Celebrating our th Anniversary

Freight Payment 2021:

logisticsmgmt.com Data analysis for all 24
Key trade topics for 2021 28
Is now the time for robotic
JANUARY 2021
lift trucks? 32

2021 Rate Outlook:

Higher rates ahead Page 20

SPECIAL REPORTS:
Implementing “touchless” DCs 38
Virtual Summit wrap up 44
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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
u WRDA makes forward progress. The U.S. House of
Representatives passed the Water Resources Development
Act of 2020 last month. Key components of the legislation
include provisions to invest in United States ports, harbors,
and inland waterways; building more resilient communities;
addressing affordability concerns for communities; unlock-
ing the Harbor Maintenance Trust Fund (HMTF); and ensur-
ing the U.S. Army Corps of Engineers carries out projects
in an economically and environmentally responsible man-
ner, with equity in mind. A major piece of this bill relates to
unlocking the HMTF by providing the authority to appropri-
ate $2 billion in additional funds annually for harbor main-
tenance needs from the existing balance in the trust fund.
“Making all designated revenue available from the HMTF is
a giant plus to provide for proper navigation maintenance
nationwide,” said American Association of Port Authorities
president and CEO Chris Connor.
u PLG and Locus Robotics collaborate in warehouse.
Omni-channel logistics services provider Port Logistics
Group (PLG) and Locus Robotics recently teamed up for a
partnership in which Locus will deploy more than 150 auton-
omous mobile robots into its fulfillment process at PLG’s
Chino, Calif.-based facility. The benefits of this, PLG noted,
are increased warehouse productivity, order pick accuracy,
improved workplace ergonomics, and safety. Locus officials
said that this effort increases worker productivity while keep-
ing workers safe, adding that by eliminating unproductive
walking time, the “LocusBots” dramatically improve picking
volumes and shorten cycle times, as well as ensure appro-
priate health safety measures.
u Port Tracker expects 2020 U.S.-bound imports to
see annual increase. Despite a stalled economy, which
saw decreased demand and ocean container through-
put for several months early in 2020, the Port Tracker
report issued by the National Retail Federation (NRF) and
maritime consultancy Hackett Associates expects to see
annual import gains. The report said that it expects total
2020 volume to hit 21.8 million TEU, which would rep-
resent a 0.8% annual increase and match 2018 for the
highest-volume year on record, which beats a previous
estimate of 20.9 million TEU that would have been the
LOGISTICSMGMT.COM
lowest annual tally going back to 2017. The report said
the estimate was updated due to an increase in imports
from September through November.
u What will manufacturing look like in 2021?
According to the “2021 Manufacturing Outlook” from
Deloitte, prior to the onset of the COVID-19 pandemic, the
manufacturing industry was working to regain the momen-
tum it had reached after the 2008 recession. However, after
the first wave of pandemic-driven shutdowns, segment
recoveries for various manufacturers have been uneven.
Looking ahead to 2021, the recovery may take longer to
reach pre-pandemic levels, as Deloitte projections based
on the Oxford Economic Model anticipate a decline in
annual manufacturing GDP growth levels for 2020-2021,
with a forecast of -3.7% for 2020 and -5.4% for 2021.
u Port’s gridlock now a critical levels. While global
port congestion is not new to the industry, Drewry Mar-
itime Advisors report that the current state of gridlock
is becoming critical. “Tight capacity management and
increased blank sailings by carriers is part of the problem,”
says Drewry analysts. “The pandemic-led lockdowns has
further disrupted global trade, and across the supply chain,
container shipping alliances were the fastest to respond—
curtailing services on certain routes or canceling port calls.”
In turn, they add, this disturbed the container demand
and availability equilibrium at ports. In a separate research
paper, Resilience360 notes that the situation is especially
acute at the Ports of Los Angeles and Long Beach. Fol-
lowing the easing of lockdown restrictions in the United
States in June, the ports have been operating at max-
imum capacity to process imports, with yard utilization
averaging 80% to 85%, observes Sara Alkawari, supply
chain risk intelligence analyst at Resilience360.
u Fitch recovery assumptions revised. The ongoing
effects of the pandemic on U.S. airports, toll roads and
ports have prompted Fitch Ratings to refine its recovery
assumptions, which the rating agency has detailed in a
new report. Six months after last publishing its assump-
tions, Fitch is now implementing more severe downside
Continued, page 2
JANUARY 2021 | 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
parameters to reflect transportation segments that are on
very different trajectories. “The slowest recovery lies ahead
for airports, with 2019 volume levels not likely to return until
at least 2024,” said director Jeffrey Lack. Fitch’s revised
pandemic rating case sees an improvement to 55% of
2019 levels by the first quarter of 2021 and 75% by the
fourth quarter. In the rating case, an effective vaccine treat-
ment is not widely available until late 2021. Comparatively,
“toll roads have already recovered more than half of peak
losses and are well-poised to rebound by 2022 as the pan-
demic wanes,” says senior director Scott Monroe.
u More on supply chain disruption. The Hackett
Group’s new research titled “Year-Round Disruption: The
Costs and Risks for Supply Chains” details the leading
causes of disruption in today’s supply chains and highlights
the impact of the fractured buyer-supplier relationship on
logistics management performance. The research also
quantifies the early impact of the pandemic on global dis-
tribution. According to the report, purchase order line-item
changes increased dramatically—from an average of 40%
in 2019 to over 60% in February 2020. It also quantifies
how effective buyers and suppliers are at dealing with
interruptions. A total of 19% consistently fell short, and
another 38% performed unevenly, sometimes meeting
on-time delivery targets and sometimes falling short. An
analysis of individual suppliers revealed similar stats, with
25% consistently late and 26% seeing sporadic per-
formance. Finally, the research cites operational waste,
excess safety stock and revenue loss among the leading
business impacts of supply chain disruption.
u Ports reach out for relief funding. In a joint plea to
congressional leadership and treasury secretary Steven
Munching last month, the American Association of Port
Authorities (AAPA) and a host of other maritime transporta-
tion entities asked that $3.5 billion in COVID-19 relief fund-
ing be made available for the U.S. maritime transportation
sector, citing “significant hardships” and “unique and unex-
pected challenges” posed by the pandemic. The letters ask
leadership to take immediate action to provide the whole
2 L O G I S T I C S M A N A G E M E N T | JANUARY 2021
of the maritime transportation system with the resources
necessary to combat the virus and ensure the safety
of the industry’s sizable workforce. “America’s maritime
transportation system, including its ports and their direct
workforce of more than 650,000 front-line personnel, have
kept essential goods moving to medical professionals, first
responders, vital manufacturing, distribution and retail busi-
nesses during the pandemic,” stated AAPA president and
CEO Christopher Connor.
u Food for thought. A new report released last month
by Panasonic North America Food Services reveals
unprecedented challenges for logistics managers in this
industry sector. “How the Pandemic Has Transformed
Food Services & Food Retail” observes that agility has
become essential to business success. Furthermore, digital
transformation is the “major enabler,” particularly in areas
that advance health and safety and consumer conve-
nience. In the report, logistics professionals sourced said
that they expected rapid advancements in business model
logistics and supply chain innovations like in-house last-
mile, delivery; self-service stores; and dedicated pick-up
solutions. Eric Symon, director of the Enterprise Process
Innovation Center at Panasonic, says that in the pre-
COVID-19 era, technology was evolving at a steady rate to
meet demand. “As result of the pandemic, we’ve seen a
transformation in the type of technologies that are required
and acceleration of their development,” he says. “It has
become apparent for restaurants to sustain they must
adapt and implement new supply technologies.”
u Resilience Virtual Summit now on-demand.
In our 15th Annual Virtual Summit, the editors of
Logistics Management and Supply Chain Management
Review have programmed sessions that put some of
today’s game-changing strategies and digital solutions
into perspective and offer practical tips for evaluating,
implementing and leveraging today’s technology to
streamline operations and build resilience into your sup-
ply chain for recovery and beyond. Register today at
supplychain247.com/virtual-2020. •
LOGISTICSMGMT.COM
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 January 2021 logisticsmgmt.com Celebrating our th Anniversary

