Transportation industry groups say priorities in Biden presidency should be infrastructure, pandemic. | 2020-11-09 | DC Velocity | The Supply Chain Xchange
Transportation industry groups say priorities in Biden presidency should be infrastructure, pandemic.
Incoming administration proposes $1.3 trillion investment over 10 years in the Highway Trust Fund, transportation sector competitive grant programs, U.S. Army Corps of Engineers projects.
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
Transportation industry leaders are pointing to two priorities for their goals in a Biden presidency beginning in 2021, urging the new administration to seek solutions to long-delayed infrastructure improvements and to stopping the deadly coronavirus pandemic.
The groups issued their statements following the news on Saturday that President-elect Joe Biden was projected to have won both the popular vote and the electoral college count, and is scheduled to be inaugurated as president on January 20, slightly more than 10 weeks from now.
“On behalf of the entire industry, congratulations to President-elect Biden on his victory,” Ian Jeffries, president and CEO of the Association of American Railroads, said in an emailed statement. “The President-elect is no stranger to America’s railroads, and the freight rail industry looks forward to working with his new administration to advance our shared goals including getting Americans back to work, strengthening the economy and reducing greenhouse gas emissions. The challenges his new Administration and our nation face are great, but the freight railroads want to be – and must be – part of the solution.”
One of the crucial groups responsible for creating new freight policies at the federal level is the U.S. House of Representative’s Committee on Transportation and Infrastructure. Following the election results, the chairman of that committee will continue to be Rep. Peter DeFazio (D-OR), who on Sunday said the group would renew its focus on Infrastructure Week, the annual collection of legislative initiatives and press events intended to draw attention to the nation’s need for improvements to roads and bridges.
“The President-elect has made it clear he is ready to work with Congress to deliver results for all Americans with bold investments in infrastructure that help everyone, from large metro areas dealing with unreliable transit and soon to be jam-packed highways, to rural communities that suffer from bridges in poor condition and deteriorating roads,” DeFazio said in a statement. “President-elect Biden plans to ‘Build Back Better,’ and that’s exactly what our Nation needs to move our infrastructure into the 21st century while creating millions of family wage jobs, supporting U.S. manufacturing, and harnessing American engineering and ingenuity.”
Details of proposed infrastructure improvements on Biden’s campaign website say that the new administration calls for investing $1.3 trillion over 10 years on projects such as stabilizing the Highway Trust Fund to build roads and bridges, creating electric-vehicle charging networks, a national high-speed rail system, the development of low-carbon aviation and shipping technology, and infrastructure fortifications to withstand the effects of climate change.
More specific to the logistics sector, that plan also seeks to invest in freight infrastructure, including inland waterways, freight corridors, freight rail, transfer facilities, and ports. That focus would also roughly double funding, from $1.8 billion to $3.5 billion a year, for competitive grant programs like the Better Utilizing Investments to Leverage Development (BUILD) Transportation Discretionary Grants program (formerly known as Transportation Investment Generating Economic Recovery, or TIGER) and Infrastructure For Rebuilding America (INFRA).
Additional freight sector improvements would “prioritize investments that will improve supply chains and distribution, reduce shipping costs, and boost U.S. exports,” the Biden website says. That would occur by increasing funding for the U.S. Army Corps of Engineers by $2.5 billion per year, supporting infrastructure projects to keep goods moving quickly through our ports and waterways, as well as providing federal funding for lock modernization projects on inland waterways.
Groups seek plan to control the pandemic
Any plans to focus federal policies and investments on freight transportation in 2021 will also have to include a strategy to support economic activity during a prolonged coronavirus pandemic. Facing that challenge, industry groups also called on Biden today to renew the federal response to fighting Covid-19.
"We applaud Mr. Biden for making Covid-19 management and relief priority number one, and commend his efforts to build a Covid-19 Task Force focused on science, the health and well-being of all Americans, and the strengthening of the U.S. economy. We look forward to working with the Biden administration on these priorities in 2021,” Steve Lamar, the president and CEO of the American Apparel & Footwear Association (AAFA) said in a release. "Until a reliable vaccine is widely available, and the economy can regain the strength necessary to sustain itself, fighting Covid-19 using all our health and economic tools must be our top priority – both for the rest of 2020 and into 2021.”
