logisticsmgmt.

com Stormy seas ahead for ocean

carriers 24
Simplify complexity with GTM 30
Musco’s well-oiled supply chain 34
February 2023 ®

Global supply chains

UNDER PRESSURE
®

Page 18

SPECIAL REPORTS:
7 supply chain software trends 54
ProMat Show Planner 58
GAIN
X-RAY
VISION
GAIN
GROUND
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management
UPDATE A N E X E C U T I V E S U M M A RY O F I N D U S T RY N E W S

u McGuigan to step down as Uber Freight u Descartes announces acquisition of Supply

president and COO. San Francisco-based Uber Freight, Vision. Waterloo, Ontario-based Descartes, a provider
a subsidiary of the ubiquitous ride-sharing service Uber, of on-demand, software-as-a-service offerings, recently
whose proprietary app matches trucking companies announced that it acquired Phoenix-based Supply Vision,
with loads to haul, said that Frank McGuigan will be a provider of shipment management solutions for North
stepping down from his current role as Uber Freight American-based logistics services providers (LSP). The
president and COO, effective January 31. McGuigan purchase price was $12 million, according to Descartes.
was formerly CEO of Dallas-based Transplace, a non- Supply Vision provides LSPs with modular applications
asset-based third-party logistics services provider, which focused on helping LSPs to coordinate shipments on
Uber Freight acquired last November for roughly $2.25 various fronts, ranging from quoting and booking through
billion. McGuigan was named CEO of Transplace in final delivery, said Descartes. And the company added that
2018, replacing former CEO Tom Sanderson, who sub- Supply Vision’s platform integrates with real-time visibility
sequently became executive chairman of Transplace and offerings, such as Descartes MacroPoint, which runs a
also served on its board of directors. McGuigan joined connected network of more than 2 million trucking assets
Transplace following its acquisition of SCO Logistics in and drivers, and gives LSPs and their shipper customers
April 2011 where he was CEO as well as the company’s enhanced information about shipment status and location.
president and chief operating officer, running all of sales
and operations in North America. u FedEx Freight Direct heralds new options for
returns. FedEx Freight, the less-than-truckload (LTL) sub-
u Forward Air brings Land Air Express into the sidiary of global freight transportation and logistics services
fold. Greenville, Tenn.-based asset-light freight and provider FedEx, said that it has expanded its FedEx Freight
logistics services provider Forward Air recently entered Direct e-commerce offering for big and bulky items. FedEx
into an agreement to acquire the assets of Bowling Freight describes Freight Direct Returns as an e-com-
Green, Ky.-based Land Air Express, a privately-held merce service that handles the delivery of bulky items
expedited less-than-truckload (LTL) services provider. like furniture, televisions, and exercise equipment, among
Forward Air said that the purchase price is $56.5 mil- other items, from—or through—the door of residences or
lion. Established in 1983, Land Air’s service offerings businesses. The company said that Freight Direct Returns
include: guaranteed standard; exclusive; same day; hot provides customers with simplified new pricing and three
shot; and pickup and delivery. The company has around return service levels, including: Basic Pickup; Basic
270 employees and more than 200 drivers—including Pickup by Appointment; Standard Pickup; and customer
company and leased capacity providers, with operations drop off at a FedEx service center. What’s more, the
in more than 25 U.S.-based terminals. “Our core LTL company said that FedEx Freight Direct Returns covers
business is the key growth area for Forward, and the almost 100% of the U.S. population for Basic Pickup
purchase of Land Air Express is an important addition and Basic by Appointment Pickup, as well as 90% of
to our LTL growth opportunities,” said Tom Schmitt, the contiguous U.S. population for Standard Pickup.
chairman, president and CEO of Forward, in a state-
ment. “This acquisition will accelerate the expansion of u Flexport announces significant staffing reduction.
our national terminal footprint, particularly in the middle San Francisco-based freight forwarding and customs
part of the United States, and we believe it will strate- brokerage services provider Flexport recently said
gically position us to better meet the current and future that it’s laying off 20% of its workforce, or a minimum
needs of customers.” of 600 employees. “Lower volumes, combined with

LOGISTICSMGMT.COM FEBRUARY 2023 | L O G I S T I C S M A N A G E M E N T 1

Get your daily fix of industry news on logisticsmgmt.com

management
UPDATE A N E X E C U T I V E S U M M A RY O F I N D U S T RY N E W S

improved efficiencies as a result of new organizational for all U.S. domestic, U.S. import, and U.S. export
and operational structures, means we are overstaffed shipments. UPS said that the demand surcharges
in a variety of roles across the company,” Flexport listed above will apply on a weekly basis to each
said in a message to employees that was noted in a package over 105% of the baseline weekly average
Reuters report. Flexport is not alone in terms of com- volume for each service level during the Specified
panies laying off staff. In late 2022, C.H. Robinson Demand Period. And it added that the “highest sur-
and FedEx Freight each also took similar measures. charge amount applicable to the volume in excess of
In February 2022, Flexport announced a $935 million the baseline average in a given week will apply to all
Series E investment round, with this round bringing its packages over 105% of the baseline weekly average
post-money valuation to more than $8 billion. volume in that week within each service level.”

u Estes announces a change at the top. Keep- u Armstrong report assesses last-mile logistics
ing it in the family, Richmond, Va.-based full-service growth in the U.S. A recently-released report by Mil-
freight transportation services provider Estes Express waukee-based supply chain consultancy Armstrong
announced that Webb Estes has been promoted from & Associates drove home the growth of the last-mile
his role as president of process improvement to pres- delivery sector in the U.S. and examines the segment
ident and COO. Webb Estes is the fourth generation from several angles. The report titled “Making it Count:
of the Estes family to lead the company, going back Big and Bulky Last-Mile Delivery in the United States” is
to its inception in 1931. Rob Estes, former president the result of a partnership between Armstrong and the
and CEO, will continue his duties as chairman of the National Home Delivery Association (NHDA) and focuses
board and chief executive officer, and vice president on various trends and themes, including: the usage of
and COO Billy Hupp moved over to vice president independent contractors compared to employee drivers;
of the board and corporate executive vice president. customer and revenue trends by vertical industry; and
“Leading a dynamic company with such a rich history the growing use of freight brokerage to source last-
of excellence is no small feat, and I’m both humbled mile carrier capacity. One of the report’s key findings
and grateful for this opportunity—and for the support observed that, for the 3PL’s analyzed, revenues ranged
of our teammates across America,” said Webb Estes. from $7 million to $1 billion, while accounting for around
“For nearly a century, Estes has helped shape and 40% of the estimated $9.3 billion 3PL big and bulky last-
lead the logistics industry, and I’m thrilled to carry on mile delivery market. Perhaps even more impressive is
our tradition of customer-focused vision, innovation the segment’s compound annual growth rate (CAGR),
and success.” which came in at 18.2% from 2017 through 2021, with
an expected CAGR from 2022-2025 of 11.8%, making it
u UPS makes changes to demand surcharges. In one of the fastest growing 3PL segments over the next
a recent customer notice, global freight transporta- three years, according to Armstrong.
tion and logistics services provider UPS stated that it
will be extending its demand-based surcharges past u Get your logistics podcast fix. LM has rolled out
peak season. UPS said that the demand surcharge a new podcast series. Group News Editor Jeff Berman
will extend to packages that require Additional Han- is interviewing industry analysts, academics, consul-
dling and Large Packages for all U.S. domestic, U.S. tants, lobbyists, and executives about all things logis-
import, and U.S. export shipments for qualifying cus- tics and supply chain on a weekly basis. Subscribe
tomers. And it added that a demand surcharge will to Supply Chain 24/7 or go to logisticsmgmt.com to
apply to all packages that are Over Maximum Limits start listening. •

2 L O G I S T I C S M A N A G E M E N T | FEBRUARY 2023 LOGISTICSMGMT.COM

Lynden: A Tradition of Quality

Thank you customers!

Lynden is proud to have earned a top score in the 2022 Quest for
Quality awards. We’ve now received 26 awards in the Western
Regional LTL category, a reflection of the continuous, dedicated
focus we place on meeting and exceeding customer expectations.
Call us today for a solution to your transportation challenges!

1-888-596-3361 | www.lynden.com
 February 2023 logisticsmgmt.com

CONTENTS
VOL. 62, NO. 2
Logistics Management
logisticsmgmt.com Stormy seas ahead for ocean
carriers 24
Simplify complexity with GTM 30

LM EXCLUSIVE February 2023 ®

Musco’s well-oiled supply chain 34

Global Logistics 2023: UNDER PRESSURE

Global supply chains
®

Under pressure
Page 18

18 Supply chains worldwide will continue to be caught

between politics, economics and ecology in the future.
Whether there will be more regionalization or nearshoring
remains to be seen. The question will linger: Who will win and SPECIAL REPORTS:
7 supply chain software trends 54
ProMat Show Planner 58

who will lose in this increasingly tense competition?

GLOBAL LOGISTICS

34 Musco: A well-oiled
supply chain
With the help of its 3PL partner,
Musco Family Olive Co. converted
its manual processes to an automated transportation management
TRANSPORTATION system, allowing the shipper to lower its total spending by more
BEST PRACTICES/TRENDS than 10% in the first year. Here’s how this shipper implemented
24 Ocean Cargo: Stormy new solutions for age-old problems.
seas ahead for carriers
After posting another record year WAREHOUSE/DC MANAGEMENT
of profits, worldwide recessionary
40 Medline builds on success
and inflationary pressures are
now chipping away at ocean
with mobile robots
carrier fortunes. As far as rates are A leading manufacturer and distributor of
concerned, our analysts suggest critical medical and surgical supplies incor-
that shippers and freight forwarders porated nearly nine years of experience with
will be able to do a little window goods-to-person robots in the design of a new
shopping this year. flagship facility.

SUPPLY CHAIN & LOGISTICS

TECHNOLOGY
TRANSPORTATION BEST
30 GTM Update: PRACTICES/TRENDS
Simplifying complexity 50 Putting the retail
As international trade volumes supply chain in reverse
continue to hit records every year,
Retailers that don’t consider
shippers of all sizes are turning
product returns their biggest
to applications to gain visibility
source of supply may want to
and control of their global trade
rethink their reverse logistics
processes—and GTM vendors are
approaches for 2023.
there to answer the call.

Logistics Management ® (ISSN 1540-3890) is published monthly by Peerless Media, 50 Speen St, Suite 302, Framingham, MA 01701. Annual subscription
rates for non-qualified subscribers: USA $180, Canada $240, Other International $300. Single copies are available for $20. Send all subscription inquiries to Logistics Management,
PO Box 677, Northbrook, IL 60065-0677. Periodicals postage paid at Framingham, MA and additional mailing offices. POSTMASTER: Send address changes to: Logistics
Management, PO Box 677, Northbrook, IL 60065-0677. Reproduction of this magazine in whole or part without written permission of the publisher is prohibited. All rights reserved. ©2023 Peerless Media, LLC.

4 L O G I S T I C S M A N A G E M E N T | FEBRUARY 2023 LOGISTICSMGMT.COM

 CONTENTS
EDITORIAL STAFF
SPECIAL REPORT
Michael A. Levans Group Editorial Director
Francis J. Quinn Editorial Advisor 54 Supply chain
Sarah Petrie Executive Managing Editor software trends to
Jeff Berman Group News Editor watch in 2023
John Kerr Contributing Editor, As the glue that holds supply
Global Logistics
chains together, software con-
Bridget McCrea Contributing Editor, tinues to play a vital role in the
Technology
smooth running of these critical
Roberto Michel Contributing Editor, global networks.
Warehousing & DC

John D. Schulz Contributing Editor,

Transportation SPECIAL REPORT

58 ProMat 2023 primed

Wendy DelCampo Senior Art Director for return to Chicago
Polly Chevalier Art Director
ProMat 2023 is back in person with
Kelly Jones Production Director
35% more floor space, more than
COLUMNISTS 1,000 solution provider exhibits as
Derik Andreoli Oil + Fuel
well as educational sessions and
Elizabeth Baatz Price Trends
keynote presentations.
Peter Moore Pricing

PEERLESS MEDIA, LLC

Brian Ceraolo President and CEO
DEPARTMENTS

EDITORIAL OFFICE 1 Management update

50 Speen Street, Suite 302 • McGuigan to step down as Uber Freight president and COO.
Framingham, MA 01701
Phone: 508-663-1590 • Forward Air brings Land Air Express into the fold.
• Descartes announces acquisition of Supply Vision.
MAGAZINE SUBSCRIPTIONS
Start, renew or update your magazine 7 Viewpoint
subscription
WEB: logisticsmgmt.com/subscribe 8 Price trends
E-MAIL: logisticsmgmt@omeda.com
PHONE: 847-559-7581 10 News & analysis
MAIL: Logistics Management
P.O. Box 677 • LM reader survey points to a post-pandemic supply
Northbrook, IL 60065-0677 chain and logistics reset
ENEWSLETTER SUBSCRIPTIONS • C.H. Robinson announces executive leadership change,
Sign up or manage your FREE Biesterfeld stepping down
eNewsletter subscriptions at
logisticsmgmt.com/enewsletters
• FedEx preps to further reduce Sunday delivery services News, page 10
• Worker shortage impedes progress in supply chains,
LICENSING AND REUSE OF CONTENT:
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Wright’s Media, about available usages, license
fees, and award seal artwork at peerless@ 16 Newsroom notes
wrightsmedia.com. Please note that Wright’s
Media is the only authorized company that can
provide Peerless Media brand materials.

LOGISTICSMGMT.COM
ONLINE
• U.S. National Blueprint for Transportation Decarbonization issued by four key
government agencies

• Cowen/AFS Freight Index lays out Q1 expectations for TL, LTL, and parcel

• U.S.-bound imports are heading back to pre-pandemic numbers, reports Port Tracker

CMYK GRAYSCALE B/W WHITE

LOGISTICSMGMT.COM FEBRUARY 2023 | L O G I S T I C S M A N A G E ME NT 5
 VIEWPOINT

Global Logistics: Vexing issues linger

Even before the pandemic, the idea of managing a streamlined global
freight transportation network was considered by many as the single
biggest challenge facing U.S. companies looking to build a universal
brand—no matter the industry.

This month we planned out an issue of LM designed and the further development of alternative fuels on the
to help readers better manage through this vortex that way to climate-neutral shipping.”
has pulled so much productivity out of our operations Ocean carriers are certainly looking to take the lead
over the past three years. The goal is to better understand in the implementation of alternative fuels, as shipping
where we are in terms of global services and technology on the high seas accounts for around 3% of global CO2
and help shippers control what they can while moving emissions, according to the International Council on
freight during this period where so many of the vexing Clean Transportation. In fact, many are using recent
issues ushered in by the pandemic continue to linger. record profits to put more modern ships with improved
Starting on page 18, our contributing European editor environmental standards into service.
Dagmar Trepins files her annual report from her location in Starting on page 24, contributing editor Karen Thuermer
Denmark to bring U.S. shippers up to speed on the latest begins her 30,000-foot view of how these global work-
from the EU. She says that increasing energy costs, wild horses are getting along—and it’s a mixed bag.
fluctuations in capacity supply and demand, continued “The numbers are impressive for 2022,” says Thuermer.
port delays, inland bottlenecks, and a threat of double-digit “By all counts, the biggest container lines are on course
inflation across many EU countries are themes facing every to post profits that will top 2021’s record by 73%—stag-
manager moving freight through Europe in early 2023. gering numbers brought on by tight capacity and excep-
“It’s clear that companies in every industry are ana- tionally high container rates. However, as they steam into
lyzing their supply chains and searching for optimization 2023, worldwide recessionary and inflationary pressures
tactics and alternatives,” says Trepins, who adds that are now chipping away at these fortunes.”
many shippers she’s spoken with are planning to build up As Thuermer reports, the reduction in consumer
more inventory with the goal of greater stability in supply. demand, the number of new ships adding capacity, as
“Still, the economy has no short-term alternative to inter- well as sourcing origin shifts—many are near-shoring or
national production and trade, and whether there will be re-shoring due to issues of the past few years—are the
more regionalization or nearshoring remains to be seen.” key trends leading to drastically lower ocean rates at
Trepins reports that while it’s clear that global supply the beginning of the year. “As far as rates go, it looks
chain operations will need to research and implement like shippers and their freight forwarder partners will be
improved risk management best practices to manage able to do a little window shopping this year,” she says.
through the complexity, it’s clear that the next big chal-
lenge for all will revolve around ecological matters.
“Improved climate friendliness is now top of mind,”
adds Trepins. “And it’s clear that the trend is to take every
Michael A. Levans, Group Editorial Director
bit of CO2 reduction into account and leverage climate
Comments? E-mail me at
potential step by step wherever sensible and effective. mlevans@peerlessmedia.com
So, we’ll be watching for shifts to low-emission modes Follow me on Twitter: @MikeLeva

LOGISTICSMGMT.COM FEBRUARY 2023 | L O G I S T I C S M A N A G E M E N T 7

priceTRENDS
Pricing across the transportation modes

28 220 TRUCKING
21 205 The trucking industry today is displaying the clearest cyclical
14 190 price trend of all modes. By calculating the change in prices over a
-7
0
7
14
21
28

7 175
rolling three-month-moving-average basis, we see that trucking’s
inflation rate hit bottom at negative 3% in June 2020 before revers-
0 160
Forecast ing to a peak 25.6% in May 2022. By December, the inflation rate
-7 145
2020 2021 2022 2023 2024 slowed again to 11.3%. Local trucking, long-distance truckload and
% change (left scale) Index 2001=100 (right scale) LTL all have strikingly similar cyclical price curves. In the last quar-
ter of 2022, their inflation rates slid to between 10.3% and 10.7%.
% CHANGE VS.: 1 month ago 6 mos. ago 1 yr. ago The specialized trucking category, however, stands out because
General freight - local -9.0 -7.5 3.5 although its inflation rate is slowing, inflation here still ended 2022
TL 0.5 -5.5 3.1 running at a 17% pace.
LTL -3.2 -9.3 7.6
Tanker & other specialized freight -1.1 -0.9 15.3

