Hurricane Sandy easily constitutes force majeure.  No questions asked.  It was the largest Atlantic tropical storm on record.  When it made landfall near Atlantic City on the evening of October 29, it brought winds of up to 90 mph.  Its wrath was fierce and far reaching.  Millions across the Eastern Seaboard battled rising floodwaters and long-lasting power outages. So far, damage has been estimated to exceed $62 billion.

I live in the Midwest, so I was not directly affected by this super storm.  But, LMS Logistics has offices and employees in the Northeast, and these staff members are responsible for ensuring smooth operations for our supply chain clients in that region.  When the storm hit, nearly our entire staff lost power at their homes.  Needless to say, so did our facilities and our clients’ facilities.  But that didn’t stop our staff.

Per our contingency plans, offsite folks in the Midwest and Canada pitched in to ease the operational burden.  But our Northeast employees still needed to be in the mix, working alongside our clients who were also experiencing  operational disruptions.  And, with plant, port, and carrier closings, managing freight became more difficult than ever.

Our employees did not complain; they did not make excuses.  They fired up their battery-operated laptops and went to work.  And, when they ran out of batteries, they worked from the homes of friends or family members who had power.  Some camped out in local restaurants and coffee shops that were equipped with WiFi.  Whatever they needed to do, they did.

Even when power was restored, the phone lines were down.  Additionally, many cell towers had been damaged in the storm, which made cell phone usage unreliable.  But our team pooled their resources and at one point, they were having a conference call with a client by huddling around a single cell phone with a signal.

And then there were gas shortages.  Some so severe that they prevented employees from commuting to work, and those people continued to work from home.  Those who could commute came early and stayed late.

Regardless of what was going on in the office or at home, our employees came through and went above and beyond to help our clients weather this unprecedented storm.  Hurricane Sandy was an act of God, an unanticipated and uncontrolled occurrence that could not be avoided.  But our staff did not fall back on force majeure; they went to work.

Special thanks to our northeast teams and the staffs that supported them.  You make us proud.

The post Weathering the Storm appeared first on Logistics Management Solutions Blog.

Your laptop, your pens – even that goofy koosh ball you keep on your desk.  All these things were delivered to their retail destinations via trucks driven by truck drivers.  So if you appreciate having the necessary (and unnecessary) possessions that fill your life, thank a truck driver.

This is National Truck Driver Appreciation Week (September 16 – 21).  It doesn’t get a lot of press, Hallmark doesn’t offer a selection of greeting cards, but it’s important to recognize the role truck drivers play in our economy, in our lives.

There’s an estimated 3.5 million truck drivers in the U.S. and the American Trucking Associations (ATA) says they logged nearly 400 billion miles in 2011.  That’s a lot of time spent on the road, in traffic, sleeping in truck cabins and most significantly, it’s a lot of time spent away from home.  Long haul drivers can be on the road for more than a week at a time.

It’s not an easy job.  In fact, truck and delivery workers are ninth on CNN Money’s list of Top 10 Most Dangerous Jobs.  According to the Bureau of Labor Statistics, more truck drivers and delivery men die on the job than any other vocation.  Truckers also report health issues such as high blood pressure, ulcers, and neck and back injuries.  Sitting in an immobile position for hours on end isn’t easy.

The median annual salary is $35,000.  Long haul drivers make a bit more, around $48,000.  Being a truck driver is not the most glamorous job, but it’s an important one and we need more people to fill driver’s seats.  According to Bob Costello of the ATA, the trucking industry is short 20,000 to 30,000 drivers.  And as the economy improves and freight volumes rise, we could face a severe driver shortage in coming years.

So let’s start showing our appreciation now.  Everything from medicine to koosh balls is delivered by a truck.  If you see a driver today, say thank you.

The post Got Stuff? Thank a Truck Driver appeared first on Logistics Management Solutions Blog.

For 11 days this season, St. Louis temperatures have climbed to 105 degrees or higher. The last time we even came near these stats was before 1934. I’ve lived in this area my entire life and I can take Missouri heat, but this summer I had to limit outdoor activities. On some days, it was even too hot to swim.

But complaining about this type of lost opportunity seems trivial. This summer’s weather has impacted more than half of our country, which is facing the worst drought in more than 50 years. And it has directly affected the livelihoods of those who depend on basic things – like rain. Farmers aren’t seeing crop yields and this affects ranchers, who are also watching their watering ponds go dry.

LMS Logistics is exceptionally invested in this segment as many of our clients are in the agriculture industry. Therefore, I was relieved to hear of the measures taken by the federal government earlier this week. You can see an overview of the measures here, which include everything from financial assistance for livestock and crop producers, to easing trucking regulations to ensure farmers and ranchers get much needed supplies.

The latter is of particular interest to those of us in the transportation industry; here’s an overview of what’s been implemented:

• Hours-of-Service (HOS) regulations will be waived for states where a drought emergency has been declared by the governor or appointed official. This waiver applies to carriers providing emergency assistance.
• For states that do not have an emergency declaration, federal rules regulating large truck operations may be waived in certain situations. The DOT will process these requests within 7-14 business days.
• In July, Obama signed a transportation bill that enables the states to issue special permits for overweight vehicles and loads that can easily be dismantled or divided in an emergency. These permits will be available beginning October 1, 2012. The DOT says this may provide states with a means of hauling heavy loads of grain and livestock for drought relief.

