Ports haven’t made any major changes to
their infrastructure since the current slump,
Blasgen says, suggesting that a new round of
delays at marine terminals are likely.
Mitigating factors include the addition of a
third set of locks at the Panama Canal, dou-
bling its capacity when the project concludes
around 2014. That will likely result in a
greater number of containerships from Asia
bypassing the U.S. West Coast in favor of
ports on the Gulf and Atlantic. In addition,
rock-bottom rates could lead to a spate of
bankruptcies tomorrow.
carriers today are spreading their business
around, relying as well on ports in Northern
California and the Pacific Northwest. Finally,
there’s the possibility that manufacturers will
relocate some of their production to Mexico
and Central America, reducing the need for
space on trans-oceanic containerships.
Blasgen cites further uncertainties on the
legislative and regulatory front, including a
possible new tax on banks, a cap-and-trade
regime for reducing carbon emissions and a
comprehensive bill for improving motor-carrier safety. They make it even tougher for
companies to predict the near future with
any degree of accuracy, he says, and are yet
another reason why business is hesitant to
resume hiring.
Preparing for Instability
For Brian Hancock, vice president of supply
chain with Whirlpool, the key lies in prepar-
ing the company “for what I think is going
to be a very unstable transportation and
logistics industry.” Profitability is proving
elusive for carriers of all modes. And today’s
modes on critical lanes, relying on truck,
intermodal and pure rail out of Mexico.
Four years ago, all of the company’s loading
facilities were exclusively served by truck;
now seven are equipped for rail. Hancock
says the new capabilities are essential to
moving a product that is bulky, expensive
and delicate in nature.
business that are essential to maintaining a
good cost structure and flow of product.”
Even in the most cost-conscious of
times, the ultimate customer can’t be
ignored. True Value Co., a cooperative of
nearly 6,000 individually owned hardware
stores, is guided by seven customer-service
satisfaction scores. They cover fill rate, max-
imization of retail margins, the right variety
of products for each geographic area, the
right orders, order lead time, reliable and
on-time delivery, and competitive whole-
sale pricing, according to senior director of
transportation Gary A. Palmer.
The best-laid strategies can be undermined by the need for tactical responses to
problems of the moment. Palmer notes that
some stores are reducing inventories because
of credit issues. True Value’s job at the corporate level is to ensure that store owners aren’t
compromising on selection and producing
unhappy customers. It sends in retail consultants to ensure that the stores are stocking the
right amount of “A” inventory, defined as the
items that people most frequently buy. At the