18 180
AIR
Forecast Moving-average price trend graphs overall do reveal some sem-
12 175
6 170
blance of a predictable cycle in airline industry inflation. However,
-7
0
7
14
21
28

price data for airfreight service on scheduled fights looks more

0 165
unpredictable than ever as the latest numbers flew off the historical
-6 160
trend lines. Between December 2021 and December 2022, trans-
-12 155
2020 2021 2022 2023 2024 action prices plunged 13.6%. This happened in two short deflation
% change (left scale) Index 2001=100 (right scale) bursts. First, in a three-month period at the start 2022, prices fell
5.5%. Then, in the last three months of the year, prices plummeted
% CHANGE VS.: 1 month ago 6 mos. ago 1 yr. ago
another 9.2%. With airlines upended due to COVID and an uncertain
Air freight on scheduled flights -0.1 -10.0 -13.6
recession outlook, it may take some time before airfreight inflation
Air freight on chartered flights 0.0 -5.3 10.6
(and our ability to understand it) sorts itself out.
Domestic air courier -3.2 -4.5 13.1
International air courier -3.2 -4.5 9.2

44 275
WATER
33 255 In December, the waterborne transportation industry reported
22 235
a painful 28.6% year-ago price hike. But there’s good news for ship-
-7
0
7
14
21
28

Forecast pers as we’re catching the whiff of a turnaround in this high inflation
11 215
trend. Looking at transaction prices on a rolling three-month-mov-
0 195
ing-average basis, the industry-wide inflation rate slowed from
-11 175
2020 2021 2022 2023 2024 30.2% in the third quarter of 2022 to 27.4% in the fourth. Over the
% change (left scale) Index 2001=100 (right scale) same period, deep-sea inflation slowed from 34.2% to 31.4% while
inland waterways shifted from 19.8% to 17.2%. Most dramatically,
% CHANGE VS.: 1 month ago 6 mos. ago 1 yr. ago coastal and intercoastal inflation rates downshifted from 39% to
Deep sea freight 0.6 10.6 30.0 32%. Maybe “what goes up must come down” is finally coming true
Coastal & intercoastal freight 0.4 5.5 33.5 for inflation in this marketplace.
Great Lakes - St. Lawrence Seaway -0.2 0.4 16.0
Inland water freight 0.1 0.8 16.0

12 235 RAIL
9 225 Cycles in the rail industry’s price trends are becoming more
6 215 apparent now too. Led by intermodal rail trends, a clear turnaround
-7
0
7
14
21
28

3 205 from high inflation rates to more manageable prices is happening

0 195
now. On a rolling three-month-moving average basis, intermodal
Forecast rail inflation swung from a 7% price decline in July 2020 to a peak
-3 185
2020 2021 2022 2023 2024 23.6% price increase two years later. But just five months after that,
% change (left scale) Index 2001=100 (right scale) by December 2022, the inflation rate slowed to 14.5%. The price
swing in carload has not been as noticeable, possibly because
% CHANGE VS.: 1 month ago 6 mos. ago 1 yr. ago
demand for hauling grain increased. Nonetheless, carload price
Rail freight -0.1 0.9 8.2
Intermodal -2.4 -1.7 12.9
hikes also slowed slightly from 8.7% in the third quarter of 2022 to
Carload 0.6 1.8 7.2 7.2% in the fourth quarter.

8 L O G I S T I C S M A N A G E M E N T | FEBRUARY 2023 LOGISTICSMGMT.COM

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NEWS analysis
Also:
• C.H. Robinson announces executive leadership change, Biesterfeld stepping down, Page 11
• FedEx preps to further reduce Sunday delivery services, Page 12
• Worker shortage impedes progress in supply chains, U.S. Chamber says, Page 13

LM survey points to a post-

pandemic supply chain reset
Changing sourcing strategies and a focus on resilience are viewed as key drivers.

BY JEFF BERMAN, GROUP NEWS EDITOR

WITH THE ONSET OF THE COVID-19 the survey was that 94% of its respon- observations included: personnel short-
pandemic approaching the three-year dents indicated that their supply chain age; a raw material shortage; transpor-
mark next month, it’s fair to say that and logistics operations were affected by tation limitations, due to carrier shut-
how freight transportation, logistics and the pandemic. downs; longer lead times for components
supply chain practitioners approach their Reasons provided by the survey’s and ingredients, as well as extended pro-
operational processes has seen some respondents varied, but some notable duction lead times due to lack of staff;
changes over that time.
That shift was to be expected, given the
economy’s sudden shutdown, which was
subsequently followed by a massive uptick
in demand. That swing led to an upended
supply chain, with fewer people working,
higher demand levels, and elevated freight
rates over an 18- to 24-month period,
beginning in March 2020. It was also a
driver for high congestion levels at key
U.S. ports as well as tight over-the-road
and intermodal capacity.
These factors have helped to influ-
ence industry stakeholders to take a
whole host of steps to essentially reset
their supply chain and logistics opera-
tions and processes in order to be better 78%
prepared for the unexpected—whether focused
that were to come in the form of another on a reset
pandemic-type event, a natural disaster, As for steps stakeholders
or war or terrorism.
22%
are taking to reset logistics not focused
That was evident in a recent Logis- and supply chain operations, on a reset
tics Management reader survey of 100 the survey found…
freight transportation, logistics, and Source: Peerless Research Group
supply chain stakeholders.
One of the key findings highlighted in

10 L O G I S T I C S M A N A G E M E N T | FEBRUARY 2023 LOGISTICSMGMT.COM

and an inability to move product in a ly begins to take off and the cost of that purposes, multiple sourcing has to be
timely fashion due to unavailable freight, automation comes down. the way going forward, in terms of a true
transportation, or labor. “Labor is still in short supply, and supply chain reset.
“We had to change our approach to when you have manufacturing taking “Sourcing from multiple suppliers in
delivery for final-mile to our custom- place in an automated fashion in the multiple countries will help to provide
ers,” said a respondent. “Many were shut U.S., you not only have to move all the that flexibility,” said Rogers. “Nearshor-
down, so we needed to be creative. We finished goods, but also the raw materi- ing or re-shoring on its own is not the
also had raw material suppliers who had als, components, and sub-assemblies,” answer. A company can move its manu-
their operations disrupted. This required said Larkin. “That really increases the facturing operations to the U.S. in Texas
us to boost our safety stock to ensure amount of transportation required, or California, which could get hit by an
uninterrupted supply.” which is very encouraging for the long- unforeseen storm. That’s not the answer,
With these many challenges came term, especially as we get through this and it helps to make the case for multiple
some eventual logistics lessons learned, period of a [supply chain] reset. I'm very sourcing. That brings it to the central
including moving more freight to asset- bullish on the long-term and think that conflict, which is the need for supply
based carriers; stockpiling certain raw the supply chain is going to be much chain resilience. But that requires buy-
materials; using multiple suppliers; more North American-oriented.” in from company stakeholders, in the
increasing focus on domestic sourcing; Independent supply chain analyst sense that they may need to swap less
shifting from a just-in-time inventory Chris Rogers observed that, for practical efficiency for better resilience.” •
management approach to just-in-case;
and the understanding of the impor-
3PL
tance of having your entire supply chain
mapped out and understood from a risk
mitigation perspective. C.H. Robinson announces executive leadership
As for steps stakeholders are taking to
reset logistics and supply chain operations,
change, Biesterfeld stepping down
the survey found that 78% are focused on MINNEAPOLIS, MINN.-based global period, which included COVID-19 and
a reset, with 22% saying they were not. logistics services provider and freight dealing with supply chain disruptions.
One respondent said her company is forwarder C.H. Robinson (CHR) Now is the right time for C.H. Robinson
pushing its business continuity planning announced a major exec- to accelerate our strategic
further down into its supply base. Anoth- utive leadership change initiatives and the board
er indicated his company now has three last month. is focused on identifying
large warehouses across the country in The company said a CEO successor who can
order to be able to receive freight from that, effective December execute on the opportuni-
multiple ports. 31, 2022, Bob Biester- ties ahead for Robinson.”
Other comments pointed to a deep- feld, president and CEO, Anderson has been on
er analysis into supply chain strategy; stepped down from those the CHR board going back
insourcing certain functions that were roles, in addition to his to January 2012, serving
previously outsourced; implementing being member of the com- as chair since 2020. Other
longer lead times for materials and sup- pany’s board of directors. positions he has held over
plies; and developing supply sources in CHR chair of the the years include: presi-
Mexico and South America to backup board of directors Scott dent and CEO of Patterson
or replace China. Anderson was tabbed as Scott Anderson was Companies from 2010 to
“We're getting back to the expecta- interim chief executive tabbed as interim chief 2017 and was elected as
tions we had prior to the pandemic and officer, effective Janu- executive officer chairman of the board of
asking our suppliers to have product on ary 1, 2023. And CHR Patterson Companies in
hand when we order it...as that is what said that its board formally kicked off a April 2013; and as a director on the board
our customers are expecting so we're search for a new permanent CEO. of Duke Realty Corporation prior to its
becoming more demanding,” said a “On behalf of the board of directors, I acquisition by Prologis in October 2022.
food shipper. thank Bob for his many important contri- In February 2019, then CHR chief
John Larkin, strategic advisor, trans- butions over the past three years as CEO operating officer Biesterfeld was named
portation and logistics, for Clarendon and his 24 years with C.H. Robinson,” CHR CEO, which took effect in May
Capital, said that when looking at the said Anderson. “Since joining Robinson 2019. He replaced C.H. Robinson chair-
longer-term in regards to a supply chain in 1999, Bob has played an important man and CEO John Wiehoff. Before
reset, more nearshoring and re-shoring role in positioning C.H. Robinson for being named COO in March 2018, Bies-
activity to the U.S. is likely in the cards, long-term success, most recently lead- terfeld served as president, CHR North
as the automation of manufacturing real- ing the company through a challenging America Surface Transportation and

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NEWS analysis

prior to that he served as vice president, is twice as much as its previous $1 billion sector, observed that it’s noteworthy that
Truckload and vice president, Robin- in investment into technology over the Biesterfeld resigned without a permanent
son Fresh, where he started his logistics last 10 years. In terms of personnel, C.H. replacement in mind.
career path in 1999. Robinson has more than 1,000 data sci- “Typically, when a company’s chair-
At the time of his hiring as CEO, entists, engineers and developers. man becomes ‘interim CEO,’ it means
Biesterfeld told LM in an interview that Evan Armstrong, president of Mil- the company hasn’t lined up a complete
one of the company’s key objectives was waukee-based supply chain consultancy transition,” said Gordon. “This has
turning the page to a more digital future, Armstrong & Associates, told LM that been a challenging year for the entire
where CHR is very focused on the three Biesterfeld did a very good job as the freight industry, and C.H. Robinson
core components of people, process, and leader of CHR and helped it expand hasn’t been immune, as evidenced by
technology—with technology continuing into a more integrated 3PL with sizable the announced layoff of 650 people
to be a more important piece of that international transportation manage- in November. It’s also worth noting
overall puzzle. ment and value-added warehousing and that C.H. Robinson has captured the
“That's how I'm thinking about it distribution operations. attention of activist hedge funds like
directionally, and our senior leader- And Ben Gordon, managing partner Ancora that are calling on the company
ship team is focused on that strategy,” of Cambridge Capital, an investor in to make shareholder friendly moves.
Biesterfeld said at the time. niche supply chain leaders, and also Could this be a catalyst for C.H. Rob-
In September 2019, CHR said it managing partner of BGSA Holdings, a inson to make more aggressive chang-
planned to make a $1 billion investment leading mergers and acquisitions advi- es, potentially including cost cuts,
to be allocated in technology over the sory firm focused on the transportation, personnel transitions, or deals?” •
next five years, which the company said logistics and supply chain technology —Jeff Berman, group news editor

PARCEL

FedEx preps to further reduce Sunday delivery services

AFTER STATING IN JULY that it was landscape, FedEx Ground is mak-
preparing to cut down on its Sunday deliv- ing further adjustments to better
ery services in remote and rural areas of align our Sunday residential delivery
the U.S. from 95% to 80% of the U.S. operations with current customer
population, Memphis-based global freight demand,” the company said in a
transportation and logistics services pro- statement provided to LM. “Effec-
vider FedEx is now reducing its Sunday tive mid-March, Sunday residential
delivery footprint to around 50% of the delivery service will be available to
country, according to various reports. more than 50% of the U.S. popula-
This development does not come as tion, primarily in densely populated
a surprise, as the company indicated in areas with proven customer demand.
September that it planned to take vari- This adjustment will enable FedEx
ous cost actions through the end of fiscal Ground to boost efficiencies while
year 2023, with a focus on mitigating maintaining a competitive advantage
reduced demand. in weekend coverage.”
One of the key focus areas it A Bloomberg report said that in
announced, at that time, was the reduc- February FedEx will decide which mar- to the money charged did the model in.
tion of Sunday operations at a number kets will be affected by this announce- There are items that must be delivered
of FedEx Ground locations, with FedEx ment. And Reuters reported that a large on Sunday—critical medical or computer
president and CEO Raj Subramaniam say- number of the company’s 6,000 U.S. shipments, for example. And if you abso-
ing that, in regards to the company’s plans contractors had stated that there was not lutely positively need it delivered Sunday,
to cut costs, FedEx was prioritizing cost enough demand for Sunday deliveries to you pay the premium. But e-commerce
actions to generate around $3.7 billion cover the cost of providing the service. is rarely ever urgent, and the sweater you
in savings relative to the company’s ini- Jerry Hempstead, president of want to give me for my birthday can wait.”
tial fiscal 2023 business plan, which was Hempstead Consulting, explained that And Keith Meyers, senior consul-
upwardly revised from an initial estimate delivering on Sundays requires a large tant, professional services, for San
of $2.2 billion to $2.7 billion in savings. capital outlay. Diego-based Shipware, agreed with
“As we continue to adapt and stream- “And 99% of items most likely can Hempstead, noting that Sunday deliv-
line the FedEx global network to meet wait until Monday,” Hempstead said. eries aren’t as big of a difference in the
our customers’ needs in a rapidly shifting “So, the amount of cost was not equal market as FedEx thought.

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NEWS analysis

“I would expect FedEx pays their days a week delivery as well. unacceptably long period.
contractors more to deliver on Sundays,” At the time of the announcement, • Increase domestic energy pro-
said Meyers. “It doesn’t make sense to it did not come as a surprise, as FedEx duction. Clark called this the “single
pour money into this aspect of their had already delivered seven days a week most important thing” that Washington
business right now.” during the holiday peak season. And, in can do this year.
As reported by LM, FedEx initial- September 2018, FedEx said that it was • More trade agreements. The U.S.
ly announced its plans for residential upping its FedEx Ground U.S. operations has not entered into an international
delivery seven days a week in May to six days a week from five. trade agreement in more than a decade.
2019, a move that took effect in January Company officials said at the time that The U.S. and Britain are talking about
2020 in an effort to “further serve the this move was made in response to a combi- entering into one, but it is not complete.
fast-growing e-commerce market” and nation of increasing e-commerce demand As part of the annual State of Amer-
match the USPS’ seven-day offering. and a record influx of volume expected for ican Business event, the U.S. Chamber
That was quickly followed by UPS the 2018 holiday season, and beyond. • of Commerce also launched its “State
stating that it was considering seven —Jeff Berman, group news editor of American Business Data Center” to
capture the economic challenges fac-
ing businesses and reinforce the need
BUSINESS
for government to pursue solutions
Worker shortage impedes progress over gridlock.
To diagnose the health of the busi-
in supply chains, U.S. Chamber says ness community and economy, the
Chamber’s new data center analyzed
IMPROVEMENTS IN UNTANGLING geopolitical uncertainty. Amid these 12 economic indicators. These crossed
SUPPLY CHAINS have been offset by challenges, confidence in government’s business topics including workers, ini-
lingering worker shortages, America’s ability to help is low. tial public offerings (IPOs), consumers,
top business lobbyist said last month in “There are big challenges and big supply chains, energy and innovation.
her comprehensive economic forecast opportunities that demand leadership on At the start of 2023, the data paint a
for 2023. the part of our policy- mixed picture. One met-
U.S. Chamber of Commerce presi- makers and partnership ric pointed to a shortage
dent and CEO Suzanne Clark described between government of U.S. workers nears
how despite economic uncertainty, Amer- and business,” Clark record, with the Cham-
ican business is “strong and optimistic” said in the Chamber’s ber’s Worker Shortage
and will continue to lead the country “State of American Index reading near an all-
forward this year. Business” report. “Busi- time low at 0.73, mean-
“Business demands better from our ness is ready... we’re ing that for every 100 job
government, because when it comes to putting forward a plan, openings there are only 73
Washington, the state of American busi- because that’s what available workers. This is
ness is fed up,” said Clark. “The polariza- business does.” especially true in long-
tion, gridlock, regulatory overreach, and According to Clark, haul trucking where the
inability to act smartly and strategically for the “Agenda for Amer- American Trucking Asso-
our future is making it harder for all of us to ican Strength” plan is ciations estimates a short-
do our jobs and move this country forward. designed to unleash age of 80,000 drivers.
We need a government that works. A gov- problem-solving for Suzanne Clark is U.S. Other notable data
Chamber of Commerce
ernment that rejects gridlock and chooses American business. It president points included how con-
governing. A government that can partner includes the following: sumer spending is strong.
with the private sector on our biggest chal- • More building. This entails build- Even though inflation is near 40-year
lenges and can engage globally to advance ing on the $1.2 trillion long-term infra- highs, spending has also been high, up
America’s interests, and the world’s.” structure bill passed last year. Clark said 8.2% annually in 2022. And supply chain
Clark called on Congress to begin work a simpler, more streamlined business strains are easing, as evidenced by the
on an “Agenda for American Strength” permitting process is now needed. New York Federal Reserve’s Global Sup-
that can “help us not only navigate the • Make it simple. Pass a permitting ply Chain Pressure Index at 1.0, down
present moment but also steer our coun- reform bill to deliver on the investment from a pandemic high of more than 4.0
try to the brighter, stronger future that we made in infrastructure. in 2021. Energy prices are coming dow
expect—and future generations deserve.” • Fix immigration. This includes and beginning to stabilize, as energy
The Chamber listed several econom- adding more employment visas to fill prices have been at record highs during
ic challenges: the threat of a recession; key openings. Average wait times for the Russian invasion of Ukraine. •
worker shortage; over-regulation; and those visas now exceed 60 weeks, an —John D. Schulz, contributing editor

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 Doubles Eliminates 6 month Proven in 1000s
productivity label errors ROI of installs
Newsroom Notes
Jeff Berman is group news editor for
the Supply Chain Group publications.
To contact Jeff with a news tip or
with Jeff Berman idea, please send an e-mail to
jberman@peerlessmedia.com.

