Change has always been constant and sometimes profound. But in the so-called "new normal" environment, the rate of change seems to be accelerating. Much of this can be attributed to the rapid advancement of technological capabilities. In this volatile environment, it can be tempting to focus on short-term trends. But it's important to remember that economies have a cyclical behavior, so it's hard to say for certain whether "the new normal" is indeed something new and unusual, or just another variation of what we've seen in past economic cycles.
Given that uncertainty, if I am the chief executive officer of a Class 1 railroad in North America, how should I envision my company and its ability to compete and win over the next two to three decades, rather than just the next two to three quarters? There will be many opportunities for railroads to grow profitably as the population continues to expand and highway infrastructure becomes progressively more constrained and expensive to build and maintain. The key question will be how to handle that growth.
What may matter most for the long term is transportation capacity—not just the raw capacity to jam lots of stuff into a given space, but also capacity that proffers network fluidity. This depends on having the right equipment available plus any related price and service considerations, along with having the supporting infrastructure to meet the needs of the buyer. Network fluidity gives railroads the ability to serve existing customers and attract new ones to secure long-term growth and prosperity.
Underlying the fundamental requirement of having sufficient salable capacity to serve customers is the need to continuously improve the productivity of assets: human, linear (track, structures, communications, and signals), and rolling (locomotives and cars). A railroad's balance sheet is dominated by linear and rolling assets; similarly, the majority of its operating expense consists of the cost of labor, along with the cost of operating and maintaining the linear and rolling assets.
Railroads historically have done a more-than-superior job of increasing productivity by deploying more efficient crews, higher-horsepower/higher-tech locomotives, and higher-capacity railcars. Their challenge now will be to continue to increase productivity as the marginal gains from these traditional approaches diminish. To make these gains and drive "next generation" performance, railroads will need to build and strategically deploy new and emerging technological capabilities that support their corporate goals for long-term growth.
Technology as a strategic advantage
The trend among the Class 1 railroads of reinvesting in physical infrastructure is encouraging from the standpoint of the ability to move goods. But the carriers seem to have less enthusiasm for investing in "e-infrastructure" (such as a common unwired platform for mobility applications) that can transform their business into one that customers will view as user-friendly.
Some carriers may think that because they are doing well, there's no hurry to make big technological changes. Moreover, because the major shippers have been successfully using rail for a long time, there's no compelling reason to "fix what ain't broke."
But future growth is at stake. To be successful, railroads need to think not just about their usual markets but also about potential new markets (shale oil and ethanol are recent examples) or ones that can be re-tapped. A fair amount of future growth probably will come from the traditional commodities—such as coal, grain, auto, metals, mining, and chemicals industries—as shorter-haul traffic that now moves by truck gradually shifts back to rail. There still are large-scale growth opportunities in intermodal, too. For years, intermodal was the growth engine, largely driven by international trade. The recession dented that growth, but things seem to be back on track, so to speak, for continued expansion. Domestic business, for instance, has come on strong recently, yet intermodal's share of intercity ton-miles is still small compared to what it could be.
If railroads want to capture more of this traffic, then they will have to work harder at being more inventive and user-friendly to get shippers' attention. The problem isn't that most supply chain managers have a negative opinion about rail (although some certainly do). It's that they don't have an opinion at all. In many cases, rail as an alternative to truck never even enters their minds. Earning mindshare is a vital precursor to getting market share. Gaining a foothold in this untapped market will require innovation and change—and that will likely require embracing new and advanced technologies.
Embracing technology is necessary not only for attracting new customers but also for attracting new talent. Look at the recent college graduates who are entering the workforce and will be running things in the next 10 to 15 years. They're cell phone-, iPod-, and iPad-enabled. They are virtuosos at texting, tweeting, and streaming. They are not going to work in an environment where they have to wait five or 10 minutes for an application to download on a 56K line, much less wait for hours or days to get data and reports from some archaic mainframe system whose output is suspect anyway.
Will rising talent want to work on rewriting mainframe applications to move trains, trace cars, and bill customers? Or will they want to go to work for Apple or Google or thousands of other au courant enterprises? Unless railroads update their strategic approach to technology, they will find themselves with a talent gap that will be hard to close.
Here's another reason for railroads to invest in e-infrastructure. These technology-savvy young folks will be the next generation of customers, too. They expect to live a good part of their lives on their personal digital assistants (PDAs) and iPads, and they are not going to stand for slow and outdated systems, interfaces, and customer relationship management systems.
Leave the comfort zone
The railroads have achieved a remarkable renaissance, pulling themselves out of the stagnation of the 1960s and 1970s and transforming themselves into a more efficient, cost-effective mode of transportation. And for the most part, they've done a pretty good job of not falling prey to the "We must be smart, look how well we're doing" attitude that always seems to precede trouble.