It’s a good start and hopefully it will go a long way to help ranchers and farmers recover from this record-setting drought. Temperatures are dropping and rain is falling, but those affected by season’s weather are just beginning to see a little bit of relief. Let’s look to brighter (and cooler) days ahead.

The post Regulation Relief for Drought Relief appeared first on Logistics Management Solutions Blog.

We just learned that LMS has – for the ninth consecutive year – earned the title of “Top 100 IT Logistics Provider” by Inbound Logistics magazine.

Every April, we compete with hundreds of companies to earn a spot on this list.  Inbound editors use questionnaires, personal interviews and other research to select award recipients.  The complete list can be found here.

What’s interesting is that LMS did not begin as a technology company.  We were a 3PL specializing in logistics execution; our staff members directed freight movements using clients’ TMS products.  However, in doing so, we discovered something – there wasn’t a single system that could do what our clients needed it to do.  We then set off to find and buy the system we envisioned, but it didn’t exist.

So we built it ourselves.

We hired software engineers and worked with them closely, very closely.  You see, we had come to believe that most TMS products were developed by talented developers who had no working knowledge of the supply chain industry.  An effective TMS had to manage transportation operations in the “real world.”

The system also had to be financially viable.  The products we encountered entailed huge costs and lengthy implementations.  Our clients needed a system that could produce a quick return on investment (ROI).  And, TOTAL is engineered to produce an ROI within 90 days.  It was – and continues to be – an unprecedented standard in the industry.

When LMS first made this list, it was exciting.  However, it’s one thing to get on a list like this and another to stay on it, especially when you consider the pace of technology.  In 2001 we didn’t just launch a system; we made a commitment to technology.  We hired a full-time staff of talented software engineers so we could continuously improve our product and meet clients’ evolving needs.

This is why we repeatedly appear on the Top 100 list.  According to Felecia Stratton, editor of Inbound Logistics, LMS “continues to be flexible and responsive, anticipating customers’ evolving needs.”

TOTAL was designed to manage shipping operations from planning to execution to tracking and tracing.  But, our clients needed more.  Today the system features a business intelligence solution that gives users an endless array of data vantage points that can lead to operational improvements.

And that’s just one example.  Our technology has evolved and will continue to evolve because, for our clients, it’s a necessity.

The post Invention, Necessity and TMS Technology appeared first on Logistics Management Solutions Blog.

It may be time to run the ad again.

This week the Department of Energy (DOE) announced that the average price of diesel rose .5 cents to $4.147 a gallon, which is the highest diesel has climbed since that summer day in 2008.  I believe it won’t be long until we reach the $4.207/gallon price and, more than likely, surpass it.  This is the ninth straight increase we’ve seen, and in the past three months the average price for a gallon of diesel has risen 36.4 cents.

Fuel costs are on an upward trajectory and shippers need to get resourceful, creative.  Of course horse-drawn transportation hasn’t been a viable option since the 1800s, but the point is made.  My advice: Don’t lament the situation, leverage it.

Now is the perfect opportunity to step back and really dig into your freight operations.  Fuel costs are beyond our control, so we must control what we can.  When was the last time you explored opportunities for freight optimization?  Shipment aggregation, consolidation, co-loading, continuous move routing, mode-shifting.  Even a small reduction in deadhead miles will contribute to your bottom line.

Maybe you don’t think these practices are an option for you, but odds are in your favor.  Over the years we’ve worked with countless shippers whom have been surprised to discover that yes, freight optimization can work for them.  And, what’s more, they don’t have to make trade-offs between cost reduction and customer satisfaction.

LMS has published a white paper that explores optimization tactics in detail – “Ten Best Practices for Motor Freight Management.”  It’s a good place to start and it’s free; you can request it via this link.  Better yet, we can perform a free analysis of your transportation data.  Using our proprietary technology, we will quickly review your freight activities to identify viable optimization opportunities within your network.  If you are interested, contact us (info@lmslogistics.com).

Regardless of how you choose to go about your research, know that it is an important exercise that can help you mitigate the effects of rising fuel costs.  Chances are great that your efforts will lead you to viable cost-saving initiatives, and, chances are, none of them will involve horses.

The post Rising Fuel Costs: Get Resourceful appeared first on Logistics Management Solutions Blog.

All signs point to yes.

For starters, intermodal loadings have shown year-over-year gains for the past 25 months.  Of course it isn’t at the heights it reached in 2006, but this mode is racing ahead.  And, a host of industry factors will continue to fuel growth for, some say, the next three to five years.

We all know truck capacity is tightening as the supply of drivers and equipment struggles to keep pace with rising freight volumes.  Factor in changes to hours of service (HOS) rules and the FMSCA’s Compliance, Safety and Accountability program (CSA), and the over-the-road market gets tighter yet.  Of course decreasing capacity means increasing rates, so shippers begin to seek alternative solutions.

In years past, many shippers could not look beyond the highway to see intermodal on the horizon.  Intermodal service was questionable and rail infrastructure was weak.  Few shippers want to compromise their customer service to save money.  But today, shippers don’t have to compromise.

According to the Association of American Railroads, in recent years railroads have spent approximately $12 billion per year on tracks, signals and other infrastructure.  And last year, they invested more than $20 billion.  All of this was done in an effort “to grow and modernize the national rail network.”  According to many shippers, rail service is more reliable than ever.

