Back to List
Transportation Management Trends: The Gathering Storm
The current environment shaping transportation has often been likened to the perfect storm. These trends threaten to turn our view of transportation and logistics on its head unless major changes are forthcoming in the near future. Here's a look at the primary changes converging on the industry to help you act proactively.
The transport management landscape has undergone dramatic change in the last 26 years. Beginning in 1980, after nearly six decades of regulation characterized only by glacial change, the transportation environment has been in a constant state of flux. The first 20 years of deregulation challenged managers with the task of confronting increased safety and social regulation, escalating customer expectations, increased globalization, improved technologies, labor and equipment shortages, and industry mergers and consolidation. To their everlasting credit, transportation managers were able to achieve staggering improvements that helped reduce the percentage of the U.S. Gross Domestic Product spent on logistics almost in half during that period (from over 16 percent in 1980 to just under 9 percent in 2000). Managers from that era have many interesting tales regarding exactly how those changes were accomplished.
The degree of change experienced in the transportation environment from 1980 to 2000, however, pales in comparison to the changes that have occurred since 2000. While some of this change can be correlated with the changing sociopolitical landscape emerging as a result of 9/11, many of the trends which transportation managers must consider today have much longer histories. Regardless of their genesis, the current environment impacting transportation has frequently been likened to the perfect storm - a reference to the interaction of a number of unique but related trends that threaten to turn our view of transportation and logistics on its head unless major changes are forthcoming in the next several years. We like to call this, instead, the Gathering Storm - because the Perfect Storm will not be perfect (a bad thing in this case) if we recognize the storm signals that are gathering and address them. The following list highlights the three most critical elements of the Gathering Storm and identifies some of the primary causes for them.
And don't look to rail to relieve the problem. Until recently, railroads had not made enough money to cover the cost of capital investment for over 20 years, resulting in the retirement of track and merger/consolidation to make a profit. Then consider that it costs millions per mile to build new rail lines. Rail has figured out that better utilizing, and in some cases shrinking, its present network and rolling stock capacity is a better formula for profitability.
Further, port facilities are inadequate to handle the volume of freight growth resulting from the historic levels of foreign trade imbalances, predominantly caused by growth of trade with China. On any given day there are dozens of ships anchored in the harbor at the ports of Long Beach and Los Angeles waiting for dockside availability. Such delays are caused by inefficient labor to offload and insufficient road and rail access to facilitate the movement of containers from portside facilities.
Finally, increased security regulations as a result of 9/11 are further slowing movement through ports, and promises from regulatory bodies to increase the number of inspections could cripple the flow of international freight. Although the situation is more dramatic in maritime ports, it is similar to that experienced in airport facilities.
So how are we to deal with this "Gathering Storm" and prevent the realization of the "Perfect Storm?" Below is a list of major implications to the shipping community and the broader economy as a result of the elements of the storm.
The Perfect Storm cannot be prevented by ignoring it. It can only be managed by recognizing the signs of the Gathering Storm and taking proactive actions to lessen the impact on individual companies, supply chains, and the economy (both U.S. and global) as a whole.