"The extraordinary events of 2020 and the Covid-19 pandemic have significantly altered life as we know it. SOCMA welcomes the opportunity to highlight the important role specialty chemical manufacturers play in the U.S. recovery with President-elect Biden and other newly elected leaders,” Abril said. “SOCMA members are creating lifesaving vaccines and pharmaceuticals, as well as consumer and industrial products essential in mitigating the impact of the disruption to American lives. To continue our vital role, SOCMA will advocate for business certainty and relief from regulatory burdens that could impede this goal."
Likewise, the Main Street Alliance, a trade group for small businesses, urged a focus on improved pandemic policies. “Small businesses are looking forward to an administration that will create a rational and effective plan to contain the virus and support small businesses through this pandemic and beyond. We are committed to working with the new Congress to ensure much-needed small business support. That includes a robust, comprehensive plan to deal with the ongoing coronavirus pandemic and economic impact,” the group said in a release.
Just 29% of supply chain organizations have the competitive characteristics they’ll need for future readiness, according to a Gartner survey released Tuesday. The survey focused on how organizations are preparing for future challenges and to keep their supply chains competitive.
Gartner surveyed 579 supply chain practitioners to determine the capabilities needed to manage the “future drivers of influence” on supply chains, which include artificial intelligence (AI) achievement and the ability to navigate new trade policies. According to the survey, the five competitive characteristics are: agility, resilience, regionalization, integrated ecosystems, and integrated enterprise strategy.
The survey analysis identified “leaders” among the respondents as supply chain organizations that have already developed at least three of the five competitive characteristics necessary to address the top five drivers of supply chain’s future.
Less than a third have met that threshold.
“Leaders shared a commitment to preparation through long-term, deliberate strategies, while non-leaders were more often focused on short-term priorities,” Pierfrancesco Manenti, vice president analyst in Gartner’s Supply Chain practice, said in a statement announcing the survey results.
“Most leaders have yet to invest in the most advanced technologies (e.g. real-time visibility, digital supply chain twin), but plan to do so in the next three-to-five years,” Manenti also said in the statement. “Leaders see technology as an enabler to their overall business strategies, while non-leaders more often invest in technology first, without having fully established their foundational capabilities.”
As part of the survey, respondents were asked to identify the future drivers of influence on supply chain performance over the next three to five years. The top five drivers are: achievement capability of AI (74%); the amount of new ESG regulations and trade policies being released (67%); geopolitical fight/transition for power (65%); control over data (62%); and talent scarcity (59%).
The analysis also identified four unique profiles of supply chain organizations, based on what their leaders deem as the most crucial capabilities for empowering their organizations over the next three to five years.
First, 54% of retailers are looking for ways to increase their financial recovery from returns. That’s because the cost to return a purchase averages 27% of the purchase price, which erases as much as 50% of the sales margin. But consumers have their own interests in mind: 76% of shoppers admit they’ve embellished or exaggerated the return reason to avoid a fee, a 39% increase from 2023 to 204.
Second, return experiences matter to consumers. A whopping 80% of shoppers stopped shopping at a retailer because of changes to the return policy—a 34% increase YoY.
Third, returns fraud and abuse is top-of-mind-for retailers, with wardrobing rising 38% in 2024. In fact, over two thirds (69%) of shoppers admit to wardrobing, which is the practice of buying an item for a specific reason or event and returning it after use. Shoppers also practice bracketing, or purchasing an item in a variety of colors or sizes and then returning all the unwanted options.
Fourth, returns come with a steep cost in terms of sustainability, with returns amounting to 8.4 billion pounds of landfill waste in 2023 alone.
“As returns have become an integral part of the shopper experience, retailers must balance meeting sky-high expectations with rising costs, environmental impact, and fraudulent behaviors,” Amena Ali, CEO of Optoro, said in the firm’s “2024 Returns Unwrapped” report. “By understanding shoppers’ behaviors and preferences around returns, retailers can create returns experiences that embrace their needs while driving deeper loyalty and protecting their bottom line.”
Facing an evolving supply chain landscape in 2025, companies are being forced to rethink their distribution strategies to cope with challenges like rising cost pressures, persistent labor shortages, and the complexities of managing SKU proliferation.