Logistics Management
CONTENTS
VOL. 60, NO. 1

LM EXCLUSIVE
2021 Rate Outlook:
Higher rates dead ahead 2021 Rate
Outlook
20 Freight transportation providers responded to COVID-19
pressures heroically, becoming leaner, more collaborative
and efficient. And while this is good news for the nation’s freight
network, shippers should expect significantly higher rates across all
modes in the months ahead as the world moves through recovery.

GLOBAL LOGISTICS

28 Trade Update 2021: Time to shift direction?

Shippers who are current on the global trade landscape are assets
to their service partners and clients. Our global trade expert pro-
vides us with a review of the key trade topics that should be top of
mind as we begin 2021.

TRANSPORTATION BEST
PRACTICES & TRENDS
24 Freight Payment:
Data analysis for
everyone
Freight payment providers are
upbeat heading into recovery,
offering a diverse menu of solu-
tions designed to take cost out of
freight transportation by helping WAREHOUSE & DC MANAGEMENT
shippers of all sizes to “think
strategically, not transactionally.” 32 Is now the time for
robotic lift trucks?
Though robotic industrial trucks
DEPARTMENTS are still a small slice of the
market, expectations are growing
1 Management update for them as operations seek to
7 Viewpoint speed up their processes while
lessening the struggle of trying
8 Price trends
to find enough operators.
10 News & analysis
16 Moore on pricing
17 Newsroom notes
CONTINUED
18 Accenture on operations

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4 L O G I S T I C S M A N A G E M E N T | JANUARY 2021 LOGISTICSMGMT.COM


