LM Management Update: An Executive Summary of Industry News
July 2016 Logistics Management - Management Update
Latest News2018 MHI Innovation Award finalists announced The Overlooked Competitive Advantage: Connected Teams Reusable Packaging Association announces 2018 board and committee chairs Face security threats head-on. Protect data beyond perimeter. Maersk’s “Transformation” Under Scrutiny More News
Latest ResourceThe Overlooked Competitive Advantage: Connected Teams 57% of surveyed manufacturers believe they could reduce downtime by 10-30% by unifying their workgroup communications. What does a minute of downtime cost you?
Schneider makes two deals with common goal. Taking steps to augment its final mile service offerings, transportation services provider Schneider has acquired Watkins & Shepard, a provider of less-than-truckload, truckload and logistics services for difficult to handle goods, and Lodeso, a final-mile logistics solution provider that’s focused on the delivery of overweight, oversized goods. Schneider officials said that Watkins & Shepard and Lodeso will compliment its Final Mile+ service that focuses on customized, home, commercial and retail delivery with white glove service. According to Mark Rourke, Schneider’s executive vice president and chief operating officer, the separate acquisitions made sense for Schneider, with retail being a major part of its business based on its place within the economy. “The bulk of our retail customers are focused on how to grow their e-commerce channels in able to effectively compete with the large e-commerce retailers,” he added.
Cass Freight Index shows signs of economic uncertainty. As was the case in previous months, the May edition of the “Cass Freight Index Report” from Cass Information Systems continues to present an environment of ongoing malaise within various freight transportation and logistics sub-sectors that shows no signs of changing. May shipments were up 1.3% compared to April at 1.091, which topped a modest 0.6% gain from March to April and down 5.8% annually. Despite May’s sequential gains, the report said that they remain well below shipment gains over the last several years. And even with depressed shipment levels, May represents a year-to-date high. For expenditures, Cass reported that at 2.282, May expenditures were down 0.4% compared to April and down 10.1% annually. Cass called the current expenditure outlook “a slow downward trend” that’s a complete oppo¬site of the upward trend of previous years.
Talent void on the high seas. While there is widespread concern about attracting new talent to logistics and supply chain positions, it seems especially acute in the maritime sector. Slowing growth in the size of the shipping fleet will reduce the shortage of officers over the coming years, according to the latest “Manning Report” published by global shipping consultancy Drewry. The global shipping fleet—encompassing all sectors except the non-cargo carrying ship types—is expected to rise by a mere 300 vessels through 2016 to 2020. As a result, the shortage in officer supply is forecast to reduce from 20,900 at the end of 2015 to 7,700 by the end of 2020. Poor freight earnings are forcing owners and operators to reduce costs, keeping any increase in wage levels to a bare minimum.
Supply chain pressures driving automation. The MAPI Foundations, the research affiliate of the Manufacturers Alliance for Productivity and Innovation, notes that supply chain pressures are becoming a transforming influence behind automation. Automation use by competitors, customers, and suppliers were three of the top five drivers of automation investment over the past five years, inferring a supply chain and industry influence on this business decision. It also suggests that as supply chains become increasingly global, automation activity by U.S. manufacturing companies will likely spread around the world. The impact of new technology on product quality was another top driver. The survey shows that the two most common criteria used by U.S. manufacturers for evaluating the performance of new automation technologies are whether they lower total production costs and whether they improve product quality.
Crack down on cyber threats at U.S. ports. An annual intelligence authorization act passed last month by the House of Representatives would crack down on cyber-security at U.S. seaports, the latest step to alleviate growing concerns over terror attacks on the maritime industry. Lawmakers voted 371-35 for the Intelligence Authorization Act of 2017, allowing funding for 16 different intelligence agencies, including the Federal Bureau of Investigation, the Central Intelligence Agency, the Department of Defense, the Department of Homeland Security and the National Security Agency. But it’s the new and revised policies in the bill that lawmakers are emphasizing, notes a dispatch from Washington, D.C.-based AMI Newswire. Specifically, the legislation would require, within six months of the bill becoming law, reports from intelligence officials on cyber-security at the 360 commercial ports in the U.S., as well as how information is being shared among federal agencies.
