http://blogdg.ctl.ca/ The blog description goes here. en Copyright 2013 Sun, 03 Feb 2013 11:22:39 -0500 http://www.sixapart.com/movabletype/ http://blogs.law.harvard.edu/tech/rss Economics During the Great Recession, every trucking company was forced to carefully scrutinize the productivity of each sales person in order to justify their value to the company. As part of this process, many companies began to realize that expensive car allowance programs, entertainment allowances and travel expenses, coupled with salaries, perks and bonuses made the value proposition of some street sales people quite unattractive. Poor producers were downsized. In addition to layoffs, detailed cost analyses showed that inside selling, which keeps sales people off the road, can be as much as ten times cheaper than street sales personnel. Industry estimates show that each contact made by an inside sales rep may cost $25 to $30 while a face to face sales call can cost $300 to $500. Technology Technological advances are making it much easier to sell without the face to face component. The internet, combined with tablet computers and smart phones is creating a revolution in sales processes. With virtual meeting software such as GoToMeeting and Webex, communication tools such as Skype and FaceTime, social media sites such as Facebook, LinkedIn, YouTube and Twitter, it is becoming easier to sell with fewer or even no face to face calls. The technology is also having a profound impact on the cost of employee office space. An employee equipped with the technology can work from home and does not need costly office space. This increases the savings even more. According to statistics compiled by consultants at Bridge Group, 46 percent of sales people are working at company headquarters, 37 percent work at both the office and at home and 17 percent work fully at home. Customer Requirements The third change is coming from shippers and logistics service providers. As Transportation departments were downsized, there were fewer people and less time to meet with or even receive telephone calls from carrier sales reps. Transportation managers became more accessible via e mail rather than by telephone or personal visit. In addition, over the past five years, the famous or infamous RFP or freight bid has become extremely popular with shippers. In some companies, the bids are done completely or extensively via technology. An actual face to face call may only be required if the carrier is short listed and/or during the implementation stage. While each of these forces is quite powerful individually, collectively they are driving a major change in the process of transportation sales. These types of changes are being experienced across a range of industries. Of course there are risks in having sales people work from home in an unsupervised environment. Years ago I remember finding one of our sales people, who was based several hundred miles from the home office, living a double life. He sold our services while working with another firm during his workday hours. As a result, there is a requirement to employ another technological advance to provide visibility and accountability. This is where CRM or customer relationship management software comes into play. Using this type of software allows a manager in a remote location to see the number of sales calls being made and the stage of each prospect in the sales pipeline. Of course, the integration of CRM with actual sales data (and periodic spot checks), ensures that there is a high level of integrity and performance. Does this mean that it’s time for carriers to cut loose their street sales teams? Not yet, since there is still a requirement to visit certain clients, in some situations, at various stages in the sales process. But these changes require sales leaders to challenge their current sales structure and their ratio of inside to outside sales personnel. It also requires sales leaders to examine how effectively their companies are employing the latest technology. It should be noted that every conversion from outside to inside sales necessitates a change in recruiting and training. To be successful, inside sales personnel require a high level of product/service knowledge and excellent computer/communications skills. The need for customer entertainment skills are much reduced. Where does your company stack up? Here is a short quiz. • How productive is your sales team? • Does your trucking company have the right mix of inside and outside sales personnel? • Does your sales team have extensive training in the latest computer and communications technologies? • Is your sales team equipped with the most effective tablets and smartphones? • Is your team using a quality CRM system? • Has your trucking company changed its ratio of inside to outside sales personnel over the past 5 years? How would you score yourself? Maybe it is time to take another look at your sales operation. ]]> http://blogdg.ctl.ca/2013/02/does_your_trucking_company_sti.html http://blogdg.ctl.ca/2013/02/does_your_trucking_company_sti.html Sun, 03 Feb 2013 11:22:39 -0500 Manufacturers and retailers spend millions of dollars a year on freight transportation. Freight costs can represent between 1 and 10 percent of a company’s operating expenses. Many companies treat freight costs as a necessary evil. Once a year they engage in an annual ritual, the freight bid or RFP. The current carriers are squeezed in their pricing; sometimes new carriers are brought into the mix if some incumbents haven’t performed. Shippers walk away thinking they have dome their jobs and optimized the value of their freight costs. They haven’t. Every few years, shippers with a freight budget in excess of $1 million should conduct an independent audit of their freight programs. Just as businesses audit their accounting practices, looking for opportunities for improvement, Transportation departments should do so as well. You might be amazed with what you find. There are four key components of well conducted Transportation Audit. 1. Face to face interviews with the key transportation professionals using a structured interview format 2. Administration of a written transportation technology and strategy questionnaire 3. Observation of a company’s shipping operations including the packaging of the freight, dock operations , loading/unloading, 4. Analysis of a company’s freight data The following items are assessed in the audit: a) Organization of Transportation within business unit – degree of centralization/decentralization b) Linkage between inbound and outbound freight c) Where transportation fits within the design of the company’s supply chain d) Location of plants, DC’s, vendors and customers and how transportation links these components e) Freight spend as a % of revenue and trend over time f) Utilization/effectiveness of transportation technology g) Freight transportation budget versus actuals h) Spend management/ Off-plan spend (e.g. use of expedited freight transportation) i) Packaging of freight j) Loading/unloading of freight – load optimization and load factors k) Dock operation l) Use and management of private fleet m) Mode and carrier selection process/vendor and customer required transit times n) Analysis of Routing Guide by mode o) Freight spend data analysis by mode p) Compliance tracking (e.g. compliance with routing guide) q) Freight rate benchmarking – is it done? r) Timing/results of most recent freight bids by mode and results achieved s) Carrier performance management (e.g. scorecards) – on time service, billing accuracy, claims ratios, customer satisfaction t) Freight rate auditing process – pre and post-audit The results of the audit provide a prioritized list of cost savings opportunities. They highlight opportunities to strengthen the transportation organization. The audit also provides a road map for improving processes and customer satisfaction. Has your company conducted an audit of its freight operations within the past three years? Was your company able to reduce its’ freight spend and improve the performance of its supply chain? If so, please share your experiences with the readers of this blog. If you haven’t conducted a Transportation Audit, you may wish to give it some consideration. Dan Goodwill is the president of Dan Goodwill & Associates Inc. (www.dantranscon.com), a company specializing in transportation consulting services. http://blogdg.ctl.ca/2013/01/take_a_fresh_look_at_your_frei.html http://blogdg.ctl.ca/2013/01/take_a_fresh_look_at_your_frei.html Fri, 25 Jan 2013 09:50:32 -0500 View image According to Blair Wagar, its chief operating officer, it was developed to achieve several objectives: 1. Try to improve transportation and logistics in Saskatchewan; 2. Bring shippers and carriers together at one location; 3. Help companies drive cost out of their supply chains. Mr. Wagar pointed out that Loblaw Companies and CP Rail are the two founding tenants. Loblaw’s, one of Canada’s premier food retailers, is occupying a million foot warehouse and is using the Global Transportation Hub (GTH) as it key gateway to western Canada. View image CP Rail will begin using this facility as a key intermodal hub this Spring. View image This inland port is attracting interest from other leading transportation service providers. Yanke Transfer, a major truckload carrier, will start construction on its 40 acre site in the Spring of 2013 and will run LCVs and temperature control units from this facility. View image Consolidated Fastfrate, a large LTL player in Canada, has done a site grading and will also begin construction on its 10 acre facility in the Spring. View image From a rail and international shipping perspective, the Global Hub is expecting to handle significant volumes of inbound freight from the Asia Pacific. It also is planning at moving some export volumes to BC (Port Metro) and some via the Port of Montreal to Europe. There are currently 3600 truck movements a week moving through the GTH. When asked about the GTH’s value proposition, Mr. Wagar highlighted that the roadways in and out of the facility are designed to move turnpike doubles between Calgary, Winnipeg, Edmonton, Regina and Saskatoon. Motor carriers can run triples between Regina and Saskatoon only at this point if they have the proper permit. Loblaw is now doing it. What is the GTH’s growth strategy? “We are interested in