And the trucking companies are right there, too.  It’s been more than two decades since J.B. Hunt and Sante Fe (now BNSF Railway) formed an unprecedented alliance that led the intermodal movement, and today truckload carriers are embracing this mode at a fervent pace.  Recently, we’ve seen a number of carriers adding intermodal capabilities to their offerings.

And why wouldn’t they?  They, like the rest of us, are here to serve the shippers.  Shippers are looking to secure capacity when the market is tight, and remain fiscally responsible as carrier rates and diesel fuel costs rise.  I haven’t even mentioned the environmental factor: Companies want and need to be in the black, but they want to be green, too. Add these requirements together and intermodal quickly equates to a “no brainer” for many manufacturers and retailers.

I am excited by the role intermodal will play in the coming years and I believe this mode is poised for significant growth – all signs point to it.

The post Intermodal 2012: Full Steam Ahead appeared first on Logistics Management Solutions Blog.

Late last month the Department of Transportation announced a final rule banning commercial truck and bus drivers from using handheld cell phones while operating their vehicles.  The rule, which was issued by the Federal Motor Carrier Safety Administration (FMCSA) and the Pipeline and Hazardous Materials Safety Administration, takes effect on the first day of the New Year. It is part of the DOT’s ongoing
mission to end distracted driving.

As you may recall, back in October the FMCSA banned texting by interstate commercial drivers. But, it wasn’t enough. Research demonstrates that, when using handheld cell phones, drivers remove their eyes from the road for an extended amount of time. They could be reaching for a phone or dialing a number – whatever it may be, it cannot happen behind the wheel of a large vehicle that is barreling down the highway at 65 to 75 miles an hour.

Enter the new ban.

However, the issuing entities understand the link between communication and commerce. Drivers can use hands-free phones, two-way radios, etc., but there will be restrictions. A few of our clients have asked for clarification regarding the ban, so we’ve compiled the following summary.

Who does it apply to?

• Interstate commercial truck and bus drivers
• All hazmat drivers

What does it ban, allow?

• It bans drivers from using handheld cell phones while operating a commercial truck or bus.
• Handheld phone use is banned while operating on a highway, including when a truck is temporarily stopped on the road. It does not include stopping on the side of the road.
• Drivers can use hands-free mobile telephones with a speaker phone option and one-touch dialing. These are allowable as long as the device is within the driver’s reach while he or she is in the normal seated position with the seat belt fastened.
• Drivers can use a handheld phone to contact law enforcement or emergency services for certain purposes, i.e. reporting an accident or a drunk driver.
• Two-way radios, or walkie-talkies, can be used for short periods of time when communication is critical for utility providers, school bus operators, or specialty haulers.

What are the penalties?

• Federal civil penalties of up to $2,750 for each offense.
• Multiple offenses disqualify drivers from operating a commercial motor vehicle.
• Commercial truck and bus companies that allow drivers to use handheld cell phones while driving face a penalty of up to $11,000.

What kind of impact will the new ban have on the New Year and beyond? Only time will tell. What are your thoughts?

The post New Year, New Rule: Truck Drivers’ Cell Phone Ban appeared first on Logistics Management Solutions Blog.

Our country’s economic foundation is shaky at best, but truck carriers are raising rates and standing firm on pricing. As we’ve experienced – not too long ago – in times of economic uncertainty freight volumes usually fall and rates drop as desperate carriers vie for business. But, this is not the case.

First of all, volumes are rising. In fact, on Wednesday the DOT announced that its freight transportation services index rose 4.4% year over year in September and reached its highest level in more than three years. All reports and analyses point to the fact that capacity is tightening; however, we must realize that this happens a lot faster now. Over the last few years many trucking companies have gone out of business and those remaining are struggling to put qualified drivers behind steering wheels. What’s more, carriers are hesitant to add capacity to their existing fleets.

According to a survey by Transport Capital Partners, 73 percent of carriers said they did not plan to add capacity over the next year or they were only planning to add 5 percent at the most. Can we blame them? Carrier operating costs are increasing, and the economic climate is cool and its forecast is unpredictable.

Mode wise, these conditions do not discriminate; both less-than-truckload (LTL) and truckload (TL) companies have raised their rates and, according to many analysts, they will do so again.

Less-than-truckload:

Between July and September, several major LTL carriers rolled out General Rate Increases (GRIs):

• FedEx Freight – 6.75% effective 9/6
• Old Dominion Freight Line – 4.9% effective 9/6
• YRC Worldwide – 6.9% effective 8/1
• UPS Freight – 6.9% effective 8/1
• Conway Freight – 6.9% effective 8/1
• ABF Freight System – 6.9% effective 7/25

I think the title of Tuesdays’ Journal of Commerce article says it all – “LTL Rates Rising, But So Are Costs.” Labor, healthcare and material costs are rising and carriers need to recoup these expenses to ensure their survival. They are also trying to make up for recent years when industry conditions were not in their favor.

Truckload:

According to Transcore, September truckload pricing increased – average dry van spot market rates rose 2.3 percent compared to August and 3.9 percent compared to 2010. And in a recent survey, the firm found truckload carriers increased their pricing by 10 percent in the first half of the year. And it’s not just rates that will drive pricing up; Transport Capital Partners found more than two-thirds of truckload carriers plan to increase the use of accessorial charges.

Not great news for shippers, I know. But we can take solace in the fact that carriers are doing what they need to do to keep pace with rising costs and promote their sustainability, which will mitigate further tightening in the long term. Meanwhile, we will adjust – as we always do. In this business, there’s no such thing as business as usual.