EDITORIAL STAFF
Michael A. Levans Group Editorial Director
Francis J. Quinn Editorial Advisor
Patrick Burnson Executive Editor
Sarah Petrie Executive Managing Editor
Jeff Berman Group News Editor
John Kerr Contributing Editor,
Global Logistics
Bridget McCrea Contributing Editor,
Technology
Roberto Michel Contributing Editor,
Warehousing & DC
John D. Schulz Contributing Editor,
Transportation
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Polly Chevalier Art Director
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COLUMNISTS
Derik Andreoli Oil + Fuel
Elizabeth Baatz Price Trends
Peter Moore Pricing
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CONTENTS
SPECIAL REPORTS
38 Implementing “touchless” DCs
The ability to automate DC operations by employing
AI technologies that include a closer convergence of
WCS, WES and WMS solutions is on the horizon.
Designing touchless operations that reduce the
dependence on traditional labor sources will better
position supply chains in their quest to provide an
uninterrupted flow of goods and improved resiliency.
44 Virtual Summit 2020: Building
in supply chain resilience
This year’s summit helps attendees shake off
the impacts of a difficult year and use digital
transformation, risk management, reshoring,
and other tools to reimagine their operations
for success in 2021.
ONLINE
LOGISTICSMGMT.COM
LOGISTICS MANAGEMENT AND
SUPPLY CHAIN MANAGEMENT REVIEW
2020 Virtual Summit:
Building in supply chain resilience
In this Virtual Summit, the editors of LM and SCMR have programmed
sessions that put some of today’s game-changing strategies and digital
solutions into perspective and offer practical tips for evaluating,
implementing and leveraging today’s technology to streamline operations
and build resilience into your supply chain.
NOW
KEYNOTE: Building resilience into logistics and supply chain strategy AVAILABLE
ON-DEMAND
SESSIONS:
Software/Technology E-commerce
How the pandemic accelerated technology trends Last-mile Fulfillment: Solving an ever-complex
puzzle
Transportation Management
29th Annual Study of Logistics and Transportation Technology
Trends: Are you willing to transform logistics State of Robotics: Why your business should be
operations for recovery? considering this technology in 2021
Software Trade
TMS: Essential to productivity in the new, modern Global Strategy: The pros and cons of reshoring
supply chain
On-Demand at: supplychain247.com/virtual-2020
JANUARY 2021 | L O G I S T I C S M A N A G E ME NT 5
Lynden: A Tradition of Quality

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 VIEWPOINT

2021 Rate Outlook: Hikes are a certainty

If history serves, this marks the 16th year we’ve offered logistics
management professionals our Rate Outlook print feature (page 20)
and webcast (January 28th) combination. Over that time, analytics have
shown that it’s our most-read magazine feature and our best-attended
webcast year after year—and I can’t say I’m surprised.

Over that time, the premise has remained the same: We
kick off the year with a picture of the state of the global
economy and fuel costs and then examine how those
realities will affect freight rates and capacity levels across
each mode of transportation over the coming year. It’s a
30,000-foot few of where costs are heading—and why.
Our master of ceremonies this year is executive editor
Patrick Burnson, who once again surrounded himself with
some of the leading economic, fuel and freight transpor-
tation analysts in the market. As is tradition, he welcomes
each of these top sources to the lectern to offer a quick
glimpse into the immediate future in an effort to help
shippers prepare their freight budgets for the long run.
Before you cement your 2021 planning, first read
through our Rate Outlook print feature and then carve
out an hour to join our esteemed panel for our webcast
that goes live on Thursday, January 28. On that date,
you’ll be able to submit any questions you have for our
speakers and dig deeper into where rates are heading.
As Burnson points out in this year’s Outlook, we would
be remiss if we didn’t first mention the Herculean effort
put forth by our nation’s carriers and freight transportation
service providers in all modes during the course of the
pandemic. Their work to keep essential inventory moving,
shelves as full as possible, and vital manufacturing opera-
tions up and running deserves to be celebrated.
“Our panel agrees that the response by our nation’s
freight network across the board was downright heroic
in many instances,” says Burnson. “And if there’s a sin-
gle, positive consequence that’s come out of this dif-
ficult period, it’s the enhanced collaboration between
transportation providers and shippers—something
that’s been sought by both parties for decades and
accelerated by necessity over the past 10 months.”
And while this unprecedented period of time has
created the most unbalanced freight environment we’ve
ever witnessed both domestically and globally, all hopes
are that any newfound carrier/shipper collaboration will
continue to blossom and improve efficiency as freight vol-
umes continue to build to historic levels and carriers work
feverishly to put needed capacity back into the network.
“I don’t think its news to anyone that motor carrier
capacity can’t be replaced fast enough, as spot rates went
through the roof during the last two quarters,” says Burn-
son. “However, our sources don’t see the issue dwindling
anytime soon, which only means shippers will be pressed
to make sure they’re doing everything that they can to
keep their carriers as happy and efficient as possible for
as long as possible.”
And while rate hikes are a certainty in 2021, Burnson
adds that all parties need to keep their eyes peeled on
the oil and fuel markets in the near future as the Biden
administration steps into the White House.
“Diesel prices have be steady and reasonable due
to the drop in demand,” Burnson adds, “but that could
change should any of the recent peace deals in the Mid-
dle East be brought into question by the new adminis-
tration. It’s one more ‘wild card’ that could lead to energy
volatility—something we really don’t need right now.”
Michael A. Levans, Group Editorial Director
Comments? E-mail me at
mlevans@peerlessmedia.com
Follow me on Twitter: @MikeLeva

LOGISTICSMGMT.COM JANUARY 2021 | 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

9 160 TRUCKING
6 155 A deep dive into industry cost trends indicates that the trucking
3 150 industry may be managing to improve its operating margins. With
0 145 benchmarks from the U.S. Census Bureau’s input/output matrix and
-3 140
moving time series cost data forward in time (by applying escala-
F
Forecast tion factors for prices, wages and other variables), a rough look at
-6 135
2017 2018 2019 2020 2021 margin trends emerges. The trucking industry is struggling to raise
% change (left scale) Index 2001=100 (right scale) prices, but with costs falling faster than prices, margins compared to
October 2019 are estimated to have increased by $2 per every $100
% CHANGE VS.: 1 month ago 6 mos. ago 1 yr. ago
of services sold. Falling fuel prices are the cause though labor costs
General freight - local -0.7 -0.7 -0.5
increased 4.6%, legal services costs escalated 4.7%, and average
TL 1.3 4.8 -0.1
insurance costs moved up 2%.
LTL 2.7 0.5 0.3
Tanker & other specialized freight -0.3 -0.3 -1.8