any company looking to expand into western Canada, companies trying to improve their supply chains. We are also looking for companies in the transport business that have an interest in setting up terminals in western Canada. The GTH is also of value to local Saskatchewan companies that are trying to tap the export market. For carriers that wish to do business with Loblaw’s they can co-locate with Loblaw in this facility. The value proposition for shippers is that they can co-locate with truck fleet operators,” stated Mr. Wagar. Looking ahead to the future, the economy is growing in the west. At Regina’s Global Transportation Hub the land is shovel-ready. “To facilitate land and regulatory approvals, the environmental studies have been done,” commented Mr. Wagar. Companies can go from concept to operations almost immediately. All infrastructure can be used by LCVs.” Which companies should consider locating a terminal location in Regina’s hub? “Companies have to perform a transport economic study to see if Regina is the right place for them to locate,” stated Mr. Wagar. If their freight flows and the economics work, the GTH could be the place for them. ]]> http://blogdg.ctl.ca/2013/01/reginas_global_transportation.html http://blogdg.ctl.ca/2013/01/reginas_global_transportation.html Sun, 13 Jan 2013 10:39:36 -0500 One of the 2013 trends identified in my last blog was the requirement for transportation professionals to ramp up their efforts at Risk Management. In recent years we have seen a range of weather related natural disasters. Of course, disruptions to supply chains can come from other sources such as terrorism, wars, accidents, the failure of various operating systems such as telephone and computer systems, quality control problems and export restrictions. To make matters worse, most of these disruptions are unpredictable in timing and scope. Supply chain risks can be categorized into five groups: operational, social, natural, economy and political/legal. Each shipper has to make an assessment of the potential risks to their supply chains. Supply chain risk management can be defined as attempts to identify risks and quantify their commercial financial exposures as well as mitigate potential disruptions at each node and lane in the supply chain. Supply chain risk models can vary from the rudimentary to the sophisticated. In the case of the latter, complex “what if” analyses can be performed. These allow shippers to identify potential trouble spots and map out alternative supply chain strategies. Historically, shippers have tended to focus on factors with the biggest impact on their supply chain, such as on-time performance, supplier lead time variability and carriers by origin or trade lane. Based on the escalation of various risks in recent years, there is a need to take risk management to another level. Shippers need to perform a probability analysis on the impacts of each potential disruption, with a particular focus on alternative vendors, manufacturing facilities, modes, carriers, origin points, ports, border crossings, distribution facilities and destination ports. Looking ahead to 2013, there are some major (predictable) risks that could drive up supply chain and transportation costs. These include the result of the ongoing debt discussions in the United States, the impact on fuel costs if there is more violence in the Middle East, a driver shortage if the economy rebounds faster than expected, the recession in Europe and other weather related problems. In Canada there is a risk of a housing bubble which would have a major impact on its economy. Each company needs to assess the potential risks for each of the five elements outlined above. As a minimum, shippers should be evaluating alternate modes and carriers to make sure they have a range of quality options in place. It makes good business sense to seek out alternate sources of supply, near-sourcing opportunities in Mexico or Latin America, back-up computer systems and expanding the range of carriers in your routing guide. Motor carriers and logistics companies should have plans in place if a freight terminal or computer system goes down. In addition, each of these options should be tested under “real world” circumstances with actual freight to see if they are viable and dependable in a time of need. To learn more about this topic, here is a link to some very good articles that were recently published by Adrian Gonzalez and Tim Cummins. http://campaign.r20.constantcontact.com/render?llr=bkiefwcab&v=001Odyl7ekdr1Y0hY6_1pu4SluP1VzX4EBZXXBQSIBKFz1mQV70lsSFWp9xjxR8kag7x9KopX36zVBSkG3wVHfrTr0WSTXZASY1qHYzbZHZhN03TsWgY9LmUWkYo3neOBernWXuWBlX-FSMXoqhr6sGZUBBklvooDpB7ig2qXCiMZc%3D http://contract-matters.com/2013/01/03/tackling-supply-chain-risk/ Here are some publications that are worth reading: Yossi Sheffi's "The Resilient Enterprise" and "Supply Chain Risk Management: A Compilation of Best Practices" published by the Supply Chain Risk Leadership Council. What is your company doing in the area of Risk Management? Please share some of your practices and procedures with the readers of this blog. Interested in improving the performance of your supply chain or your transportation company, join the Freight Management Best Practices Group on LinkedIn http://blogdg.ctl.ca/2013/01/risk_management_in_freight_tra.html http://blogdg.ctl.ca/2013/01/risk_management_in_freight_tra.html Sun, 06 Jan 2013 12:13:13 -0500 1. The “Fiscal Cliff” Crisis may determine the level of the Economic Recovery in 2013 As the year comes to a close, America is facing a number of economic headwinds (e.g. high unemployment and underemployment, mismatch between job skills required/positions available) and tailwinds (e.g. possible rebound in the housing sector, potential revival of domestic manufacturing, boom in energy production, improving household balance sheets). Senior government leaders in Washington are trying to solve America’s so-called “fiscal cliff” that is casting a dark shadow over the economy. The resolution of this crisis may go down to the wire and will likely set the tone for the economic recovery, or lack thereof, in 2013. Should America’s leadership come to a good understanding on tax increases and spending cuts, this will place the United States and probably Canada on a more solid path to an economic recovery, even if 2013 is not expected to be a year of robust growth. This will help shippers and carriers in all sectors of the economy. A failure to reach an agreement, a weak agreement or an agreement to push the problem down the road, will put a damper on discretionary spending, consumer confidence and possibly shove North America and much of the world into recession. 2. America’s Energy Renaissance/ Fracking comes to the USA America is going through an energy renaissance. Induced hydraulic fracturing or hydrofracking, commonly known as fracking, is a technique used to release petroleum, natural gas (including shale gas, tight gas, and coal seam gas), or other substances for extraction. Fracking is allowing America to produce increasing supplies of energy just as the Middle East, the world’s leading source for petroleum, has become increasingly volatile. Since the transportation industry is such a large consumer of petroleum products, these developments will have a profound effect, over time, on the types and volume of energy consumed by this sector. Of course, obtaining this energy comes at a price, a higher price than the “cheap oil” America has been accustomed to buying. With natural gas utilization, hybrid engines and electric powered vehicles in truck fleets still many years away, America will continue to buy petroleum based products. The good news is that fracking will provide a more stable source of supply. But high petroleum costs and high fuel surcharges will encourage shippers to place more focus on packaging optimization, improved cube utilization and near-shoring to keep freight costs in check. 3. Rails maintain focus on Intermodal Intermodal volumes have grown steadily over the past decade. A recent JOC article suggests that this growth could moderate as truckers fight back to protect their market share. However the railways are relying on intermodal service as a growth engine. Coal volumes, a huge rail commodity group are expected to decline as the demand declines in overseas markets. The huge CAPEX incurred by the class 1 railways over the past 5 years requires these companies to earn a satisfactory return on their investments. All of the railways including CP Rail are developing and implementing intermodal growth strategies. Many truckers, both large and small, that are facing shortages of qualified drivers, particularly for long haul movements, are joining the intermodal party. The New Year should see continued growth from intermodal service. 4. Freight Brokerage Goes through Shakeout/Transformation A major trend over the past decade has been the proliferation of the freight brokerage business. Entrepreneurs with a basic understanding of the freight business and trucking companies looking for a non-asset based way to increase revenues and profits, have been attracted to this sector. The money-making concept seems so simple. You find a shipper with a load, find a trucking company with low rates to move the load, add a markup and presto, you have a new source of profits. Freight brokerage can be a great business in certain circumstances (e.g. high demand/high supply coupled with good customers and good technology). The trouble is that we are not living in a high supply/high demand time and the market is a bit saturated. Many companies that do not provide value are likely to be part of a shakeout or consolidation. The leading freight brokers are adopting a Freight Management customer engagement model as compared to a Freight Brokerage transaction model. Watch for this industry to consolidate as customers and the industry leaders raise the bar. 5. Risk Management Becomes a Major Focus of Shippers and Carriers Over the past few years, the world has faced some unique challenges. Global warming is causing unusual weather and some very difficult storms. Whether you look at the Tsunami in Japan, Superstorm Sandy or severe weather in other parts of the world, these “Black Swans” are causing nightmares for supply chain professionals and transportation company leaders. In addition, the world is facing political unrest and the menace of very dangerous weapons and terrorism. Risk Management is going to receive more serious attention in the years ahead as companies commit to evaluating various threats in their supply chain planning and putting contingency plan in place. 