Friday’s U.S. job numbers coupled with the latest ISM manufacturing report would seem to suggest the American economy is as “flat as a pancake." We appear to be on the precipice of another Great Recession or Contraction, if we aren’t there already. What can we do “turn the ship around”? This is what I suggest.

Political Collaboration and Leadership

We are currently witnessing the battle of the “job creation plans”. Every Republican candidate for President and even some who are not running are trying to outsmart each other with their competing plans. President Obama is going to present his job creation plan later this week. We are going to be bombarded with rhetoric and op-ed pieces all debating the strengths and weaknesses of each plan. Then these plans have to be captured in laws and run through the House and Senate. This could take forever before being signed into law by the President.

Isn’t this the opportunity to break the political impasse in Washington by having the leaders of the two parties and their staffs work together to create a unified plan that is going to truly help get Americans back to work? Isn’t this what the American people want to see, particularly after the debt crisis fiasco of a few weeks ago? C’mon leaders, show us that you can lead by breaking out of the current paradigm and collectively making something powerful happen quickly.

Business Leadership and Consumer Confidence

The stimulus programs put in place over the past couple of years have been criticized for being too small and unfocused. While some would argue that if we had not had these programs, we would be in even more dire straits, it is hard to find anyone who can pinpoint the effectiveness of all the money that was spent. With interest rates so low, there is not much that can be done in this area to stimulate growth. The government cannot create the number and types of quality jobs the economy needs to revitalize itself.

That leaves it up to business leaders, all business leaders. The various plans we will be hearing about will likely all contain tax breaks or incentives for new job creation. These incentives will only work if businesses are able to create more products and services that can be sold at levels that result in a profit. They will only work if consumers buy these products. The only way to turn around the moribund economy is to create an atmosphere of confidence where we all feel that America is on the way back, where people are willing to spend money again. The implication is that many business leaders must be willing to take some risks, to spend some of the money they have been hoarding for the past couple of years on new capital equipment and new jobs.

Make an Immediate Dent in the Unemployment Numbers

There are millions of unemployed Americans who are struggling to find a job. The longer these people remain unemployed, the worse things are going to get. As employers scrutinize the resumes of these individuals who have been unemployed for extended periods of time, the more unlikely it is for them to be rehired. Having been an employer for many years, I know what it is like to look at an individual who has been unemployed for a year or more and wonder why so many other prospective employers have passed on this person.

Creating a well though-out job creation plan for those people who are now becoming chronically unemployed has to be a priority. Everyone will start feeling more confident as jobs are created and as the unemployment number dips below 9 percent and then 8.5 and then even further.

To sum up, America needs a well-conceived job creation plan that is embraced by political leaders of both parties. The plan, with the strong endorsement of both parties, must contain some metrics in terms of job creation that demonstrate that America is putting its citizens back to work. The plan must tackle the block of unemployed people who are struggling to find work. It must instill a sense of direction, confidence and hope. The option of drifting into another recession should be a strong enough deterrent for political and business leaders to come on board quickly.

There is in interesting article in the Thursday issue of the Toronto Globe & Mail that addresses the issue of the differential on the price of goods in Canada versus the U.S. The situation has become so ludicrous that the article makes reference to Canadian manufactured goods (e.g. Ziploc bags) retailing at a higher price in Canada as compared to the United States.

Even Canada’s Finance Minister, Jim Flaherty, is at a loss to explain the persistent price gap. In a brief to the senate national finance committee he wrote, “Canadians are rightly irritated when they see large price discrepancies on the exact same products being sold on different sides of the border. . . I share this irritation.”

Retail chains such as Costco Wholesale Canada Ltd. blame their global suppliers for charging higher prices in Canada that push up the retail prices on items such as soap and toothpaste as much as 30 percent more than in the United States. Manufacturers blame retailers for imposing stocking fees and blame their government for imposing bilingual labels. Nancy Croitoru, president of the Food & Consumer Products of Canada blames the variance on the higher cost of doing business in Canada due to smaller, more dispersed markets which drive up transportation costs.

Let’s take a look at some of these arguments in light of some other data presented in the report. J. Crew, the famous U.S. retailer opened in Canada last month with a 15 percent premium on Canadian goods and a steep tax on online purchases. A week after they opened, they backtracked and dropped the online duty charge. Abercrombie & Fitch, another major retailer displayed higher Canadian and lower U.S. prices on its price tags. It backed down and made the two sets of prices equal.