4 170 AIR
2 167 Cost models for the airline industry must be done for the entire
0 164 industry. This means, perforce, that air cargo is hidden under the
-2 161 air passenger segment. Nonetheless, another snippet of intelli-
-4 158
gence for trend watchers can be found in industry margin esti-
F
Forecast mates. A late autumn 4.4% hike in average industry prices served
-6 155
2017 2018 2019 2020 2021 to create a slightly healthier short-run relationship between opera-
% change (left scale) Index 2001=100 (right scale) tional costs and rates charged to customers. Still, the air transpor-
tation industry’s estimated margins now sit at around $18.35 per-
% CHANGE VS.: 1 month ago 6 mos. ago 1 yr. ago
$100-of market-valued services. That still compares unfavorably to
Air freight on scheduled flights -3.0 -0.3 -0.3
a year-ago figure of $26.22. To make up this margin gap, average
Air freight on chartered flights 5.6 10.9 11.0
Domestic air courier -0.6 1.2 1.4 prices would have to rise another 10.7%.
International air courier -0.6 1.2 0.3

9 190 WATER
F
Forecast
6 185 A dearth of price hikes appears to be swamping any hope
3 180 for propping up margins in the U.S. waterborne transportation
0 175 industry. Last year we saw at least seven consecutive months
-3 170 whereby industry prices fell below same-month-year-ago levels.
-6 165
(It may be more than seven months as we’re waiting for final end-
2017 2018 2019 2020 2021 of-year data.) On the other side of the equation, operating costs
% change (left scale) Index 2001=100 (right scale) still increased 1.8%, even though the industry enjoyed a 9.5%
estimated decline in fuel-related expenses. Putting it all together to
% CHANGE VS.: 1 month ago 6 mos. ago 1 yr. ago
create a very rough estimate of margin trends, it looks like margins
Deep sea freight 0.3 0.7 -4.6
compared to October 2019 are estimated to have fallen by more
Coastal & intercoastal freight 0.3 -5.2 -6.3
than $5 per every $100 worth of transportation services sold.
Great Lakes - St. Lawrence Seaway -1.1 -2.7 -5.3
Inland water freight -0.5 -5.8 -7.1

8 195 RAIL
F
Forecast
6 190 In the rail services industry, prices generally have remained stub-
4 185 born to any efforts in stemming a downward slide, although the last
2 180 months of 2020 may show a turnaround in the offing. Alas for margins,
0 175 the rate of decline in rail prices, particularly intermodal, overwhelmed
-2 170
the meager declines in the industry’s underlying costs. In the 12-month
2017 2018 2019 2020 2021 period ending October 2020, intermodal rail prices dropped 3.7%.
% change (left scale) Index 2001=100 (right scale) Meanwhile, total costs in the rail industry are estimated to have
declined by only 1.4%. Granting limits to input/output cost modeling,
% CHANGE VS.: 1 month ago 6 mos. ago 1 yr. ago
trends suggest that the industry’s gross operating margins are down
Rail freight 0.0 -0.9 -0.8
Intermodal -0.8 -2.0 -6.6
$1 for every $100 of services sold compared to a year ago.
Carload 0.2 -0.6 0.6

8 L O G I S T I C S M A N A G E M E N T | JANUARY 2021 LOGISTICSMGMT.COM

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NEWS analysis
Also:
• XPO Logistics signals intent to spin its logistics group into two separate companies, Page 12
• Name change only the start at Yellow Corp., Page 13
• CBRE report points to reverse logistics gains paving the way for increased development, Page 14

COVID-19 vaccine distribution

process contains many
moving parts
Logistics industry observers paint a picture of what the sector is up against
in order to make sure this generational task goes as smoothly as possible.
BY JEFF BERMAN, GROUP NEWS EDITOR

NOW THAT MULTIPLE pharmaceuti-
cal companies have COVID-19 vaccines
ready to go, eyes are locking in on the
logistics sector—and for good reason.
For starters, there are many challenges
related to vaccine distribution, includ-
ing securing capacity; related tempera-
ture-controlled needs (the Pfizer vaccine
needs to be kept at -70 Celsius); secu-
rity concerns; and seasonal challenges.
What’s more, both Pfizer and Moderna
have publicly stated that their respective
vaccines are 95% effective, which further
increases the onus on efficient logistics
and distribution.
Timing will also be key, with vice
president Mike Pence stating at an
early December press conference that
when the vaccine is ready to be admin-
istered to the first group of Americans
that qualify, it will be shipped within 24
hours of approval.
Various logistics industry observers
painted a clear picture of what the logis-
tics and distribution sector is up against.
“Most of the leading vaccines must
be transported and stored at cool, or
cold, temperatures,” said John Larkin,
operating partner at Clarendon Capital.
“This complicates matters, as refrigerat-
ed capacity of containers, trailers, and
warehouses are already in short supply.
To make matters more complex, various
vaccines must be transported and stored
at different temperatures.”
Larkin also touched on other key
vaccine distribution-related aspects to
monitor, including supply chain security,
ensuring product integrity, and the sup-
ply of labor. As readers are well aware,
truck drivers, warehouse personnel, and
supply chain security are already tough
to recruit and retain—especially during
the traditional retail season.
According to Brooks Bentz, a sup-
ply chain consultant and Logistics Man-
agement contributing editor, the line-
haul component of vaccine distribution
is another key element that needs to
be considered. “With the vaccine being
manufactured in Europe, it will then be