Shippers seeing more cyber danger. According to a report from BDO USA, an accounting and consulting organization, manufacturers’ intellectual property, data and products have also become prime targets for cybercriminals. In a recent survey, more than nine in 10 manufactur¬ers cite cyber-security concerns in their SEC disclosures this year. That represents a 44% jump from 2013—and the first time in BDO’s analysis that cyber risk ranks among manufacturers’ top 10 risk factors. “As the industry races toward the next frontier, manufacturers must strike a bal¬ance between progress and security,” said Rick Schreiber, national leader and board member of the manufacturing and distribution practice of the National Association of Manufacturers. “Data analytics and the Internet of Things may spur the next industrial revolution, but with that comes increased exposure to cyber risk. Manufacturers still have some catching up to do to adequately protect their data, customers, products and factory floors.”
CN’s top executive steps down. Montreal-based Class I railroad carrier Canadian National Railway (CN) said last month that its president and CEO Claude Mongeau will no longer serve in his role due to health-related reasons. Mongeau joined CN 22 years ago. Over that time, he served as the carrier’s chief financial officer for 11 years and as CEO for the last six and a half years. CN’s directors named Luc Jobin as president and CEO and a member of the CN Board effective as of July 1, 2016. Jobin joined CN as executive vice-president and chief financial officer in 2009.
Movement at Maersk. Major management changes seem to be afoot after The A.P. Moller-Maersk Group, the parent company of leading liner carrier Maersk Line, appointed Soren Skou as its new chief executive officer. Skou was previously CEO of Maersk Line, guiding the world’s largest container line in its recovery from the economic downturn. He takes over from Nils. S Andersen, who had led the parent company for eight years. The Maersk Group has interests not only in container shipping, but in freight forwarding, container terminal operations, as well as oil and gas. He assumes leadership with a focus on operational cost reduction and profitability, and said in a statement that disruptions may be in the offing. Shipping analysts, meanwhile, speculate that Maersk might even acquire the assets of the troubled South Korean carrier Hyundai Merchant Marine.
Hurricane watch is on. As the 2016 Atlantic hurricane season gets underway this month, forecasters with the Slidell office of the National Weather Service and the National Hurricane Center continue to work on how best to warn the Port of New Orleans and other Gulf ports in advance of a storm surge. Close to half of all deaths during hurricanes and tropical storms between 1963 and 2012 resulted from storm surge, while flooding rains caused another 27%. Only 8% of deaths were caused by winds, and 3% from tornadoes spun off by tropical systems. More than half of all deaths during that time were in Louisiana and Mississippi—not surprising, considering that time period includes Hurricanes Betsy, Camille and Katrina. The other two storms with large death rates were Hurricane Agnes in 1972 and Hurricane Sandy in 2012.
Who’s who in Logistics? If you are looking to find out, then take a look at the 2016 edition of the “Who’s Who in Logistics 3PL Guide” from supply chain consul¬tancy Armstrong & Associates. This offering provides online access replete with proprietary 3PL market research, with detailed information on 478 companies that comprise more than 50% of global 3PL market revenues. Types of information and data included in the guide include: provider revenues, service offerings, geographies served, warehousing and transportation assets, freight forwarding volumes, IT and operational capabilities, and overall strengths and weaknesses. For more information, go to 3PLogistics.com.
Caplice honored. Dr. Chris Caplice, executive director of the MIT Center for Transportation and Logistics and frequent contributor to Logistics Management, will receive the Council of Supply Chain Management Professionals’ (CSCMP) 2016 Distinguished Service Award. He will be presented with the award during the opening general session at CSCMP’s Annual Conference Orlando, Fla. on Monday, September 26, 2016.
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