontinue to grow. For details, check out our expanded 3PL coverage starting on page 63 or here and here.
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