10 L O G I S T I C S M A N A G E M E N T | JANUARY 2021 LOGISTICSMGMT.COM

NEWS analysis
moving by air,” he said. “There’s a lot of
air capacity out there right now. But the
big challenge will present itself once it
lands on the ground in the United States.
What do you do with it then?”
Ground capacity is going to be tight,
said Bentz, and the vaccine will cer-
tainly get priority, but chances are slim
that there would be any home delivery
of it, at least not right away. “It will end
up having to go through a distribution
network, starting first with hospitals and
places like CVS and Walgreens. And
that’s likely to be on a FedEx- or UPS-
type of delivery.”
According to Bentz, the biggest chal-
lenge is going to be capacity constraints
in the short term. “You need to be looking
at alternatives to augment capacity,” he
said. “That could be through courier ser-
vices or smaller parcel carriers or regional
LTL carriers, but you’d have to make sure
you have enough time in the supply chain
to get it through so you don’t have to
disrupt the packaging to re-cool it—and I
LOGISTICS
XPO Logistics signals intent to spin
logistics group into two companies
SIGNIFICANT CHANGES MAY BE
COMING for global freight transporta-
tion and logistics services provider XPO
Logistics, with the company recently
announcing that its board of directors
signed off on a plan to seek a spin-off
of its logistics group as a standalone,
publicly traded company.
Should this spin-off come to fruition,
the logistics group would be split into
12 L O G I S T I C S M A N A G E M E N T | JANUARY 2021
don’t even know if that’s possible.”
While over-the-road ground capacity is
expected to loosen up into the New Year,
former Robert W. Baird & Co. research
analyst Ben Hartford explained that
capacity, as it relates to the specific needs
of the cold chain and storage, will be key.
“As the vaccine is transported, all
eyes will go to airfreight and the lift
capacity needed to move this sensitive
product in an expedited manner,” said
Hartford. “And we’re already starting
to see air charter and lift capacity con-
sumed on that front.”
Looking ahead, Hartford explained that
that any of the specialty equipment that
pertains to housing the vaccine in a tem-
perature-controlled setting—specifically
airfreight and lift capacity—will be at a
premium well into 2021 amid the global
rollout. He added that the models that are
going to play the most direct role in its dis-
tribution would be the global integrators
on the parcel side [FedEx, UPS, and DHL]
and international freight forwarders. •
two separate publicly-traded companies
on the New York Stock Exchange, with
the placeholder names XPORemainCo,
a global provider of less-than-truckload
(LTL) and truck brokerage transporta-
tion services, and NewCo, which would
become the second-largest global con-
tract logistics provider with around 200
million square feet of warehouse space.
XPO said that it expects this transaction
to be completed in the second half of
2021, with the caveat that there can be
no assurance that a separation transac-
tion will occur or, if one does occur, of its
terms or timing.
“By uncoupling our transportation and
logistics segments, we intend to create
two, high-performing, pure-play compa-
nies to serve the best interests of all our
stakeholders,” said Brad Jacobs, XPO
Logistics chairman and CEO. “Both
businesses will have greater flexibility
to tailor strategic decision-making and
capital allocations to their end-markets,
with the benefit of strong positioning as
customer-focused innovators.”
XPO officials said that upon the
expected completion of the spin-off,
Jacobs would continue to serve as chair-
man and CEO of XPORemainCo and also
become chairman of the NewCo board.
Troy Cooper will stay as president of
XPORemainCo, with the current execu-
tive team for the XPO global logistics seg-
ment staying in senior NewCo positions.
In terms of service offerings for the
respective companies, one of the main
things that will be different will be the
split out of XPO’s transportation and con-
tract logistics groups into two separate
pure-play, publicly traded companies.
“From a customer standpoint, they
will continue to come to us for LTL and
truck brokerage, which are the two main
pieces of our transportation business,
and represent about 90% EBITDA for
XPORemainCo,” an XPO spokesman
said. “And on the contract logistics side at
NewCo, we will still have our global oper-
ations in North America and Europe.”
Evan Armstrong, president of Mil-
waukee-based supply chain consultancy
Armstrong & Associates, said that XPO’s
move makes strategic sense, but it comes
with a significant caveat.
“It probably would’ve made more
sense just to spin off the LTL portion,
since there are synergies between freight
brokerage and the other third-party logis-
tics offerings,” said Armstrong. “But it’s a
nice step in the right direction. There’s
little synergy between LTL and third-par-
ty logistics in the United States.” •
—Jeff Berman, group news editor
LOGISTICSMGMT.COM
 NEWS analysis

LTL

Name change only the start

at Yellow Corp., subsidiaries
IT’S BECOMING APPARENT that the
name change at Yellow Corp., the holding
company formerly known as YRC World-
wide, is the least of the changes occurring
at the companies controlling 10% of the
less-than-truckload (LTL) market.
There are operational changes occur-
ring at networks run by long-haul YRC
Freight as well as regional subsidiaries
New Penn (East), Holland (Central
States) and Reddaway (West) as well
as HNRY, its third-party logistics (3PL)
unit. According to Yellow CEO Darren
Hawkins, the goal is to coordinate ship-
ments better, and reduce transit times.
Through attrition, sales, and other dis-
persals, today Yellow is a North Ameri-
can transportation company flush with a
$700 million cash
infusion under
the Coronavirus
Aid, Relief and
Economic Securi-
ty (CARES) Act,
allowing the carrier
to buy about 300
new tractors and
950 trailers in the
coming quarters.
“YRC Worldwide has not had global project that will involve some changes at
pursuits in a decade,” said Hawkins. the 330 terminals that comprise its North
“YRC Worldwide is not representative American freight network. Hawkins said
of our true mission, which is North he views the move as a long-term project
American LTL freight.” to transform the four companies into
On this point, Yellow is embarking one “super-regional LTL carrier,” able
on an ambitious network optimization to provide one- to three-day service in

