Keynotes at the 2012 Council of Supply Chain Management Professionals (CSCMP) Annual Global Conference were not just persuasive and entertaining but also offered real-world ideas for success.
Early morning keynote speeches at industry conferences can sometimes be dull affairs, and attendees often elect to skip them and sleep in. Anyone who did so at the Council of Supply Chain Management Professionals (CSCMP) Annual Global Conference, however, was the poorer for it: The speakers offered both wit and wisdom in presentations that clearly resonated with the audience of logistics and supply chain professionals. The conference was held Sept. 30-Oct. 3 in Atlanta.
On Oct. 1, Ann Drake, the recipient of CSCMP's 2012 Distinguished Service Award, set the bar with an acceptance speech that focused on changes in supply chain management and success factors for the future. Drake, the chairman and CEO of DSC Logistics, said the most important changes she has seen in her long career include the recognition by top executives of the importance of logistics and supply chain management; the increasing participation by women in the profession; the growth in importance of global supply chains; and the shift from day-to-day, transactional relationships to long-term strategic relationships with customers. As for the future, she said, success will come to organizations that emphasize intellectual capital, enthusiastically adopt new technologies, and expand relationships up and down the supply chain. In short, she said, "Think big, think new, and think together."
Two prominent business leaders then took the stage: Arthur Blank, co-founder of The Home Depot and owner of the National Football League's Atlanta Falcons, and Shahid Khan, owner of auto parts maker Flex-N-Gate Corp. and the NFL's Jacksonville Jaguars. Led by moderator Mike Regan, president of Tranzact Technologies, the two recounted their rags-to-riches stories, how they built their companies from the ground up, and their philosophies of business innovation and leadership.
Blank, for example, explained how close observation of customers' behavior informed The Home Depot's supply chain and merchandising decisions. He also revealed some of his own and the company's mistakes, including a failure to consider the impact of differing corporate cultures on the integration of acquired companies. Blank summed up his management philosophy this way: "Hire the best people, give them the resources they need, give them a vision and help them to take the long-term view, imbue them with the company's culture, and give them reason to have pride in the company."
Khan, who rose from immigrant dishwasher to a CEO with his own "fan club" (some of whom sat up front wearing paper versions of his trademark handlebar moustache), largely focused on people management. In times of economic trouble—and the auto industry has seen more than its share, he said—"the key resource we have is intellectual capital." During the recession, he noted, his company consolidated operations and found ways to reduce costs while continuing to promote product and process innovation. As a result, Khan said, Flex-N-Gate achieved record sales over the past few years. He said a company's success depends in large part on the way it treats employees. "They have to get a monetary paycheck and an emotional paycheck," he said. "Otherwise you won't have a strong company or satisfied employees."
On Oct. 2, investor T. Boone Pickens and Andrew Littlefair, president and CEO of Clean Energy Fuels, conducted a wide-ranging discussion on energy, economics, and public policy. Pickens' dry Texas wit and strong opinions were on display as he opined about the presidential candidates' energy policies ("Romney has got the skeleton of a really good energy plan, but it needs more work. Obama has no plan."); the need for energy independence (Ethanol is "stupid, but if I had to choose one, I'd rather use ethanol than OPEC oil."), and alternative fuels for truck fleets ("15.5 million vehicles in the world use natural gas, and only 130,000 of the are in the United States.") Pickens also asserted that the availability of new, more efficient engines and the growing number of natural gas fueling stations, especially along major highways, would help to bring more fleets into the natural gas fold. (For more on Pickens' views on transportation fuel sources, see "A bold vision for energy independence.")
With that money, qualified ports intend to buy over 1,500 units of cargo handling equipment, 1,000 drayage trucks, 10 locomotives, and 20 vessels, as well as shore power systems, battery-electric and hydrogen vehicle charging and fueling infrastructure, and solar power generation.
For example, funds going to the Port of Los Angeles include a $412 million grant to support its goal of achieving 100% zero-emission (ZE) terminal operations by 2030. And following the award, the Port and its private sector partners will match the EPA grant with an additional $236 million, bringing the total new investment in ZE programs at the Port of Los Angeles to $644 million. According to the Port of Los Angeles, the combined new funding will go toward purchasing nearly 425 pieces of battery electric, human-operated ZE cargo-handling equipment, installing 300 new ZE charging ports and other related infrastructure, and deploying 250 ZE drayage trucks. The grant will also provide for $50 million for a community-led ZE grant program, workforce development, and related engagement activities.
And the Port of Oakland received $322 million through the grant, which will generate a total of nearly $500 million when combined with port and local partner contributions. Altogether, that total will be the largest-ever amount of federal funding for a Bay Area program aimed at cutting emissions from seaport cargo operations. The grant will finance 663 pieces of zero-emissions equipment which includes 475 drayage trucks and 188 pieces of cargo handling equipment.