Logistics pros and cons in early 2023

With 2023 underway, it’s time to take a fresh declining for the sixth straight month. Yes, this is
look at where things stand as they relate to key still too high, but it represents ongoing progress.
trends germane to supply chain, logistics and And as previously noted in this column, a 2022
freight transportation. LM survey based on feedback from 100 freight trans-
There’s little doubt that things have changed on portation, supply chain and logistics stakeholders
various fronts, especially when viewed against the reinforced the impact of how inflation has continued
backdrop of nearly three years since the onset of the to affect procedures, from both an operational and
pandemic. It’s fair to say that everyone remembers business perspective.
that period of time all too well. As for how or in which ways, some of the key
But now it feels that we’re back into a more themes focused on things like capacity constraints
normal rhythm, a fact that’s certainly welcomed across multiple modes; rate and price increases;
and appreciated. However, just because we’re there rising fuel prices; supply chain unreliability; sur-
doesn’t mean that our logistics challenges have charge and accessorial increases; raw material price
completely melted way increases; delayed orders and longer lead times; and
There are a few lingering hurdles that affect the a shipping container imbalance, among others.
system in different ways, depending on what type of So, inflation coming down again is a good sign.
industry stakeholder you are. A quick example may Another dataset widely viewed in freight and logis-
be how declining U.S.-bound imports continue to tics circles that’s also seeing declines is the national
affect domestic freight movements. For one thing, it average price per gallon for diesel gasoline. Based
clearly translates into lower volumes, and, more than on data from the Energy Information Administra-
likely, lower rates—a situation that could very well tion, through the week of January 9, the national
define market conditions over the first half of 2023. diesel average had fallen in eight of the last nine
At a top level, there are a few things that contin- weeks, albeit the average is still being pretty high—
ue to influence both the freight economy and the in the $4.50 per gallon range.
general macro-economy. A good place to start may It’s nice to see some relief at the pump, as we
be inflation. The Department of Labor’s Bureau of all know the reactionary effects for businesses and
Labor Statistics (BLS) reported last month that the consumers alike as they relate to high prices. But
annual inflation rate for the month of December yes, prices do remain high and could remain in this
came in at 6.5%, lower than the 7.7% and 7.1% range for a while, given the ongoing Russia-Ukraine
reported for October and November respectively, war as well as OPEC-influenced production output.
Indeed, lower inflation and diesel
prices are two things to feel good about
early in 2023, in addition to pretty solid
employment numbers. But this leads to
a few lingering issues. On that list are
declining U.S.-bound imports, with vol-
umes down over much of the second half
of 2022, and with the expectation that
will remain the case into the first half of
2023, returning to pre-pandemic levels.
In the most recent Port Tracker report
issued by the National Retail Federa-
tion and maritime consultancy Hackett
Associates, Ben Hackett observed that
his firm is hopeful that the downward
pressures on demand will be short-lived,

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 Newsroom Notes
with Jeff Berman

with a return to growth by the sec- Looking at this admittedly selective previously was, is still decent on the
ond half of 2023. He added that mixed bag of data, combined with an heels of record levels set during the
despite a falloff in the second half, anticipated recession, leaves things pandemic. All of that said, the outlook
2022 was bolstered by record-setting somewhat open-ended at the moment. for 2023 remains pretty open. So, now
monthly totals in the first half of Consumer demand, while not where it we’ll see where things go from here. •
the year thanks mainly to continued
strength at East and Gulf Coast
ports as carriers shifted from con-
gested West Coast docks.

RELIABLE SHIPPING
“Compared with last spring’s strong
showing, the first half of 2023 is fore-
cast to experience a year-over-year
import decline of nearly 17%, with
FROM JACKSONVILLE TO SAN JUAN
the trans-Pacific trade suffering a
drop of over 20%,” Hackett comment-
ed. “Nonetheless, as inflation eases
and consumer spending returns, we
project that growth will slowly return
going into the second half of the year.”
Declining industrial production
and manufacturing data will also
require a watchful eye early into 2023.
That was evident in the most recent
edition of the Institute for Supply
Management’s data for December,
which indicated that the report’s key
metric, the PMI, came in at 48.4
(a reading of 50 or higher indicates
growth), down 0.6% from November’s
49.0, contracting at a faster rate for
the second consecutive month.
The last two months of contrac-
tion were preceded by a stretch of
29 consecutive months of growth.
The December PMI is at its lowest
level since May 2020’s 43.5 read-
ing. And the PMI is 5.1% below
the 12-month average of 53.5, with
December marking the lowest read-
ing over that period and February
2022’s 58.6 marking the highest. From food and pharmaceuticals to
While those numbers are not electronics and the vehicles on the
ideal, the PMI reading was in the road, imported goods are essential to
lower end of its estimate of 48 to 52, the people of Puerto Rico.
coupled with the fact that the sector TOTE is proud to provide the trade’s best-
had been running hot over much of in-class experience to our customers
the duration of the pandemic. ISM as we partner to deliver on our shared
attributed the recent declines to pro- commitment to the island.
duction levels coming down, as well
as lower levels of demand serving
as a catalyst for lower prices, faster
supplier deliveries, and lead times
coming down, but not enough. PROUD TO SERVE PUERTO RICO 877.775.7447 TOTEMARITIME.COM

LOGISTICSMGMT.COM FEBRUARY 2023 | L O G I S T I C S M A N A G E ME NT 17

 EXCLUSIVE

GLOBAL LOGISTICS 2023:

UNDER
PRESSURE
Supply chains worldwide will continue to be caught between politics,
economics and ecology in the future. Whether there will be more
regionalization or nearshoring remains to be seen. The question will linger:
Who will win and who will lose in this increasingly tense competition?

BY DAGMAR TREPINS, CONTRIBUTING EDITOR

W
hen logistics experts discuss the challenges and prospects for global supply chains
in 2023, it’s clear that a multitude of factors are involved. Many shippers and play-
ers in the transport and logistics business are currently under great pressure.
This is due to a number of lingering issues including the pandemic; huge increases in
energy prices; large fluctuations in the supply and demand for transport capacities; delays
in port trans-shipment; and bottlenecks in hinterland transport. Furthermore, numerous
countries are experiencing double-digit inflation.
Russia’s war on Ukraine also has effects on the supply and flows of goods, while dis-
ruption of supply chains and the West’s dependence on imports continues to intensify the
debate about relations with China. Above all, there’s also the environmental challenge and
the question of how to reduce CO2 emissions and deal with the costs for doing so.
And in the midst of these unprecedented challenges, industrial and commercial compa-
nies are analyzing their supply chains and searching for optimization tactics and alternatives.

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LOGISTICSMGMT.COM FEBRUARY 2023 | L O G I S T I C S M A N A G E ME NT 19
 EXCLUSIVE: Global

One possibility is to go back to more most important way to further climate lines will have to reckon with freight
warehousing with the aim of greater protection in the transport sector and rates around 20% to 30% higher than
stability in the supply of goods of all logistics,” say DSLV experts. two to three years ago. He expects that
kinds—which has often not been run- shipowners will face difficulties in long-
ning smoothly as of late. Still, the econ- Freight rates remain high term planning in general and will need
omy has no short-term alternative to Just-in-time deliveries, a strategy fol- to rely more on quarterly adjustments in
international production and trade. lowed for a long time, can often no services and rates.
As we move forward, it’s clear that longer be reliably guaranteed in many Major seaports, such as Rotterdam,
global supply chains will continue to not places. High-volume consigners have Europe’s largest port, will respond to
only need exceptional risk management the advantage of market power to exert increasing costs with moderate price
solutions, but also improved climate pressure on shipowners, port terminals, hikes of around 2.5% to 3%, according
friendliness. According to experts of and transport companies to meet just- to Siemons Boudewijn, COO of Port
the German Freight Forwarding and in-time delivery schedules. of Rotterdam Authority. Other ports
Logistics Association (DSLV), one thing In addition to delays in deliveries are also expected to implement price
is certain: the trend is to take every worldwide, the huge increases in freight increases for 2023.
bit of CO2 reduction into account and rates caused problems for shippers last
leverage climate potential step by step year. For 2023, consigners hope that Gradual introduction of
wherever sensible and effective. freight costs will gradually taper down a CO2 levy in the EU
“Through innovative technology and toward pre-pandemic levels. Maritime shipping accounts for around
efficient and digital processes, we need However, Rolf Habben Jansen, CEO 3% of global CO2 emissions, according
fewer resources and can reduce emis- of Hapag Lloyd, pointed out at an online to a report published in October 2017
sions. Switching to low-emission modes press event that the significant increase by the International Council on Clean
of transport, motors, and fuels is the in fuel prices will mean that shipping Transportation (ICCT). Around 60,000
larger merchant ships, including
around 6,000 container ships, operate
on the world’s oceans.
In October 2022, the International
Chamber of Shipping (ICS) announced
its goal of achieving climate-neutral
shipping by 2050. In 2018, the Inter-
national Maritime Organization (IMO)
had already set the target of reducing
emissions by 2050 to a level at least
50% lower than in 2008. The EU is
planning to reduce CO2 emissions and
to put taxes on shipping even earlier.
Within the framework of its Emission
Trading System (EU ETS), a CO2 tax for
ships of 5,000 gross tonnage (GT) and
above is to be introduced in the EU in
three stages from 2024 to 2026. Some
shipping companies, such as MSC, have
already informed their customers about
additional costs in the future. Container
shipping companies have estimated
the added costs at about $192 to $202
COSCO container vessel at Hamburg’s HHLA Container Terminal Tollerort (CTT) for a 40-foot standard container on the
Photo courtesy of © HHLA.Raetzke Northern Europe-U.S. East Coast route.

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 EXCLUSIVE: Global

DSLV’s experts point out that it’s

important that the introduction of a
CO2 levy in the EU region must not
lead to any competitive disadvantages.
Equal competitive conditions in inter-
national shipping are crucial for global
trade. In the opinion of shippers and
shipowners, the IMO should implement
global regulation in a timely manner.
In the meantime, the development
of alternative fuels for shipping is still
in its early stages. The production,
distribution, and market ramp-up of
sustainable alternative fuels, as well
as the expansion of shore-side power Maersk invests in new methanol fueled container vessels.
supply in sea and inland ports, are Photo courtesy of ©Maersk
important steps towards reducing
greenhouse gas emissions on the way $0.007 per T-shirt, that’s not a huge countries, the construction of LNG
to climate-neutral shipping. added cost per unit of product. terminals is a priority. Now there are
The number of consigners interested 41 LNG terminals located in several
Green shipping in EcoDelivery is increasing steadily, countries in Europe with a total capacity
Shipping lines are increasingly employ- according to the shipping company. of 241 billion cubic meters—enough to
ing modern ships with significantly According to Maersk, customers cover around 40% of Europe’s natural
improved environmental standards as already using EcoDelivery include gas demand. Another 32 LNG terminals
well as new propulsion systems and H&M, Electrolux, Lenovo, and the are in planning in Europe.
more environmentally friendly fuels. Danish fashion group Bestseller. Stationary LNG terminals are
There’s no doubt that investment in The shipping company recently planned in four German ports, each of
climate-friendly transport chains is on ordered 19 container ships powered by which is expected to handle around 13
the rise. climate-neutral green methanol. From billion cubic meters per year. Before
Among the world’s largest carriers, June 2023 to 2025, one feeder ship they’re completed, four floating LNG
companies such as Maersk already and 18 large container ships with slot terminals will be put into operation
offer their customers special “green capacities of 16,000 TEU and 17,000 from the turn of 2023 on. Up to 22.5
shipping offers.” EcoDelivery, for exam- TEU will be put into service under the billion cubic meters of LNG per year
ple, takes climate-neutral fuels into Maersk flag. will then be imported through these
account. These are, for example, waste The carrier is also moving towards facilities in the four German ports on
vegetable fats and oils from the food climate neutrality landside and is build- the North Sea and Baltic Sea coasts.
industry. The CO2 saved is certified for ing or leasing very low-emission ware- Before December 2022, there was no
the shippers’ carbon accounting, while houses and using electric vehicles at its terminal in Germany that could be used
a total of 3% of Maersk’s total cargo own terminals. To date, 300 e-trucks to discharge LNG tankers. Previously,
volume was carried with climate-neu- are already in use, mainly in the United only small amounts of liquefied natural
tral fuels in third quarter of 2022. States, and a further 140 e-trucks have gas had been imported by truck from
The EcoDelivery surcharge for a been ordered. other European ports—such as Rotter-
40-foot container in major trades, dam or Antwerp—that have been oper-
such as the Far East and trans-Pacific, More LNG terminals in Europe ating LNG terminals for several years.
was around $200 to $300 per box in The Russian war of aggression against The German LNG terminals now
2022. If you convert that to, say, the Ukraine is making an impact on under construction will in the longer
30,000 T-shirts or 6,000-8,000 pairs Europe’s energy supply security. In addi- run become part of the infrastructure
of shoes that can fit in such a box, at tion to finding new natural gas supply for importing hydrogen to help achieve

LOGISTICSMGMT.COM FEBRUARY 2023 | L O G I S T I C S M A N A G E M E N T 21

 EXCLUSIVE: Global

climate neutrality. Low-CO2 energy Park Rotterdam. This will partially University’s Wendy Leutert. U.S. ports
sources including pure hydrogen and decarbonize the facility’s production of include Miami; Houston; Long Beach;
hydrogen derivatives such as ammonia fuels like gasoline, diesel, and jet fuel. Los Angeles; and Seattle.
will then be imported. As heavy-duty trucks are coming to In Europe, COSCO and its sis-
Wilhelmshaven is to become the market and refueling networks grow, ter company China Merchants Port
“energy hub” for green energy on the renewable hydrogen supply can also be already own terminals or shares in
German North Sea coast. Among other directed toward these to help in decar- port operators in 14 European ports.
things, it’s planned to build an elec- bonizing commercial road transport. COSCO’s port investment in Europe
trolysis plant to generate hydrogen gas started in 2008, when it signed its first
and an ammonia cracker to reconvert How to deal with China deal with the Piraeus Port Author-
climate-friendly produced ammonia Business with China is coming under ity to operate two of the port’s three
into hydrogen. pressure and there’s a huge emphasis in terminals. Since 2016, COSCO has
Olaf Lies, Lower Saxony’s Minister the United States and European coun- become a majority stakeholder in the
of Economic Affairs, Transport, Build- tries on reducing dependence on China Piraeus Port Authority, which operates
ing and Digitalization, recently stated: for trade. In particular, Chinese invest- the port’s third terminal.
“The new LNG terminal is a major step ments in global ports and terminals are
towards a secure energy supply. The being discussed. Chinese interest in Germany’s
early decision to choose Wilhelmshaven There are military concerns, for biggest port
as a hub for LNG imports was the right example, that China’s port engagement Chinese stakeholding in seaports is
one. The existing port infrastructure and can be critical to NATO operations, as increasingly becoming a political issue
the excellent conditions have helped well as data security worries, as China’s in Europe as well, as COSCO’s planned
make the project a success.” Ministry of Transport has installed a investment in the Port of Hamburg
Europe’s largest green hydrogen state-subsidized platform called Log- shows. COSCO Shipping Ports Limited
plant will be built on Maasvlakte 2 in ink to monitor and digitally manage had planned to buy a share of 35% of
the Port of Rotterdam. Shell has made global logistics supply chains and data the port operating company of HHLA
the final decision on investments for exchange between the ports. Container Terminal Tollerort.
this new plant, which will be named Globally there are around 96 ports in After controversial debates, the Ger-
Holland Hydrogen 1 and is expected 53 countries where Chinese companies man government decided to limit the
to be operational in 2025. own or operate terminal assets, accord- share to 24.9%. COSCO has not yet
The hydrogen generated there will ing to research by Isaac B. Kardon of agreed to the compromise, even though a
supply the Shell Energy and Chemicals the U.S. Naval War College and Indiana first deadline was set for the end of 2022.
At the time of writing, it’s not clear if
there will be an extension or if COSCO
may revoke its offer. That would have
serious consequences for the Port of
Hamburg, since China is its most import-
ant trade partner, responsible for over a
quarter of the total throughput.
Hamburg is worried that China
might shift its shipping to competing
ports in the Netherlands, Belgium,
and Poland, where COSCO, Hutchin-
son Ports, and China Merchants Port
already own shares. To ensure fair
competition in the future, the German
Association of Ports is calling for a
First German LNG terminal opened in Wilhelmshaven. coordinated European stance on Chi-
Photo courtesy of © NPorts. W.Scheer nese shareholding in terminals and

