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A bright future... together
In 2008, our Annual "State of Logistics Report"—aptly titled Surviving the Slump—was all about survival. In 2009, we were Riding Out the Recession. This year, our report's theme is The Great Freight Recession. But as you and I both know, there's nothing "great" about this recession.
It's been a rough couple of years, to say the least. This past year, downturns in each of the individual transportation sectors combined to create a huge loss in overall shipment volume. Here are some of the cold, hard facts:
- The cost of the U.S. business logistics system declined 18.2 percent in 2009, the largest drop since 1981.
- Orders for new goods dropped off substantially.
- Trucking (the largest component of the transportation sector) was one of the hardest-hit modes in the recession, with overall spending on truck transportation dropping by 20.3 percent in 2009.
One takeaway from reviewing the data was that carriers and shippers alike need to keep in mind that business moves in cycles, shifting back and forth from a "shippers' market" to a "truckers' market." Even in a strong economy, shipper and carrier negotiations can be tense and at times even adversarial. What has changed in the last year or so is that the stakes have never been higher. The U.S. supply chain faces the very real threat of more motor carriers going out of business. The added pressure of these tough economic conditions have increased frustrations and anger on both sides of the shipper/carrier debate. But as difficult as it is, we need to remember that no one ever got rich by saving (or charging!) an extra nickel per hundredweight.
As supply chain professionals, our collective goal must instead be to move beyond the typical approach of "state the problem and talk about the frustrations." We need to bring industry leaders together to discuss potential solutions to the problem of shippers and carriers working at cross-purposes—a problem that affects every business in the world. For our part, CSCMP is developing a program that will address this issue head on.
This kind of friction isn't limited to shippers and carriers; it occurs between the modes, too. The classic example is the competition between truck and rail. It's not as if they can't get along at all; as BNSF Rail's executive vice president and chief marketing officer, John Lanigan, has noted, in most cases the railroads are working better than ever with motor carriers on intermodal moves. But when shipment demand resurges, we'll once again be looking at truck driver shortages and capacity shortfalls for both modes. Hopefully, we have learned through the years that in the long run, working together as a team, with all parties on one side of the table, will be beneficial to those we serve. A national transportation policy in the United States that benefits all modes of transportation might help to address this perennial issue.
This year's "State of Logistics Report" wasn't entirely gloomy. In fact, there were some signs of growth in the data:
- Truck tonnage has grown more than 6.5 percent in the last seven months.
- Manufacturing output climbed 1.0 percent in April for a second consecutive month and was 6.0 percent above its year-earlier level.
For those of us involved in the U.S. supply chain, such growth is welcome indeed, but it prompts us to ask this question: Will we be able to sustain the productivity gains realized during the recession? If we work together to meet the challenges that lie ahead of us, we can make sure that the answer to this question will be a resounding "yes."
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