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LOGISTICSMGMT.COM JANUARY 2021 | L O G I S T I C S M A N A G E M E N T 13

NEWS analysis

its regional lanes and transcontinental terminals an uphill fight. that’s where there will be a few million
service by long-haul YRC Freight. “What they’re doing is creating one dollars leaking out.”
“We’re in the early innings of a network for regional and long-haul,” said However, since there are no new
nine-inning game,” said Hawkins. “A lot Satish Jindel, principal of SJ Consulting, entrants in the LTL sector, and there
of planning has been done, but as you do a firm that closely tracks the LTL sector. haven’t been seen since Con-way came
this in markets with physical freight, it’s “It will result in some revenue leaking on in 1984, Jindel concluded: “This is a
a process you have to work through, and from the company because, unlike par- time for LTL carriers to take control of
I’m very pleased with how we’re doing.” cel, you have very strong regional com- the market.” •
Yellow’s network optimization com- petition with one-day transit times. So, —John D. Schulz, contributing editor
prises six facets: network design and
facilities; linehaul planning; routing and
interchange; city operations; dock and SITE SELECTION
yard operations; and visibility and sta-
tus. According to Hawkins, the imme-
diate goal is to improve efficiencies CBRE report: Reverse logistics gains may
and cost reductions through terminal
cohabitation and consolidation. Ship- pave the way for increased development
pers, he said, should notice little dif-
ference outside of gradually improved WHILE THERE WAS a heightened purchases expected to be returned.
transit times lane by lane. sense of attention being paid to the And it added that these returns can
The terminal redesign was one of the number of goods ordered online this “cause enormous stress to distribution
key components in the 2019 contract holiday season, one inevitable aspect networks, adding significant costs for
talks signed off on by the Teamsters of the frenetic pace of e-commerce retailers,” with reverse logistics costs
union, which represents the majority of activity will be how much of an impact equating to 59% of the cost of an item’s
Yellow’s 30,000 employees. The problem it will have on reverse logistics. original sales price.
Yellow faced was that it had two brands— That was a key theme of a report As for the intersection of reverse
Holland in the Upper Midwest and long- recently released by industrial real estate logistics and the industrial real estate
haul Yellow Freight—competing for the developer CBRE titled “Reverse Logis- opportunities they provide, CBRE point-
same type of freight. tics Stress Test: Holiday E-Commerce ed to data from Optoro, a reverse logistics
“The 2019 labor agreement, with Spike Will Lead to Record Returns.” software provider, that showed how a
the change of operations that followed, The report put the anticipated impact retailer’s supply chain requires four to
allows us to go across brands as we need of reverse logistics into perspective, citing seven times more space allocation at
to,” said Hawkins. “We won’t have two the National Retail Federation’s (NRF) peak periods. It also pointed to how there
brands operating in one geography. Enter- estimate that total 2020 online holiday are limited warehouse space options, as
prise transportation allows servicing that sales are pegged to see a 40% annual demonstrated by 22 U.S. industrial mar-
customer with one brand and gives that increase, to $234.9 billion, with almost kets having vacancy rates that are below
customer access to the entire Yellow net- one-third—up to $70.5 billion—of these the national average of 4.7%.
work. It just takes connectors.”
With nearly $5 billion in revenue
last year and $700 million in govern-
ment loans, Yellow has the size to be a
significant force in the $46 billion LTL
sector. Yellow’s cash and cash equiva-
lents in the third quarter surged to $454
million, as the CARES loan kicked in,
compared with $150 million in the
2019 third quarter.
Yellow no longer breaks out operat-
ing statistics by company. Instead, it
will have four divisions and 17 operat-
ing teams supporting its 330 terminal
locations. Analysts say those terminals
are gold in an era when real estate is
scarce for trucking terminals and envi-
ronmental concerns make building new

14 L O G I S T I C S M A N A G E M E N T | JANUARY 2021 LOGISTICSMGMT.COM

 NEWS analysis

“More forward orders mean more million square-feet, more space could be speaks to the need for more industrial
inventory coming back, increasing space needed to process returns.” space stock. “It’s coming online, but the
demand especially during the holiday Walaszek also observed that the demand right now is quite high, given
season,” wrote CBRE. What’s more, the industrial logistics real estate space the fundamentals of the market and the
report noted that reverse logistics supply is continuing to experience tight mar- expansion of e-commerce,” he added. •
chains require, on average, up to 20% ket fundamentals, a fact that he said —Jeff Berman, group news editor
more space and labor capacity when
compared to forward logistics.
While that statistic is impressive,
what’ve even more so is an estimate from
CBRE Econometric Advisors, indicat-
ing that e-commerce growth will result
in an additional 1.5 billion square-feet
of industrial space over the next five
years. And it added that reverse logistics
and inventory control are also serving as
drivers for increased warehousing size
requirements, with the average size of
warehouse leases at more than 100,000
square-feet coming in at a record 272,000
square-feet in the third quarter of 2020.
John Morris, an executive managing
director at CBRE, noted that during
the pandemic, which has seen carriers
struggle with capacity challenges like
driver availability and lack of equipment
coupled with higher than ever e-com-
merce delivery and warehousing costs,
2020 has been a very expensive year for
the forward supply chain.
“But one of the things all retailers have
been really good at this year is securing
off market spot transportation and ware-
housing space,” said Morris. “When the
forward supply chain takes a bit of a break
after the New Year, there will be those driv-
ers and that equipment that will be able to
handle quite a bit of these expanded return
volumes. There will still be quite a bit of
strain on the reverse supply chain, but it’s
good news that we’re coming through a
COVID period where supply chain capac-
ity itself is somewhat expanded.”
According to Matt Walaszek, a CBRE
director of research, that 1.5 billion
square-feet of industrial space is set to
be delivered over the next five years, for
what he called “modern classic space”
for occupiers that are currently in sec-
ond generation, or Class B, space.
“That will leave more Class B space
leftover for the purpose of reverse logis-
tics,” said Walaszek. “As this process
continues to grow year-over-year, which
we’re expecting in the form of up to 400

