Conference Review
Industry Leaders, Economic Experts Express Cautious Optimism at SMC³ Winter Conference
Attendees get a no-holds-barred look at the issues facing transportation and supply chainRepresentatives from shipping companies, freight carriers, logistics service providers and business consulting firms gathered in Atlanta this week to increase their industry knowledge and network with their peers at the SMC³ 2010 Winter Conference, Jump Start: Supply Chain’s Look Ahead.
The two-day event, which also featured pre-conference bonus sessions, focused on economic and legislative business impacts as well as best practices for today’s supply chain professional. SMC³ assembled an array of industry leaders and subject matter experts to give attendees information that is highly insightful and actionable.
Did you attend the conference but need a “refresher” on a speaker’s points? Or did you miss the conference and want to see a little of what you’ve missed? Read on for snippets from the individual speakers’ sessions. Also, many of the speakers’ PowerPoint presentations are now available.
Pre-Conference Bonus Sessions
On January 18 SMC³ presented two special, pre-conference bonus sessions as an added value of attending the 2010 Winter Conference. These concurrent sessions were held at no additional charge to registered conference attendees.
The Dimensional Technology and Pricing session provided supply chain participants with an improved understanding of how shipment density and distance work together to impact carrier handling costs and how supply chain professionals can contribute to improving transportation productivity and carriers’ asset usage. Several experts on the topics of LTL transportation costing and how a shipment’s density and cubic footprint impact cost were on hand to discuss the subject. Ken Manning, founder of Transportation Costing Group, provided a foundation for the seminar by discussing the fundamentals of measuring density and trailer capacity, as well as the impact of these measurements through various operations, such as shipment handling at the pick-up, peddle run, line-haul and local delivery steps.
Rick Keeler, SVP of strategic development and yield management with Old Dominion Freight Line (ODFL), then presented a case study on how his company is using next-generation weighing and dimensioning technology to improve the accuracy of shipment data, which leads to improvements in many operational areas, including dock operations, equipment utilization and shipment costing and pricing. Jerry Stoll, marketing manager for Mettler-Toledo’s Transportation and Logistics division, and Ray Penn, a supply chain technology consultant at ORTEC, discussed the science of dimensional technologies and how these technologies perform to improve material handling, increase capacity utilization, support costing and pricing accuracy, and create positive gains in green initiatives.
After a Q&A session with all panel members the seminar attendees participated in an exclusive tour of the Conley, Ga. ODFL terminal facility to see Mettler-Toledo’s dimensional scanning equipment running in a large-scale LTL terminal operation. The tour gave real-world insight on how this technology can be implemented into a carrier’s workflow and shipment handling and administrative processes.
CFOs, COOs, CMOs and others involved in forecasting and budgeting brought their laptops to the Indices as a Forecasting Tool session to get hands-on training in integrating the most recognized industry indices into their company’s business planning and measurement processes. Bernard Baumohl, chief global economist at The Economic Outlook Group LLC, showed attendees how to locate a bevy of free online economic reports which are regularly published by the U.S. government and other entities. He also detailed the worth of each index and how to locate key indicators within the data groupings.
Baumohl stressed that to really know what is happening with the economy one must go beyond “just reading the paper” and take a look at the source data for themselves. He noted that economic reporters most often skim the surface when it comes to economic data and that the real “golden nuggets” are deeper within the reports. Additionally, he said it is important to avoid looking to one index or report for all the answers; one must view a variety of data and then look for consistencies and patterns.
Greening Your Enterprise and the Effects of Environmental Legislation
Complex, business-affecting environmental legislation is imminent in the United States, and in this educational session—moderated by Alan Gray, Accenture’s U.S. director of office sustainability and facilities and services corporate citizenship lead—panelists discussed environmental legislation and practical, “green” approaches for positive, sustainable business results.
The first speaker, Patrick J. Larkin, environmental lawyer, noted that companies with international operations may have valuable offset assets, and significant federal dollars will be available to subsidize energy efficiency and greenhouse gas (GHG) capture research. He touched on cap and trade’s potential affect on the United States’ international competitiveness; the growth of regional programs (20 states have or are developing cap and trade programs); and noted reluctance to pass contentious federal environmental legislation may prove an obstacle as elections draw closer.
John Felmy, chief economist, American Petroleum Institute, discussed production (the “fundamental factor affecting fuel costs”); the future of U.S. energy demand and consumption; U.S. crude oil and natural gas resources; and the myth of “Big Oil” as a percentage of proven reserves. He cited the politicization of cap and trade legislation and advocated for a rational, non-tax-punitive energy policy that helps to avoid unintended consequences and enables the United States to participate actively in global energy markets.