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 EXCLUSIVE: Global

port and logistics facilities as part of a assessment has started in Customs, eye on the growing Vietnamese mar-
common foreign and economic policy and e-way bills and FASTag are bring- ket. In December 2022, the company
among EU member states. ing more efficiency. Furthermore, the announced that it would help busi-
capacity of ports has been increased and nesses in Vietnam take advantage of
Asia’s new emerging markets the container vessel turnaround time new cross-border trade opportunities
Discussion is also intensifying in the has been cut from 44 hours to 26 hours. from the Regional Comprehensive
United States against the backdrop of Economic Partnership (RCEP).
the trade war with China, the Taiwan Vietnam in the focus The RCEP is the world’s largest free
conflict, and the supply chain disrup- In addition to India, Southeast Asia’s trade agreement, covering 15 countries
tions caused by the ongoing pandemic markets are becoming increasingly inter- including Vietnam. Experts from FedEx,
problems in China. Leading manufac- esting for manufacturers, suppliers, and who spoke at the RCEP-focused confer-
turers are increasingly considering alter- logistics companies. Vietnam in particu- ence in December, highlighted opportu-
natives elsewhere in Asia. lar is developing into one of the leading nities provided by the trade agreement
For example, Apple is rethinking its e-commerce markets, which offers and areas that Vietnamese businesses
strategy. U.S. media such as the Wall potential for both local and foreign can tap into for potential growth.
Street Journal reported that the company investors and service providers. “The RCEP offers significant opportu-
has accelerated its plans to relocate According to the report “E-commerce nities for Vietnam’s businesses, including
part of its production outside China. beyond borders” released in 2022 by The small and medium-sizes enterprises
India and Vietnam are cited as alter- Ninja Van Group, a leading express logis- (SMEs), to accelerate cross-border
native locations for assembling Apple tics company in Southeast Asia, Vietnam trade and economic recovery,” says
products. Both countries have been is the leading country in the region for Hardy Diec, managing director of FedEx
in the focus of global manufacturers, online purchases, with an average of Express Indochina. “The conference
suppliers, and logistics providers who 104 orders per year per person. Around aims at helping them better prepare and
are seeking new opportunities for com- 74% of the survey respondents in Viet- enhance their competitiveness as they
ponent production, final assembly and nam said that they have shopped several expand to new markets or look to tap into
logistics services. times from foreign websites, followed the global value chain. The free-trade
India, the world’s 5th-largest econ- by Singapore (67%), Thailand (63%), agreement may benefit Vietnamese busi-
omy, is emerging as a manufacturing Indonesia (62%) and Malaysia (61%). nesses through tariff reduction and better
and logistics hub. The country offers a “With strategic research demon- access to inputs and raw materials.”
huge potential of human resources, but strating the development of the
its weakness is its lack of infrastructure e-commerce and e-postal industries In the end
and high logistics costs. in Southeast Asia, we believe that the Global logistics with its worldwide
According to Indian Union Minis- Vietnamese market is one of the coun- supply chains will continue to be
ter for Road Transport and Highways, tries with the most potential thanks caught between politics, economics
Nitin Gadkari, its logistics cost is at to the sustainable and clear growth in and ecology in the future.
16% to 18%, whereas it’s 8% to 10% recent years,” says Phan Xuan Dung, The great concern about possible
in China and 12% in Europe and the sales director of Ninja Van Vietnam. escalation of the war in the Ukraine
United States. “We’re going to accept In 2022, the company announced an and of the Taiwan conflict means that
this challenge and reduce the logistics investment of $50 million in automation companies are already starting to look
cost to 8-10 per cent,” he said, when technology and systems to enhance its for alternatives. This will also change
the government introduced its National parcel processing capabilities across its global supply chains.
Logistics Policy last year. nine key parcel sorting hubs. Ninja Van Whether there will be more region-
The government under Prime Min- expects to complete this by the second alization, or nearshoring, remains to
ister Narendra Modi is planning to half of 2024 to increase the group’s be seen. The persisting question: Who
expedite last-mile delivery by building overall operational productivity across will be the winners and the losers? •
22 expressways across the country and Southeast Asia by 50%.
using technology such as drones to However, there are also global —Dagmar Trepins is the European
strengthen the logistics sector. Faceless players such as FedEx who have an correspondent for Logistics Management

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Transportation Best Practices/Trends

OCEAN CARGO:

STORMY SEAS
ahead for carriers
After posting another record year of profits, worldwide
recessionary and inflationary pressures are now chipping away
at ocean carrier fortunes. As far as rates are concerned, our
analysts suggest that shippers and freight forwarders will be
able to do a little window shopping this year.

BY KAREN THUERMER, CONTRIBUTING EDITOR

G
lobal ocean carriers reached the top of the bullish market in 2022 by realizing high profits
largely due to tight capacity and exceptionally high container rates. In fact, analysts at
Blue Alpha Capital project that the world’s biggest container lines are on course to post
profits in 2022 that will top 2021’s record by 73%.
However, worldwide recessionary and inflationary pressures are now chipping away at these
fortunes. “Recession now appears likely in Europe and North America—economies that account
for half of global output,” says Rahul Kapoor, vice president at S&P Global Market Intelligence.
So, what factors will most affect ocean shipping as it enters these stormy seas? Spencer
Shute, principal consultant at Proxima, identifies three trends: overall reduction in consumer
demand; new ships adding additional capacity; and souring origin changes (off-shore vs near-
shore or re-shore).
“All three factors are leading to reduced ocean rates, which are likely near bottom in most cases,
and an increased need to partner with customers [shippers filling containers] to ensure equipment
is appropriately positioned around the globe,” says Shute.

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LOGISTICSMGMT.COM FEBRUARY 2023 | L O G I S T I C S M A N A G E M E N T 25
Transportation Best Practices/Trends: Ocean Cargo

Container rates recent surge in COVID cases and its trans-Pacific eastbound ocean rates to
According to Freightos data, freight strict “zero-COVID” strategy. be fully restored to pre-pandemic lev-
rates fell 21% to $2,607/forty-foot By the latter half of 2022, ocean rates els within the second quarter of 2023.
equivalent unit (FEU) in November, began to plummet and continued to “They, ultimately, could reach 10-year
its lowest level since December 2020 crash. HSBC Global Research reported lows by summer,” he adds.
due to slowing demand and decreased that the cost of sending a container from To protect rate levels in 2023,
port congestion levels. Freightos notes, Asia to the United States collapsed by Monaghan notes that carriers will
however, that while this rate is 72% nearly 90% in 2022. need to be cautious with the capacity
lower than a year earlier, it’s still double “Suddenly, we saw a very heavy they put into trade lanes. “We may
its 2019 level. decrease in cargo demand,” says Stefan continue to see blank sailing sched-
While the continuing Russia war on Verberckmoes, an analyst at Alphaliner. ules rather strong again,” he says.
Ukraine, skyrocketing fuel prices, and a “Today, Chinese export freight rates are “With new vessels entering the market
dramatic slowdown in consumer spend- almost at the same level as pre-pandemic.” this year, this includes continuing to
ing are contributing factors, perhaps Joe Monaghan, CEO and founder monitor capacity in specific trades to
the biggest impact comes from China’s of Worldwide Logistics Group, expects accommodate for the potential down-
fall in demand in 2023 and the further
softening of rates going into the 2023-
Record number of ships on order 2024 contract season.”

A potential red flag for container Analysts predict significant market

capacity is the large number of volatility disrupting container shipping
ships container lines have on order. For industry this year. Philip Damas, man-
2023, a record 2.5 million TEU of new aging director at Drewry Supply China
containership deliveries is scheduled. Advisors, says that the consultancy
“On December 1, the order book expects ocean carriers to normalize
was for about 7.5 million TEU, or 29%
operations and stop chasing spot mar-
of the current fleet. That’s massive,” Intensity Indicator.
kets. “They will realize intense price
says Stefan Verberckmoes, an analyst To avoid a complete market melt-
at Alphaliner. “We don’t have a global down, analysts predict that carriers competition,” he says.
economy that’s growing 20% to 30%.” will try to defer some of this huge ad- The trend of spot ocean freight
Drewry Supply China Advisors ditional capacity to 2024 and reduce rates already shows that such rates
reports how, in late 2021, 1 million capacity by cancelling sailings or by have fallen nearly as fast as they rose
TEU of new capacity was scheduled idling ships. when the shipping boom started in
to be delivered in 2022. “The capacity Container lines are also altering mid-2020. Based on the Drewry World
expansion could be up to 250% of the types of vessels that they’re or-
Container Index, average spot rates
what happened in 2022,” says Philip dering. Rather than investing in large
across eight major shipping routes
Damas, managing director at Drewry. 24,000 TEU ships, orders are being
However, container lines are cur- placed for 13,000 TEU to 16,000 TEU have dropped by 75% on average
rently not seeking to add capacity. neo-Panamax vessels and compact through December 2022.
Verberckmoes attributes many new vessels of around 5,000 TEU to “Year-long, 2023 contract ocean rates
orders to carriers’ attempts to sat- 10,000 TEUs. will follow the sharp fall in spot rates,”
isfy environmental regulations such Compact ships are wide and Drewry predicts. “Lower supply-demand,
as IMO 2023. “A lot of these ships short, meaning they occupy less lower fuel costs and lower capacity disci-
are LNG, and some are already on berth space at terminals. Neo-Pan-
pline among ocean carriers are all point-
methanol,” he says. amax ships are very flexible and
ing to much lower ocean rates in 2023.”
Plus, in January 2023, the Inter- can be deployed on almost any
national Maritime Organization intro- route. Verberckmoes surmises that Drewry experts calculate that spot
duced another set of regulations in- neo-Panamax ships will become the ocean rates will continue to dive until the
tended to reduce emissions of GHG new workhorse. first quarter of 2023, at which time they
from shipping: the Energy Efficiency —Karen Thuermer, will reach the break-even cost of carriers.
Existing Ship Index and the Carbon contributing editor “When this happens, ocean carriers will
have to decide whether they engage in a

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Transportation Best Practices/Trends: Ocean Cargo

price war—and suffer losses—or whether World container index

they pull capacity back and stabilize $ per 40 foot container
ocean rates,” Damas says. $10,000
In either scenario, Drewry expects
$8,000
contract rates to at least halve in 2023
$6,000
on most routes. “The $10,000 ocean
rates of 2021 to 2022 will soon be past $4,000
history,” Damas adds. $2,000

$0
Less port congestion Dec Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2 30 27 24 24 21 19 16 14 11 8 6 3 1
Also affecting capacity is the easing of
2021 2022
seaport congestion. Last year, much
Source: Drewry
capacity was tied up waiting to berth.
In the United States, seaports on both
the West Coast and East Coast faced incidence of port congestion by about Better alignment of operations
the worst congestion ever since the age 75% since December 2021, but they One silver lining for shippers is that
of containerization. have not yet brought congestion back ocean container rates are finally com-
Today, Verberckmoes notes that to pre-pandemic levels. ing down—and drastically. “We expect
almost all of the about 10 % of the “Less port congestion means both all of the pandemic gains [to container
global fleet that was blocked by port more reliable transportation opera- lines] to be given away and ocean
congestion is now sailing again. tions, lower costs from delays and shipping to become a shipper’s market
According to Drewry’s port conges- more productivity from ships—and again,” says Kapoor.
tion report tracker, high-volume ports therefore more effective shipping Now with ample capacity on
in North America have reduced the capacity,” says Damas. both the vessel and container side
of the business, Christian Roeloffs,
co-founder and CEO of Container
xChange, sees the high possibility of
an all-out price war in 2023. “With the
competitive dynamics in the container
shipping and liner industry, I especially
don’t expect the big players to hold
back, and we do expect prices to come
down to almost variable costs,” he says.
Drewry predicts carriers will try to
restore the many damaged business
relationships with manufacturers and
retailers who suffered poor transpor-
tation service at high prices for nearly
two years. Analysts there expect that
with a lower supply-demand balance in
shipping, manufacturers and retailers
will regain bargaining power in 2023
and negotiate the return of more favor-
able contract terms that many enjoyed
before the pandemic.
“Areas to focus on are capacity guar-
antees, ‘dead freight’ as well as demur-
rage penalties and payment terms,” says

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Transportation Best Practices/Trends: Ocean Cargo

This includes managing capacity with

U.S. container import volume
TEUs, millions blank sailings and closed loops.
2.7
Key takeaways
2.5
What can shippers learn from the ocean
2.3 carrier industry this year? For one, they
2.1 can finally plan their supply chains
based on steady and less disrupted
1.9
ocean transportation operations.
1.7
“They should demand from ocean
1.5 carriers a return to clear service levels
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
and a better monitoring of performance
2019 2020 2021 2022 and delays,” advises Damas. “This year
should be a buyer’s market and present
Source: Datamyne
opportunities to bring ocean contract
prices close to pre-pandemic prices.
Damas. Drewry also sees a better align- by using slower sailings.” Shippers should spend time getting
ment of ocean shipping operations and Roeloffs even foresees market insight into target rates for 2023 con-
inland flow planning at origin in Asia— consolidation initially starting with tracts to maximize savings.”
now called “origin management.” “This carriers defaulting and reducing their In fact, this year, shippers and
should once again become possible, fleet. “Recently, there was news about freight forwarders will be able to go
now that ocean shipping is becoming China United Lines, an emerging car- window shopping. “There’s going to be
more reliable,” he says. rier on trans-Pacific and Asia-Europe a lot of room for negotiation, especially
Monaghan adds: “We fully expect services, being at risk of defaulting on in the early parts of the year,” says Roe-
[our customers] to ask for fixed rates a charterparty involving more than 10 loffs. “Contract rates will follow suit as
again to get stability, even if it means containerships,” he says. spot rates fall significantly.”
the rate is higher than the current spot Monaghan predicts that it would not However, global re-alignment as a
market. They don’t want to go back to be shocking to see at least one of the result of supply chain constraints will
paying $20,000 for a container. The top 10 global ocean carriers disappear, be the biggest unknown for ocean car-
priority is on the ability to plan.” likely through merger or acquisition. riers. “Many companies, particularly
With a significant oversupply of The chartering business is particu- small- and medium-sized enterprises,
containers and a further influx of more larly feeling the impact of these eco- are evaluating their current supply chain
TEUs in 2023, Container xChange nomic times. Verberckmoes points out strategies and evaluating which models
expects shipping lines to continue to that most non-vessel owning charter reduce risk as a whole,” adds Shute.
reduce vessel capacity and suspend ser- services that came into the business While experts anticipate more efforts
vices by introducing considerable blank during the boom—the so-called new- toward diversification of supply chain
sailings. Maersk, for one, has already comers—are now out of business. Fur- sourcing and manufacturing away from
indicated that it will continue “to make ther, Costco reserved $93 million in the home, many see this as a long-term view
capacity adjustments on services from third quarter of 2022 to pay as a com- that requires vision and strategy from
Asia to North America, Europe and pensation for the early termination of companies looking for a more resilient
the Mediterranean to better align with seven chartered ships, which were fixed supply chain. Meanwhile, Roeloffs
demand fluctuations.” at the height of pandemic congestion. expects more increased container vol-
“In order to address demand reduc- “The decrease in rates and cargo umes intra-Asia and more countries
tion, ocean carriers commonly return volumes came much faster than we will emerge as potential alternatives like
to blank sails to reduce capacity avail- expected,” says Verberckmoes. “And if Vietnam and India. •
able on ships,” says Shute. “In addi- you look to the future, fuel capacity is
tion to blank sailings, ocean carriers really worrying. Carriers will need to use —Karen Thuermer is a contributing
have looked at reducing delivery speed all their available tools to be disciplined.” editor for Logistics Management

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Supply Chain & Logistics Technology

GTM UPDATE:

Simplifying
complexity
As international trade volumes continue to hit records
every year, shippers of all sizes are turning to applications
to gain visibility and control of their global trade processes—
and GTM vendors are there to answer the call.

30 L O G I S T I C S M A N A G E M E N T | FEBRUARY 2023 LOGISTICSMGMT.COM

 BY BRIDGET McCREA, CONTRIBUTING EDITOR

G
lobal trade hit a record $32 trillion for
2022, up from its previous record-high
of $28.5 trillion in 2021. According to
UNCTAD’s latest Global Trade Update, even the
war in Ukraine and the lingering impacts of the
pandemic couldn’t throttle strong growth in the
trade of both goods and services last year. Trade
in goods grew 10% from 2021 to an estimated
$25 trillion for 2022, due in part to higher energy
prices, while international trade in services rose
15% to a record $7 trillion.
In the meantime, new trade agreements, fewer
ocean shipping snarls and a reduction in ocean
freight rates may have all helped buoy global
trade last year. For example, UNCTAD says the
Regional Comprehensive Economic Partnership
and the African Continental Free Trade Area both
helped to “improve logistics” in 2022.
“Ports and shipping companies have now
adjusted to the challenges brought on by the
COVID-19 pandemic,” UNCTAD adds. “Freight
and cargo rates are still higher than the pre-pan-
demic averages, but the trend is downward.”
As global trade volumes continue to climb
year-over-year, a growing number of shippers are
dipping a toe in international waters. What many
quickly find is that doing business with overseas
customers and suppliers is a lot different than
transacting business within your own borders.
Knowing this, global trade management (GTM)
software providers are regularly honing and
improving their platforms to meet the needs of
today’s international shippers.
The platforms manage the logistical, regu-
latory and financial aspects of the import and
export processes associated with international
trade, and often for multiple modes of transpor-
tation. According to Oscar Sanchez Duran, senior
principal research analyst for Gartner Supply
Chain, GTM has become more important than
ever as world events impacting supply chains are
occurring with more frequency.
“There are different drivers for an increased
adoption of GTM technology,” said Sanchez

LOGISTICSMGMT.COM FEBRUARY 2023 | L O G I S T I C S M A N A G E M E N T 31

Supply Chain & Logistics Technology: GTM

of U.S. companies’ earnings calls and

Even the war in Ukraine and the presentations, onshoring buzzwords were
lingering impacts of the pandemic thrown around more often than ever in
couldn’t throttle strong growth 2022. And according to a UBS survey of
in the trade of both goods C-suite executives, 90% of respondents
and services last year
GLOBAL said their company was either in the pro-
TRADE cess of or considering moving production
hit a record out of China, with around 80% saying

$ 32
TRILLION
Trade in
goods
GREW
10%
to $ 25
TRILLION
they were considering bringing some pro-
duction back to the United States.

for 2022 from 2022 for 2022

How shippers use GTM
Shippers are using GTM applications
Due in part to higher energy prices for different reasons, most of which
UP
focus on using technology to help stay
from its
previous compliant while also avoiding sanctions,
record-high of International trade in services penalties and fines.

