First things first: Hows the traffic out there right now?
For the short term, things are flowing in the United States. Traffic is moving through shipping terminals efficiently, and were not seeing the rail bottlenecks that we have in the past.
So the news is basically good?
Its better than it has been. But U.S. roadways, railways and ports are still aging and inadequate. In the face of expected long-term growth, that doesnt bode well for future efficiency.
Five years ago, the major cause of U.S. congestion was the huge growth in global manufacturing, especially in China and the increased import traffic that created. What do you see as the main drivers today?
China is still a primary driver. But in this decade, weve experienced strong growth in all major trade lanes. And the problem is not unique to the United States.
What are port conditions like?
Major U.S. ports are handling current volumes. Theres no doubt that port diversification strategies have helped many shippers take some pressure off their Transpacific supply chains. Shippers are moving more of their Transpacific goods via the Suez and Panama canals these days, and with the Panama Canal expansion due to be complete in 2014, that trend should intensify.
But East Coast ports cant assume that staying competitive will be easy. Post-Panamax ships are going to be considerably bigger, and theyll require ports with greater channel depths and higher bridge clearances. East Coast ports need to be aggressively beefing up now if they want to compete by the time the expansion is complete.
What about railways and roadways?
Although U.S. truck traffic isnt experiencing significant problems right now, we cant put our head in the sand and assume everything will continue to run like clockwork.
According to a study recently released by a national research group called TRIP, nearly 25 percent of the major urban roadways in the United States are in poor condition already. And considering that traffic from heavy truck shipments may increase by as much as 40 percent over the next decade, those remedial conditions are cause for concern.
As for railways, given our countrys rapid population growth, its extraordinary to think that our available track capacity has diminished by about 40 percent since the late 1920s. When our limited railways become crowded, as they often have in the past, it means that velocity suffers. In fact, for every mile per hour that rail cars have to travel slower due to congested tracks, the rail system requires 200 to 250 more locomotives, 5,000 more freight cars and 180 train, engineer and yard employees.
The major U.S. railroads have made significant investments to help meet demand in the past few years, and performance has improved somewhat. However, much greater amounts of investment will be required to meet anticipated demand in the future.
All of us need to be supporting initiatives like double-tracking that will enable us to fully tap into the potential of this highly efficient mode.
Are overseas locales experiencing similar conditions? Or is potential overcrowding just a domestic problem?
Chinas ports have some of best throughput in the world right now, not only because China has invested significant infrastructure but also because its prevailing labor conditions allow it to operate shifts more hours per day, all of which helps productivity. But its landside transportation still has a long way to go, especially when you venture any distance away from its coastline.
And the infrastructure in other growth markets such as India is in need of significant upgrading to take advantage of market opportunities.
European ports also are experiencing serious congestion problems.
In other words, the United States isnt alone in terms of struggling with infrastructure issues.
Absolutely not. Infrastructural shortcomings are a global and industry-wide challenge.
Even companies that dont source globally are affected, because they still have to share the road and rails with companies that are.
Which leads us to the $60,000 question: Besides calling for improvements and cooperating with public/private initiatives, what can shippers do to help keep products flowing as smoothly as possible even when our infrastructure isnt where it should be?
For starters, we need to use all of the basic tools of our trade things like visibility, optimization and simulation tools to ensure that we minimize both our inventory and the miles it has to travel. By keeping our inventory levels and transportation consumption as streamlined as possible, well be doing our small part not to overburden our waterways, roadways and railways.
Non-peak shipping can also be a help, because certain times of year are notorious for being more prone to capacity crunches than others. If shippers move at least a portion of their products during slower times, theyll help better amortize the use of all of our collective transportation resources.
The practice of deconsolidation -- breaking down a single, large ocean shipment into several smaller shipments and then timing and organizing those shipments for delivery offers a lot of product flow advantages, too. Among other things, it can eliminate some redundant transportation. And every empty mile not traveled makes a difference.
What about providers?
We need to continue developing better visibility tools, because those create confidence, and confidence can reduce the need to carry (and transport) as much safety stock.
We need to provide services that help shippers address the problem of shipment volatility whether its a premium ocean shipping service or a well-placed public warehouse location that allows them to bring product into the United States a bit earlier and store it until its needed.
And we need continue creating products that can help our clients maximize the use the transportation assets that are on the roads, rails and waters.
Finally and this applies to all of us we need to lead the way in trying to generate a public-private consensus about the importance of freight transportation. Its going to be critical to channel more money into transportation expansions and improvements throughout the supply chain. And its going to be critical for everyone to be on the same team.
Your company has been extremely vocal about this over the past few years.
Thats because we feel very strongly about it.
Almost everything in our transportation needs fixing. But it cant be fixed all at once, which is why could use a national freight policy to guide us on which projects to undertake first.
It also cant be fixed without collaboration, because theres no single entity on earth that has the energy and funding to undertake something this massive alone. Not even the United States.