Jim Saunders, a practice leader at consultancy Pricing Solutions in Toronto made this refreshingly honest statement. “It’s really about what the consumer is willing to pay.” Thank you Mr. Saunders for telling it like it is. For many years, the Canadian dollar was well below the U.S. dollar in value. Canadians have become accustomed to paying more for American made goods.

But those days have come and gone, for now. The fact that there is so little full disclosure, the fact that the evidence of higher costs in Canada is so hard to find, the Ziploc example, the fact that even the Federal Finance Minister is voicing skepticism, says there is something not quite right here that needs to be fixed, and soon.

As far as the issue of small markets and higher transportation costs, let’s look at the facts. Most Canadians live within a 100 hundred mile radius of the U.S. border, not near the North Pole. A closer look at the facts will tell you that many Canadians live in the major urban areas - - - Toronto, Montreal, Calgary, Edmonton, Vancouver. While the U.S. is ten times the size of Canada that means that it has ten times as many small markets as there are in Canada.

Does it cost more to ship a truckload of furniture from Grand Rapids, Michigan to Toronto than it does to L.A. Does it cost more in freight to ship a load of fruit juice from Newark, New Jersey to Montreal versus Dallas, Texas? If transportation costs are an issue, why don’t consumers in L.A. and Dallas pay more for these specific goods as compared to consumers in Montreal and Toronto? Why aren’t retail prices created based on distance from the manufacturer versus than the country in which they are sold?

This artificially created price discrepancy is hurting Canadians and the Canadian economy. It reduces the purchasing power of Canadian citizens and causes unnecessary inflationary pressure. More purchasing power will allow more Canadians to buy more rather than less goods and services. We need a public inquiry to get to the bottom of these unfair and harmful business practices. We need to bring the prices of goods down to help Canadians cope better with these difficult economic times.

Each year, Mary C. Holcomb, Associate Professor at the University of Tennessee and Karl B. Manrodt, Professor at Georgia Southern University, in partnership with Con-way Inc., Ernst & Young, and Logistics Management conduct research and prepare an Annual Study of Logistics and Trans­portation Trends (Masters of Logistics) report. This year the studysuggests that logisti­cians are now facing the freight transportation version of a Bermuda Triangle, one which, if left unattended, has the potential to create disastrous and inexplicable outcomes.

“For the past two and a half years, companies have been simply reacting to what some economists and financial experts are calling the ‘new normal.’ The hallmark of this new business environment is a sluggish economy that is fore­casted to grow at an annual rate of just under 2 percent. To exacerbate matters, the new normal also has unpredictable and volatile change at both the demand and supply ends of the supply chain.”

The authors also point out that after a dip in freight costs as a percent of revenue in 2008 and 2009; this percentage is on the rise. Shippers are being squeezed by sluggish growth and rising freight costs. The authors characterize a confluence of three factors facing shippers as a form of “Bermuda Triangle.” The Triangle . . . “consists of (1) a lack of planning for the impact of rising fuel prices; (2) a rigid network that is incapable of flexing when uncer­tainty occurs; and (3) a myopic internal focus that limits the enterprises’ ability to achieve the desired performance results.”

These three factors are explained as follows. “The data from this year’s annual study suggests that ‘tried and true’ approaches are being used. We asked study respondents about the level of maturity for a variety of actions and initiatives aimed at improving operating efficiency. The top five most mature actions are: (1) the use of core carriers; (2) the use of dedicated transpor­tation; (3) carrier tracking; (4) load planning; and (5) ship­ment consolidation.

Perhaps even more revealing is that more than half of the 22 actions and initiatives presented to participants had been completed for several years. Three other actions or initiatives that are poised to assist in keeping transportation costs in line include the use of new transportation technology; the use of ‘green’ carriers such as Smartway; and freight balanc­ing or pooled distribution. Interestingly, the use of intermodal shipments and sharing capacity forecasts with carriers or other service providers are the top two actions currently in the planning stages. The analysis showed that there is no predominant action or project that is being used or planned to improve trans­portation efficiency.”

When asked what primary action the company (or busi­ness unit) would take to offset the accompanying rise in transportation costs, the leading response was “no actions are currently planned.” This was followed—in rank order—by “increases will be passed along to the customer,” “improved load planning,” and “improved route planning.” The first two options will be unacceptable to management at the “C” level who will expect a response that will deliver results.

The latter two actions, improved load and route planning, are execution oriented. While this level of action will produce results, it can be a short-term, sub-optimal approach. Improved route planning tied with network optimization/ redesign is a way to offset a rise in transportation costs. It’s at this strategic level that a long-term, “best line of attack” can be formulated to avoid what appears to be unexplained mishaps in the Triangle.