LOGISTICSMGMT.COM JANUARY 2021 | L O G I S T I C S M A N A G E ME NT 15

Moore on Pricing
Peter Moore is dean of the
Logistics Training Center and
adjunct professor at Georgia
College and State University in
the MSCLM Graduate Program
and adjunct professor at The
University of South Carolina
Beaufort. He lives on Hilton Head
Island, S.C. and can be reached
at peter.moore@logstudies.com.

Blockchain and freight payment

In a recent LTL freight class held online tracking separately in transportation operations.
by SMC3, three LTL executive guest panelists It’s clear that we need an auditable, common
responded to a question about freight payment. I ledger for the shipper and the carrier with one set
was surprised by their answer. of tracking history, costs and service records for all
The three major carriers responded that they were parties to see. A hack-proof digital record of service
still dealing largely with paper invoices and pre-audit/ performed can then trigger an automatic payment. In
pay firms and post auditors all locked into match-pay this case, the agreed upon charges are part of the sin-
processes. Indeed, this is a very expensive process gle, shared record and no match-pay is needed.
for the carrier to receive payment as well as for
payables processing on the part of the shipper.
Let’s see if it could be done better. But first, “ My humble advice to all logistics
let’s consider this business case.
LTL freight is estimated to be a $35 bil-
professionals: Pay attention to blockchain. ”
lion-per-year market sector, with 25 carriers
invoicing 90% of that. Let’s say billing and col- The records must meet the very highest standards
lections costs are a mere 3% of revenue. For the for secure international financial transactions. Very
moment, we’ll ignore uncollected receivables and detailed shipment, tracking and financial data is col-
consider counting administration, collections, and lected in real time and permanently stored in a secure
borrowing on receivables. “ledger” platform. Yes, I’m describing blockchain.
That means that a billion dollars is spent just try- Many international shipping firms and all major
ing to get paid for work already done several weeks ocean carriers are working with major consulting
before the cash comes in. That would mean that firms and IBM to standardize blockchain transactions
these 25 LTL companies spend an average of $36 for logistics globally. The Federal Maritime Commis-
million each in billing and collections—which is sion, a part of the U.S. Department of Transporta-
hard to believe. tion, has blessed the sharing of processes between
On the shipper’s side, there’s also administration, competitors so that this can be achieved quickly.
check writing costs and third-party service fees. The government gets the added benefit of being
Under administration, there’s the cost of maintaining able to see records for Customs tariff collection
a TMS with copies of the same rate tables the carrier and security; and, of course, the business case
has on their system in order to support match-pay for combining transaction tracking data to trigger
processes. The two parties to the transaction are both financial settlement is easy with large ocean con-
spending money in similar processes—a significant tainer moves. In fact, ocean carriers can take out
portion of which could be better spent elsewhere. tens of dollars per shipment.
For several decades, EDI billing has been avail- But once it’s set up, even small shippers and
able, but it merely replaced the paper being passed carriers can use the global system. From the EDI
between parties, and it comes at an expense. If we’re standards to UPC codes to RFID, the big boys
still using paper to settle transactions, the ability to built it, and now the smaller firms got to use it.
track the shipment and tie that to a proof of delivery Billions of dollars will drop to the bottom line for
and service performance are still separate expensive carriers and shippers.
processes for both the shipper and the carrier. We’re My humble advice to all logistics professionals:
match-paying in accounting departments and doing Pay attention to blockchain. •