The post Despite shaky economy carriers stand firm on pricing appeared first on Logistics Management Solutions Blog.

Last week republican leaders of the House Transportation and Infrastructure Committee sent President Obama a strongly worded letter urging the White House not to change the current HOS rules, which have been in place since 2004 and are due for a revision on October 28.

There are many ways the final version could take shape, but most concerns center on the possibility of reducing drivers’ on-the-road time, which could include cutting drive time from 11 to 10 hours a day. Those in favor of changes cite safety concerns; those opposed cite the financial impact on our industry and the American economy at large.

Safety First

While many of my colleagues and I oppose a reduction in hours, we certainly are not adverse to safer highways and roads. I traverse our country’s roadways, as do my loved ones. However, data does not suggest the current rules compromise safety; in fact, since the current rules were put in place, our country has achieved unprecedented safety levels.

The American Trucking Association (ATA) says that since 2004
the truck-involved fatality rate has dropped by 36 percent – nearly twice as fast as the overall highway fatality rate. And here are the facts from the National Highway Traffic Safety Administration (NHTSA) and the Federal Highway Administration (FHA):

• Last year the U.S. traffic fatality rate fell to 1.09 per 100 million vehicle miles traveled – a new low in recorded history.
• It is estimated that in 2010 32,788 people were killed on U.S. roads – the fewest since 1949.
• The number of people killed in large truck crashes dropped 26 percent in 2009. The number of injuries in those accidents also dropped 26 percent.

The Cost of Change

Financially speaking, changes to the HOS rules are likely to result in less productivity for drivers and trucking companies, as well as additional administrative costs. These, of course, will translate into higher consumer costs. Upon assessing pending regulations, the White House said the proposed revisions could cost $1 billion.

Based on our current economic conditions, can we really afford to sustain such an impact?

Then there’s the traffic congestion and the impact on the environment. If daily driving hours are reduced, trucking companies would have to put more trucks and more drivers on the road just to deliver the same amount of freight. And won’t more traffic increase the likelihood of roadway accidents?

What Now?

The Federal Motor Carrier Safety Administration (FMCSA) has been working on rule revisions for the past two years and the late October deadline looms large. The FMCSA hasn’t said that it will reduce the number of hours, but many see this as a real possibility considering the amount of pressure applied by groups like Public Citizen and the Teamsters union. These organizations have taken FMCSA to court time and time again until 2009 when the agency agreed to revisit the HOS rule.

Regardless of whether changes are made or not, the FMSCA is likely to get sued again – either by the ATA or Public Citizen – and it will probably be a while before the HOS debate is settled. Meanwhile, all of this back and forth is costing everyone time and money. In my opinion, it’s like tinkering with the assembly of a perfectly good bicycle. You know what they say: If it ain’t broke. . .

The post Hours of Service: It’s About Time, Again appeared first on Logistics Management Solutions Blog.

Clicking through the interactive maps and reading the dire warnings to East Coast residents makes following Hurricane Irene both fascinating and frightening. Based on the facts, figures and projections, Irene has the potential to be a historical storm that could severely impact the entire East Coast.

Over the last couple of days we’ve received messages from our carrier partners – transportation companies keeping us informed of the storm’s progress. Today, these updates are arriving at a more intense frequency as carriers share details of their contingency plans and news of hub closures. There’s a general message in all of these updates: carriers are doing everything they can to keep freight moving while keeping employee safety a priority.

So what can shippers do?

• Allow as much lead time as possible for all shipments, especially those heading to the East Coast.
• Keep abreast of the storm’s progress and understand how it may affect your freight operations. Work closely with your transportation planners.
• Be flexible. Carriers are prepared to adjust delivery routes, reposition people and equipment, adjust hours of operation and consolidate loads bound for affected areas. As one carrier told us, do not expect “business as usual.”
• If and when a delivery delay is expected, contact your customers and keep them informed of the situation.
• Cooperate as much as possible with carriers. A storm of this magnitude compromises the safety of their staffs and the resilience of their businesses. Your understanding and flexibility will go a long way in regards to your current and long-term relationships with carriers.

Most importantly, stay safe. Remember, business is business but your safety and the safety of others is paramount. If you live in the affected areas, don’t shrug off the warnings; make a plan. Be proactive, be safe.

The post Preparing for Irene appeared first on Logistics Management Solutions Blog.

Estes Express just announced it will raise less-than-truckload (LTL) rates by an average of 6.9 percent. They are the latest in a line of LTL carriers who are trying to keep pace with rising costs by implementing a general rate increase (GRI).

Identical 6.9 percent increases took effect on Monday, August 1, for LTL carriers UPS Freight, YRC Worldwide and Con-Way Freight. ABF Freight System’s 6.9 percent increase took effect a little earlier – July 25. Estes Express’ increase kicks in on August 8.

These GRIs only apply to non-contract freight, which is a small percentage of cargo hauled by carriers. However, the increases come into play during contract talks and ultimately raise pricing for most shippers.

In a letter to customers, Paul J. Dugent, vice president of pricing for Estes Express, echoed the sentiments of his fellow competitors who raised their rates before him.

“Equipment costs have skyrocketed in 2011, spurred by higher prices for raw materials such as metal, lubricants and rubber,” Dugent said.

