Victoria Kickham, an editor at large for Supply Chain Quarterly, started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for Supply Chain Quarterly's sister publication, DC Velocity.
As much of America has settled into a social distancing routine by staying home and making the occasional trip to the grocery store or pharmacy, warehousing and logistics professionals are watching it play out in real time, all day long. Distribution center employees, truck drivers, delivery personnel, and essential retail workers are among those most affected by social distancing and safety protocols aimed at containing the spread of the novel coronavirus that has gripped the country since mid-March. In this new environment, logistics workers have seen their workplaces re-tooled, processes redesigned, and interactions with supply chain partners upended as companies seek to create a delicate balancing act between keeping people safe and keeping on with business.
"We have customers that rely on us, even more now, to move their goods around," explains Maryclaire Hammond, senior vice president of human resources for transportation and logistics provider XPO Logistics, emphasizing the importance of maintaining a productive supply chain workforce amid shutdowns and quarantines. "We are spending 16 hours a day working on this and doing everything we can to keep our employees safe. We have to focus on safety, business continuity, and also keeping our business solvent for the future ... We've got to keep the world moving."
That means creating workplace guidelines for social distancing and deep cleaning as well as enhancing sick leave policies and other benefits. The changes affect everyone across the organization and are vital to keeping the business open as demand from particular segments of XPO's customer base grows, Hammond explains. Food and beverage customers are among those seeing the greatest need; one of XPO's large wholesale grocery customers has predicted it will need 50% more capacity over the next few months, for instance, and has turned to XPO to fill that transportation void, according to the company. XPO says it is also handling 40% more shipments from its facilities to the hospital community right now.
As a result, Hammond says the company is on a communications campaign to educate employees about the steps they need to take to stay safe while reminding them of the vital service they are performing during the pandemic.
"We have to communicate, communicate, communicate—we can never communicate enough. Especially at times like this," Hammond says. "Our drivers, our warehouse people, fork truck operators, customer service [personnel]—they are all on the front lines and we are reminding them of all the good they are doing."
New safety precautions
Like other essential workplaces, XPO has taken steps to enforce social distancing in its facilities, including marking floors to indicate six-foot distances in work areas and at building entrances, creating barriers where necessary to keep people apart, staggering break times, and removing chairs from break rooms to keep gatherings to recommended minimums. Early on, XPO removed all biometric login devices from its facilities and implemented extra cleanings at the beginning and end of each shift, Hammond says. In addition, every shift starts with a meeting reminding employees of the government-recommended safety measures and other precautions the company has put in place. Employees are asked to take their temperature before reporting to work each day and stay home if they are sick; they must also confirm that they have not tested positive for Covid-19, are not experiencing any symptoms, and have not been exposed to anyone who has tested positive for the virus.
Employee reaction has been reassuring, Hammond says.
"People are, overall, reacting very, very well and we need to keep repeating, repeating, repeating," these messages, Hammond adds. "But people are scared. So we have to keep reminding them why we are considered essential; we have to keep reminding them what we do here [every day]."
Material handling systems integrator Vargo Solutions is fielding requests from customers about how to implement similar social distancing protocols, according to Art Eldred, the company's client executive for system sales. He says Vargo's customers, which include firms that operate warehouses and distribution centers in a range of industries, are figuring out how to retool their layouts to add space between workstations while also accommodating the need for more frequent equipment cleaning. He says the biggest challenge for some is making employees feel comfortable enough to come to work.
"[With the] Covid crisis, right now [some] people aren't showing up to work," he says, adding that companies are responding with incentives such as hourly bonuses and paid time off. "Everyone is getting creative to get people to come into work."
XPO has added pandemic paid sick leave to its U.S. and Canadian benefits packages, giving affected full-time employees up to 80 hours of additional sick leave on top of standard annual paid time off, Hammond says. The company is also giving up to three days of 100% pay continuation if a facility is closed temporarily for deep cleaning or sanitation, and is offering free counseling sessions for all U.S. employees and their dependents via its Employee Assistance Program.
E-commerce backlogs, rising delivery demands
As more people stay home, online ordering and demand for home delivery are increasing, creating order backlogs and putting pressure on delivery methods—in many cases among companies that were just beginning to get a handle on their e-commerce and omnichannel business strategies over the last couple of years. Eldred says many e-commerce customers are experiencing order backlogs, some significantly. That lines up with recent reports of delays at large online retailers such as Amazon.com and delivery services such as Peapod.
As a result, businesses are scrambling to accommodate an increased need for last-mile delivery—especially small businesses, according to George Schegolev, vice president of operations for Route4Me, a New Jersey-based route optimization software provider. Schegolev says the company has seen increased interest in its product—which helps firms plan last-mile delivery routes—from small, independent grocery stores, bakeries, and restaurants who want to stay up and running and keep people employed during the pandemic. Schegolev adds that the global pandemic is creating behavior changes that will only accelerate demand for last-mile delivery, and notes that Route4Me is offering tutorials via video conferencing service Zoom to help get companies up to speed.