1. Optimize labor productivity and costs. Forward-thinking businesses are leveraging technology to get more done with fewer resources through approaches like slotting optimization, automation and robotics, and inventory visibility.
2. Maximize capacity with smart solutions. With e-commerce volumes rising, facilities need to handle more SKUs and orders without expanding their physical footprint. That can be achieved through high-density storage and dynamic throughput.
3. Streamline returns management. Returns are a growing challenge, thanks to the continued growth of e-commerce and the consumer practice of bracketing. Businesses can handle that with smarter reverse logistics processes like automated returns processing and reverse logistics visibility.
4. Accelerate order fulfillment with robotics. Robotic solutions are transforming the way orders are fulfilled, helping businesses meet customer expectations faster and more accurately than ever before by using autonomous mobile robots (AMRs and robotic picking.
5. Enhance end-of-line packaging. The final step in the supply chain is often the most visible to customers. So optimizing packaging processes can reduce costs, improve efficiency, and support sustainability goals through automated packaging systems and sustainability initiatives.
That clash has come as retailers have been hustling to adjust to pandemic swings like a renewed focus on e-commerce, then swiftly reimagining store experiences as foot traffic returned. But even as the dust settles from those changes, retailers are now facing renewed questions about how best to define their omnichannel strategy in a world where customers have increasing power and information.
The answer may come from a five-part strategy using integrated components to fortify omnichannel retail, EY said. The approach can unlock value and customer trust through great experiences, but only when implemented cohesively, not individually, EY warns.
The steps include:
1. Functional integration: Is your operating model and data infrastructure siloed between e-commerce and physical stores, or have you developed a cohesive unit centered around delivering seamless customer experience?
2. Customer insights: With consumer centricity at the heart of operations, are you analyzing all touch points to build a holistic view of preferences, behaviors, and buying patterns?
3. Next-generation inventory: Given the right customer insights, how are you utilizing advanced analytics to ensure inventory is optimized to meet demand precisely where and when it’s needed?
4. Distribution partnerships: Having ensured your customers find what they want where they want it, how are your distribution strategies adapting to deliver these choices to them swiftly and efficiently?
5. Real estate strategy: How is your real estate strategy interconnected with insights, inventory and distribution to enhance experience and maximize your footprint?
When approached cohesively, these efforts all build toward one overarching differentiator for retailers: a better customer experience that reaches from brand engagement and order placement through delivery and return, the EY study said. Amid continued volatility and an economy driven by complex customer demands, the retailers best set up to win are those that are striving to gain real-time visibility into stock levels, offer flexible fulfillment options and modernize merchandising through personalized and dynamic customer experiences.
Geopolitical rivalries, alliances, and aspirations are rewiring the global economy—and the imposition of new tariffs on foreign imports by the U.S. will accelerate that process, according to an analysis by Boston Consulting Group (BCG).
Without a broad increase in tariffs, world trade in goods will keep growing at an average of 2.9% annually for the next eight years, the firm forecasts in its report, “Great Powers, Geopolitics, and the Future of Trade.” But the routes goods travel will change markedly as North America reduces its dependence on China and China builds up its links with the Global South, which is cementing its power in the global trade map.
“Global trade is set to top $29 trillion by 2033, but the routes these goods will travel is changing at a remarkable pace,” Aparna Bharadwaj, managing director and partner at BCG, said in a release. “Trade lanes were already shifting from historical patterns and looming US tariffs will accelerate this. Navigating these new dynamics will be critical for any global business.”
To understand those changes, BCG modeled the direct impact of the 60/25/20 scenario (60% tariff on Chinese goods, a 25% on goods from Canada and Mexico, and a 20% on imports from all other countries). The results show that the tariffs would add $640 billion to the cost of importing goods from the top ten U.S. import nations, based on 2023 levels, unless alternative sources or suppliers are found.
In terms of product categories imported by the U.S., the greatest impact would be on imported auto parts and automotive vehicles, which would primarily affect trade with Mexico, the EU, and Japan. Consumer electronics, electrical machinery, and fashion goods would be most affected by higher tariffs on Chinese goods. Specifically, the report forecasts that a 60% tariff rate would add $61 billion to cost of importing consumer electronics products from China into the U.S.