It reminds me of a quote I read in a recent article in Logistics Management magazine. Lana Batts, a partner at Transport Capital Partners said, “Carriers today are not interested in adding capacity, because rates today are about equal to what they were in 2006. The price of a truck has gone up from $80,000 to $120,000 and fuel is up, too. Everything is more expensive, and the industry is still charging 2006 rates. It is not sustainable. Trucking is not as easy of a business to get into as it was before.”

Industry consultants contend that the increases are a good thing; LTL carriers need to become more profitable. We know what happens when carriers don’t make money – they close their doors. Fewer carriers lead to less capacity and less capacity leads to significant rate increases.

To a shipper’s ears, these GRI announcements are a bit painful. But I believe it’s important to address the issue now rather than down the road when the stakes, and GRIs, could be higher.

The post LTL Price Increases: Less-than-Desirable Yet Necessary appeared first on Logistics Management Solutions Blog.

Why should running a country be any different?

Right now congress is wrangling with the debt ceiling in the shadow of a looming deadline: August 2.  The U.S. has reached its debt ceiling and if it’s not raised, we could find ourselves in a potentially catastrophic economic crisis.  Not raising the ceiling means
our country would default on loans, in other words, not pay our bills.  And what happens when you don’t pay your bills?  Your credit rating suffers and your interest rates rise.

While congress fervently debates over what needs to be done to raise the ceiling, let’s look at the next basic principle of fiscal success: investing.  Obama is hoping for a “grand bargain” that he believes could save up to $4 trillion over the next decade through various tactics like spending cuts, Medicare and Medicaid reform and tax increases for Americans earning more than $250,000 annually.

In a press conference on Monday, Obama said that such a deal could pave the way for investments, including an infrastructure bank to fund transportation projects.  Being in the transportation industry, we understand the importance of such an investment.  And while both parties are looking to make budget cuts, Obama remains firm on his stance to increase funding in this sector.  I applaud this.

Last week House Republicans proposed a six-year, $230 billion highway-funding transportation package, which would cut current funding and is a stark contrast to the $556 billion the White House is looking to slate for highway projects. (See story)  In fact, the American Society of Civil Engineers says over the next decade the U.S. needs to invest $1 trillion beyond current levels just to maintain and repair our existing infrastructure.

But it’s not about maintenance; it’s about growth, which leads us to the third principle.  Investments, such as transportation projects, increase jobs and stimulate the economy.

As Obama recently pointed out, the housing market bust left one million construction workers unemployed and America needs rebuilding.  And without maintaining and
advancing our infrastructure, how can we compete in global economy that is becoming
increasingly competitive?

I realize raising the debt ceiling and managing the national budget are complicated issues that entail too many nuances to address in a single blog.  However, I believe revisiting the
basics can help us as we navigate complex issues.  Pay. Invest. Grow.

What do you think?

The post Debt Ceiling & Transportation Funding: Back to Basics appeared first on Logistics Management Solutions Blog.

But how are you getting to your oasis – are you driving? If you’re hitting the road, you won’t have to take as much cash as you may have expected, but more than you did last year.

On a national average, gas prices fell 11.1 cents to $3.849 this week.  It’s the second straight decline and the lowest level we’ve reached in five weeks.  Last Memorial Day weekend, however, gasoline averaged less than $3 a gallon.

One thing that I appreciate about Memorial Day weekend is that it puts fuel prices in headlines, regardless of whether they are up or down.  Being in the transportation industry, fuel prices are always making headlines.  However, this holiday weekend gives everyone pause and turns our attention to fuel projections for the upcoming summer
months.

So what can we expect?  Last month the U.S. Energy Information Administration (EIA) released the April 2011 Short-Term Energy and Summer Fuels Outlook that includes detailed forecasts for the summer months, which it defines at April through September).

If you want to dig into the details, and you’re a fan of graphs, check the EIA’s presentation.  Otherwise, here’s the CliffNotes version:

Average diesel fuel price projected for Summer 2011 = $4.09 (vs. $2.98 last year)

Average gasoline prices projected for Summer 2011 = $3.86 (vs. $2.76 last year)

Based on consumption, growth, disruption of the Libyan oil supply and overall unrest in the Middle East and North Africa regions, the EIA expects oil prices to average about $110
per barrel compared to last summer’s per barrel cost of $77.

However this Memorial Day weekend, high fuel prices are not keeping Americans tethered to their backyards.  According to AAA, 34.9 million Americans will travel 50 miles or more from home this weekend.  Compared to last year, this represents an increase of .2 percent  – or 100,000 travelers – when compared to the 34.8 million people who traveled during the 2010 Memorial Day weekend.

If you are one of the 34.9 million Americans, I wish you safe travels.  And, if you’re anxious to start your journey, go ahead a leave a little early today.  (I won’t tell).

The post Summer Forecast: Fuel appeared first on Logistics Management Solutions Blog.

Diesel fuel is rising and truck capacity is tightening. We send industry stats and updates to our clients on a regular basis, and I have found that many people are surprised by what’s happening in the marketplace.  And once they’ve grasped the situation, the big question surfaces: What can we do about it?

But first, here’s a quick overview of what is happening in the marketplace: 

Diesel rises

According to the Department of Energy (DOE), diesel is averaging $4.078/gallon nationwide.  This is the first time the national average has reached $4/gallon since 2008 and prices are expected to remain over $4/gallon this summer.  At this point, the DOE estimates diesel to average $3.98/gallon this year, versus the $2.99/gallon average we saw in 2010. 