6. Industry leaders need to become more Innovative. Many shippers and carriers have learned and implemented Freight Management 101. They have done the basics by acquiring TMS systems, rationalizing their networks, implementing dock appointment processes, conducting RFPs and becoming Smartway carriers. In other words, they have gleaned as much as they can in cost savings through the various traditional and available tools. To continue to achieve cost savings in transportation, industry leaders must become more innovative. Running an annual freight bid will result in the law of diminishing returns. The focus must now shift to the overlooked and underappreciated areas of transportation – packaging optimization, integrated yard management, new types fleet equipment with expanded capacity (e.g. Wal-Mart’s 60 foot prototype tractor-trailer), business intelligence and compliance management. Innovative business practices will help companies keep their supply chain costs in line. 7. Dedicated Transportation Truckload capacity constraints will continue due to an aging truck fleet, the higher cost of new trucks and trailers, significant safety regulatory changes and a challenging driver market. Concerns over the speed of the economic recovery will continue to restrain truckload carriers in hiring drivers and adding equipment. Truckload carriers will continue down the path of diversification that has been blazed by JB Hunt. One of the most attractive areas of opportunity will continue to be dedicated transportation. The trend among retailers such as Wal-Mart and Home Depot to take greater control of their supply chains has intensified demand for dedicated carriage. Shippers looking to reduce cycle times and get products closer to customers are building regional distribution centres that are easily served by dedicated fleets. By offering consistency, flexibility and reliable contingency planning, dedicated carriage is a natural fit. 8. Shippers Need to Beware of Disguised Rate Increases Transportation companies have not hidden the fact that they need rate increases to continue to invest in their businesses and improve their profit margins. However, in many cases they have not been totally forthcoming when it comes to the level of their rate increases. The so-called GRIs or general rate increases of X percent are often misleading or disingenuous. Shippers that move significant volumes of small parcel or LTL freight need to apply strong analytical tools to proposed carrier increases. Carrier base rates vary. Rate increases may vary by weight break. A portion of some fuel surcharges may be added to the base rate. Accessorial charges may contain higher than advertised rate increases. The message to shippers is Caveat Emptor - Buyer Beware. If you have volume, particularly small parcel volume, if you don’t have good analytical tools and you don’t have a good understanding of how small parcel or LTL rates work, seek professional help before you make any commitments. The advertised rate increase and the precise impact of a rate increase on specific shippers may vary significantly. 9. Retail Transportation will continue to Evolve as Internet Shopping becomes more prevalent The retail sector remains one of the most vibrant and innovative areas of the economy and will continue to evolve in 2013. This will have a profound impact on transportation. As reported in the Top Stories of 2012, there are variety of new types of retailers, new types of transportation services and new types of transportation companies that are appearing to meet these requirements, whether they are for same day delivery, utilizing retail outlets as mini-DCs or the myriad of other service requirements that continue to emerge. 10. Transportation Technology will Reshape the Transportation Industry Smartphones and Tablet computers will become increasingly important elements of transportation systems as PCs, notebook and netbook computers decline in importance. The proliferation of these devices is being enhanced by the rapid development of useful applications. These devices will transform freight transportation on the dock, in the DC, in the store and in the truck. If you see any trends that I may have missed, please share them with the group. I wish all of you a successful, prosperous and healthy 2013. ]]> http://blogdg.ctl.ca/2012/12/transportation_trends_in_2013.html http://blogdg.ctl.ca/2012/12/transportation_trends_in_2013.html Thu, 20 Dec 2012 11:50:53 -0500 1. CP Rail’s Shareholder Revolt CP Rail is a landmark Canadian company that has played an important role in the country’s history. It made a unique kind of history in 2012 when Bill Ackman, head of US hedge fund Pershing Square Capitol Management, led a shareholder revolt that resulted in the ouster of CP Rail’s president and several board members. While this was the major transportation story of the year, it resonated throughout the board rooms of North America as underperforming companies, in other industries, were served notice. Shareholder activism can be very powerful if a company’s leaders do not produce results that are in line with market expectations. The latest chapter in the CP Rail story is currently being written as its new CEO, Hunter Harrison, the former CEO of CN Rail, is taking aggressive action to improve asset utilization and improve transcontinental intermodal service. As this blog was going to press, CP Rail announced that it plans to cut 4500 employees or roughly 28 percent of its workforce over the next three years. Stay tuned for the next set of chapters in the history of this famous Canadian company. 2. Wal-Mart’s 60 Foot Tractor-Trailer Each year Wal-Mart blazes a new trail on the road to leadership in supply chain efficiency. In recent years Wal-Mart has led the charge on RFID, on packaging optimization and on a host of green initiatives. This year, Wal-Mart pulled a new “rabbit out of a hat” by developing a prototype 60 foot tractor-trailer unit that caught the transportation industry off guard. The prototype has 28 percent more capacity than a traditional 53 foot trailer and can carry 40 percent more freight when a “drome” or belly box that fills the wasted space between the trailer’s wheels, is included. The prototype will be trialed in Ontario, Canada where the retailer has received a permit to operate it. If successful, it may be rolled out in other provinces and U.S. states where permits can be obtained. 3. The YRC Recovery The merger of two of North America’s best known LTL carriers, Roadway Express and Yellow Freight System, has produced nothing but heartache for its shareholders over the past several years as billions of dollars in losses were incurred. The YRC story took a new and positive turn in 2012. James Welch, reprising the role of Steve Jobs at Apple, has come back to YRC to lead the company back to stability. While YRC’s operating ratio is well below some of its Best in Class competitors, the company is at least producing a positive operating profit and seems to have returned to a focus on its core LTL business. YRC’s survival is good news to shippers. The company’s collapse would mean the loss of a huge block of capacity and would likely result in major freight rate increases. If YRC stays in the LTL game, it keeps the other players on their toes and provides shippers with more options. 4. The Ultra Slow Economic Recovery Unlike other economic recoveries, this one is particularly slow. As we approach year end, the United States still has an unemployment rate of 7.9 percent with over 23 million citizens out of work. The high unemployment and high debt levels have provided strong headwinds to the recovery and have had a direct effect on trucking firms throughout North America. Combined with a lack of consumer confidence, this has inhibited trucking firms from making investments in new equipment. It also limited the requirement for qualified drivers. A serious driver shortage did not take place in 2012. Ample truck capacity also helped put a lid on freight rate increases. While there was some encouraging economic news this year (e.g. uptick in housing starts, improvement in household balance sheets), the ongoing debate over America’s debt levels and so-called fiscal cliff, is not helping spur growth. The modest economic recovery has been a major transportation story for the past couple four years and 2012 was not a breakout year. 5. Same Day Deliveries in the Retail Sector The internet has transformed a number of industries such as books, electronics and music. Each year, many consumers are increasing their online purchases of a variety of items. To respond to customer demand for rapid delivery of their purchases, companies like eBay and Wal-Mart stores are putting pressure on their transportation partners to deliver customer orders on the day of purchase (e.g. same-day delivery). To compete, Amazon and Google are also trialing same-day delivery in certain markets. They are turning to local and major small parcel players such as UPS. Of course, these types of changes drive new processes, expanded warehousing capabilities and carrier start-ups. While some retailers appear to be “eating” the cost of transportation to grow their market share, watch this sector develop as it achieves more critical mass. 6. Trucking Takes to the Rails The year 2012 was a “transformational” period for intermodal transportation as trucking companies, large and small, added intermodal service to their portfolios. Many truckers realized that long haul drivers are getting harder to find. As a result, they chose to focus their resources on short and medium haul lanes and shift their longer haul lanes to intermodal service. This led truckers to view the railroads as service providers rather than enemies. J.B. Hunt has been the leader in migrating much of its full load business to intermodal service. Schneider National, another huge player, is now moving a third of its truckload business on the rail. U.S. Xpress and Swift Transportation are growing their intermodal programs. To support these initiatives, Norfolk Southern and CSX expanded their eastern U.S. networks to handle increased volumes. To further bolster their service, the railways have been offering “expedited” rail service on distances less than 1000 miles and supplying 53 foot domestic containers. 