$28.5
Other reasons for implementing the
TRILLION ROSE to a $7 software include reducing and optimiz-
in 2021 15% record TRILLION ing the cost of goods using free trade
agreements, duty drawbacks and free
trade zones. Using a combination of
Source: UNCTAD’s latest Global Trade Update analysis and landed cost calculations,
the platforms also help shippers plan
Duran. “For example, with the Russian management compliance—mainly out their trade lanes and drive risk out
invasion of Ukraine at the beginning because these and other laws require of their global supply chains.
of 2022 and the subsequent sanctions organizations to “know” their suppliers “Organizations also use GTM to
established by the different countries, and business partners. optimize and automate processes, with
many organizations had to review their Along with the “low maturity” firms some even using the software to do
current process to check if they were that may have been managing global self-filing and digitize customs-related
remaining in compliance.” trade compliance manually in the past, processes, versus relying on Customs
This event pushed some organiza- interest in GTM is also coming from brokers to do this for them,” says San-
tions to seek technology to automate “higher maturity” organizations that want chez Duran. “The platforms can also
or at least have better control of their to improve their global trade functions. In be used to manage and control export
denied party screening (DPS) process 2022, for example, the latter were mostly licenses, screen business partners
to avoid incurring any sanctions. A due seeking technology to optimize costs, against sanction lists or manage the
diligence review of a company’s internal make better use of free trade agreements, classification of products.”
lists, the DPS process ensures transac- calculate landed costs and otherwise save As he surveys the current GTM
tions don’t involve any companies on costs related to global trade. landscape, Sanchez Duran says soft-
a sanctioned, watch or concern list, or Other companies were regionalizing ware vendors are focusing mainly on
that are operating in a country that has their supply chains and reevaluating the Cloud deployments and managing plat-
been sanctioned or embargoed. rules of origin with regards to costs, legal form-like development that incorporates
According to Sanchez Duran, the requirements and the other complexities microservice architecture.
implementation of new regulations of exporting or importing products from Gartner defines microservice as an
such as the U.S. Uyghur Forced Labor a new location or supplier. This repo- application component that is tightly
Prevention Act and the German Due sitioning of production and sourcing is scoped, strongly encapsulated, loosely
Diligence Act will probably further expected to continue in 2023. coupled, independently deployable
accelerate the need for global trade According to Bloomberg’s transcripts and independently scalable. Using this

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Supply Chain & Logistics Technology: GTM

approach, software developers can inde- “In these situations, “Despite the capabilities that will not
pendently make, test, deploy, scale and GTM can provide investments being only help you stay com-
update parts of their platforms without more overall visibility pliant, but that also add
made in new planning
having to disrupt the entire ecosystem. and give companies value to the organization.
Sanchez Duran says more GTM more control over
and transportation This value often comes
vendors are building advanced ana- their global trade systems, many in the form of optimized
lytics into their platforms, with a movements,” says companies rely on resources or new ways to
focus on predicting potential risks McCullough, who multiple different save money.
and cutting costs. “They’re also using expects blockchain to enterprise resource For example, the
machine learning and artificial intelli- begin playing a larger many shippers still using
planning and supply
gence to help improve automation and role in the global trade decentralized global trade
data quality,” he adds, “and reduce process in the near chain planning functions and manual
end-user errors.” future. This may pres- systems…In these processes may not even be
ent opportunities for situations, GTM aware of the full spectrum
Exploring GTM platforms GTM providers that can provide more of trade agreements that
Michael McCullough, vice president, start moving in this apply to their imports and
overall visibility and
NA, and supply chain lead at Capgem- direction sooner rather exports. These types of
ini, has received more inquiries about than later. “We’re see-
give companies information gaps not only
GTM over the last six months. Some of ing some discussion of more control over make global trade more
the interest is coming from U.S. compa- blockchain being used their global trade expensive than it has to
nies that want to onshore or near-shore to manage the various movements.” be, but they also make
some of their operations, but realize links in the global —Michael McCullough, Capgemini
shippers more prone to
that those shifts can’t just happen over- supply chain,” he adds, sanctions and fines.
night. To better manage their global “and to better track With more shippers
supply chains in the interim, more of product through those networks.” realizing the benefits of GTM appli-
them are exploring GTM platforms. Today’s shippers are also asking for cations, Sanchez Duran says that the
With those platforms in place, com- more modular solutions, and particularly current global geopolitical climate
panies can effectively automate the those that already have solutions in place and COVID-19 outbreaks in producer
management of invoices, packing lists, to address some of their global trade countries like China may push more
certificates of origin and compliance. needs. Vendors have also been actively companies to explore their GTM
Global trade management systems also acquiring and developing new capabili- options this year.
help companies avoid or reduce fines ties, with most of the former focused on “Geopolitical tensions are still high
associated with compliance and reduce obtaining complementary capabilities. not only in Europe but also Asia-Pa-
the costs of doing business globally. For example, E2open increased cific; countries have implemented more
Finally, the software helps companies its Customs network coverage in regulations instructing organizations to
gain better overall visibility into their Europe with the acquisition of BluJay know more about the working condi-
supply chain activities. Solutions, says Sanchez Duran, “and tions and risks in their supply chains,”
“Despite the investments being made vendors such as QAD Precision and says Sanchez Duran, adding that GTM
in new planning and transportation sys- Descartes added new capabilities in vendors are focused on developing
tems, many companies rely on multiple Foreign Trade Zone management to more integration capabilities and inno-
different enterprise resource planning their portfolio by acquiring specialized vating in areas that can drive efficiency
and supply chain planning systems,” vendors [FTZ Corp., and QuestaWeb] and improve decision-making. “These
said McCullough. If those systems can’t in these areas.” innovations are very important and will
“talk” to one another and share data help global trade to be more than [only]
among themselves, he adds, companies More than a cost-center function a cost-center function.” •
are left to rely on manual processes, To shippers that are shopping for GTM
spreadsheets and phone calls to keep solutions this year, Sanchez Duran Bridget McCrea is a contributing
their global supply chains moving. says to look for automation and other editor for Logistics Management

LOGISTICSMGMT.COM FEBRUARY 2023 | L O G I S T I C S M A N A G E M E N T 33

 Global Logistics

Musco:
A well-oiled
supply chain
With the help of its 3PL partner, Musco Family Olive Co.
converted its manual processes to an automated transportation
management system, allowing the shipper to lower its total
spending by more than 10% in the first year. Here’s how this
shipper implemented new solutions for age-old problems.

BY JOHN D. SCHULZ, CONTRIBUTING EDITOR

S
hippers who find themselves stuck in the maintain service to customers and mitigate the
“we’ve-always-done-it-this-way” of thinking impact of rising freight transportation costs. How-
might be able to learn a few new tricks ever, the problem was that Musco lacked a coordi-
from an 80-year-old family-owned California nated system for tendering outbound shipments,
olive company that recently partnered with a and its processes were consuming hundreds of
3PL to realize some big-time benefits. hours of manual work every week.
Musco Family Olive Co. is the “As a family owned and operated
nation’s leading provider of business that’s been around for
table olives from more than more than 80 years, we had a lot
THE CHALLENGES
450 California farmers of manual and outdated pro-
With capacity tough to find
and supplys a significant and continuously rising costs, cesses that just stuck around
portion to private label it became more difficult for because it was how we had
sellers—which equates to the company to scale their always done it,” says Michael
operations and coordinate
ownership of a majority of Lin, Musco’s senior director
shipments since it was all being
the U.S. olive market. performed manually. of supply chain.
And with its growing This lack of coordination
volumes, the company knew was leading to double- and
it needed better efficiency to even triple-brokering of loads.

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 Convert MANUAL processes to AUTOMATED

Improve WORKFLOWS and reduce manual HOURS

Support to quickly adjust to market DISRUPTIONS

Execute invoice AUDIT process

Coordinate annual freight BIDS

THE
Conduct NETWORK analyses
SOLUTION
Review to track PROGRESS and PERFORMANCE

Some brokers would re-broker the partnership in 2019. We’ll discover costs with no impartial processes to
freight to asset-based carriers, but how its 3PL partner implemented more ensure that the most cost-effective
that created concerns about chain of efficient processes and technology for option was being used.
custody for the valuable foodstuffs. Musco, and then explore how those Internal controls were also absent.
What was needed was a partner efficiencies allowed the shipper to lower Musco lacked an effective track-and-
experienced with solving complex its total transportation spending by more tracing system for visibility into the
transportation problems in a cost-ef- than 10% in the first year. full cycle of their shipments. And
fective manner to make Musco’s because they weren’t auditing their
transportation operation on a par with Out with the old LTL, truckload or intermodal freight,
the quality of its olives. The solution In early 2019, Musco wanted to elim- they had no way of knowing if they
came in the form of AFS Logistics, inate waste of hours and cost across were being billed inaccurately.
a third-party logistics company with multiple modes. This involved a hard Without that visibility into the true
expertise in auditing, less-than-truck- examination of long-ten-
load (LTL) and truckload freight, ured brokers and carriers
parcel, intermodal and international that retained Musco busi-
freight forwarding. ness year after year. The
Let’s trace the path of Musco’s shipper found that it was
savings from the beginning of this paying inflated transport

LOGISTICSMGMT.COM FEBRUARY 2023 | L O G I S T I C S M A N A G E M E N T 35

Global Logistics: 3PL Management

cost of freight services and lack Managed services Musco electronically sent to AFS. The
of data on load status, it became will be putting to work: 3PL then sought the most com-
impossible for Musco to dispute petitive transportation rate from
claims for late or partial ship- a wide assortment of pre-vetted
ments. This left the company vul- carriers. Data was automatically
nerable to overpayments in acces- loaded into Musco’s ERP for
sorial charges as well as customer billing and tracking.
deduction claims. Audit LTL Truckload By introducing automation
“I’ve worked for large compa- to the system, AFS was able to
nies and people kind of get stuck improve Musco’s work flows
in their old processes,” says Lin, and reduce the manual hours
who came to Musco after years of spent coordinating and manag-
working at PepsiCo. “That men- ing shipments as well as sched-
tality is fairly prevalent in a lot of Intermodal Parcel International uling transport appointments
freight forwarding
organizations, big and small,” he and filing claims. Another
says. “Unless you have continuous important aspect was AFS’s
improvement programs to challenge the have to be able to do processes a little ability to help Musco quickly adjust
status quo, if something is working you better than this.’” to any market disruptions. The 3PL
don’t always ask if there’s a better way.” was able to monitor with full trans-
When Lin joined Musco in 2019, he In with the new parency to seek mode optimization
knew the family-run business needed By mid-2019, Musco realized that while proactively addressing issues
a shakeup. “When it came to freight, it had enough of wasteful hours and when they occurred to maintain
what jarred me was we were a national inflated costs across multiple modes of Musco’s high service standards.
distributor, yet all of our brokers were transport. It turned to AFS, which has To help Musco gain control of
located within 20 minutes of our proven to be what Lin calls the “differ- inaccurate fees and surcharges, AFS
plant,” he says. “The brokers would entiator” that vaulted Musco to where executed an invoice audit process on
then contact another broker on the it needed to be in securing the lowest all modes. Through a comprehensive
East Coast for a shipment. Everyone transportation rates while scaling review of every bill, Musco can now
was getting a piece of the action.” operations to keep up with global and recover overcharges, ensuring that it
Orders to brokers were sent via domestic supply chain changes. never pays more than the negotiated
e-mail, even though they were just 20 As part of the solution, AFS imple- rate while simultaneously consolidating
minutes away. Orders were entered mented a transportation management weekly billing into one invoice.
manually, and when bills arrived, freight system (TMS) for Musco and took By adding this practice to their stan-
rates came down to what people remem- ownership of the entire life cycle of dard operations, Lin and the Musco
bered. “How do you know the price is shipments. It then converted old man- supply chain team now have a docu-
right?” Lin asks. “Rates change all the ual processes to the TMS, which was mented audit trail to assist in resolving
time. I remember thinking to myself: then integrated into Musco’s enterprise any potential discrepancies.
‘We can put on a man on the moon. We resource planning (ERP). For ongoing support and optimiza-
All outbound freight notices for both tion, AFS coordinates annual freight
sales and internal stock transfers were bids for Musco’s carrier network.

“I’ve worked for large companies and people get stuck in their old
processes…That mentality is fairly prevalent in a lot of organizations,
big and small…Unless you have continuous improvement programs
to challenge the status quo, if something is working you don’t always
ask if there’s a better way.”
—Michael Lin, Musco Family Olive Co.

36 L O G I S T I C S M A N A G E M E N T | FEBRUARY 2023 LOGISTICSMGMT.COM

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Global Logistics: 3PL Management

THE RESULTS

10% $50,000 $150,000 100%

REDUCTION SAVINGS RECOVERED INCREASE
in total transportation by identifying in lost sales in carrier mix
spend in the first year further shipment on a single shipment
opportunities

AFS also conducts network analyses to

identify opportunities for movement or “One thing I would say about managed transportation solutions
consolidation of warehouses. Quarterly is that it’s about giving customers discipline and control of their
networks…They design it and control the cost and services. At
business reviews are performed to track
end of day, this is about giving customers discipline and control.”
progress and performance and to pin-
—Andy Dyer, AFS Logistics
point any suboptimal shipments.
These process improvements worked
for two main reasons, says Andy Dyer,
president of transportation manage- of our warehousing network.” $150,000 in sales right there that I
ment for AFS Logistics. “One was that On a scale of 1 to 10, Lin says he would have lost on my own.”
there was significant due diligence and rates the entire process a 9.5. “Musco Another facet that AFS employs
gathering of requirements, and the is now securing capacity at much bet- involves expanding a scorecard meth-
other was correct program and imple- ter rates, and tracking and tracing are odology used for transport providers
mentation governance,” he says. “It improved as well.” to track performance of its network
takes both customer and 3PL to bring of warehouses to measure service and
the right governance to the table.” What’s next? track internal costs at each location.
The next step in Musco’s logistics evo- In the end, it’s all about better control.
What’s the bottom line? lution will be handing over control of “One thing I would say about man-
According to Lin, automating its pro- international shipments to AFS to lower aged transportation solutions is that
cesses through its 3PL helped the transit times, secure the chain of cus- it’s about giving customers discipline
shipper lower the company’s total tody, and help drive down higher than and control of their networks,” Dyer
transportation spend by over 10% in necessary volumes of safety stock. adds. “They design it and control the
the first year; saved the company over And Musco moves to import more cost and services. At end of day, this
$150,000 in lost sales in one instance black olives from Spain and the Mediter- is about giving customers discipline
on a single shipment; restructured ranean, Lin says they’re turning the ocean and control.”
roles and responsibilities within freight shipments over to AFS as well. Lin adds that it’s simply about
Musco to improve quality of employee “Over the past year, ocean freight has relationships. “It’s been a partner-
contribution; and increased Musco’s been a bottleneck with soaring rates on ship—not transactional,” he says.
carrier mix by 100%. some lanes,” Lin explains. “I’m a data “I’m looking at our business now
Linn adds that AFS has truly become geek, and AFS’ analytics are outstand- through the lens of ‘how can we get
part of its logistics team that’s able to ing. But the big thing is that they’re an better?’ I appreciate that it’s not a
keep up with fast-moving changes in the advocate for us from a cost and service transactional thing.” •
global and domestic supply chains. “Not standpoint. We had a couple loads stuck
only that, but the quality of the data they at the port, and we called AFS and it John Schulz is a contributing editor
provide has revolutionized the efficiency was able to free up a load so we saved to Logistics Management

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Warehouse/DC Management

Medline builds
on success with
mobile robots
A leading manufacturer and distributor of critical medical and
surgical supplies incorporated nearly nine years of experience with
goods-to-person robots in the design of a new flagship facility.

40 L O G I S T I C S M A N A G E M E N T | FEBRUARY 2023 LOGISTICSMGMT.COM

 BY BOB TREBILCOCK, EDITOR AT LARGE

B
ack in 2013, Medline worked with Swisslog to become the first company in the United
States to implement a robotic goods-to-person solution from AutoStore. The original site
was a 600,000-square-foot distribution center north of Chicago in Libertyville, Ill. That
first implementation sported 43 bots in a relatively small area plus four goods-to-person
workstations. The bots managed 27,570 totes across 37,750 storage locations with throughput of
up to 12,500 lines per day.
It was a bold move at the time, but even then, Medline was embracing high levels of automa-
tion technologies across its network, including numerous sortation technologies.
Fast forward and one of the country’s largest manufacturers and distributors of medical and
surgical supplies is using 1,463 AutoStore bots across 18 sites, including 135 bots in a new facility

John Zich/Getty Images for Peerless Media

LOGISTICSMGMT.COM FEBRUARY 2023 | L O G I S T I C S M A N A G E M E N T 41

Warehouse/DC Management: Automation

Medline is using nearly 1,500 AutoStore bots across its many facilities.

and moving parts required by the

system and reduces the robot travel
time to and from the pick stations.
Fewer moving parts reduces downtime
and maintenance.
Two-way induction to the trans-
port conveyor. In the original design,
all totes traveled in one direction to
exit the work area and induct onto the
transport conveyor. Now they can exit
in either direction, and there is an
independent line for fulls and empties,
which improves flow.
The new flagship facility features 13 goods-to-person workstations, where associates
Picking to four totes instead of
pick from two totes into four order totes. three. In the first implementations,
order selectors picked from two donor
in nearby Grayslake on a grid that other facilities. That’s the case in Grays- totes into three order totes. Now, team
measures 233 x 82 feet. lake. A $140 million investment, it is members pick from two totes into four,
The bots, soon to expand with referred to internally as the fourth-gen- with an enhanced batching algorithm.
the addition of another 20, serve 12 eration design and incorporates the Packing in the pick area. As is the
workstations, a number that will soon lessons learned after nearly nine years case in many highly automated facilities,
expand to 13. The grid is at least four working with AutoStore technology. traditional packing is the bottleneck
times the size of that original grid, Some examples are as follows. during heavy order periods. To smooth
and is fully temperature controlled. Workstations located close to out the workload and manage the flow,
The 1.4-million-square-foot, state- the robots. In most of the AutoStore Medline installed pack stations in the
of-the-art DC was built as a replace- implementations we have seen, donor goods-to-person pick area so team
ment for the Libertyville facility to totes are picked on top of the grid and members can also pack select low-cube
accommodate Medline’s continued, conveyed down a level to goods-to- orders during the busiest periods. That
steady growth. In some respects, it is a person workstations. In the new Med- minimizes the backup in packing.
cookie cutter building: Like Gap Inc. line design, the pick stations are on Temperature controlled. The first
and IKEA, Medline uses successful the same level as the grid. According AutoStore implementation was ambient
building designs for its new facilities. to Daniel Schwartz, vice president of temperature; temperature control was
At the same time, each iteration engineering automation at Medline, added later. The newest implementa-
builds on the lessons learned in those that reduces the amount of conveyor tions, including Grayslake, incorporate

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 Warehouse/DC Management: Automation

A conveyor and sortation system

connects the various processing
areas in the facility, ultimately leading
to the shipping area where totes are
aggregated for customers.

fully temperature-controlled grids.