However, the predicted average increases on a regular basis as oil prices continue to climb.  Between mid-February and April alone, oil has risen from $85 to $112 a barrel.

Capacity closes in

Here’s some good news – the economy seems to be improving as freight volumes are increasing.  However, we are still experiencing reverberations from the recession when many trucking companies went bankrupt or did not invest in additional equipment.  Now, to put it very simply, we have more freight and less trucks.

We are seeing an uptick in all modes, including intermodal, but truckload is the frontrunner.  According to the Longbow Research Truckload Barometer, which measures available freight against available equipment and climbs as capacity contracts, truckload is up 46% year-over-year.  What’s more remarkable is that the barometer has risen 47.4% since January.

Less-than-truckload (LTL) capacity is tightening, too.  Stifel Nicolaus research firm predicts 2-3% growth this year however, this is likely to rise as truckload tightens further and more shippers look to LTL.

Capacity seems to be the tightest in the southeast where resources have become limited.  The produce season is here and many carriers have said they are not getting enough inbound freight to counteract their outbound activity.  According to TransCore data, the southeast has an average of 5.7 or more loads for every available truck. 

And now the big question:

What can shippers do?

Go intermodal

By switching modes (truck to intermodal or truck to railcar), you can mitigate the effects of both rising diesel fuel costs and tightening truck capacity.  Rail is also a less expensive mode of transportation and is more environmentally friendly, too. 

Optimize, optimize, optimize

One of the most popular and basic forms of freight optimization is LTL consolidation – combining LTL freight into less costly TL movements.  However, with TL capacity shrinking, this may not be the best option for you.  Instead, you can create less costly routes by stringing multiple TL moves into continuous routes with multiple stops.  This reduces deadhead charges and, better yet, creates carrier friendly routes.  As capacity tightens carriers can afford to pick and choose business.

Share with others

It’s about sharing resources when resources are limited.  Long before capacity concerns emerged, we launched a cross-shipper collaboration program that proves especially beneficial in times like these.  We leverage our diverse client base of high volume shippers to create optimized ship plans.  For example, we can combine TL shipments – from different clients – into continuous move tours.  If you work with a 3PL that does this, ensure they have the technology to safely match compatible freight and the ability to keep your freight data confidential.

Be carrier friendly

As I mentioned before, carriers can afford to be choosey so aim to have the business they want.  In addition to creating carrier-friendly routes (continuous moves), work with them at the dock level by expand your shipping and receiving hours, loading quickly and dropping trailers when possible.  And don’t forget the financial side – create and adhere to reasonable payment terms for all of your carriers.

Plan ahead

The last piece of advice simple but not always feasible: Book your shipments as early as possible.  Ideally, TL lead times should be 3-5 days (or more) to give you the breathing room you need to ensure coverage.

The post Meeting Capacity, Fuel Challenges appeared first on Logistics Management Solutions Blog.

The logistics industry is no different and this week LMS expanded its options.

On Monday, we acquired McCann’s Piggyback Consolidated, Inc., which is an Intermodal Marketing Company (IMC) based out of Fenton, Mo. By buying this IMC, we now have access to all Class 1 railroads. This gives LMS more opportunities for growth but more importantly, it gives our clients more modal options.

Read the headlines of a few transportation magazines and a few things become clear: diesel fuel costs are on the rise, truck capacity is tightening and shippers are seeking greener solutions. So, shippers need options. Enter intermodal.

Intermodal combines truck and rail transport to reduce costs, reduce greenhouse gas emissions and take freight off the road. In fact, a double-stacked train is equal to 280 trucks. And, rail is three times more fuel efficient than its over-the-road counterpart. The American Association of Railroads estimates that if an additional 10 percent of truck volume were shifted to intermodal, the annual savings would reach one billion gallons of fuel.

Sounds like a good option to me.

To bring the intermodal option into focus, we are combining our freight brokerage operations (Dedicated Services) with the McCann’s acquisition to form a new company, Freight Management Solutions (FMS). Dedicated Services and McCann’s staff members will now operate as the FMS team. These logisticians will work with clients to help them choose the option that is best for their freight needs.

You’ll be hearing more about FMS in the near future. And, I guarantee you’ll be hearing more about intermodal benefits as market conditions change and evolve. Just remember, you’ve got options.

The post Acquiring Options appeared first on Logistics Management Solutions Blog.

Chemicals are part of our everyday lives and every day LMS helps chemical companies move product through the supply chain. As you can imagine, moving this class of freight entails adhering to a litany of government and client regulations and requires specialized training for our transportation planners. As a non-asset-based 3PL, we don’t own trucks or hire truck drivers, but we can make a difference when it comes to helping to ensure the safe transport of chemicals.

I can tell you that LMS is committed to protecting people, property, and the environment and, as guardians of the supply chain, we are committed to monitoring and managing safety and security in all aspects of supply chain operations. But as the adage goes, actions speak louder than words. That’s why in 2005 LMS became a Responsible Care® Partner of the American Chemistry Council (ACC). And, as part of the partnership program, LMS implemented the Responsible Care Management System® and recently received third party certification to the RCMS (see the news release).

What is Responsible Care? Formally speaking, it is a global initiative where chemical companies, and their supply chain partners, share a commitment to advance the safe and secure management of chemical products and processes. Responsible Care is the tool that LMS uses to effectively establish objectives and processes that deliver the results that our clients expect and the public deserves.