Kevin F. Smith, president and CEO, Sustainable Supply Chain Consulting, advised attendees to take a strategic sustainability approach. His fiscally sound steps for greening the enterprise included recycling, waste reduction, and reusable media, and he noted the importance of making stewardship “part of your culture.” He advised looking inside the company first for best practices and lower costs; formalizing data collection and reporting process and responsibilities; completing validation of carbon footprint data and processes; sharing information; and turning to programs like the Carbon Disclosure Project, EPA SmartWay, Energy Star, and Climate Leaders for useful information.
For his presentation, Dave Miller, senior vice president of global policy and economic sustainability at Con-way, Inc., noted that green initiatives— “part of the company DNA”—are directed by a cross-enterprise committee, so all functions and business units have a stake and all decisions are founded, measured and graded on their financial impact. Areas of focus include reducing fuel consumption; conserving energy/reducing usage; recycling, reuse; and curtailing the waste stream, to reduce disposal costs.
Featured Supply Chain Speaker: G. Tommy Hodges
Featured supply chain speaker G. Tommy Hodges, Chairman of the American Trucking Associations (ATA), presented SMC³ Winter Conference attendees with a candid look at the state of the industry as well as his “Washington viewpoint.” Calling the country’s economic downturn the “great recession,” Hodges noted that in the 7 quarters from 1st quarter 2008 through 3rd quarter 2009, 160,000 trucks exited the marketplace. “We’ve hit the bottom,” he said.
Expressing his concern over trucking companies pricing themselves at unsustainable rates, Hodges added that in terms of tonnage, trucking will always be the leading mode of freight transportation. He also expressed strong misgivings over the current cap and trade legislation. According to Hodges, the bill will cause a 77-cent-per-gallon increase in gasoline, an 88-cent-per-gallon increase in diesel fuel and as much as a 35 percent increase in electric rates. He also called the allocation of credits a “political football.”
Other legislative issues Hodges warned would have “unintended consequences” include legislation on EOBRs, CSA 2010, the Highway Reauthorization bill and “card check” legislation. Acting as trucking’s primary advocate, the ATA is holding steadfast positions on these issues and more.
“Associating” the Associations: Executive Panel
In a one-of-a-kind panel presentation, SMC³ brought together the leaders of the transportation and supply chain industry’s top associations to debate and discuss their viewpoints on the state of the industry and their organizational position. Moderated by Rick Blasgen, chairman and CEO of the Council of Supply Chain Management Professionals (CSCMP), the group was ready to share insights and field questions.
In a brief presentation, Blasgen detailed key factors surrounding the business of supply chain management. According to Blasgen, supply chain management is directly tied to “strategic profit impact.” He cited a Georgia Tech study that found a company’s stock price drops an average of 8 percent when the company experiences a glitch in its supply chain. Conversely, a study by Miami University of Ohio showed that when a company adopts a new supply chain innovation the company’s stock price increases. Blasgen also touched on the need for the United States to adopt a national transportation policy.
First to join the panel were Bruce Carlton, president and CEO of the National Industrial Transportation League (NITL); Jean C. Godwin, executive vice president and general counsel of the American Association of Port Authorities (AAPA); and Bob Voltmann, president and CEO of the Transportation Intermediaries Association (TIA). Blasgen set a discussion-style tone for the group, asking them first to debrief the audience on their individual roles and concerns, and then delving into various topics of interest, including CSA2010, Highway Reauthorization and short sea shipping. When asked to provide a statement of optimism, Voltmann replied that he is optimistic that the leaders in Washington will find common ground, bringing back common sense and shared values.
Continuing the panel setting, David Bradley, CEO of the Canadian Trucking Alliance (CTA) and president of the Ontario Trucking Association (OTA), and Kevin Burch, chairman of the Truckload Carriers Association (TCA), took the stage with Rick Blasgen to continue the dialogue from the Canadian and truckload carriers’ perspectives. Discussion topics included the devaluation of the U.S. dollar, which caused our country’s exports to Canada to drop significantly, as well as SAFESTAT and cap and trade. Also asked to provide a statement of optimism, Bradley commented, “Nothing will come along to replace trucking; I’ve never seen a more resilient group of people.”
Geopolitical Update Panel
Wednesday morning, Paul Page, editorial director for Journal of Commerce (JOC), moderated a lively panel of experts who spoke on the economy and political climate.