But it's time for them to get out of their comfort zone. Railroads have become adept at improving physical infrastructure and operating more efficiently. They are much less comfortable dealing with fast-moving technological change and the opportunities it affords. Historically, railroads have viewed technology as a tactical necessity, not as a strategic advantage. If they want to prosper in the future, that has to change.
The railroads' success will be determined by whether industry leadership can view the future differently and embrace what's coming (as well as what's already here), and then leap into the fray. This will make the rail industry an even more exciting and energizing place to be, both for the young talent coming along and for customers who are seeking new opportunities for moving freight more effectively.
Artificial intelligence (AI) tools can help users build “smart and responsive supply chains” by increasing workforce productivity, expanding visibility, accelerating processes, and prioritizing the next best action to drive results, according to business software vendor Oracle.
To help reach that goal, the Texas company last week released software upgrades including user experience (UX) enhancements to its Oracle Fusion Cloud Supply Chain & Manufacturing (SCM) suite.
“Organizations are under pressure to create efficient and resilient supply chains that can quickly adapt to economic conditions, control costs, and protect margins,” Chris Leone, executive vice president, Applications Development, Oracle, said in a release. “The latest enhancements to Oracle Cloud SCM help customers create a smarter, more responsive supply chain by enabling them to optimize planning and execution and improve the speed and accuracy of processes.”
According to Oracle, specific upgrades feature changes to its:
Production Supervisor Workbench, which helps organizations improve manufacturing performance by providing real-time insight into work orders and generative AI-powered shift reporting.
Maintenance Supervisor Workbench, which helps organizations increase productivity and reduce asset downtime by resolving maintenance issues faster.
Order Management Enhancements, which help organizations increase operational performance by enabling users to quickly create and find orders, take actions, and engage customers.
Product Lifecycle Management (PLM) Enhancements, which help organizations accelerate product development and go-to-market by enabling users to quickly find items and configure critical objects and navigation paths to meet business-critical priorities.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
Businesses were preparing to deal with the effects of the latest major storm of the 2024 hurricane season as Francine barreled toward the Gulf Coast Wednesday.
Louisiana was experiencing heavy rain and wind gusts at midday as the storm moved northeast through the Gulf and was expected to pick up speed. The state will bear the brunt of Francine’s wind, rain, and storm damage, according to forecasters at weather service provider AccuWeather.
“AccuWeather meteorologists are projecting a storm surge of 6-10 feet along much of the Louisiana coast with a pocket of 10-15 feet on some of the inland bays in south-central Louisiana,” the company reported in an afternoon update Wednesday.
Businesses and supply chains were prepping for delays and disruptions from the storm earlier this week. Supply chain mapping and monitoring firm Resilinc said the storm will have a “significant impact” on a wide range of industries along the Gulf Coast, including aerospace, life sciences, manufacturing, oil and gas, and high-tech, among others. In a statement, Resilinc said energy companies had evacuated personnel and suspended operations on oil platforms as of Tuesday. In addition, the firm said its proprietary data showed the storm could affect nearly 11,000 manufacturing, warehousing, distribution, fabrication, and testing sites across the region, putting at risk more than 57,000 parts used in everyday items and the manufacture of more than 4,000 products.
Francine, which was expected to make landfall as a category 2 hurricane, according to AccuWeather, follows the devastating effects of two storms earlier this summer: Hurricane Beryl, which hit the Texas coast in July, and Hurricane Debby, which caused $28 billion in damage and economic loss after hitting the Southeast on August 5.
Economic activity in the logistics industry expanded in August, though growth slowed slightly from July, according to the most recent Logistics Manager’s Index report (LMI), released this week.
The August LMI registered 56.4, down from July’s reading of 56.6 but consistent with readings over the past four months. The August reading represents nine straight months of growth across the logistics industry.
The LMI is a monthly gauge of economic activity across warehousing, transportation, and logistics markets. An LMI above 50 indicates expansion, and a reading below 50 indicates contraction.
Inventory levels saw a marked change in August, increasing more than six points compared to July and breaking a three-month streak of contraction. The LMI researchers said this suggests that after running inventories down, companies are now building them back up in anticipation of fourth-quarter demand. It also represents a return to more typical growth patterns following the accelerated demand for logistics services during the Covid-19 pandemic and the lows of the recent freight recession.
“This suggests a return to traditional patterns of seasonality that we have not seen since pre-COVID,” the researchers wrote in the monthly LMI report, published Tuesday, adding that the buildup is somewhat tempered by increases in warehousing capacity and transportation capacity.
The LMI report is based on a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).