The LEED-certified facility was
designed to be energy efficient and
employee friendly to help meet goals
around sustainability and employee
retention. “This is our flagship facility,”
notes Steve Miller, the executive vice
president of supply chain who joined
Medline from Walmart in late spring
2022. “But it’s also part of our broader
network.” He adds that since 2018,
Medline has invested $2 billion across
the network to provide superior customer
service, with another $400 million in
planned investments for the near future.

Automation yes, but people, too

M uch has been written about the labor
shortage on the shop floor. That
battle is not lost on Medline—it’s no
accident that a recent tour of the facil-
ity began in the break room, which in
appearance and comfort level rivaled
the lunchroom in any corporate office.
“We’ve invested heavily in the em-
ployee experience because we want
to retain our team,” says Brian Bevers,
senior vice president of operations. “Our
break rooms are well lit. They feature
gaming stations, a separate room with
recliners where associates can relax and
cafes if they forget their lunches.”
To improve work-life balance,
Medline is offering full- and part-time Veryable, an Uber-like platform for on-de- deep commitment to inclusivity,
schedules, along with flex schedules mand industrial labor. “We bring in and says Steve Miller, the executive vice
that team members can sign up for train a Veryable team member who can president of supply chain.
on an app on their phones. The app then use the app and sign up for work as “Team members have a lot of
lists the positions and times available, well,” says Bevers. Gig labor is especially choices about where they want to
and if an associate is trained for that useful at busy periods, like the first of the work,” Miller says. “While we have
function, they can sign up for the shift month when orders are heaviest due to a lot of interesting technology, we
that meets their needs. Medicare and Medicaid reimbursements. have to be sure that people feel
Finally, Medline is working with On a broader level, Medline has a valued and included.”

LOGISTICSMGMT.COM FEBRUARY 2023 | L O G I S T I C S M A N A G E M E N T 43

Warehouse/DC Management: Automation

years, Medline recently invested an

additional $500 million in buffer
inventory, bringing the total in-stock
inventory to $4 billion.
“When it looked as if there might
be a rail strike, we were able to
send out a communication to our
customers that we had the inven-
tory and the fleet to take care of
them,” notes Brian Bevers, senior
vice president of operations. That
investment is spread across a port-
folio of more than 300,000 unique
medical products, 65,000 of which
are manufactured by Medline.
As an early adopter of automation,
In the multi-level pick area, full cases are picked from pallets to a belt conveyor. Medline has in recent years been
Individual items to complete orders are picked to totes from shelving (not shown). focused on technologies that max-
imize the cube of the building and
Thinking inside and outside 125 countries and territories. Medline’s therefore the sales dollars per square
With 2021 sales of $20.2 billion, Med- North American supply chain network foot. “It’s not unrealistic that 10 years
line Industries LP was ranked No. 16 includes a total of more than 40 distribu- from now we’ll have doubled what
on the Forbes list of largest privately tion centers totaling more than 28 mil- we’re doing today,” says Bevers. Auto-
held companies in America. lion square feet and a fleet of more than Store, as well as other types of auto-
A global manufacturer and distrib- 1,500 trucks, including 200 parcel vans. mated storage and retrieval systems,
utor of medical supplies and clinical Nearly 80% of Medline’s North Ameri- fits that strategy.
solutions, Medline was founded in can volume is delivered by its own fleet.
1966 by Jim and Jon Mills. At the time, At least seven of the distribution A new flagship
they had one small warehouse with one centers have earned LEED certification. According to Kate Slattery, vice pres-
loading dock to distribute gowns, scrubs Along with order fulfillment centers, ident of real estate and construction,
and supplies to the healthcare industry. Medline also operates crossdock facil- planning for the new facility began
The company’s roots, however, date ities near the ports to receive imported in 2018.
back to 1910 when A.L. Mills, the great product and then redistribute it across “We had exceeded our ability to
grandfather of the current management the network. All told, a little more than grow the business out of Libertyville,”
team, began sewing surgeon gowns 10,000 team members work in logistics, Slattery says. In 2019, Medline closed
and nurse uniforms for Chicago- including 8,500 working in the DCs and on the purchase of a site in Grayslake.
area hospitals. 1,600 private fleet drivers. Construction continued through the
Although it was acquired by private In addition to distributing products pandemic in 2020. “We were deemed
equity for $34 billion in October 2021, from its DCs, Medline is using the net- an essential business and were able to
the company is still managed by the work to launch new business models, maintain our schedule,” Slattery notes.
fourth generation of the Mills family. such as offering third-party logistics (3PL) After completion of construction,
“We enjoy the benefit of being one of services to manage customer-owned it took another nine months to install
the largest medical suppliers in the inventory and then deliver it back to the the racking, conveyor and automation.
country, but with the agility and speed customer. Currently, more than 70 cus- Medline began receiving product in
of a family business,” says Miller. tomers are using Medline as a 3PL. April 2021 and by August 2021, it was
With headquarters in Northfield, While supply shortages have been shipping orders to customers.
Ill., the company has operations in garnering headlines over the last two When it came to the design of the

44 L O G I S T I C S M A N A G E M E N T | FEBRUARY 2023 LOGISTICSMGMT.COM

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Warehouse/DC Management Automation

Orders are closed and readied for shipment in the packing area (right). They are then
delivered to the shipping area where they are palletized and stretchwrapped, or put
on roller carts for customers.

building, Schwartz notes that Medline Adopting the next AutoStore

aims to create a common look and feel Schwartz and Bevers say that Medline
to the building design for team mem- continues to investigate new types
bers. In part that’s because each center of automation for the future. The
services the entire continuum of health embrace of automation is driven by two
care. Differences, such as whether a factors: The first is the goal of deliv-
building is an AutoStore facility, are ering the perfect order every time; the
driven by the amount of throughput second is labor scarcity.
required from a facility. “We have great metrics, but to get
In that sense, while the new build- to perfection, we have to invest in
ing is more than twice the size of the systems,” says Schwartz. “And, the
Libertyville DC, and the AutoStore combination of an already scarce labor
section is larger still, it’s the scale that’s market and an increase in our e-com-
different rather than the technologies. merce business means that we have to robotic piece-picking arm at an Auto-
Schwartz notes that the innovations do anything we can to make picking and Store workstation. AutoStore delivers
noted earlier are the result of so many packing easier, faster and better.” the tote and the robotic arm picks
years of working with the system. As part of that $2 billion invest- from the donor tote to order totes.
“The most important learnings of each ment in network capabilities, the com- “The robotic arm is not yet as fast as
install continue to shape our designs; pany continues to pilot and roll out a team member, but can support our
most importantly, we have developed a new solutions. When and if they prove team as we use it for the easier, more
great, capable maintenance, engineering themselves, they become part of the repetitive SKUs,” says Schwartz.
and operations staff,” Schwartz says. overall solution available to the net- At another facility, order selectors
“Having that subject matter expertise work of more than 40 facilities. Even are picking from Swisslog’s CarryPick,
from working with AutoStore for nearly if a technology is not quite ready for a a robot that delivers a shelving unit of
nine years and across more than 1,400 full production environment, Medline inventory to a pick station, into a Tomp-
bots has been important.” He adds that is tailoring the solution to a best fit kins Robotics tSort, which sorts the
the Medline team is so comfortable with environment to be ready to put them items to packing locations.
the system that they can estimate how to use as they improve. Down the road, the Medline team
many robots they’ll need before they ask For example, in one building, Med- has plans to explore automated packing
for a proposal. line worked with Swisslog to install a technologies and unit load automated

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Warehouse/DC Management: Automation

storage and retrieval technologies. to pilot autonomous reach trucks, tion of having incredible sustained
In addition to the innovations with especially for narrow aisle storage. growth, and that forces us to get ahead
AutoStore, the Grayslake facility is While it may be some time before of the business needs in both our
using two autonomous fork trucks those technologies are fully deployed capacity and capabilities. Our supply
from Vecna: One vehicle shuttles pal- across Medline’s network, they reflect chain is capable of serving customers
lets from receiving to a drop zone for Medline’s commitment to continuous better than ever.”
long distance pallet movements in the improvement. “The challenges of the That is echoed by Miller. “Our No. 1
vast distribution center; the other is last two years have ultimately had a goal is taking care of our customers,” he
used to transport empty totes. As the positive impact on our strategy,” says says. “As we build our capabilities and
technology improves, Medline expects Slattery. “We are in the unique posi- grow, we’re positioned to do that.”

Meeting the needs of the Medline

healthcare community Grayslake, Ill.
Medline’s latest facility builds on the company’s success SIZE: 1.4 million square feet.

with automation to serve the demands of a critical industry. PRODUCTS: Medical and surgical
supplies.

F
THROUGHPUT: More than 40,000 lines
rom surgical kits to tempera- with more than one SKU receives a spe- per day.
ture-controlled vaccines to wheel- cial master license plate, which is a bar SKUs: More than 50,000 unique.
chairs, Medline’s facilities must code that identifies all of the SKUs on
SHIFTS PER DAY/DAYS PER WEEK:
handle a variety of products, while meet- that pallet for separation at storage. 3 shifts a day; building runs 24 hours a
ing the exacting demands of an industry Storage. Items staged for putaway day, 6.5 days a week

where how a product is stored, picked are retrieved by a lift truck operator. EMPLOYEES: 607 employees, including
part-time and salaried employees and
and packed and delivered can impact After a scan of the license plate bar
97 MedTrans drivers.
the health of a patient. In its 1.4-million- code, the operator is directed to a put-
square-foot facility outside of Chicago, away location in the primary storage
Medline built a distribution center area. Palletized loads are scanned into
designed to meet those needs. a storage location and are now available cision surgical items (3). Most of the
Receiving. Inbound loads arrive in to promise. SKUs in this area are received from Ger-
the shipping/receiving area (1) as parcel, As a rule, pallets are stored on the many. They are inspected to ensure qual-
less-than-truckload and full truckload upper levels of the reserved storage area ity, and then scanned into a bin location.
shipments. Once product is unloaded and picked from the lower level, with Surgical instruments used around the
in the facility, team members verify the the fastest moving items stored on the country are shipped from Grayslake to
received merchandise against a purchase floor. Cartons are directed to a shelf control the quality of the kits. Similarly,
order and scan the receipts into the level, where they are scanned into a a bank of refrigerated, temperature-con-
warehouse management system (WMS). location and hand stacked to optimize trolled storage units (4) hold vaccines,
Material can be put away in the pri- storage. Like the pallets, they are now not including COVID vaccines as they
mary storage area (2) as a full pallet of available to promise. are shipped from the manufacturer.
one SKU; a mixed pallet representing While the reserve storage area takes Replenishment. Not counting spe-
multiple SKUs; and at the case level. The up the length of one side of the long cialized storage areas, picking primarily
WMS generates an advance ship notice but relatively narrow building, smaller happens in three areas: The AutoStore
(ASN) for each SKU, and a license plate storage areas hold specialty items. These robotics goods-to-person picking area
bar code for pallets and cases. A pallet include a bank of case storage for pre- (5); a multi-level pick module (6) in the

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 Warehouse/DC Management Automation

middle of the reserve storage area for fast storage bins that can be handled by the Full case picking. As a rule, cases are
moving items; and from pallets and cases mobile robots. They are then transported picked from the reserve storage area, with
stored on the floor and in racks in the by conveyor ports to the robots that the fastest moving items stored at the pal-
reserve storage area. transport the bins to the storage grid. let level on the ground: The factors that
Replenishment in reserve storage is Picking. Given the variety of determine the storage location include
typically a matter of relocating pallets unit loads handled, from full pallets the cost of replenishment, the cost of
and cases from the upper reaches of to eaches, and from small items to consolidation; the cost of picking on
the area to storage locations that can non-conveyables, several picking meth- the ground versus picking from a higher
be accessed by associates on tradi- odologies are used. We’ll focus on the storage levels; and finally, travel time.
tional equipment: As a rule, items are three most common: Full pallet, full About 77% of case picks are the fast-
not picked from man-up equipment for case and each picking for mixed cases est moving items that are picked to a
case replenishments. and totes. It’s important to keep in mind double walkie rider. The system routes
The pick modules include shelves that an order may include a mix of all order selectors so they pick the heaviest
and space to store enough pallets for three types of profiles and be consoli- items first. Once those pallets are built,
a week’s worth of demand; pallets are dated in the shipping area. they are delivered to a staging location
replenished from the back pick module. Full pallet picking. Full pallet picks in the shipping area. Slower moving
Cases to replenish AutoStore are aren’t common, but when there is an cases are batch picked to an order
delivered to an induction point (7). order, pallets are retrieved by a reach truck picker; orders are then consolidated at
There, the case is broken open and the and delivered directly to a staging area (1) the dock.
inner packs or eaches are transferred to in shipping where orders are consolidated. Less-than-case or item picking.

1
2 Receiving and Elevated conveyor
Reserve storage area shipping area and sortation

Multi-level AutoStore
pick module 6 storage and
picking area 5

3 Surgical
supplies
storage
4 Vaccine
AutoStore storage
induction area 7

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 Warehouse/DC Management: Automation

Less-than-case quantity orders begin it is routed to the multi-level pick mod- where an associate scans a tote. The
in the AutoStore area, which includes ule where it is conveyed into as many system then selects a box size. The
12 goods-to-person pick stations, soon zones as necessary to complete the packer also inserts any value-added
to be expanded to 13. Donor totes are order. Once all the items have been items such as brochures. The box is
retrieved by the robots and delivered by picked, it goes to the print-and-apply then labeled and sealed and diverted
conveyor to a pick station. area and then to shipping. to shipping.
Order selectors receive their picking The remaining 30% of the orders will Shipping: Parcels are diverted to
instructions on a screen and pick items follow a similar process, but are shipped an area set aside for FedEx shipments.
to up to four totes at a time. A subset of to a packing area, where they are packed Extendable conveyors deliver the car-
those orders pass to a secondary zone in shipping containers; receive a label; tons into waiting trailers. Everything
for zone route picking prior to continu- and are transported to shipping where else will ship on pallets or carts in
ing outbound. they will be consolidated with other con- truckload or less-than-truckload quan-
In about 70% of the orders, items will tainers for that order or loaded directly tities. Pallets and carts are built from
ship in that tote. If they are picked com- onto a parcel carrier. donor pallets that have been delivered
plete in the AutoStore area, the tote is Packing and shipping: To man- into the shipping area. Once a pallet
conveyed to a print-and-apply area where age the flow of work through the or cart is ready to go, it is scanned
the shipping label is created and then the facility, some shipping containers will into a trailer. •
tote is automatically closed and delivered be packed at stations in the goods-to-
to a staging location in shipping. person work area. Everything else that —Bob Trebilcock is an editor at large
If an order was not picked complete, has to be packed goes to a packing area for Logistics Management

asi_halfpgLM_0223_final_• 1/9/23 1:30 PM Page 1

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▪ IMPORTER SECURITY FILING SERVICES (10+2)
www.alliance.com ▪ SHIPPERS RISK COVERAGE SERVICES
 Transportation Best Practices/Trends

PUTTING THE RETAIL SUPPLY

CHAIN IN REVERSE
Retailers that don’t consider product returns
their biggest source of supply may want to rethink
their reverse logistics approaches for 2023.