At an operational level, cost-to-serve and energy (fuel) prices affect transportation choices. It’s not surprising there­fore that supply chains use truckload (TL) as the principal mode for moving freight. The data for 2011 indicate that TL’s share of the transpor­tation budget increased to 32.1 percent as compared to 27.2 percent for 2010.

“Transportation plays a lead role in the firm’s pursuit to improve supply chain flexibility,” says Con-way’s Tom Night­ingale, vice president of communications and chief marketing officer. The study data indicate that the top initiatives com­pleted to date to improve supply chain flexibility include the use of multiple transportation modes to meet delivery sched­ules, the use of freight brokers for shipping needs, and the increased use of multiple transportation modes to meet deliv­ery schedules. “These actions are tactical and operational,” says Nightin­gale. “While they can be part of a larger plan to improve sup­ply chain flexibility, they are not sufficient in and of them­selves to achieve this goal.”

The study results indicate that there remains a meaningful planning gap between the firm and its key customers and suppliers. This gap results in a myo­pic, internal focus that limits the degree to which the firm engages its key sup­ply chain partners in strategic initiatives such as sales and operations planning (S&OP) and company-wide inventory reduction initiatives.

While not specifically mentioned in the study, freight bids, which are still popular with many shippers have also lost some of their effectiveness due to the steep decline in freight costs. For many carriers, their freight rates are at or just above their costs leaving them little room to offer much more savings to shippers. Shippers will need some more innovative approaches to reduce their freight spend.

The authors conclude their study by saying that “avoiding the logistics and transporta­tion Bermuda Triangle isn’t that diffi­cult—it means separating folklore from reality. Successful navigation requires planning in advance of potential haz­ards and working with partners to maxi­mize current efforts. Last, but not least, it involves future thinking in order to plot a course toward innovation. Those who accept the status quo may not be heard from in the years to come.”

In view of the troubling state of the United States economy, shippers are looking for creative ways to reduce transportation costs, specifically LTL costs. Tight capacity and rising freight rates are making this a challenge as we head into the fourth quarter of 2011.

Schneider Logistics is offering shippers an integrated delivery service that it says can cut transportation costs for certain types of freight by 7 to 20 percent. The logistics arm of truckload giant Schneider national that they have branded Integrated Delivery Services is consolidating less-than-truckload freight for customers with similar distribution patterns. The service is aimed at shippers, often competitors, with common routes, distribution and cross-dock locations and dispatch and delivery schedules. Food and the large diverse national retailers represent two such target markets.

Many years ago, a similar concept gained widespread acceptance in the automotive industry. The major North American automotive companies, working closely with their core carriers, created multi-stop milk runs that would pick up auto parts that were delivered on a just in time basis to a Ford, GM or Chrysler plant. Selected carriers would pick up a range of complementary parts that taken together could be used on an assembly line to build cars.

The Schneider Logistics concept is a bit different. They are calling their approach more “strategic and creative,” even to the point of sharing a dedicated tractor-trailer with a competing company. They claim that more and more shippers are willing to do that, in various ways. Other carriers have offered “shared dedicated” or “collaborative distribution” services. Some shippers look for other companies with complimentary freight to help “cube out” or more completely fill a trailer, mixing lighter weight and heavier goods.

The fact that this concept is starting to take hold is no surprise to anyone. In fact, the surprise is that it has taken so long to gain acceptance. The delay has been largely a result of competitive shippers being reluctant to work collaboratively with each other. With logistics service providers becoming so pervasive over the last decade, this lessens the size of the hurdle. A third party can pull together the participants, manipulate the confidential data from each party, create and optimize the most cost effective routes, orchestrate the consolidated movements and pool points and arrange for the deliveries. The shipper can enjoy the benefits of a truckload movement without the headache of trying to make it happen on their own, and at a savings over standard LTL rates.

The logistics arm of $3.1 billion trucker Schneider National piloted IDS with nearly 20 customers with competing brands in Denver, merging their freight. The service is being rolled out in Portland, Ore.; Sacramento, Calif.; Los Angeles, Houston; Lenexa, Kan.; Jackson, Miss.; Winchester, Va.; and Memphis, Tenn. Schneider plans to expand IDS in the Midwest and the Dallas-Fort Worth area. Look for these types of shared service models to become more popular in the days ahead, particularly if the economy does not turn around soon.