So what does this really mean for LMS? As a Responsible Care Partner, we go far beyond what is required of a 3PL that manages chemical transport. We measure and report our Environmental, Health, Safety and Security (EHS&S) performance to the ACC and follow the RCMS, which is a rigorous means of continuously improving our performance in seven areas: community awareness and emergency response; security; distribution; employee health and safety; pollution prevention; process safety and product stewardship.

In addition to human health and the environment, the Responsible Care program addresses the security concerns of a post-9/11 world. In 2001 the ACC adopted the Responsible Care security code that has been recognized by federal and local government agencies and has been used as a model security program for other trade associations. The code helps ensure the protection of people, products and property.

But there’s more. As a by-product of implementing the RCMS program, LMS and its clients benefit from continuously improved operations. The RCMS is based on effective and proven management practices and embraces a plan-do-check-act philosophy. This means we are constantly checking our performance and finding ways to operate as safely and efficiently as possible. And as any business professional knows, efficiency = time and cost savings.

The benefits are immeasurable, which is why we are proud to be a Responsible Care Partner of the ACC. At LMS, we realize we play a vital role in the chemical supply chain. In fact, maybe we should change our slogan: “We do not make the chemicals you transport. We help make the transport of chemicals safer.”

The post The Chemical Supply Chain: Becoming Responsible appeared first on Logistics Management Solutions Blog.

As you know,  CSA 2010 entails the Safety Measurement System (SMS) which will replace SafeStat; CSA 2010 is slated to roll out nationally 12/12/2010.  However, on Tuesday, the National Association of Small Trucking Companies, the National Association of Small Trucking Companies, The Expedite Alliance of North America and the Air & Expedited Motor Carriers Association, asked a federal appeals court to block the implementation of CSA 2010 or, at the very least, to stay the publication of its safety ratings until the FMCSA completes a rulemaking process that complies with the Administrative Procedure Act (APA) (see story).  Unlike the current SafeStat program, the SMS impacts a carrier’s safety rating and assigns safety scores to carriers and drivers.  Moreover, SMS data would become available to the public.

It is difficult to dispute the FMCSA’s bolstered efforts – who doesn’t want safer roadways?  We need to ensure carriers and drivers are capable of safely traversing our highways, suburban streets and side roads.  But the accuracy of the data itself is in dispute.  And some believe that publishing this data will wreak havoc on a struggling industry.

CSA 2010 features a BASIC scoring system (Behavior Analysis Safety Improvement Categories) and uses the following seven categories to calculate safety scores:

- Unsafe Driving (i.e. speeding, improper lane change)
- Fatigued Driving (i.e. Hours-Of-Service violations, crash reports)
- Driver Fitness (i.e. lack of training, medical issues)
- Controlled Substances, Alcohol (i.e. misuse of medication)
- Vehicle Maintenance (i.e. mechanical defects)
- Cargo-Related (i.e. spilled cargo, unsecured loads)
- Crash Indicator (i.e. patterns of crash involvement)

But what are the formulas used to develop these scores?  Perhaps more importantly, is the playing field level?  For example, some states just need “probable cause” to charge a moving violation and carriers that are required to maintain driving logs will be compared with those that are not required to do so.  Most logging violations involve recordkeeping errors, not excess driving time.  Will data be deceiving?  And if data needs to be corrected, can carriers and drivers rely on a fair and satisfactory process?

The filing associations contend that the public release of data will have an anticompetitive effect on the industry.  Additionally, shippers and brokers may be liable for “negligent selection” of a motor freight provider as public data easily becomes evidence in a trial.  CSA 2010 may also result in a driver exodus.  Some predict a 10 percent decrease in truck drivers as CSA 2010 data renders some operators unemployable.  And as we know, less drivers means tighter capacity.

The filed motion states, “While the public undoubtedly has an interest in safe highways, it also has an interest in a competitive motor carrier industry, especially in these economic times.  A program that decreases competition, reduces jobs, and increases transportation costs, is not in the public interest.  Implementation of CSA 2010 in its current form threatens the survival of thousands of carriers, many of which are small companies in rural America.”

The associations say they want the FMSCA to comply with the APA which entails notice-and-comment provisions that would allow interested parties to comment on the proposal before final rule.  The FMSCA did invite comments on its proposal, and made modifications accordingly (see story), but it did not provide full disclosure regarding all aspects of the proposed rule, namely, aspects surrounding the data.

This is a difficult issue to navigate.  As transportation industry professionals, and drivers and passengers, we need to do all we can to ensure safe roads. But how will CSA 2010 affect our industry and our economy?  What are your thoughts?

The post CSA 2010: The Devil is in the Data appeared first on Logistics Management Solutions Blog.

This new acronym stands for driving while distracted (DWD) and it refers to behaviors that can be just as deadly as driving under the influence of alcohol or drugs. For more background, check out my previous blog Driving While Distracted. The reason I am returning to this topic is because this week Ray LaHood, U.S. Transportation Secretary, said that the federal government is looking to ban text messaging and limit the use of mobile devices by drivers hauling hazardous materials. See the full story.

As non-asset-based 3PL, LMS caters to companies that ship hazardous materials; more than half of our business comes from chemical companies. As such, our transportation planners are required to be hazmat trained and certified. We are also a partner of the American Chemistry Council’s Responsible Care program, which entails a comprehensive system for safety and security management. We understand the impact chemicals can have on people and the environment and although we do not haul the materials ourselves, we have a responsibility to help ensure the safe transport of these fragile shipments.