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 BY BRIDGET McCREA, CONTRIBUTING EDITOR

M
anaging product returns has always to merchandise inspection at the warehouse
been a headache for retailers. The and issuing customer refunds or credits.
e-commerce boom only increased that
pain and pressure. Call it buyer’s remorse, but Returns as a source of supply
when customers can’t see, touch and try on Even with a boost from technology and auto-
merchandise before they buy, they’re more apt mation, the retail supply chain is struggling to
to return it. The proof is in the numbers: By absorb the huge backflow of returned goods
some estimates, online return rates average that its customers are sending back. And once
anywhere from 20% to 30%, versus about 9% the merchandise makes its way back to the
for in-store sales. retail warehouse or third-party logistics pro-
For retailers that were already letting returns vider (3PL), there’s still the question of what to
pile up in a corner of their warehouse or DC do with all of it. “The assumption is that tech-
pre-pandemic, the sudden onslaught of online nology will be the silver bullet that solves this
ordering that happened in early-2020 and hasn’t problem,” says Debrup Jana, a senior director
really let up yet was further proof that they analyst at Gartner, Inc., “but it won’t be.”
needed better returns management processes. Instead, Jana says retailers should shift
E-tailing giants like Amazon are also strug- their thinking about reverse logistics and
gling under the weight of returns. In an article viewing the backflow of merchandise not as
about the company’s “massive returns prob- a burden but as a source of supply. Assuming
lem,” CNBC did the math and determined that just a small percentage of the products
that, based on Amazon’s $469 billion in net are actually defective, broken or unsale-
sales for 2021 and assuming a 21% product able—and that the average supplier provides
return rate, the company’s return numbers are about 5% of any company’s stock—returns
“likely staggering.” are actually any retailer’s largest supplier.
Along the way, customers have also started “The industry average for retail returns
demanding, and retailers have been deliver- in 2021 was about 16%, which proves that
ing, a better returns experience. They want returns is actually these companies’ biggest
extended returns windows, faster refunds and supplier,” Jana explains. “And yet reverse
easier ways to physically return the goods, logistics and returns have been brushed under
for example. Meeting these demands can get the rug for a long time. It’s still largely an
costly for anyone running a retail supply chain. afterthought that’s handled reactively.”
In response, more technology vendors are Retailers that focus too closely on pro-
developing solutions that help with everything cessing returns versus preventing them
from receiving and tracking the returned goods in the first place have only added to their

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Transportation Best Practices/Trends: Retail

own reverse logistics challenges. “Solving the

problem will require a completely different Supporting the
approach that’s centered on prevention,” says regenerative supply chain
Jana, “versus just blaming the consumer for
having to return something.”
Here’s where technology can help. Virtual
A model that factors in all of the business activ-
ities that go into satisfying customer demand,
ASCM’s Supply Chain Operations Reference (SCOR)
dressing room applications, for example, let model helps companies assess and improve their
consumers use their own uploaded photos supply chains.
to “try on” apparel. This helps them check In September, the organization released SCOR
for look and fit before hitting the buy button DS (“digital standard”). According to Peter Bolstorff,
ASCM’s executive VP, the new SCOR DS modernizes
online. Similar platforms can be used to see
the open access framework to include resilience,
how furniture looks in specific areas of your
sustainability, omnichannel and other modern supply
home or visualize what that new pair of glasses chain concepts. It also helps companies address their
will look like on your face. returns challenges with an eye on creating a more
Tony Sciarrotta, executive director of “circular” supply chain—versus a one-way, outbound
the Reverse Logistics Association, says these path—returns included.
efforts also help retailers operate more sustain- “Our main objective was to create a model for
ably. “Software that helps you size things better 2030, where people and organizations could see
themselves in their supply chains inside the model,”
or envision what that new dining set will look
says Bolstorff, who encourages retailers to focus
like in your house can help stem the flow of
on orchestrating circular supply chains that sup-
returned merchandise,” says Sciarrotta, “and in port effective planning from the return standpoint.
turn, reduce the amount of waste that’s piling “Whether it’s a product or some other asset,” he
up in the landfills.” says, “think about what you need to do to be able
to efficiently and effectively bring it back in, repair it,
Rethinking return policies restock it and resell it.”
Sciarrotta says retailers are also rethinking Offered at no charge, the SCOR DS model
provides a compass that organizations can use to
their return policies, with ZARA being among
standardize and improve all aspects of their supply
the first companies to start charging its cus-
chains. “It fuels innovation,” says Bolstorff, “so I
tomers to return their purchases. Those who would challenge people to explore that idea and use
dropped the returns off at a store receive full it in their own operations.”
credit, but customers who ship the goods back This is vastly different than the retail supply chain
have to shell out a few bucks for that option. of old, which was largely focused on bridging a linear
“We’ll probably see more of this happening,” path between supplier, retailer and end customer.
Sciarrotta predicts. With an average of 16% of outward bound products
now coming back to retailers, smart companies are
Some of the push to improve returns man-
coming up with new ways to manage the “right-to-
agement is coming from the retailers’ suppliers,
left” flow as well as the traditional, “left-to-right”
who used to take back 75% or more of the mer- freight movement.
chandise from retailers, according to Sciarrotta. “It’s about organizing the supply chain in a contin-
The other 25% was usually liquidated. Now, the uous way,” says Bolstorff. “It’s one thing to be able
same vendors are giving retailers allowances for to forecast demand, but retailers also have to be able
disposing of the goods instead. “They’re playing to concurrently forecast supply capacity in order to
a real game with their environmental, social and orchestrate the synchronization of the regenerative
supply chain. The SCOR DS model supports that
governance (ESG) scores and other sustainability
regenerative supply chain.”
[metrics],” says Sciarrotta.

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Transportation Best Practices/Trends: Retail

In response, retailers have started reassessing flow of returns, however, he says retailers will
whether they even want the products back, or have to cumulatively start rethinking their long-
not. Consumers are often told to just keep low- standing “free and easy” return policies. Much
value items that would cost the retailer more to like a single airline can’t lower fees without the
ship back, process and try to resell. This puts rest of its competitors at least trying to follow
the onus of disposal on the consumer. “That’s suit, at least one large retailer will have to be a
not a very environmentally-friendly reverse logis- first-mover in this area.
tics approach,” Sciarrotta points out. “It’s also “I don’t think retailers are going to be able to
not sustainable, but unfortunately it’s happening put that genie back in the bottle. I teach class-
more and more.” rooms of Gen Z students who have grown up in
a world where you can always just pull out your
The burgeoning secondary market phone, select three different options, keep one
When Zac Rogers began analyzing the secondary and then drop the rest of them off at a Kohl’s or
market—dollar stores, salvage dealers, factory UPS Store,” says Rogers, “and all for free.”
stores and the like—in 2008, the total market
size was about $308 billion. Last year, the The new returns mindset
number reached $689 billion, or roughly 3% of Like Jana, Vincent Crimaldi says a mindset shift
the total U.S. gross domestic product (GDP). may help willing retailers get a better handle on
“The market has more than doubled over the their reverse supply chains. A Capgemini VP
last 13 years,” says Rogers, assistant professor for consumer products, retail and distribution,
of supply chain management at Colorado State Crimaldi says returns can be an especially good
University, “and I wouldn’t be surprised if it source of goods at a time when pandemic-driven
doubled again over the next 13 years.” supply chain shortages are still lingering.
Credit the overflowing reverse logistics pipeline “If a product is scarce and if 20% to 30% of
with driving at least some of that growth. This the goods sold online are being returned, you
year, for example, the gradual easing of pandemic really need to take care of that product not only
pressures created a lot of overstocked inventory at when it’s on its way out to the customer,” says
the retail level. Rising interest rates, inflation fears Crimaldi, “but also on the way back.” Retail-
and a drop in consumer spending hit all at once, ers that extract maximum value from those
leaving retailers holding the inventory bag. returned products—be it via resale, refurbish,
“A lot of those goods were stuck with liquidation, donation or another means—can
nowhere to go,” says Rogers. For help, retailers effectively transform returns into assets versus
turned to secondary outlets that by the end of just burdens.
2022 were also dealing with a “record number of “Look at returns as another source of
overstocks,” he says. The cycle repeated itself as supply,” Crimaldi recommends. “You may need
salvage dealers and outlet stores offloaded some to refurbish that product and it does take time
of the stock to their own secondary market out- to determine why the product was returned. In
lets, many of which were also already swamped, the end, higher-value items in particular can
according to Rogers. translate into significant value when they can
As retailers work to solve this immediate be received, inspected, restocked and sold as
challenge and look for ways to avoid it in the quickly as possible.” •
future, Rogers says more of them will probably
use data and technology to better understand —Bridget McCrea is a contributing
what inventory they have on hand. To stem the editor for Logistics Management

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 7 supply chain software
trends to watch in 2023
As the glue that holds supply chains together, software continues to
play a vital role in the smooth running of these critical global networks.

BY BRIDGET McCREA, CONTRIBUTING EDITOR

I t helps a company control costs, alleviate risks, see what’s going on in their supply
chains and get more done with less. Long considered a vital aspect of any supply chain,
transportation management systems (TMS), warehouse management systems (WMS), en-
terprise resource planning solutions (ERP) and other platforms work either independently
or together to help shepherd goods from the point of origin to their final destinations.
Along the way, software also supports accurate forecasting, good decision making,
high levels of visibility and better control over the world’s increasingly complex, inter-
twined supply chains. As we move further into 2023, here are seven important supply
chain software trends that are either already taking shape or currently standing by on
deck for the remainder of the year.

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 ®

A SPECIAL SUPPLEMENT TO:

1. We’ve entered the era of “digital intelligence.”

End-to-end visibility has long been the Holy Grail for supply
chain and logistics managers who now want tools that leverage
To meet the challenge, vendors are switching up their
software algorithms, introducing new models and folding
more advanced technology like artificial intelligence (AI)
that visibility into better decision making. Analysts have begun into their platforms. These advancements are helping ship-
referring to this as “digital intelligence,” and Laurent Lefouet, pers move away from making “manual” decisions as they
chief customer and strategy officer at Aera Technology, sees it as a work to respond to fast-changing supply chain situations.
key trend that will only accelerate in 2023. “It’s about moving from Instead, they’re using dashboards, data analytics, control
visibility to execution,” he explains, “and thinking beyond ‘knowing towers and automation to quickly address emerging issues
what’s going on’ to actually executing on those decisions.” or take advantage of new opportunities.

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Special Report: Supply Chain Software A SPECIAL SUPPLEMENT TO LOGISTICS MANAGEMENT

2. The Cloud continues to

reign. The fact that more
companies are investing in Cloud-based
of supply chain, but vendors are also
looking for new ways to enhance and
improve their platforms in order to meet
5. Software platforms are
converging. As he looks
around at the supply chain software
software isn’t exactly news, but it’s a the needs of the modern customer. ecosystem, Köse is seeing more
trend that’s expected to continue—and “There’s more development money “integrated” supply chain management
even accelerate—in 2023 and beyond. going into the actual platforms and into (SCM) solutions on the market. Larger
“Cloud is almost a deal breaker at making them Cloud-native,” says Reiser. providers are buying best-of-breed,
this point for companies investing in Software developers are also using more entrepreneurial-type companies that
new supply chain software,” says Mi- microservices, which allow them to specialize in specific applications. This
chael McCullough, vice president, NA use “contained building blocks” within helps the larger software developers
and supply chain lead at Capgemini. their applications. These microservices address a bigger market.
“On-premises solutions are more the support simpler adaptation, change, In the meantime, private equity
exception than the norm.” updates and development without and venture capital firms are acquiring
For example, McCullough still having to take down an entire system to companies in a space that’s really come
encounters some companies that are make those alterations. “That way,” says up onto their radar screens as a result
using legacy, on-premises WMS, but Reiser, “customers are always on the of the global pandemic and subsequent
says Cloud as a whole is in “very high latest version of the software.” supply chain challenges. “Last year, we
demand” right now. One of these appli- saw a lot of new startups and small-
cations’ biggest selling points is the fact
that they can be updated in the back-
ground and on a regular basis without
4. Everyone wants more
digitization and automation.
According to Koray Köse, senior direc-
er companies enter the market, but
now that’s beginning to show signs of
converging,” Köse says. “As a result, the
the need for disruptive upgrades. tor and analyst for Supply Chain Re- solutions themselves are more inte-
“Companies are much less accept- search and Advisory at Gartner, 99% of grated—not necessarily fully ‘one stop
ing of only getting a software update organizations plan to invest in emerging shops,’ but definitely applications that
every couple of years,” says Mc- technologies over the next five years. target more than one specific area.”
Cullough, who also sees more shippers Citing a recent Gartner “Supply
playing an active role in helping to
“shape” any new upgrades, features
and capabilities that their vendors are
Chain Technology User Wants and
Needs Survey,” Köse says that the key
drivers behind these initiatives include
6. Removing the latency
between “planning” and
what happens in real-life. As they
working on. “Customers expect to have the need to support new business/op- continue down the road to recovery and
a seat at the table in terms of the soft- erating models (for 36% of companies), begin planning for what’s coming around
ware’s roadmap,” he adds, “and want improve resiliency and agility (35%), the next corner, organizations are turning
more collaborative relationships with and enhance decision making (35%). to software to help them reduce the time
their vendors.” Other companies are investing in it takes to respond to real-world events.
digitization and automation because In other words, they want to remove

3. Supply chain platforms

are being enhanced and
improved. For its most recent WMS
they want to drive efficiency improve-
ments (31%) and manage the labor
shortage (26%). To address their labor
the latency between their planning and
what actually happens in real-life—a
need that became more important than
market study, ARC Advisory Group constraints, Köse says 92% of compa- ever during the pandemic. When they
pinpointed one major new trend: nearly nies that Gartner surveyed are explor- can reduce that latency, companies can
all large WMS providers were putting ing new use cases for advanced robot- better manage their inventory, suppliers,
money into their platforms, and at a ics. “Those robots rely on software for labor and other resources in a way that
higher degree than usual. Much of both orchestration and enablement,” meets their own customers’ demand.
the emphasis is on the Cloud at this he adds. “Without software, they To get there, they have to be able
point, says Clint Reiser, ARC’s director wouldn’t work.” to identify those areas of latency and

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Special Report: Supply Chain Software A SPECIAL SUPPLEMENT TO LOGISTICS MANAGEMENT

then address those issues with alter-

nate sourcing, production or shipping
options. “When markets shift, compa-
nies have to be able to react quickly,”
says Lisa Henriott, senior vice president
of product marketing at Logility. “Using
today’s advanced software platforms,
they can more effectively optimize their
supply plans, realign production, explore Being able to have a closed loop with your co-workers, customers
different contract manufacturing options and suppliers is extremely important, because it enables you to
and work with alternate suppliers.” shift gears a lot faster, versus having everyone working in silos,
which can result in delayed decision making and greater risk.
7. Driving down risk is a key
concern. Companies have come
to realize that what was once thought of
—Philip Vervloesem, senior vice president, OMP USA

as a “constant state of disruption” has

simply become the new normal. Instead industry sectors. choice may be to rip-and-replace that
of addressing issues as they arise, for “Being able to have a closed loop platform with something new.
example, organizations are learning how with your co-workers, customers and “Some companies may not want
to deal with—and constantly preparing suppliers is extremely important,” to do a replacement because their
for—disruption and risk. Vervloesem adds, “because it enables existing solutions still work, while
“Reducing risk is a key concern for you to shift gears a lot faster, versus others may be replacing because
companies right now,” says Philip Vervloe- having everyone working in silos, which their platform is being sunsetted in a
sem, senior vice president at OMP USA. can result in delayed decision making couple of years,” Lefouet points out.
In response, he says that more of those and greater risk.” “While others may upgrade in order
organizations are using an approach he to gain access to a more modern tool
calls “boundary-less planning.” Replace or upgrade? that features new capabilities.”
This is the process of building up How to make the choice For best results during this pro-
network resiliency across logistics, If your company is part of the 99% of cess, also consider where the invest-
sourcing, supply, production or other firms that will be investing in emerging ment and effort is going, and then
areas, and then using a tactical exe- technologies over the new few years— whether that will pay off for your
cution approach to identifying and and we’re going to guess that it is— organization in the form of a positive
effectively reducing risk. This, in turn, there are some key considerations to return on investment (ROI).
helps companies respond to risk in a think about before making those invest- “No matter how you look at it,
more reality-based manner—versus only ments. In most cases, you’ll be picking this is a big decision, and especially
making predictions about what “might” between upgrading an existing piece if you can only make one major soft-
happen and reacting as they do happen. of supply chain software or completely ware investment during any given
Vervloesem says automation plays replacing it with a new solution. year,” says Lefouet. “If you have
a key role in boundary-less planning, Lefouet says a good starting point is two projects in mind and aren’t able
which requires the right balance of to ask yourself this question: What will to do both at the same time, you
human intervention and automation. really make the biggest difference in should look carefully at which one
And due to the number of players in how efficiently we operate as a supply will make the biggest difference.” •
any network, he says collaboration and chain organization? In some cases, the
connectivity have also become extremely answer may be to enhance an existing —Bridget McCrea is a contributing
important for organizations across most solution, but in other cases the better editor for Logistics Management

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 SHOW PREVIEW
A SPECIAL SUPPLEMENT TO:

PROMAT 2023 HOURS:

Monday, March 20 • 10:00 a.m. – 5:00 p.m.
Tuesday, March 21 • 10:00 a.m. – 5:00 p.m.
Wednesday, March 22 • 10:00 a.m. – 5:00 p.m.
Thursday, March 23 • 10:00 a.m. – 3:00 p.m.

ProMat 2023 primed for

return to Chicago
ProMat 2023 is back in person, with 35% more floor space, more than 1,000 solution
provider exhibits as well as educational sessions and keynote presentations.

BY BRIDGET McCREA, CONTRIBUTING EDITOR

A
fter going “virtual” in 2021 due to the global COVID At ProMat, attendees can see firsthand what the future
pandemic, ProMat is back in Chicago for a live, holds; find the tools they need to shockproof their operations
in-person event for 2023—and it’s going to be big. As and move their business forward; and experience hands-on
the largest international materials handling, logistics demonstrations at 155 different on-floor educational seminars.
and supply chain show and conference, ProMat 2023, pro- ProMat 2023 attendees can also:
duced by show sponsor MHI, will feature exhibits from more • discover new ways to reduce operating costs and increase
than 1,000 of the world’s top manufacturing and supply chain efficiency;
solution providers in more than 560,000 square feet of exhibit • find ideas for streamlining and automating their operations;
space—about 35% larger than in 2019. • build strong business relationships with peers and suppliers
ProMat exhibits represent all segments of the materials han- from around the world; and
dling and logistics industry, from traditional, manual equipment to • see the latest equipment and tech solutions, in-person,
computerized, automated systems. To make it easier for attendees, in-action.
the ProMat show floor will be divided into solution-specific sec- This year’s show also features four keynote presentations,
tions: equipment and components for manufacturing/assembly a “Student Day” on Wednesday, March 22, and multiple net-
logistics solutions; fulfillment and delivery solutions; information working events. On Industry Night, MHI will recognize the
technology (IT) solutions; and robotics and automation solutions. industry’s most innovative products with its Innovation Awards.