Panelist Jon Langenfeld, associate director of research at Robert W. Baird & Co., began by recounting his predictions from the SMC³ 2009 Winter Conference that projected the start of the industry’s recovery in mid-2010, which he says is still “on target.” Langenfeld believes the truckload market will be the first to see improvement and admittedly differs from some of his peers in his expectation of a possible truckload capacity shortage in the near future. This of course is contingent on “demand coming through,” in his projected 6 percent growth in domestic industrial production for 2010. Truckload pricing bottomed in mid-2009 and he believes the LTL market has now hit its bottom. According to Langenfeld, the capacity shortages in the LTL market will continue and LTL carriers will have to rationalize pricing, strategize capacity and continue to increase operational efficiency to stay afloat as the recovery unfolds.
Coming off the heels of Langenfeld’s remarks was the always-energetic, Don Ratajczak, Ph.D., an internationally recognized economic forecaster. He echoed Langenfeld’s positive outlook, but adjusted predictions for industrial production from Langenfeld’s 6 percent to “more like 3 to 4 percent.” Ratajczak stated early in his remarks that “the recovery has begun – but how strong?” His perspective: “The patient is still in intensive care and what’s going to happen when the Feds pull the life support? The majority of unemployment benefits have been exhausted, lending is tightening and the stimulus of 2009 was “the weakest $787 billion ever spent by government.” So where will we see the growth? Ratajczak contends that purchasing power will tell the story; we must first see an increase in private-sector wages. 2009 Christmas sales were “better than expected,” air freight volume picked up to meet demand and excess inventories are finally depleting. These factors, among others, will have one million more Americans working by June, putting more purchasing power in the economy. On the international scene, Asia is already coming back fairly strong as it did not feel the financial crisis the way that Europe, the United States and the rest of the world did. The U.S. dollar should not see any significant decline because China, the fastest growing country in the world, is using it as its export currency. And some good news for all – we should see a decline in oil prices at least through the spring because OPEC inventories are at record highs and projected-demand alone cannot support current prices.
Political analyst, Larry Sabato, Ph.D. , professor at the University of Virginia, joined the group on the heels of a late-night political rally following the surprise election of Republican Scott Brown to a ‘blue’ Massachusetts Senate seat. Sabato began by saying that the Kennedy seat election to a Republican candidate resonated not just nationally, but internationally and “it will change politics.” A month prior, no one (including Brown’s campaign manager) thought he would win that seat and the ripple effect will be felt through November’s mid-term elections at the very least. It was, as Sabato stated with a tone of sarcasm, “quite an anniversary gift for President Obama.” He said that independent voters have turned against Obama because of four primary factors – too much spending; too many taxes; too much new debt and the healthcare reform has been a political disaster. Sabato believes that the ‘agreed principles’ of healthcare reform could have been passed last spring, but overconfidence and envelope-pushing on certain healthcare issues has led to a political mess for the Democratic party. He went on to say the Republicans will pick up 3-5 seats in 2010 and identified the most vulnerable Democratic states as Arkansas, Nevada, Colorado and Illinois. According to Sabato, “Democrats only have the power to stop things from happening; not make things happen.” At the time of his SMC³ presentation, Sabato noted that he was in the process of updating his projections for the 2010 seat elections based on the changing tide of the Brown election. He believes that the 2011 Senate will maintain Democratic majority, but will be much more balanced between Republicans and Democrats.
Legislative and Regulatory Update
The final session of the conference was presented by transportation attorney John R. Bagileo, who highlighted the most relevant cases in both the federal and state courts as well as regulatory legislation currently in front of congress. He focused on SAFETEA-LU, the current highway reauthorization legislation, which has been granted two short-term extensions while the 775-page “working draft” of the bill seeks support. The bill would take $450-500 billion to finance. In between his self-deprecating lawyer jokes that kept the audience engaged with the legalese, Bagileo covered various state legislations that are under consideration to generate additional revenue including taxation and increasing vehicle registration fees. He then moved on to discuss the latest on hours-of-service (HOS) regulation, proficiency exams for motor carrier entrants, the Roadability Program and other federal-level regulatory matters. In one of his final remarks, he made mention of the FMCSA’s pursuit of regulation that would ban texting while operating a commercial motor vehicle.
Want More?
Plan now to attend the SMC³ 2010 Summer Conference, which is scheduled to take place June 23-25 in Palm Beach, Florida. Pre-event registration is now open—watch your inbox for more information coming soon.