7. CSA Compliance, Safety, Accountability (CSA) is a U.S. Federal Motor Carrier Safety Administration (FMCSA) initiative to improve large truck and bus safety and ultimately reduce crashes, injuries, and fatalities that are related to commercial motor vehicles. Rolled out in December 2010, it introduced a new enforcement and compliance model that allows FMCSA and its State Partners to contact a larger number of carriers earlier in order to address safety problems before crashes occur. The FMCSA implemented a number of improvements to its CSA safety enforcement program in 2012, including dropping the Cargo-Related BASIC and adding a new Hazardous Materials BASIC that is expected to put more scrutiny on carriers hauling hazmat. The improvements, which were initially announced last August, include changes to a number of the Behavior Analysis and Safety Improvement Categories that the agency uses to keep track of carrier performance. Announcing the changes, agency administrator Anne Ferro said CSA is an effective program that has had a positive effect on safety. She cited an 8% decline in violations at roadside inspections, and a 10% drop in driver violations per inspection in the last calendar year. "These represent the most dramatic decrease in violation rates in a decade," she said. 8. Natural Gas hits Energy Utilization Milestone One change went unnoticed this year by most shippers and carriers in the United States. In April 2012, the amount of electricity generated by natural gas-fired power plants equaled that produced by coal-fired plants for the first time, with each accounting for 32 percent of total U.S. power generated. This is the lowest coal percentage since the 1970s. The sheer abundance and low cost of natural gas is making it an attractive option as an alternative fuel for trucks, and potentially for locomotives and container ships. While the percentage of natural gas as compared to diesel fuel is very small at present, the conversion process could be driven by early adopters seeking to secure cost savings. Of course, the widespread use of natural gas would require major investments in infrastructure. Nevertheless, this year’s milestone event and the willingness of selected truckers (e.g. Robert Transport) to purchase and trial LNG vehicles suggest that this is a trend that needs to be followed closely in the years ahead. 9. Freight Bids become a core Procurement Tool In 2012, freight bids became so prolific in carrier procurement/rate negotiation exercises that they were employed by shippers with as little as $25,000 in freight costs per year. The bid process has had multiple effects on the transportation industry. Done well, they force shippers to package and leverage their high volume freight to achieve maximum savings in freight costs. They provide a structured, methodical way to procure freight services. Done poorly, they are a nuisance to carriers since poor data and a weakly constructed RFP are a waste of time and produce rates that are not in line with business volumes or the shipper’s freight characteristics. Conducting FRPs has become an industry all to itself. There are companies that provide the software to run the bid events. There are companies that specialize in the design and execution of freight bids. The freight bid process, for some companies, is replacing the normal sales process. Rather than maintain relationships with carriers across the various modes, shippers in downsized companies, can use the RFP process as their annual mechanism to secure and negotiate rates. 10. Forward Thinking Carriers Invest in Technology Financially stable carriers seeking to gain competitive advantage invested in technology in 2012. This included fuel efficient equipment, testing LNG or hybrid equipment, improved driver screening and training. Creating and growing their brokerage/logistics businesses was also a trend. Larger carriers made investments in technology beyond basic load matching services to increase their margins. Transportation management as compared to basic freight brokering continues to evolve. Using a managed transportation management system (TMS), companies can provide contract management, load optimization, freight auditing and payment. The top carriers are using yield management tools to rank their clients on profitability and tailor rate increases to specific shipper requirements. As 2012 comes to an end, I thank all of the readers of this blog for their support and feedback during the year. I welcome suggestions on blog topics. Happy Holidays! ]]> http://blogdg.ctl.ca/2012/12/the_year_in_review_the_top_fre.html http://blogdg.ctl.ca/2012/12/the_year_in_review_the_top_fre.html Fri, 07 Dec 2012 09:32:22 -0500 Despite being the incumbent President, Barrack Obama and his re-election team were faced with a tall challenge in trying to secure enough votes to keep him in office. After the Great Recession of the mid 2000s, a major stimulus effort and low interest rates were not able to revive the American economy. Entering the election, President Obama faced an economy with 7.9 percent unemployment and 23 million Americans out of work. He also faced a Republican candidate with a highly successful career in the private sector, something President Obama has not had. Governor Romney did not help himself by staking out some policy positions to meet certain extremist elements of his party and by making some widely publicized verbal gaffes. Nevertheless, the economic headwinds faced by President Obama made this a tight race that could have gone either way. President Obama was able to gain re-election by 4 million votes. While some people will point to the gaffes and policy positions of the Republican Party, one of key reasons for Obama’s victory was the team of computer wizards who helped mastermind the victory. “If you look at the numbers, we raised more money online this time than last time, had more donors, more volunteers, registered more people to vote online, and did all kinds of revolutionary stuff through Facebook and Twitter,” stated Teddy Goff, digital director for Obama for America in a recent article in Businessweek. Based on my understanding of the work they did, the Obama team was able to outperform the Romney team in three areas.  Data Mining  Marketing, particularly using social media marketing  Face to face communication with committed and prospective voters On the data mining front, the Obama team was able to develop highly detailed profiles of Democratic and Republican voters. In addition to the demographic profiles (e.g. Democratic voters are more likely to be women, African-Americans, Latinos etc.), they were also able to discern specific preferences when it came to such things as music (e.g. Democrats tend to like Smooth Jazz more than Republicans), dining out (e.g. Democrats prefer Red Lobster while Republicans prefer the Olive Garden) and reading material. By identifying these voter profiles, they were able to better target their marketing messages and personal solicitation strategies. They were better equipped to focus on the prospective voters in the key counties in the “swing states.” They were more successful than the Republicans at contacting their most likely voting prospects through the appropriate social media and targeted advertising. “The biggest idea we brought to bear was integrating data and then acting on what it told us,’ says Dan Wagner, who ran the analytics team. “Through the single database we built, we could tie everything together and make an assessment based on all of somebody’s online activities, whether or not what we were doing was actually producing offline outcomes.” “Of our turnout targets 29-and-under, half couldn’t be reached by phone, either because they didn’t have one or we didn’t have their number,’ Goff says. “Yet we were able to reach 85 percent of them through targeted sharing. Almost everyone is on Facebook.” He estimates that 5 million voters were contacted this way – more than Obama’s margin of victory. The Businessweek article highlights that “what excited marketers about social media was that a friend’s endorsement was a more powerful, and therefore valuable motivator than traditional forms of advertising - - seeing somebody you know rave about Pepsi on his Facebook wall makes you more likely to try it than a newspaper ad would.” “The fundamental building block to targeted sharing is an overlay of the voter file and the social graph,” says Goff. “If you apply that same concept - - the social graph and the consumer data - - then almost any company stands to gain something.” The Obama team was also more effective at mobilizing volunteers in these locations to go out and meet these potential voters and secure their commitment to go to the ballot box. What can truckers learn from the Obama team? While very few trucking companies would have the budget to undertake a data mining/sales and marketing initiative of this nature, there are still many powerful tools that are currently available to help achieve successful results. When it comes to data mining, trucking companies with good computer systems can identify the services, lanes and yields on their customers’ business. If not, this should be a top priority to fix. This data can provide a wealth of information on shipper preferences. The data can also highlight services and lanes that are not matching up well against the competition. In addition, increasing numbers of trucking companies utilize customer relationship management (salesforce automation) software such as salesforce.com. These types of tools when related to a company’s own data on customers’ use of their services and competitors’ services, can yield very valuable insights into a customer’s preferences and decision-making processes. It is always important to remember that it is not companies that make buying decisions but rather the people working for these companies. They have demographic and psychographic profiles just as do voters. These profiles can be gleaned through mining the data in CRM systems, focus groups and market research studies. The next task is to successfully marshal this data so as to select the key verticals (e.g. food shippers that require a high