Logistics trade groups say infrastructure should be top goal for Buttigieg at Department of Transportation | 2020-12-16 | DC Velocity | The Supply Chain Xchange
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.
Logistics industry groups are pointing to infrastructure rebuilding as a top priority for working with the incoming Biden Administration, following news Tuesday that former South Bend, Indiana, mayor Pete Buttigieg had been nominated as Secretary of Transportation.
Drafting plans to renovate decaying roads, rails, and bridges has long been a common goal of diverse transportation interests, but previous attempts to launch broad infrastructure initiatives have floundered on the thorny challenge of funding those expensive projects.
However, trade groups quickly renewed their call for infrastructure repair after Biden won the election in November, backing Biden’s plan to invest $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.
Biden referenced those goals when he named Buttigieg as his choice for Senate confirmation to the job. “I am nominating him for Secretary of Transportation because this position stands at the nexus of so many of the interlocking challenges and opportunities ahead of us,” Biden said in a statement. “Jobs, infrastructure, equity, and climate all come together at the DOT, the site of some of our most ambitious plans to build back better.”
While Buttigieg lacks a background in the transportation sector, a number of trade groups are optimistic that his government and military experience will allow him to chart a path through the administrative minefield that has defeated previous efforts to launch infrastructure renewal efforts.
“Having served as a mayor, Pete Buttigieg has had an up close and personal look at how our infrastructure problems are impacting Americans, and how important it is to solve them, Chris Spear, the president and CEO of American Trucking Associations (ATA), said in a release. “On behalf of the trucking and freight transportation industry, I’d like to congratulate Pete Buttigieg on his nomination to lead the Department of Transportation. We look forward to rolling up our sleeves and working with him to begin the important work of rebuilding our nation’s infrastructure.”
Rail groups also pledged to cooperate on rebuilding plans, according to a statement from Ian Jefferies, president and CEO of the Association of American Railroads (AAR). “Former-Mayor Buttigieg’s forward-looking approach supported by data-driven decision making will serve him well as the next Secretary of Transportation. On behalf of AAR and the nation’s rail industry, we look forward to working with Mr. Buttigieg to modernize the nation’s surface transportation,” Jefferies said.
Likewise, the Consumer Brands Association said Buttigieg would bring a “fresh perspective” to the challenge. “The nation’s reliance on critical supply chains was laid bare during the Covid-19 pandemic, with a huge burden being placed on our transportation networks and the essential workers who help deliver for America,” Geoff Freeman, president and CEO of the Consumer Brands Association, said in a release.
“Reducing congestion, addressing the truck driver shortage, and encouraging innovations like commercial autonomous vehicles to lower carbon emissions are just some of the issues we expect to be on the department’s radar screen. Especially with a new Congress and anticipated infrastructure legislation on deck, not to mention trends like the growth of e-commerce, now is the time to resolve chronic transportation concerns and leverage many of the lessons learned over the past year,” Freeman said.
And while political control of the Senate rests on the result of a pending January run-off election in Georgia, Buttigieg will at least have support for his efforts from the Democratic majority of the House of Representatives. In fact, the pandemic crisis may even provide extra leverage for leaders to make a deal on infrastructure, since the work would not only modernize outdated structures but also generate new economic activity to help the nation pull out of economic recession, according to Peter DeFazio (D-OR), chair of the House Committee on Transportation and Infrastructure.
“As a presidential candidate, Pete’s infrastructure proposal for the country not only focused on fixing our existing roads and bridges, but also investing in the national passenger rail network, boosting public transportation, and investing in rural communities, all while putting an emphasis on 21st century needs such as broadband internet and electric vehicle infrastructure,” DeFazio said in a release. “The bottom line is with a forward-looking leader at DOT, our Nation has an incredible opportunity to create jobs, support U.S. manufacturing, reduce carbon pollution from the transportation sector, and create safer, more efficient infrastructure by investing in transportation.”
If it is realized, that focus on physical infrastructure would mark a departure from the department’s direction during the Trump Administration, when it has been led by Transportation Secretary Elaine Chao. During her tenure, DOT policies have often walked a thin line between opposed interest groups such as industry, labor, and environment. Those sectors have debated the impacts of decisions like the Federal Motor Carrier Safety Administration (FMCSA)’s move to loosen federal restrictions on truck drivers’ hours of service (HoS) caps and the Federal Railroad Administration (FRA)’s call that U.S. railroads will not have to meet minimum requirements for the size of train crew staffs.
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.
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.
That strategy is described by RILA President Brian Dodge in a document titled “2025 Retail Public Policy Agenda,” which begins by describing leading retailers as “dynamic and multifaceted businesses that begin on Main Street and stretch across the world to bring high value and affordable consumer goods to American families.”
RILA says its policy priorities support that membership in four ways:
Investing in people. Retail is for everyone; the place for a first job, 2nd chance, third act, or a side hustle – the retail workforce represents the American workforce.
Ensuring a safe, sustainable future. RILA is working with lawmakers to help shape policies that protect our customers and meet expectations regarding environmental concerns.
Leading in the community. Retail is more than a store; we are an integral part of the fabric of our communities.
“As Congress and the Trump administration move forward to adopt policies that reduce regulatory burdens, create economic growth, and bring value to American families, understanding how such policies will impact retailers and the communities we serve is imperative,” Dodge said. “RILA and its member companies look forward to collaborating with policymakers to provide industry-specific insights and data to help shape any policies under consideration.”