Numerous accidents can be linked to drivers who were distracted by cell phone use. According to the DOT’s distracted driving Web site, using a cell phone while driving, regardless of whether it’s hand-held or hands-free, delays a driver’s reaction as much as having a blood alcohol concentration of .08 percent – the legal limit. Any respectable truck driver would never haul freight while under the influence of drugs or alcohol, yet countless drivers are engaging in equally harmful activities. Imagine a driver hauling chemical shipments while drunk; the potential consequences are unimaginable.

The proposed hazmat regulation supplements a rule the Federal Motor Carrier Safety Administration (FMCSA) published on Tuesday that bans texting by interstate commercial drivers; it takes effect on Oct. 21. But the FMCSA does not have jurisdiction over hazmat drivers – these drivers are under the Pipeline and Hazardous Materials Safety Administration. This new proposal will ensure the no-texting rule applies to hazmat drivers as well.

As a 3PL owner, and a non-commercial driver who appreciates safe roadways, I continue to support the government’s efforts to fight distracted driving. I encourage everyone to add DWD to their transportation vernacular and remember: a DWD can be just as hazardous as a DUI or DWI. Drive safely.

The post Hazardous Texting appeared first on Logistics Management Solutions Blog.

Just this week, Mexico announced its plan to apply import tariffs to even more U.S. products (see full story)  Not so coincidentally, this move comes as President Obama signed a $600 million bill to increase Mexican border security and add customs officers at ports of entry.

This is Mexico’s second round of retaliatory tariffs.  As you may recall, Mexico began applying tariffs last year when the Obama administration and Congress halted a pilot cross-border trucking program that allowed select Mexican carriers to travel beyond the 20-mile border commercial zone.  The tariffs affected a wide-range of U.S. goods and carried a $2.5 billion value. 

The newly revised and expanded list entails 99 U.S. products and affects 43 states, versus the 40 affected in 2009.  However, Mexico says the total export value will be similar to that of last year ($2.5 billion).  Regardless, the message is clear – our southern neighbors are losing patience with us. 

Under the North American Free Trade Agreement (NAFTA), the U.S. was to allow Mexican – and Canadian – trucks full access to U.S. highways by January 2000.  Ten years later, only our northern neighbors have access.  Last March, the U.S. shut down the cross-border pilot program with Mexico while vowing to make a new and improved program a priority.  However, we are still waiting for a program (or even a proposal).

Mexico has set out to fiscally punish us, but they too are suffering.  According to Mexico’s economy minister, Bruno Ferrari, the dispute has caused an 81% decrease in U.S. imports affected by the tariffs (see full story).  Of course we cannot estimate the degree to which the recession impacts financial statistics, but Mexico’s overall imports fell $234.39 billion from 2009 to 2008.

Why are we not allowing Mexican trucks to traverse our highways?  Much of the debate centers on safety.  Many feel Mexican trucks and truck drivers could compromise our roadways.  In my opinion, this is a simple fix.  Should we swap safety for free trade?  Never.  So let’s spell out the requirements for trucks and drivers alike.  If a Mexican – or Canadian – carrier cannot meet our safety requirements, including hours of service (HOS) regulations, they should not have access to our highways.

I realize this situation isn’t as simple as it appears.  However, I also recognize the need for the U.S. to adhere to NAFTA and circumvent unnecessary tariff activity. The road to safe and free trade may be scattered with political potholes and lined with red tape, but I am hopeful that it will lead us to a place where everyone wins.

The post Retaliatory Tariffs: No One Wins appeared first on Logistics Management Solutions Blog.

Enter the SmartWay Transport Partnership. It is the EPA’s collaboration initiative that enables the freight industry and the government to team up and reduce harmful emissions. The best part of this program is that it embraces the many players of the freight sector – truck and rail carriers, shippers, truck stops and yes, non-asset-based logistics companies.

As I mentioned, we don’t own trucks; we hire them. But we can help reduce greenhouse emissions by making smart hiring choices. Enter SmartWay carriers. Truck and rail providers become SmartWay partners when they commit to increasing fuel efficiency and reducing their impact on the environment. But it’s more than just talk. These carriers must set and strive for fuel efficiency goals within a three-year timeframe. Annually, they must complete a Freight Logistics Environmental and Energy Tracking (FLEET) Performance Model, to quantify the environmental performance of their operations. Based on the results, each carrier is assigned a SmartWay score – .75, 1.0 or 1.25.

There a number of different ways carriers can reduce their fuel usage. Most obviously, they can employ hybrid technology; less obviously, they can invest in wide-base tires, use low-viscosity lubricants and simply reduce their speed. In fact, SmartWay offers a number of carrier strategies for greener operations.

Some carriers may be greener than others, but all SmartWay carriers are working to lessen their impact on the environment. (Check out SmartWay Partners and their scores). As far as LMS, we are scored based on our use of SmartWay providers and the miles we spend with them. And, the greener the provider, the better our score.

As part of our partnership agreement, LMS must encourage carriers to join the program and increase our use of SmartWay carriers by at least 10 percent a year. Since joining the initiative in 2008, LMS has more than doubled its use of SmartWay carriers.

If you haven’t already, check out SmartWay. Whether you’re a shipper, a carrier or even a non-asset-based 3PL, you can work with us to reduce harmful emissions. Join today (all the smart companies are doing it).

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