level of customer service), customer data (e.g. participation in selected supply chain organizations that cater to the food industry) and personal data (e.g. college educated, younger, females, prefer to meet for lunch due to after-ours commitments etc.), that when taken together can provide a more focused sales and marketing effort. Armed with this information, these prospects can be found in specific LinkedIn groups, on Twitter and in industry associations. They can be reached through the appropriate blend of social media, target marketing and focused sales effort. The participation of Canadian and American trucking companies in social media was one of the items covered in the presentation by Lee Palmer, president of Palmer marketing at the 2012 Surface Transportation Summit. He noted that Canadian companies are not keeping pace with their American counterparts. He also highlighted that “in Canada, the small guys have turned to (social media) marketing more so than the big guys.” Hopefully the success enjoyed by the Obama re-election team, particularly in making such effective use of social media, will encourage business leaders in industry, particularly the trucking industry, to give social media more focus in their marketing strategies. http://blogdg.ctl.ca/2012/12/sales_and_marketing_lessons_fo.html http://blogdg.ctl.ca/2012/12/sales_and_marketing_lessons_fo.html Sat, 01 Dec 2012 14:27:31 -0500 The decision by Wal-Mart to conduct a pilot of a 60 foot high cube tractor-trailer in Ontario, Canada caught the transportation industry off guard. The surprise is not so much that a newer and longer piece of trucking equipment is being trialed. This was inevitable. The surprise is that the initiative was driven by a large shipper and not by a Trucking Association or trucking company in Canada or the United States. The arguments in support of the trial are compelling and are the same arguments that were made when 53 foot trailers and every other innovation in transportation occurred. A 60 foot tractor-trailer that offers 30 percent more cubic space promises to make the North American economy more efficient. It places fewer trucks on the road, thereby reducing congestion and lessening the need to refurbish our existing highway infrastructure. It reduces the impact of a driver shortage. It would reduce fuel consumption and greenhouse gas emissions. It permits drivers to accomplish more under HOS restrictions. It would allow trucking companies to derive a better return on their investment. The arguments against Wal-Mart’s pilot are the same as those made each time there is a proposed change of this nature. The most frequently mentioned reservation is that this will make our roads less safe. It will result in more highway fatalities. The prototype trailer is not in compliance with existing laws in various jurisdictions. There will be problems in backing up a tractor-trailer combo of this nature into many existing loading and unloading docks. Longer high cube equipment will contain heavier payloads that will speed up the damage to our roads and highways. It will require infrastructure changes to accommodate vehicles of this length. While all of these comments deserve discussion, it must be pointed out that the transportation industry has dealt with all of these issues before. Laws can be amended. Loading areas can be reconfigured. Bridge crossing can be modified. Weight configurations can change. It wasn’t that long ago that Ontario ran a trial on long combination vehicles (LCVs). What makes a 60 foot tractor-trailer so different? Perhaps the biggest issue is the impact that the widespread standardization of 60 foot equipment would have on the capital budgets of trucking companies and shippers who have their own fleets. The industry has billions of dollars invested in 53 foot equipment. With an economy that is less than robust, trying to “keep up with the Jones” by having to convert part of a fleet to 60 foot equipment is certainly not what the industry is looking for at this time. This issue alone explains why longer tractor-trailer lengths have not been driven by the trucking industry. A change of this nature would cost enormous amounts of money. The cost alone creates a certain amount of inertia and resistance. The bottom line is that change is inevitable. The lengths of road trailers and rail cars have evolved over the years. The railways have been extending the geographic availability of double stack trains. They supply rail cars that go up to 86 feet in length. The trucking industry cannot afford to be left behind. The current economic challenges we face in Canada and the United States suggest that we have to be open to opportunities to increase efficiencies. In a global economy, we need to evaluate every change, whether fracking, the Keystone Pipeline and/or longer tractor-trailer lengths, that will give us an edge in these difficult times. Hats off to Wal-Mart for taking this initiative. http://blogdg.ctl.ca/2012/11/walmarts_60_foot_prototype_tra.html http://blogdg.ctl.ca/2012/11/walmarts_60_foot_prototype_tra.html Sun, 25 Nov 2012 15:17:15 -0500 Last weekend I walked into one of my favourite Men’s stores in a local mall, Yorkdale Shopping Centre in Toronto, to arrange for a pair of pants to be mended. The retailer, Harry Rosen, asked me to stick around for a few minutes while they did the repair. After looking at their display of Armani ties, I walked across the hall into the Hudson’s Bay store. Like many men, I don’t shop for clothes too often and when I do, I go to a select group of stores, in a very focused way, to buy what I need. After passing the cosmetics counters that have always been across the hall from Harry’s, I had quite a shock. In fact, I would say that the HBC store was unrecognizable to me. The previously rather bland retail environment was replaced with a dazzling array of designer fashions. The men’s department that had always been on the main floor was nowhere to be found. This caused me to reflect on the many changes taking place in the retail sector. As I walked through the mall, I saw a number of well-known American retailers that have found their way to Canada. The list now includes Victoria’s Secret (also just next to Harry’s), American Eagle (a few doors away), J Crew and William Sonoma. Another one of my preferred men’s shops (Brooks Brothers) has also landed in downtown Toronto. Canada has been discovered, not by Christopher Columbus, but by Target Stores and Nordstrom, that have announced their intentions to head north. Canadian retailers have been preparing for the invasion for some time. Clearly, the HBC makeover is directed at blunting the attack from Nordstrom, Target and others. Holt Renfrew, one of Canada’s leading luxury retailers, that is affiliated with Lord and Taylor in the United States, has announced its intention to open a chain of HR2 stores. The stores will feature unique merchandise sourced from many of the same designers that supply Holt Renfrew, but at a lower price point. While Holt Renfrew executives have denied the suggestion, the stores will likely resemble Barney’s New York’s less expensive Co-Op chain or Neiman-Marcus’s lower-priced Cusp stores. Not to be outdone, one of Canada’s major furniture retailers, Leon’s Furniture, bought The Brick this week to gain efficiencies and economies of scale and to more effectively respond to a slowing housing industry. They also hope to compete more successfully against Target Stores. Product mix is another area of rapid change. Shoppers Drug Mart stores have been selling high end cosmetics and food products in their drug stores for some time. Food sales are a big part of the revenues at Wal-Mart and Target Stores. Retailers of books, music and electronic gear are also transforming their operations. For people who live in Canada and frequent their local Indigo bookstore, the change in product mix is profound. A significant percentage of the books and CDs have been replaced by gifts and toys as an increasing number of people download their music, books, magazines and newspapers on their tablets and smart phones. The major Canadian retailers are also playing the product mix expansion game. Canadian Tire is now selling electronics, Home Depot is selling appliances, Future Shop is selling bedroom sets and Loblaw companies, one of Canada’s pre-eminent food retailers, is selling “Joe Fresh” clothes and pharmaceuticals. Of course a large part of the retail battle is not going on in the malls. Rather it is taking place on peoples’ computers. While online sales represent about 7 percent of U.S. retail sales, they are expected to represent 16 percent of the total ($586 billion) in holiday sales in 2012, according to the National Retail Federation. Online sales are transforming certain industries. These changes are having significant impacts on the logistics and transportation industries. In the U.S., Target, Macy’s, Nordstrom and others are trying thwart challenges from rivals Amazon and EBay by offering same day shipping. Retailers such as Macy’s and Nordstrom, that used to operate their stores and websites independently, are integrating them. Wal-Mart Stores is starting to view its 4,000 plus US stores as mini distribution centres and is testing same-day delivery on its web purchases. Target and Saks Fifth Avenue understand that consumers with tablet computers are shopping online while in their stores. As a result, they are supplying visitors with a mobile app and free Wi-Fi access, in their stores, to encourage additional purchases. Toys “R” Us lets its online shoppers pick up their purchases at a local store within three hours. Wal-Mart, always at the leading edge of cost efficient logistics, is testing a 60 foot tractor-trailer prototype unit in their network of stores in Ontario, Canada. They claim that this configuration offers 30 percent more cubic space. They have also launched an initiative to encourage their vendors to use their transportation network to haul their inbound freight. Home Depot in Canada outlined, at the recent 2012 Surface Transportation Summit, that they converted from LTL store deliveries to consolidated truckloads of LTL freight. Technology, cost pressures, consumer preferences, competition, and in Canada, the US invasion, are transforming retail operations. They are forcing transportation service providers to adapt to this “brave new world” of