Likewise, the Port of Virginia said its $380 million in new funding will help to reach its goal of eliminating all greenhouse gas emissions by 2040. The grant money will be used to buy and install electric assets and equipment while retiring legacy equipment powered by engines that burn gasoline or diesel fuel.
According to AAPA, those awards will demonstrate to Congress that the Clean Ports Program should become permanent with annual appropriations. Otherwise, they would soon cease to be funded as backing from the Inflation Reduction Act (IRA) comes to a close, AAPA said. “From the earliest stages of legislative development in Congress, America’s ports have been ecstatic about and committed to the vision of implementing a novel grant program for the port industry that will complement and strengthen existing plans to diversify how we power our ports,” Cary Davis, AAPA’s president and CEO, said in a release. “These grant funding awards will usher in a cleaner and more resilient future for our ports and national transportation system. We thank our champions in Congress and the Biden-Harris Administration for committing to us and we look forward to working closely with our Federal Government partners to get these funds quickly deployed and put to work.”
The majority of American consumers (86%) plan to reduce their holiday shopping budgets this year, with nearly half (47%) expecting to cut spending by more than 50% compared to last year, according to consumer research from Relex Solutions.
The forecast runs against some other studies that predict the upcoming holiday shopping season will be stronger than last year, with higher sales and earlier shopping than 2023.
But Finland-based Relex says its conclusion is based on the shorter holiday shopping period of 27 days in 2024 (five days shorter than 2023), combined with economic volatility and supply chain disruptions. The research includes survey responses from 1,000 U.S. consumers in October 2024.
According to Relex, those results reveal a complex landscape where price sensitivity and decreased brand loyalty are reshaping traditional retail dynamics. That means retailers and manufacturers must carefully balance promotional strategies with profitability while maintaining product availability, since consumers are actively seeking better value and may switch between brands more readily.
"Retailers are facing a highly challenging season, with consumers prioritizing value more than ever. To succeed, retailers must not only offer attractive promotions but also ensure those deals don’t erode their margins. At the same time, manufacturers need to optimize their operations and collaborate with retailers to deliver value without sacrificing profitability," Madhav Durbha, Relex’ group vice president of CPG and Manufacturing, said in a release. The company says it provides a supply chain and retail planning platform that optimizes demand, merchandising, supply chain, operations, and production planning.
"This holiday season represents a critical juncture for the retail industry," Durbha added. "With reduced brand loyalty and a shorter shopping window, there’s no room for error. Retailers and manufacturers need to work together closely, leveraging AI-powered tools to anticipate demand, manage inventory, and run effective promotions," Durbha said.
In additional findings, the survey found:
Brand loyalty is eroding: About 45% of consumers say they're less likely to remain loyal to brands without meaningful discounts, while 41% will switch brands if faced with both poor deals and out-of-stock products.
Digital channels dominate deal-seeking behavior: Store and brand apps (60%) and email promotions (60%) are the primary channels for finding deals, while only 32% of consumers primarily search for deals in physical stores.
Supply chain concerns remain significant: Nearly 85% of shoppers express concern about potential disruptions, with electronics (60%) and clothing/accessories (57%) being the categories of highest concern.
Age significantly impacts shopping behavior: Consumers from age 45-60 show the highest economic sensitivity, with 60% cutting budgets by more than 50%, while shoppers aged 18-29 prioritize product availability over price.
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The East and Gulf Coast Port strike as well as an increase in imports from offshore e-commerce retailers helped to boost demand for airfreight in the second half of 2024.
Like much of the transportation industry, the pace of change in the air cargo sector remains uncharacteristically high. Disruptions in other freight markets and emerging business models have added new demand for airfreight. The result for shippers has been more variability in rates, capacity availability, and service offerings than we saw last year.
Airfreight capacity levels have risen to historical highs this year in large part due to a growth in air passenger travel, which has opened up more belly-hold capacity for freight. As Boeing reports in its 2024 Commercial Market Outlook, air passenger demand has recovered from the pandemic and has returned to the long-term growth trend that Boeing had projected 20 years ago in 2004.
While airfreight rates have dropped significantly from a high in 2021, they are still volatile.
Freightos Air Freight Index, https://www.freightos.com/freightos-air-index/
Several trends are impacting the balance of supply and demand. One of the obvious benefits of air cargo service is its speed and reliability relative to ocean service. With the levels of disruption seen in the ocean market—drought, port strikes, and war being only a few—the case for airfreight has been made stronger. As shippers seek predictability for their operations and their customers, the demand for airfreight has risen.
Another large tailwind driving air cargo market is the continued success of offshore e-commerce platforms like Shein and Temu. Their model focuses on fulfilling orders in markets like the United States and Europe directly from East Asia, negating the need for holding inventory in destination countries. This model has large cost and cash benefits but depends on faster delivery of consumers’ orders than ocean shipping can provide, leaving air service as the only realistic option.