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 ProMat Show
PLANNER
SPECIAL REPORT: SHOW PREVIEW A SPECIAL SUPPLEMENT TO LOGISTICS MANAGEMENT

Startup Pavilion moderated by AWESOME CEO Michelle Dilley, these

New this year, ProMat 2023 will feature a Startup Pavilion leaders will share their vision for the future.
located on the show floor. Daniel McKinnon, MHI’s EVP of
exhibits and events, said the new feature was added in response March 21: A Conversation with José Andrés
to attendees’ request for “new and exciting” exhibitors. One of TIME magazine’s most influential people in the world,
“ProMat has always been a place for established commercial José Andrés has captured the zeitgeist of a nation: not only as
organizations and incorporated companies,” says McKinnon. one of the most popular chefs in America, but with his dynamic
“Now, it’s also a place for 10 different startup companies to personality and diverse humanitarian projects aimed at making
show the world what they’re working on.” the world a better place. He is the founder of World Central
The participating startups will also compete for an MHI Kitchen (WCK), a non-profit devoted to providing meals in
award that will be judged by a non-MHI jury. “We want to the wake of natural disasters as well as the Ukraine war. Join
make sure we’re recognizing innovation and new technologies Andrés as he shares his inspiring story of, and the logistics
that are coming into the industry,” says McKinnon, “and giving behind, making the world a better place one meal at a time.
those organizations a platform to become future MHI members
and ProMat exhibitors.” March 22: A Conversation with Ron Howard
Whatever springs to mind when you hear his name, you’re surely
Keynotes familiar with the career of Academy Award-winning director Ron
ProMat always features an exciting lineup of keynote presenta- Howard. He’s one of the film and television world’s most endur-
tions offering critical insights from experts on supply chain-re- ing legends, with more than 50 years in the entertainment indus-
lated topics. try as producer, director, writer and star of some of the seminal
This year’s event will feature these four keynotes. works of his generation. Howard will share his thoughts on the
creative process, inspiration and the role of a mentor.
March 20: Women Leading in Supply Chains
This panel of AWESOME women will discuss their supply March 30: MHI’s 2023 Annual Industry Report
chain careers, the challenges they’ve faced and how they con- Be the first to have access to this new report on the supply
tinue to break down barriers. They’ll also talk about how they chain trends and digital technologies that are transforming
use their voices to advocate for themselves and others, and the supply chains. Wanda Johnson of Deloitte will join MHI
importance of developing strong networks. During this keynote CEO John Paxton in presenting the report findings. They

LOGISTICSMGMT.COM FEBRUARY 2023 | L O G I S T I C S M A N A G E ME NT 59

 ProMat Show
PLANNER
SPECIAL REPORT: SHOW PREVIEW A SPECIAL SUPPLEMENT TO LOGISTICS MANAGEMENT

will be joined by a panel of manufacturing and supply chain During Industry Night, MHI’s CEO will present its 2023
thought leaders to discuss the real-world significance of the Innovation Awards in three categories: Best New Innovation;
report findings. Best Innovation of an Existing Product; and Best Information
Technology (IT) Innovation. This year, 10 participating start-
Industry Night ups will also compete for an MHI award that will be judged
MHI’s staff and Board of Governors will present Industry Night by a non-MHI jury. This “Best Startup Award” is separate
with comedian Nate Bargatze on Wednesday, March 22, from from the Innovation Awards.
4:30 p.m. to 7:00 p.m., in McCormick Place’s Grand Ballroom. “We want to make sure we’re recognizing innovation and
Event tickets are available at ProMat Attendee Registration new technologies that are coming into the industry,” says McK-
during the show. innon, “and giving those organizations a platform to become
A portion of ticket sales will be donated to the Material future MHI members and ProMat exhibitors.”
Handling Education Foundation Inc. (MHEFI). At the event, Industry Night attendees will be treated to a show featuring
MHI will also hold the first-ever ProMat silent auction, which comedian Nate Bargatze, who was featured as one of Esquire’s
benefits MHEFI. “Best New Comedians” by Jim Gaffigan, one of Marc Maron’s
“We look forward to celebrating our industry’s continued “Comedians to Watch” in Rolling Stone, one of Variety’s “10
innovation and commitment to quality and achievement at Comics to Watch,” and as No. 1 on Vulture’s “50 Comedians
Industry Night,” says McKinnon. “It’s a great way to engage You Should Know.” Bargatze has two Netflix specials, “The
our members and honor our Innovation Award members, Greatest Average American” and “The Tennessee Kid,” plus
which is always a great feature of that event.” the “Nateland” weekly podcast. •

ProMat 2023 on-floor seminars

T his year’s ProMat event will feature 155 different
on-floor education seminars that you can take part
in right on the event’s exhibition floor.
ranging from groundbreaking automation to employee
engagement and everything in between,” says Brown.
Some of the seminars include Innovations in Item
These presentations will cover the leading trends, & Parcel Sortation; Optimize Automated Warehouse
best practices and state-of-the-art equipment and Productivity through Storage Type and Distribution Net-
technology solutions that can make the entire supply work Analysis; and Optimizing Warehouse Execution
chain more agile, efficient and profitable. and Warehouse Control Systems with Automation.
According to Nick Brown, MHI sales service coordi- ProMat’s on-floor seminars will be presented
nator, this year’s seminars will be presented by industry across all four days of the show and in four different
experts and panels of customers. “They’ll be speaking types of theaters: standard; super-sized; emerging
on innovation within the industry and covering topics technology; and transportation and logistics.

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 ProMat Show
PLANNER
SPECIAL REPORT: SHOW PREVIEW A SPECIAL SUPPLEMENT TO LOGISTICS MANAGEMENT

MHI-sponsored seminars at ProMat 2023

Monday, March 20 Description Time and Location

Solutions Community Latest & Greatest advances @ ProMat in 25 minutes 12:00 p.m., Theater G
MHI’s Solutions Community is presenting the “Latest & Greatest” products and services you will find at ProMat. Every facet of warehouse
operations is represented by the Solutions Community members. A cheat sheet with products, company and booth numbers will be
handed out to all attendees to help assure you maximize your ProMat exhibition time. From robots to conveyor to components and
software, the full gamut of technologies will be represented.

EASE (Ergonomic Assist Maximize workplace safety and minimize risk:

Systems & Equipment) Ask an ergonomist 12:45 p.m., Theater H
Workplace safety almost always includes a healthy dose of ergonomics, particularly when it involves manual material handling. This
unique interactive panel hosted by the EASE (Ergonomics Assist Systems & Equipment) Council will be a focused Q&A with ergonomic
experts that will cover ergonomic best practices related to workplace and supply chain safety.

SMA (Storage Manufacturers The new SMA standards and S-Mark Certification Program
Association) along with best practices that can help mitigate risk 1:30 p.m., Theater I
With an increased industry focus on e-commerce, micro-fulfillment and last-mile delivery, shelving and work platforms have become a
crucial part of efficient facility operations. The new SMA standards highlight best practices, are a key component to ensuring safety, and
will help you prepare your facility for major upcoming changes that apply to boltless shelving and work platform systems.

MAG (Mobile Automation Group) High-flying automation: How to maximize vertical storage 3:00 p.m., Theater G
This seminar will discuss use cases for different automated compact storage concepts, such as automated very narrow aisle turret truck
(AutoVNA), automated storage and retrieval systems (AS/RS) and 3D shuttle systems. All three storage concepts have in common that if
combined with AI for storage strategies and inventory management the physical material flow level and the digital control level will be at
peak performance for today’s challenging times.

TRG (The Robotics Group) The importance of risk assessments in automation 3:45 p.m., Theater H
Goal of the panel is to discuss, identify and explore plans for mitigating risks when deploying automation. What automation risks should
companies be aware of? How do you develop a risk mitigation strategy for automation? How can you be successful implementing and
maintaining a risk mitigation strategy? Where is the future of risk management headed with respect to automation?

Tuesday, March 21 Description Time and Location

CSS (Conveyor and Sortation Systems) Adoption of automated conveyance and sortation systems 10:30 a.m., Theater G
This moderated panel session will share insight, learnings and mistakes in projects focused on ROI outcomes. In addition, how that dif-
fers from the business case at hand. ROI goes beyond the efficiency gain. How will the outcomes allow the organization to be different or
better than they were before that will allow them to grow? Join us for this interactive session where customers and consultants will share
their automation transformation experiences.

SLAM (Scan | Label | Apply | Manifest) The business case for SLAM systems in fulfillment centers 12:00 p.m., Theater I
Members of MHI’s SLAM Industry Group discuss the business case for optimizing the last 100 feet of the warehouses, fulfillment, and
distribution centers. With advances in high-tech robotics and smart systems being developed and implemented upstream in fulfillment
centers, it is important that you don’t lose sight of optimizing the end of the process so bottlenecks don’t get diverted to and accumulate
at the end of the process—the last 100 feet. Learn what pain points and problems a SLAM system can solve, what the hidden benefits of
a SLAM system are, and what kind of ROI you can expect.

ASRS (Automated Storage/ Reality check: How ASRS assists in the digitization
Retrieval Systems) of the supply chain 1:30 p.m., Theater G
Panel Discussion: The fragility of many supply chains was brutally exposed during the outbreak of the pandemic: poor visibility, lack of
information, lengthy lead times, missing inventory, lack of manpower, over corrections, and the list goes on. Robotics, goods-to-person
technologies, wearable devices, sensors, algorithm optimization, and data analytics have become commonplace logistics assets en-
hancing operational efficiency and significantly impacting customer experience and the day-to-day job of the logistics operator. The more
successful supply chains are deploying solutions that can be both easily scaled and globally aligned through digitization. ASRS is such a
solution and is playing an ever-increasing role in the digitization of the supply chain, and thanks to its reputation for optimization of space,
time and cost.

62 L O G I S T I C S M A N A G E M E N T | FEBRUARY 2023 LOGISTICSMGMT.COM

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PLANNER
SPECIAL REPORT: SHOW PREVIEW A SPECIAL SUPPLEMENT TO LOGISTICS MANAGEMENT

ProGMA (Protective Guarding 5 common hazards to people, products & facilities: How
Manufacturers Association) proper protective guarding can help mitigate risk 2:15 p.m., Theater H
ProGMA is leading the safety industry by pioneering safety standards including the new ANSI guardrail standard MH31.2-2021, which is
now a key factor in promoting safety and preventing injury in your facility. Join us as we discuss this standard, how to minimize risk and
injury through proper protective guarding, and guarding solutions to prevent rack damage.

RMI (Rack Manufacturers Institute) Storage rack safety 101 3:00 p.m., Theater I
The safe use of a storage rack system is key to the productivity of a warehouse. We discuss the resources available from the Rack Man-
ufacturers Institute that can be used to design and implement a safe rack system. We discuss the inspections necessary in maintaining a
safe rack system. We discuss how to assess rack damage and how to make a repair or replace decision.

TRG (The Robotics Group) What’s possible now in warehouse robotics 4:15 p.m., Robotics Theater
Warehousing and distribution thought leaders will discuss what’s new and what is needed to tap into the immense value that both people
and technology bring to their supply chain performance, how robots (working in harmony with the human factor) can deliver labor savings
and what innovative automation means for the future of work. You will hear from a variety of industry experts, including AMR (autono-
mous mobile robots), pick and place (robot arm), and warehouse drone providers. Participants will take away an action plan on how to
define a successful project and get started with these new technologies. Case study examples will be used to illustrate what went right
and what could be done differently next time.

Wednesday, March 22 Description Time and Location

TRG (The Robotics Group) Tracking project ROI 10:15 a.m., Robotics Theater
This moderated panel session will share insight, learnings and mistakes on projects focused on ROI outcomes. In addition, how that dif-
fers from the business case at hand. ROI goes beyond the efficiency gain. How will the outcomes allow the organization to be different or
better than they were before that will allow them to grow? Join us for this interactive session where customers and consultants will share
their automation transformation experiences.

Integrated lithium battery in MHE: types, standards,

Advanced Energy Council and benefits 10:30 a.m., Theater G
“Before a valid debate can be made for any direction of lithium power, we should speak a common language, thus adopting some stan-
dard terminology associated with this evolution and exploring the history and possible future of Chassis Integrated, CAN Integrated and
Drop-In batteries. In this collaborative forum, you can participate in establishing the language and comparing the pros and cons of avail-
able options of battery integration in the ever-changing material handling landscape.

RMI (Rack Manufacturers Institute) Planning your rack system: traditional and e-commerce 11:15 a.m., Theater H
As e-commerce becomes the norm in warehousing and distribution, the need to adapt storage and retrieval systems is imminent. RMI
industry experts will share how rack system designs are changing to meet the requirements in the e-commerce world.

Condition monitoring and reliability:

Solutions Community foundations of a new frontier 12:00 p.m., Theater I
The Condition Monitoring & Reliability Committee will share lessons from real industry experiences—both painful lessons and shining
successes when seeking to transform your business with condition monitoring. You can expect to learn about fundamentals of a condi-
tion monitoring solution and how it can address common failure modes for materials handling equipment. You will also learn how to build
a business case to start your journey by evaluating your potential to lower costs with increased reliability.

TRG (The Robotics Group) Integrating in workflows 2:15 p.m., Theater G

Integrating workflows in your operations is a critical task—and can make or break your facility. But have you considered all the aspects
that impact your operations at an enterprise level? On this panel we will discuss integrating robotics with humans and other standard au-
tomation including utilizing multiple robots and automation, a variety of use-cases such as picking and putaway, and more.

CSS (Conveyor and Sortation Systems) Machine & operational safety for conveyors 3:00 p.m., Theater H
In this seminar, you will gain an understanding of safety component technologies and systems, the major regulatory directives for ma-
chine safety, and best practices for streamlining your operations for high productivity. This panel of experts will share the optimal prac-
tices and processes to guide users to safe & functional implementation of their conveyance and sortation systems.

LOGISTICSMGMT.COM FEBRUARY 2023 | L O G I S T I C S M A N A G E ME NT 63

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SPECIAL REPORT: SHOW PREVIEW A SPECIAL SUPPLEMENT TO LOGISTICS MANAGEMENT

Wave releasing solution

Offering high volume fulfillment in a condensed footprint, the SURF Dispenser Solution can be
combined with the IndaGO warehouse control system. Due to this integration, the automated
wave releasing solution can release products sequentially, enabling particular outbound loading
profiles to be created. As a result of its automatic infeed design, the solution allows users to
feed the dispensers layer by layer. Highly scalable, the solution can handle large throughput,
and it also provides chronological dispensing for high volume SKUs. Developed for high-density
storage and gentle product handling, the solution doesn’t require labor for unit case picking.
Capable of handling 1,200 cases an hour for each level, the solution offers an ROI in less than
two years. DMW&H, dmwandh.com. Booth S4118.

Voice solution supports more than 50 languages

A voice solution for Android devices, Lydia Voice 9 offers a variety of features unavailable in the
past. It enables users to distinguish several languages in real time and in parallel. This feature will
continue to become more significant as more people use dialects comprised of two languages,
along with numerous localized speech patterns and phrases. Aside from enabling users to distin-
guish various languages, the voice solution supports more than 50 languages, more than before.
In addition, Lydia Voice 9 provides complete support for multi-core threading, allowing it to
have three times higher voice recognition performance than other solutions on the market. EPG
(Ehrhardt Partner Group), epg.com. Booth S1859.

AS/RS improves warehousing efficiency

The Infinity AS/RS offers high configurability, and it features the supplier’s Cortex software
platform’s full capabilities. The AS/RS can provide high flexibility and storage density. Sure
Sort, a high-speed, small-item robotic sorting system, can decrease the total amount of unnec-
essary touches associated with existing manual sorters. The highly configurable, cost-effective
and scalable automated solution can increase productivity without requiring an increase in
labor. It can deliver single items in several shapes and sizes, along with parcels that weigh
up to 5 pounds and are up to 6 inches high, to designated sort locations—at rates as high as
2,400 items per hour. OPEX Corporation, opex.com. Booth S2712.

Orderpicker boosts storage capacity

Created to facilitate order picking one full rack higher than any other lift truck model available, the Raymond High
Capacity Orderpicker decreases each stored pallet’s annual cost by 19%, in comparison to other offerings. Providing
an elevated height of 456 inches, the orderpicker enables operators to have a rise in rack storage access to 11%
more pick slots than other orderpickers. Due to its elevated height, operations can boost their storage capacity and
increase SKU count without increasing the facility footprint. The orderpicker improves safety, as it features an In-Aisle
Detection System that notifies operators when objects are detected in its path, minimizing the risk of collisions and
injuries. The Raymond Corporation, raymondcorp.com. Booths S1703 and S1903.

Technology suite decreases lift truck operator injuries

By improving operator and pedestrian situational awareness and reaction time, the Yale Reliant technology
suite and comprehensive training offerings reduce lift truck operator injuries. Supporting lift truck safety
best practices, the technology suite can automatically adjust operator performance, including lifts and
speeds, based on facility rules, truck stability and proximity to obstacles and colleagues. Operators receive
alerts that increase their reaction times, along with a clear notice, concerning why the intervention occurred.
Unlike other systems, the system can be equipped with several detection technologies. It offers detection
for obstacles in the line of sight, along with detection for tag-wearing individuals or objects in proximity,
even if they aren’t in the line of sight. Yale Materials Handling Corporation, yale.com. Booth S1003.

Robot unloading system

Capable of handling a variety of product types and package sizes, the Pickle Robot Unload
System can be used in several aspects of logistics operations, including truck unloading. Using a
custom suction gripper and a robotic arm with extensive reach, the system can unload and load
packages weighing up to 45 pounds from the back of a truck or trailer at a rate of 1,600 packag-
es per hour. The system uses machine learning to teach the robot to quickly adapt and improve
its efficiency. It can handle packages of many different shapes and sizes, whether they’re
arranged in neat stacks or randomly piled in the back of a trailer. Pickle Robot Company,
picklerobot.com. Booth N6307.

64 L O G I S T I C S M A N A G E M E N T | FEBRUARY 2023 LOGISTICSMGMT.COM

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