retailing. http://blogdg.ctl.ca/2012/11/transportation_industry_trying.html http://blogdg.ctl.ca/2012/11/transportation_industry_trying.html Sat, 17 Nov 2012 15:22:45 -0500 Pierre Berton, the late, famous Canadian author noted in his book, “The Last Spike,” that CP Rail has held a respected place in the country’s history. He wrote that “no other private company, with the single exception of Hudson’s Bay Company, has had such an influence on the destinies of the nation.” For most of the past 15 years, CP Rail faced stiff competition from CN Rail as Paul Tellier and Hunter Harrison led the company’s move from a bloated government run enterprise to a highly profitable public company. In fact CN’s operating ratio of 61.3 is not only the best among the major North American railroads, it is one of the best of any company in the transportation industry. The fact that CP Rail lagged so far behind CN Rail and the other class 1 railways in North America led the activist investor Bill Ackman, of Pershing Square Capital, to launch his “palace revolt” proxy battle that resulted in the replacement of CP’s former President with Hunter Harrison, whom he brought out of retirement to drive the railway’s profit improvement. As we pass through the last quarter of this year, Canada’s two largest railroads are heading down separate tracks. With an operating ratio is the low 80’s, Mr. Harrison has embarked on a series of actions to reduce costs through improved asset utilization. This is another way of saying that CP Rail is planning to move its equipment more quickly and efficiently, to become Canada’s second “precision” railroad. It is seeking to accomplish this by undertaking a series of initiatives. These include: • Building trains at CP’s intermodal terminal in Vancouver with blocks of cars for long haul destinations. This reduces stops and streamlines connections. • Increasing average train lengths to 7,000 to 12,000 feet • Speeding up the fueling of trains • Improving daily scheduling • Investing $1.2 billion in 2012 and $1 billion in 2013 on key infrastructure projects • Working with customers at both ends to improve coordination The net result of these changes is that CP Rail now provides 4 day transit times between Vancouver and Chicago and Toronto. These changes represent half of the transcontinental trains that CP launches daily across its network. Mr. Harrison is not expecting an overnight drop in the company’s operating ratio. He told Bloomberg News that he is targeting about 65 percent in the next four years. Shippers appear to be taking notice of improved service on both major Canadian railways. In the 2011 Canadian Industrial Transportation Association Shippers’ Pulse Survey, the respondents gave the railways’ intermodal service a 78 percent favourable rating as compared to 82 percent for LTL and 84.5 percent for truckload. Carload service was ranked at 70 percent. These scores are 45 percent better than the ratings in 2009. The railways’ quality rankings were also up 22 percent as compared to 2010. The railways offer three primary types of services to its customers - - unit trains, carload service and intermodal. Both railroads are positioned to capitalize on trade between NAFTA partners but also trade with Asia and Europe. Michael Bourque, President and CEO, Railway Association of Canada, highlighted in his presentation at the 2012 Surface Transportation Summit that Oil, LNG, shale development (sand, steel pipe, chemicals) are now moving by rail. This is not just a stop gap measure. There are many long term contracts now in place alongside pipeline shipments. The railways can supply capacity and service to a variety of industries. CN Rail, that already climbed the efficiency mountain under Hunter Harrison, is seeking profit growth from these specific opportunities. CN is enjoying steady growth through the Port of Prince Rupert, BC, the closest North American port to the Asian market. The 13% year/year growth in intermodal traffic through this port is helping drive CN’s intermodal volume increase. It is also planning to capitalize on the boom in commodities, namely iron ore. It is expecting to invest $3 to $6 billion on infrastructure to service the mines in Sept-Iles, Quebec, on the Gulf of St. Lawrence, in northern Quebec. Iron ore exports are expected to rise more than 35 percent as China seeks to diversify its sourcing of this key steelmaking ingredient. With such a high profile and well publicized change in leadership, everyone is expecting big things from Hunter Harrison and CP Rail. As rail speeds and efficiencies improve, this will open up a larger share of the truck market for conversion to rail service. With rail being such an energy efficient alternative to road transportation, on longer lengths of haul, we should expect an ongoing series of sales and operations initiatives as both Canadian railways look to capitalize on these opportunities and spur growth in the Canadian economy. http://blogdg.ctl.ca/2012/11/cn_rail_and_cp_rail_canadas_tw.html http://blogdg.ctl.ca/2012/11/cn_rail_and_cp_rail_canadas_tw.html Sun, 11 Nov 2012 08:10:11 -0500 Mercifully, the U.S. election is in its final days. As a Canadian with friends, family, colleagues and clients in the United States, it has been distressing to watch the talk shows, debates and the steady bombardment of election ads on television. There is no doubt that Mitt Romney and Barrack Obama are two very intelligent, gifted people. Their respective parties each have a vague plan to restore America to its rightful place as the leader of the free world. Regrettably, neither party has provided a detailed substantive roadmap on how they would reduce the deficit and put Americans back to work. The reasons for this are simple. Every policy statement offered by one party would be parsed and ripped apart by the other party. There is safety in being vague. Even worse, the Republican plan, if you can really call it a plan, would likely increase the size of the U.S. deficit and be of most benefit to affluent Americans, those who are least in need of more financial perks. Also troubling is the fact that the party leaders and pundits cannot acknowledge any value in their opponent’s program. Each party demonizes the other with misstatements, half-truths and exaggerations that make the level of political discourse very negative and unpleasant. America is very a polarized and divided country. Almost every poll shows the two leaders in a virtual dead heat. Millions of dollars are being spent in a handful of “swing” states and in a select group of counties where a small number of so-called undecided voters control the fate of the election. After four and a half hours of debates, hundreds of hours of chatter on television and radio and millions of words in the social media, is there anyone truly “undecided” at this late stage? The election appears to be based on two polarized versions of the past four years. If one believes that President Obama was faced with the worst financial crisis since the Great Depression and that he did everything possible to stimulate jobs, protect U.S. autoworkers, provide universal health care and keep America safe, you will vote for the President. If you buy into the scenario that President Obama and the Democrats could have done a better job of stewarding the economy during this period, that employment would have been higher and gas prices lower under a Republican administration, that the social policies proposed by the Democrats are too radical, that universal health care is too rich for America and that it is time for a change, you will vote Republican. The few undecided voters ultimately have to accept one of these distorted views of reality. Neither one of these scenarios is an accurate reflection of the current state of America. Fortunately or unfortunately, I live in Canada and have to deal with our own very troubled political realities. Sadly, we lost one of our best political leaders to illness and lost one of our major political parties to a series of inept leaders and policies. The son of former Prime Minister Pierre Trudeau, a young and inexperienced man, may end up becoming its leader and face the very difficult task of resurrecting the fortunes of the Liberal party against a very crafty Stephen Harper, Canada’s current Prime Minister - - a very tall order. We have our own problems in Canada. But looking south, I see the election this way. President Obama is a very hard-working, dedicated family man who understands much better than Governor Romney, the plight of middle class Americans. If he remains President, he and his party will likely reap the rewards of the low interest rate, stimulus initiatives that have been in place the past few years. He is focusing on the right things – education, affordable health care, the middle class and addressing the fiscal cliff through a combination of cost reductions and tax increases for those most able to pay more. This plan makes sense to me, more sense than the tax reduction, no revenue increase, cancel Obamacare policies of the Republicans. I believe his policies will be better for the economies of the United States and Canada. I also believe that his policies will be better for the transportation industry that is of most concern to me and my clients. I endorse President Obama for re-election. I hope many Americans will weigh their options and make the right choice on Nov. 6. Good Luck. http://blogdg.ctl.ca/2012/11/the_divided_states_of_america.html http://blogdg.ctl.ca/2012/11/the_divided_states_of_america.html Thu, 01 Nov 2012 16:01:45 -0500 1. Passion for the Business Top CEO’s have a passion for the business. They are fully engaged in the operation and actively seek to improve their companies on an ongoing basis. 2. Become personally engaged with the company’s top clients The best CEOs get out from behind their desks to meet their clients and form strong bonds with them. They take a keen interest in their clients’ businesses. They also seek to establish a personal rapport with their clients that extends beyond the office. One of the best examples of staying close to a client’s business was demonstrated to me by a trucking company CEO who, several times a year, would take a tractor-trailer on the road to pick up and deliver loads for the company’s key customers so he would have an insight into the freight and its specific loading and unloading requirements. 