"Businesses need to adapt to more deliveries because behaviors are changing," Schegolev says. "And many are saying they don't know how to do it. Our tool is just one small piece of the puzzle ... it's a complicated journey and we just want to support communities and people throughout these difficult times."
The extra tutorials are a cost for Route4Me, but Schegolev says it's a way for the firm to help address a need during the pandemic. Route4Me has also made its service available at no cost to federal, state, and local government agencies as well as food banks.
Help wanted
Despite the difficulties, the logistics sector remains one of the healthier segments of the economy. Business activity increased in March as demand for warehousing and transportation surged, according to the most recent Logistics Manger's Index report, released April 3. And businesses are hiring. U.S. drugstore chain Rite Aid said this week it will hire 5,000 full- and part-time employees nationwide for both store and distribution center positions to meet coronavirus pandemic demand. In March, Amazon said it would hire 100,000 warehouse and delivery workers to accommodate a surge in online orders. And the National Retail Federation (NRF) reports that although many retailers have had to make cuts to their workforce, others are hiring thousands of workers during the current conditions. The association is listing more than 900,000 job opportunities for workers displaced by the Covid-19 pandemic via a dedicated page on its website.
XPO's Hammond underscores the growing need for supply chain workers by pointing to a new motto the transportation and logistics provider is using throughout the organization: "Together we can."
"From the bottom of my heart, I cannot thank [these workers] enough. In XPO we're calling them our everyday heroes," she said, adding that XPO's sentiments apply across the board, no matter your industry or your location. "We are all in this together, and together we can. We will get through it."
Ron Marotta of Yusen Logistics listens to Rick DiMaio of Ace Hardware talk about the steps Ace is taking to keep its store stocked after Hurricane Helene and during the East and Gulf Coast Port Strike.
The East and Gulf Coast port strike was the top discussion point during a panel discussion of shippers and logistics providers at the Council of Supply Chain Management Professionals (CSCMP) annual EDGE Conference this morning. The session, which was supposed to be focused on providing an update to CSCMP’s “2024 State of Logistics Report,” quickly shifted to addressing the effect that the strike by nearly 50,000 dockworker at 36 ports in the Eastern half of the U.S. could have on supply chains.
“The seriousness of this action cannot to be taken lightly,” said Ron Marotta, vice president of the freight forwarder and supply chain service provider Yusen Logistics (America). “It has not happened since 1977. Our lives depend on sustaining a smooth global supply chain.”
Marotta warned that for every day that the ports were not open, it would take four to five days to recover from the impact. One added concern is how the port closures would affect recovery efforts for Hurricane Helene. “There’s a huge amount of item that would normally be replenished by importers and retailers,” Marotta said.
Rick DiMaio, executive vice president and chief supply chain officer, for Ace Hardware Corp., commented that the hardware retail cooperative was doing okay for now keeping stores in stock, although he did expect the company would be “chasing generators for awhile.” “But in this recovery phase [from the hurricane], we certainly don’t need a strike right now,” he said.
The port closure will also have a knock-on effect on other transportation modes. For example, Andy Moses, senior vice president of sales and solutions for logistics services provider Penske Logistics, expects to see some companies turn to air freight as a result of the strike. This will, in turn, cause air freight capacity to tighten up and rates to rise. Furthermore, the longer the ports are closed, the more likely inflation is to rise again, according to Moses.
Nor will the effects of the strike stop at the U.S. border, according to Marotta. Many Caribbean Island nations depend on food import from the U.S. that move through East Coast ports. Additionally, some medical supplies typically are exported through the ports to Europe.
On a positive note, however, many companies took actions earlier in the year to prepare themselves for a potential strike. Ammie McAsey, senior vice president of customer distribution experience for the pharmaceutical distributor McKesson, said the pharmaceutical industry has brought in enough extra inventory that there will not be a short-term impact on the U.S. health care system due to the strike.
Government intervention?
Marotta hopes that the U.S. government takes the step of invoking the Taft-Hartley Act to stop the strike and send the International Longshoremen’s Association (ILA) and the port management group, United States Maritime Alliance (USMX) back to the negotiation table. In 2002, for example, President George W. Bush used the Taft-Hartley Act to end an 11-day lockout of union workers at West Coast ports. President Joe Biden, however, told reporters on Sunday that he would not do this.
“I hope that cooler heads prevail and that the executive branch realizes that it’s not just a labor issue, it’s also a humanitarian issue,” Marotta said.
Confronted with the closed ports, most companies can either route their imports to standard East Coast destinations and wait for the strike to clear, or else re-route those containers to West Coast sites, incurring a three week delay for extra sailing time plus another week required to truck those goods back east, Ron said in an interview at the Council of Supply Chain Management Professionals (CSCMP)’s EDGE Conference in Nashville.