The subsequent growth in demand on lanes from China to the United States has resulted in higher rates and tighter capacity availability. Shippers have also reported difficulties in securing capacity on niche lanes because carriers have been pulling capacity from these lanes and using it to serve more lucrative opportunities on e-commerce lanes.
While disruptions in other modes and new sources of demand have served as tailwinds for the airfreight market, there are other factors that are working to dampen demand. One of the major headwinds for the air industry is a renewed focus on cost containment on the part of shippers. When demand for goods spiked during the pandemic, many shippers turned to airfreight to fulfill orders and keep products stocked. Four years later, many shippers still have more reliance on air services than they would prefer. As a result, they are looking to rebalance or reoptimize their air and ocean allocations, pushing service-sensitive cargo to air while moving less sensitive cargo back to ocean.
Given these countervailing trends in the market, it’s not surprising that rates are volatile. The Freightos Air Index (see chart above) shows a significant decline in rates from a high of $5.16 in 2021. Since mid-2023, rates have ranged between $2.20/kg to $2.80/kg. While shippers are happy to be well below pandemic rates, 30% month-to-month variations make financial projections difficult.
Stability on the horizon?
With major shifts underway in routes, demand, capacity, and rates, there’s never a dull moment for users of air services. Looking ahead, however, one can begin to see a more stable future.
Systemic capacity growth driven by passenger volumes can be expected to continue. On certain lanes, like Asia to the United States, growth in e-commerce volume will continue to drive capacity challenges and higher rates—at least as long as existing laws allow offshore platforms to enjoy tax and duty benefits that subsidize their business model. For the rest of the world, however, we can expect to see capacity growth outpace demand growth and a continued reduction in rates.
Route churn can be expected to continue as air carriers respond more quickly to passenger and cargo demand shifts. We expect to see carriers’ analytics capabilities continue to improve, and yield and margin gains to follow.
Additionally, we expect that carriers and freight forwarders will invest in technology tools that can enhance collaboration and improve efficiencies. These efforts will give them a stronger position to handle inevitable future disruptions.
On the shipper side, we expect to see more companies lock in longer contracts as a way to mitigate the effects of rate volatility. This shift is already beginning to occur. In the fourth quarter of 2023, 45% of new contracts were for longer than six months, up from 27% in 2022. Additionally, shippers should look to technologies such as market monitoring and digital compliance tools to help them can keep on top of market trends and opportunities. These steps can help companies navigate and thrive in the highly dynamic airfreight marketplace.
Buoyed by a return to consistent decreases in fuel prices, business conditions in the trucking sector improved slightly in August but remain negative overall, according to a measure from transportation analysis group FTR.
FTR’s Trucking Conditions Index improved in August to -1.39 from the reading of -5.59 in July. The Bloomington, Indiana-based firm forecasts that its TCI readings will remain mostly negative-to-neutral through the beginning of 2025.
“Trucking is en route to more favorable conditions next year, but the road remains bumpy as both freight volume and capacity utilization are still soft, keeping rates weak. Our forecasts continue to show the truck freight market starting to favor carriers modestly before the second quarter of next year,” Avery Vise, FTR’s vice president of trucking, said in a release.
The TCI tracks the changes representing five major conditions in the U.S. truck market: freight volumes, freight rates, fleet capacity, fuel prices, and financing costs. Combined into a single index, a positive score represents good, optimistic conditions, and a negative score shows the opposite.
“ExxonMobil is uniquely placed to understand the biggest opportunities in improving energy supply chains, from more accurate sales and operations planning, increased agility in field operations, effective management of enormous transportation networks and adapting quickly to complex regulatory environments,” John Sicard, Kinaxis CEO, said in a release.
Specifically, Kinaxis and ExxonMobil said they will focus on a supply and demand planning solution for the complicated fuel commodities market which has no industry-wide standard and which relies heavily on spreadsheets and other manual methods. The solution will enable integrated refinery-to-customer planning with timely data for the most accurate supply/demand planning, balancing and signaling.
The benefits of that approach could include automated data visibility, improved inventory management and terminal replenishment, and enhanced supply scenario planning that are expected to enable arbitrage opportunities and decrease supply costs.
And in the chemicals and lubricants space, the companies are developing an advanced planning solution that provides manufacturing and logistics constraints management coupled with scenario modeling and evaluation.
“Last year, we brought together all ExxonMobil supply chain activities and expertise into one centralized organization, creating one of the largest supply chain operations in the world, and through this identified critical solution gaps to enable our businesses to capture additional value,” said Staale Gjervik, supply chain president, ExxonMobil Global Services Company. “Collaborating with Kinaxis, a leading supply chain technology provider, is instrumental in providing solutions for a large and complex business like ours.”