Tag Archive: rail

The Sheer Relevance & Impact of Transportation (A Billion Here, a Billion There)

November 24th, 2018

Recently, I attended Mobility 21, the Southern California transportation coalition, and it reminded me of the sheer relevance of transportation.  No manufacturer can operate without transportation: distributors are out of business without trucks dropping off and picking up, healthcare would stop functioning and our frequent Amazon orders would be a thing of the past.  In essence, everything would come to a grinding halt!     

Certainly, trucks are what we typically think about when it comes to transportation.  They account for $722 billion in freight flows with Canada and Mexico, for example. Whereas rail still accounts for $174 billion (not pocket change).  The ports are our gateway to the rest of the world (and the Los Angeles ports alone bring in 40% of the U.S. volume). Air carries an impressive number of packages especially with the rise of e-commerce. UPS and FedEx are expanding at amazing rates, especially at Ontario airport, the hub of e-commerce activity.  For example, during the 2017 peak season, this region of UPS alone processed 13.1 million packages!

At Mobility 21, there were some interesting statistics throw out:

  • AAA has 60,000 service calls per day
  • Transportation has a $700 billion dollar economic impact on Southern California and accounts for 1/3 of the jobs in Southern CA!  
  • 350 billion miles each year are driven in California
  • The number of trucks is expected to go from 1.8 trillion to 3.9+ trillion by 2045
  • And the list goes on….

What Should We Consider and/or What Impacts Could Arise?
At a minimum, why not take a step back to think about your transportation network?  What does it look like? How do you receive materials and products? Do you use the ports?  Air? Rail? Undoubtedly, you use trucks! How expansive is your network? Are there many players involved?  Since it could cause your operations to cease, it makes sense to find out!

Next, think about what you’d like your transportation network to deliver.  Do your customers expect rapid deliveries and “above and beyond” service? If so, who is your partner in ensuring this occurs?  

Your transportation partners are your last face to your customer. And, in today’s marketplace, there is a significant demand and challenges your transportation partners must navigate.  If you plan to be successful, you must stay on top of your transportation network and partners. Are you attractive to them? Perhaps we better think about that further….



There is More to Chicago than Good Pizza. Logistics Anyone?

July 23rd, 2018

 

My aunt worked at CSX rail outside Chicago for her entire career.  Growing up, it sounded like odd, middle of the night shifts was what rail was all about.  Now, rail – and specifically Chicago – have become strategic. As people moved west in the good old days, Chicago became a rail hub, and it remains so today.  

When having supply chain network strategy discussions with clients, Chicago often arises since it connects rail across the country. Now Chicago has expanded beyond rail to become a high-tech logistics hub.  And with transportation rates tight with no end in sight, we better pay attention to the impacts of Chicago logistics!

Chicago logistics is all about connectivity.  Connecting the east with the west, Chicago is a natural hub.  5 international airports, 7 Class I railroads carrying 50% of the nation’s freight (think of the enormity of that figure!), 3rd largest intermodal port in the world, 3rd largest interstate highway system in America, and more.  Chicago is the leader in transportation assets and connectivity. Have you considered what this means to you?

What Should We Consider and/or What Impacts Could Arise?
Perhaps we shouldn’t be too fast to dismiss Chicago’s relevance (even as tempting as this is when it is in the negative digits in the middle of winter).  Location, location, location. Chicago clearly has the location in the middle of the country which puts it in the top position related to connectivity. Connectivity brings power.

Chicago connects the east with the west, rail with rail, rail with trucks, rail with air, high-tech talent with logistics opportunities, products with consumers (as it is also a significant consumer base) and more.  Being at the center of this activity can have a significant impact. For example, in one client’s supply chain strategy project, we hesitated at expanding the volume through Chicago because it frequently “got stuck” and experienced delays which negatively impacted the customer experience.  

We had to account for this extra lead time (and therefore extra inventory and carrying costs) and find creative offsets to the lead time to support customers.  Whether you go through Chicago or not, do any of your suppliers? How about your suppliers’ suppliers? How about your partners?

We are all impacted. The question is by how much!  Contact us to tell us how it worked out for you.