3. Become personally engaged with the firm’s employees Years ago I had a (CEO) boss who ran a large multi-division transportation organization with operations across Canada. As he visited his divisions across the country, he would first meet privately with the GM in each division and go through the names of all of the people he would meet that day. As he walked the dock, he would address each employee by their first name and engage them in conversation. He would take a sincere interest in the employees, their work and their lives. This had a huge impact. Top CEOs form close working relationships with many of their employees. Through communication and trust, they build loyal, productive work forces. 4. They understand all elements of the business No one is an expert in all facets of the trucking business. Some people start their careers as sales people while others enter the industry as truck drivers. Over time, they learn those aspects of the business that are not their core competence. Some trucking companies with good employee development programs route their employees through a multi-disciplinary training program to expose their resources, particularly their upwardly mobile resources, through the various key areas of the business. Other CEOs, who do not have this opportunity, immerse themselves in all facets of the business so they can operate their companies from a position of strength. 5. They know their numbers Good CEOs know all elements of their financial statements. They know and challenge every number that is not consistent with budget, normal readings or last year’s numbers. They know what to look for, where to get it and they do. They then set in motion action plans to keep their businesses on track. 6. They know when to say “NO” The word “NO” is one of the most powerful words in the English language. Great CEOs know when it is time to say, “this is not good enough”, “it is not acceptable and we need to do better”. This was one of the great attributes of Steve Jobs of Apple. After key members of his staff would present new products for him to review and approve, he would then push them back. He would request changes that would invariably elevate Apple’s products to Best in Class. Good trucking company CEOs follow the same principle. They don’t accept customer complaints or sub-standard service. They demand that their management teams find solutions that significantly enhance the value of their customers’ experiences. 7. They “keep their cool” and project a confident, mature image The CEO is the most watched and visible symbol of a company. His or her behavior is carefully scrutinized by employees and customers. The trucking business is very competitive and challenging. Dealing with driver turnover, rate cuts and equipment shortages takes its toll. It is easy to “let your hair down” and throw a temper tantrum or use inappropriate language. These acts can undermine the confidence of employees and customers and hurt a CEO’s credibility. Maintaining a calm composure inspires confidence and stability. 8. They are good communicators Great CEOs listen to what employees and customers say without interruption and without signaling disapproval or contempt. They analyze what is being said and respond, whether orally or in writing, in a thoughtful and respectful manner. By their communication they instill openness and trust. This allows problems to surface rather than festering and being hidden from view. 9. They hire good people Nobody has expert knowledge of all aspects of transportation. Good leaders hire and train quality people, often employees who are as good or better or smarter than themselves. They are not afraid to hire great people, specifically people with ideas that are different from their own. They support and nurture their leadership team so it can take the company on new and productive paths. 10. They listen, analyze, decide and follow through Great CEOs synthesize the inputs they receive from customers and/or their leadership team. They carefully evaluate the viable scenarios, test them out and then decide. They are confident in themselves that they can make good decisions and act on these decisions in a timely manner. They don’t procrastinate or make a decision and then unmake it a few days later when they receive some new inputs. Top CEOs can lead their organizations to extraordinary levels by virtue of their skill sets. The list of attributes itemized above is not exhaustive. There are many others that could be added to the list. Finding leaders with these attributes will position your trucking company for greatness. ]]> http://blogdg.ctl.ca/2012/10/attributes_of_top_trucking_com.html http://blogdg.ctl.ca/2012/10/attributes_of_top_trucking_com.html Sat, 27 Oct 2012 16:11:12 -0500 The 2012 Surface Transportation Summit held in Toronto last week attracted over 200 shippers, carriers and industry vendors. The speakers and panelists discussed a wide ranging array of topics but one of the recurring themes was the need for shipper-carrier collaboration. The Great Recession placed tremendous downward pressure on freight costs and freight rates. The industry is still in a recovery mode. Carlos Gomes, the Senior Economist from Scotiabank, the leadoff speaker at the Summit, expressed the view that the economies of North America will be in a period of slow growth for some time to come. On the other hand, Maximizing Profitability and Reducing Freight Costs remain the two top priorities for shippers in the 2012 Transportation Buying Trends Survey, as presented at the Summit by Lou Smyrlis, Editorial Director of the Business Information Group. The carrier executives who spoke talked about the need for freight rates to increase to maintain the viability of their businesses. How do you reconcile these two disparate positions? A number of shippers and carriers talked about the importance of communication and collaboration. This collaboration is taking several forms. Brian Springer, the VP of Transportation of Loblaw Companies discussed the value of providing a company’s core carriers with freight forecasts. His company provides 6 month, 6 week and 24 hour forecasts of load expectations, thereby allowing his core carriers to better meet the Loblaw capacity requirements. This approach is particularly important since a number of carriers talked about the requirement to control investments in capital, specifically tractors and trailers, until there is a quicker pace of economic improvement. Jim McKay, Director of Transportation at Wal-Mart Canada outlined their “WPP” or Wal-Mart Freight Program. Essentially what Wal-Mart is doing is allowing its vendors to use Wal-Mart’s carrier network to move their inbound freight. In other words, their vendors are supplying Wal-Mart’s carriers with backhaul freight from the store location areas. Wal-Mart matches each vendor with a particular store location. It then leverages its carrier network as a resource. The advantage to shippers is that Wal-Mart takes responsibility for delivery compliance and lets its vendors focus on their core competence, manufacturing rather than transporting products. Mark Gallant, Director of Transportation at Home Depot of Canada outlined the major transformation his company went through. His company shifted 95% of their freight from LTL store deliveries to truckload shipments. Working with his carrier partners, Home Depot was able to take significant costs out of their system. When asked, Mark indicated that he was able to retain most of his carrier base. Jack Ampuja, President and CEO of Supply Chain Optimizers, leads a company that specializes in packaging optimization. His company has done work for many of the leading shippers in North America. Jack provided one example of how his team was able to identify an opportunity to improve the packaging of a client’s freight and take forty percent out of their freight spend. Since the cost of freight is essentially the cost of the space occupied on a trailer or container, improving freight density can lead to significant cost savings. This is certainly an underdeveloped area where shippers and carriers, working together, can identify ways to improve cube utilization through improvements in packaging and loading. The carriers who participated in the shipper-carrier panel expressed a similar view on collaboration. They are clearly tired of the wave of poorly designed freight RFPs that contain incorrect information. They very much appreciate shippers who treat them as business partners and who share information in an open and trusting manner. From my own experience as a carrier executive for many years, a good trucking company can see many areas of inefficiency in shipper operations, where improvements can lead to cost savings. These can include such simple things as having the paperwork and freight ready on time, calling the carrier in advance of pick-up to advise of changes in the number of pallets tendered and providing carriers with appointment times, so as to reduce or eliminate waiting time or trailer detention. Mark Seymour, President and CEO of Kriska Transport posed this question at the Summit. “Do you want a carrier or a partner”? In these challenging times, when high equipment and fuel costs and rising driver wages are driving up freight rates, shippers should engage their carriers in meaningful discussions and look for opportunities to share information on Best Practices and cost efficiencies. This is the time for true shipper-carrier collaboration. http://blogdg.ctl.ca/2012/10/shippercarrier_collaboration_o.html http://blogdg.ctl.ca/2012/10/shippercarrier_collaboration_o.html Sat, 20 Oct 2012 15:11:17 -0500 For over two decades the University of Tennessee has been conducting its Masters in Logistics research study. This year the study was undertaken in partnership with Con-way Inc., Ernst & Young, and Logistics Management. The U.S. based participants accounted for an estimated $30.1 billion in domestic transportation expenditures and over $20.5 billion in international transportation. Some 1,370 domestic and global logistics, transportation, and supply chain management professionals participated in the study. A summary of the report appears in the current issue of Logistics Management and is the basis of this blog. The Masters of Logistics, those companies with annual freight spend in excess of $3 