However, Uber Freight says its latest platform updates offer a series of mitigation options, including alternative routings, pre-booked allocation and volume during peak season, and providing daily visibility reports on shipments impacted by routings via U.S. east and gulf coast ports. And Ron said the company can also leverage its pool of some 2.3 million truck drivers who have downloaded its smartphone app, targeting them with freight hauling opportunities in the affected regions by pricing those loads “appropriately” through its surge-pricing model.
“If this [strike] continues a month, we will see severe disruptions,” Ron said. “So we can offer them alternatives. We say, if one door is closed, we can open another door? But even with that, there are no magic solutions.”
Turning around a failing warehouse operation demands a similar methodology to how emergency room doctors triage troubled patients at the hospital, a speaker said today in a session at the Council of Supply Chain Management Professionals (CSCMP)’s EDGE Conference in Nashville.
There are many reasons that a warehouse might start to miss its targets, such as a sudden volume increase or a new IT system implementation gone wrong, said Adri McCaskill, general manager for iPlan’s Warehouse Management business unit. But whatever the cause, the basic rescue strategy is the same: “Just like medicine, you do triage,” she said. “The most life-threatening problem we try to solve first. And only then, once we’ve stopped the bleeding, we can move on.”
In McCaskill’s comparison, just as a doctor might have to break some ribs through energetic CPR to get a patient’s heart beating again, a failing warehouse might need to recover by “breaking some ribs” in a business sense, such as making management changes or stock write-downs.
Once the business has made some stopgap solutions to “stop the bleeding,” it can proceed to a disciplined recovery, she said. And to reach their final goal, managers can use the classic tools of people, process, and technology to improve what she called the three most important key performance indicators (KPIs): on time in full (OTIF), inventory accuracy, and staff turnover.
CSCMP EDGE attendees gathered Tuesday afternoon for an update and outlook on the truckload (TL) market, which is on the upswing following the longest down cycle in recorded history. Kevin Adamik of RXO (formerly Coyote Logistics), offered an overview of truckload market cycles, highlighting major trends from the recent freight recession and providing an update on where the TL cycle is now.
EDGE 2024, sponsored by the Council of Supply Chain Management Professionals (CSCMP), is taking place this week in Nashville.
Citing data from the Coyote Curve index (which measures year-over-year changes in spot market rates) and other sources, Adamik outlined the dynamics of the TL market. He explained that the last cycle—which lasted from about 2019 to 2024—was longer than the typical three to four-year market cycle, marked by volatile conditions spurred by the Covid-19 pandemic. That cycle is behind us now, he said, adding that the market has reached equilibrium and is headed toward an inflationary environment.
Adamik also told attendees that he expects the new TL cycle to be marked by far less volatility, with a return to more typical conditions. And he offered a slate of supply and demand trends to note as the industry moves into the new cycle.
Supply trends include:
Carrier operating authorities are declining;
Employment in the trucking industry is declining;
Private fleets have expanded, but the expansion has stopped;
Truckload orders are falling.
Demand trends include:
Consumer spending is stable, but is still more service-centric and less goods-intensive;
After a steep decline, imports are on the rise;
Freight volumes have been sluggish but are showing signs of life.
CSCMP EDGE runs through Wednesday, October 2, at Nashville’s Gaylord Opryland Hotel & Resort.
The relationship between shippers and third-party logistics services providers (3PLs) is at the core of successful supply chain management—so getting that relationship right is vital. A panel of industry experts from both sides of the aisle weighed in on what it takes to create strong 3PL/shipper partnerships on day two of the CSCMP EDGE conference, being held this week in Nashville.
Trust, empathy, and transparency ranked high on the list of key elements required for success in all aspects of the partnership, but there are some specifics for each step of the journey. The panel recommended a handful of actions that should take place early on, including:
Establish relationships.
For 3PLs, understand and get to the heart of the shipper’s data.
Also for 3PLs: Understand the shipper’s reason for outsourcing to a 3PL, along with the shipper’s ultimate goals.
Understand company cultures and be sure they align.
Nurture long-term relationships with good communication.
For shippers, be transparent so that the 3PL fully understands your business.
And there are also some “non-negotiables” when it comes to managing the relationship:
3PLs must demonstrate their commitment to engaging with the shipper’s personnel.
3PLs must also demonstrate their commitment to process discipline, continuous improvement, and innovation.
Shippers should ensure that they understand the 3PL’s demonstrated implementation capabilities—ask to visit established clients.
Trust—which takes longer to establish than both sides may expect.
EDGE 2024 is sponsored by the Council of Supply Chain Management Professionals (CSCMP) and runs through Wednesday, October 2, at the Gaylord Opryland Resort & Convention Center in Nashville.