billion, represented 27.8 percent of the study participants. Medium-sized firms, with between $500 million and $3 billion in annual revenue, were 20.6 percent of respondents. The majority of respondents (51.6 percent) were smaller firms with reported annual revenue less than $500 million. The study participants came from a broad array of industries. The results identify the emergence of an idea advocated for over a decade, and one which is being put into place by the Masters of Logistics: Use logistics and transportation services to differentiate yourself in the marketplace. As the study suggests, being able to deliver differentiated service is not possible without a value-creating partnership between the shipper and its strategic carriers; in turn, this has created a unique balance of power between the two parties. Overall transportation spending as a percent of sales increased from 2011 to 2012. The data showed that companies that spent more than 5 percent of sales on domestic transportation increased year-over-year, rising from 21.2 percent to 26.7 percent in 2012. The key reason is the change in strategic direction for many companies. Following several years of intense cost cutting, particularly in transportation spending, the 2012 study results point towards companies shifting some of their focus to maximizing profitability and asset utilization. In the meantime, the percentage of respondents who reported that their primary objective is reducing costs has shrunk each of the past three years—findings that reveal that shippers again believe that you have to “spend money to make money”. Being able to rapidly respond to changing customer requirements is becoming increasingly critical for both shippers and carriers. Today, more than ever, transportation plays a key role in helping companies attain that necessary level of responsiveness. The study indicates that some 71.6 percent of respondents are either capable or highly capable of adjusting transportation operations in response to changing conditions—and this ability to alter and adapt is greater for transportation than for logistics operations. ‘Total Delivered Cost” is becoming the value creation metric and competitive differentiator among carriers. The need to create more value is reflected in how shippers are utilizing the various modal combinations. Truckload transportation still accounts for the largest share of the transportation budget. In addition to being highly responsive to changing conditions, it enables companies to address concerns about fuel costs that ultimately impact the cost to serve and the total landed cost. LTL accounted for 17.3 percent of the transportation budget in 2012, representing the second largest modal expenditure for firms. However, this is a decline of 2.7 percentage points from 2011. The decline in LTL was the largest change reported for any of the modes for 2012. The study found that part of this decline in spending was used to boost the budget for private fleet. After a slight dip in the percent of the transportation budget in 2011, the expenditures for private fleets are almost on par with the 2010 level. Rail’s portion of the transportation budget remained essentially the same year-over-year while intermodal increased in 2012 accounting for 4.3 percent of total spend. In the current shipping environment where supply and demand are in fairly close balance, there is a requirement to have a capacity strategy. Tommy Barnes, president of Con-way Multimodal mentioned that “companies, both shippers and carriers, are looking for a way to use the right capacity in the right geographical places. Using a multimodal strategy can fill that gap.” Shippers are taking five actions to improve transportation efficiency. • Shipment consolidation • Core (strategic) carriers • “Spot” bidding for freight • Route planning • Carrier tracking Of the five, the study suggests that the most promising one is the use of core or strategic carriers. To be successful, both shippers and carriers must be fully committed to the relationship. The efficiency initiatives suggest that shippers are making use of multiple methods to keep transportation costs in check. “Logistics and transportation efficiencies will help create a competitive advantage for small- and large-sized shippers,” says Barnes. “The efficiencies can drive logistics and transportation productivity and eliminate risk, thus allowing organizations to focus on customer/supplier value.” Many factors have caused shippers to change the way they manage logistics and supply chain activities. The main influences according to the results from this year’s study are: • ability to respond to changing customer requirements; • energy (fuel) prices; • cost to serve (specifically distribution); • inventory reduction; • and total landed costs. The results of this year’s study suggest that the nature of the relationship between carriers and shippers has fundamentally shifted. Study participants are in strong agreement that being better than their competitors in terms of service would significantly improve their competitive position. There is also an awareness that while logistics and transportation service will differentiate them in the marketplace, it does not allow them to charge customers a premium price—hence the need for carriers and shippers to work together to create the former without incurring the latter. The study results show an emerging trend by the Masters of Logistics to set themselves apart from their competitors through differentiated service. Transportation plays a critical role in enabling the firm to deliver differentiated service of which a prominent feature is being able to respond to changing conditions. As such, it positions transportation as a vital part of value creation. For more on the study, pick up the latest issue of Logistics Management http://blogdg.ctl.ca/2012/09/the_2012_masters_in_logistics.html http://blogdg.ctl.ca/2012/09/the_2012_masters_in_logistics.html Sat, 29 Sep 2012 09:31:03 -0500 1. Hold a Customer Engagement Summit They suggest that the leadership teams in companies should hold a “customer engagement summit”. They argue that senior managers, from all departments of the company, should look beyond the basic interactions that customers have with various departments. The meeting should focus on developing strategies to motivate customers to invest in a continuing relationship with the company and its services. In other words, companies should implement strategies that move shippers along the customer loyalty continuum. 2. Focus on Three Factors The writers outline three factors that should be addressed in formulating a customer engagement strategy. First the company should construct a vision for how it wishes to build relationships with its customers. Second, the company should craft an integrated and consistent strategy for interacting with customers across its various departments. For a trucking company, the customer interactions with Sales, Customer Service, Dispatch and Claims should be in harmony. Third there should be agreement on the components of the company’s customer engagement system that will be undertaken in-house or via its partners (e.g. beyond carriers, carrier partners, pick-up and delivery agents etc.). 3. Create a Customer Engagement Council The consultants suggest that there is value in creating a continuing in-house forum to discuss and co-ordinate customer engagement throughout the organization. Of course, for those companies that truly wish to meet their customers’ needs, there is the option of creating a mechanism to obtain first hand input from their clients. This can be via a focus group, customer survey or a similar research tool to measure the impact of a company’s customer engagement strategies on its customers. The research results can be compared to other objective measurements such as Canadian Transportation & Logistics Annual (Canadian) Shipper’s Choice Awards Survey or Logistics Management’s (American) Quest for Quality Survey. The authors write that “when conceived, constructed and operated correctly, these customer-engagement councils play a critical role in breaking the ‘silo’ mindset that diminishes the effectiveness of customer engagement in many organizations”. 4. Name a chief content officer It is important to control the message that is sent to prospects and customers. The consultants suggest that the content made available to customers should be sophisticated and interactive. Since many trucking companies are still in their infancy in embracing social media, the appointment of a chief content officer, as a full time position, would be a bit of a stretch at this point in time. Nevertheless, there is value in creating a “go to” person for all customer communication to ensure it is consistent and meets the requirements of customers. 5. Create a Listening Centre Being an effective listener is a key element of a sound customer engagement strategy. It is important to obtain and share information from the various “touch points” where customers interact with a company. At the same time, there is a requirement to at least monitor the relevant social media where a trucking company’s services, policies, and employees are discussed. While many trucking companies are still new to participating in social media, there is value in connecting to the most relevant blogs, forums and LinkedIn groups where trucking company issues are debated. Active listening allows companies to become aware of and address concerns, perceptions and problems articulated by prospects and customers. 6. Adjust your budget The consultants suggest that companies often perceive the costs of performing these activities as an additional expense and unaffordable. They argue that the money to do these things is available but it is allocated to less productive efforts (e.g. trade journal or buyers’ guide advertisements). Companies that actively engage their customers have the opportunity to differentiate their services and their brand. Improved customer engagement can lead to improved customer loyalty and revenue retention. Is your trucking company taking the necessary steps to top the list in the 12th annual Shipper’s Choice Awards Survey next year? ]]> http://blogdg.ctl.ca/2012/09/is_your_trucking_company_engag.html http://blogdg.ctl.ca/2012/09/is_your_trucking_company_engag.html Sun, 23 Sep 2012 17:20:30 -0500