16 L O G I S T I C S M A N A G E M E N T | JANUARY 2021 LOGISTICSMGMT.COM

Newsroom Notes
with Jeff Berman
Dry ice: A critical component
of vaccine distribution efforts
A year ago at this time, did anyone think that a major
theme in logistics would be the importance of dry ice?
Well, that’s clearly changed, given that dry ice is a
key factor in keeping doses of many COVID-19 vacci-
nations at the required temperatures needed in order
for them to be effective. For example, the Pfizer vaccine
needs to be kept at -70 Celsius.
Evan Armstrong, president of Milwaukee-based supply
chain consultancy Armstrong & Associates, recently point-
ed out to me that securing the needed quantity of dry ice
has been a problem due to the decline in oil prices.
“Dry ice manufacturing happens next to oil refin-
ery plants, because they capture the CO2 out of the
process,” Armstrong explains. “When the price of oil
dropped, it created a lot less CO2 because production
went down. Right now, dry ice supplies are very tight.”
And now it appears that the challenges related to
limited dry ice availability are likely to continue across
a number of verticals. “As the Pfizer vaccine needs to
be distributed at -70 Celsius, all of the dry ice is going
to get sucked up for its distribution,” says Armstrong.
“That’s going to affect all of the food and grocery items
on the frozen side, so the ripple effects of that are going
to be pretty extreme.”
A recent MarketWatch report highlighted other
related challenges of dry ice related vaccine distribu-
tion, including safety concerns related to the fact that
dry ice emits CO2 on airplanes.
“Packaging dry ice in a container that doesn’t allow
adequate release of the gas could cause the container
to explode from the built-up levels of pressure, a pro-
cess known as sublimation,” the report stated. “Dry ice
can also deprive a confined space of oxygen, making it
difficult to breathe. That’s why the U.S. Department of
Transportation and the International Air Transport Asso-
ciation classify dry ice as hazardous when transported.”
LOGISTICSMGMT.COM
Jeff Berman is group news editor for
the Supply Chain Group publications.
To contact Jeff with a news tip or
idea, please send an e-mail to
jberman@peerlessmedia.com.
A Wall Street Journal report indicated that air carriers
involved in vaccine transportation have called on fed-
eral regulators to increase the amount of dry ice they’re
allowed to carry on flights transporting vaccines.
The report added that both Delta Airlines and Unit-
ed Airlines have respectively received FAA approval
related to dry ice transport, with Delta obtaining FAA
approval to double the allowed load of dry ice on its Air-
bus A330 and A350 wide-body jets. In the meantime,
“When the price of oil dropped, it created a
lot less CO2 because production went down.
Right now, dry ice supplies are very tight.”
United recently received FAA approval to increase its
dry ice allowance to 15,000 pounds from 3,000 pounds
on charter flights between Brussels International Air-
port and Chicago O’Hare International Airport to dis-
tribute the Pfizer vaccine.
From a logistics provider perspective, UPS is
actively involved on the dry ice front, announcing in
late November that its UPS Healthcare unit is now
able to produce up to 1,200 pounds of dry ice per
hour “to support the storage and transportation of cold
chain products, such as frozen vaccines, in accordance
with manufacturer storage requirements.”
UPS said that dry ice will be sourced at its UPS
WorldPort location in Louisville, Ky., and be made
available the next day. UPS points to the dire need
for more dry ice, explaining that a major spike in
demand is driving logistics providers to plan for what
some analysts say may be a coming shortage “as phar-
maceutical companies strategize getting hundreds
of millions of their vaccine doses to communities
around the U.S. and globally.”
Given the various angles related the intersection of
the need for dry ice, logistics, cold chain and vaccine
distribution, this is a topic that is not going away any-
time soon. There’s an expectation that it will be going
on well into the third quarter of 2021.
So, between now and then, dry ice is more than like-
ly to become a common part of the logistics vernacular.
When it no longer is, it will hopefully mean that the
logistics sector did its job and the world is in a much
healthier place. •
JANUARY 2021 | L O G I S T I C S M A N A G E M E N T 17
Accenture on OPERATIONS
By Sean Simmons, and Michael Reiss, Accenture
Putting customers at the center
with intelligent fulfillment
This has been a pivotal year for supply chains. The
COVID-19 pandemic highlighted the critical need for
resilient and responsible supply chains that can keep
essential medical supplies, food and other necessities
flowing where they’re needed most.
Facing major shifts in consumer demands and behaviors
that were further accelerated by the pandemic, companies
are now focused on transforming their supply chains to con-
tribute to a customer experience that leads to growth. Cus-
tomer-centric supply chains are no longer a luxury, they’re an
imperative for meeting future business requirements, as well
as “black-swan” shifts in supply and demand.
Accenture research shows just 10% of companies
were on the right path to building customer-centric sup-
ply chains prior to the COVID-19 pandemic. Those with
advanced digital capabilities (including the use of ana-
lytics and collaboration platforms) and ecosystem agility
have been able to weather the current pandemic better
than those who did not.
A resilient and responsible customer-centric supply
chain embedded with digital capabilities needs to be
anchored on four core characteristics: tailored, agile,
trustworthy and innovative.
Tailored
Digital technologies like machine learning and artificial
intelligence play a key role in providing personalized,
last-mile delivery and direct-to-consumer offerings that
give customers what they want, where and when they
want it. Other capabilities like advanced analytics can
help companies leverage the world of information to
best understand how to serve customer needs in order to
build a truly customer-centric supply chain.
Agile
The Accenture survey showed most companies lack the
flexibility to deliver differentiated customer offerings on
demand. To do this, companies should focus on restruc-
turing their legacy supply chain to create multiple supply
chains tailored to specific segments based on unique
value propositions. Companies should also focus on an
asset-light supply chain model, leveraging the breadth and
depth of their partner ecosystem—to allow them to flex in
sync with changing customer demands.
Trustworthy
Trust is paramount in a customer-centered supply chain.
Several capabilities play a role in helping companies build
18 L O G I S T I C S M A N A G E M E N T | JANUARY 2021
By Sean Simmons, Managing Director,
Supply Chain & Operations, Accenture Strategy
Michael Reiss, Senior Principal,
Logistics, Accenture Strategy
lasting trust through sustainability, social responsibility
and radical transparency. One example is blockchain
that can be an important enabler, providing full trace-
ability across the value chain from raw materials all the
way through final delivery.
“With the right actions, supply chain
leaders can turn supply chain disruption
into meaningful change and build
long-term resilience.”
Additionally, technologies such as IoT and RFID,
coupled with analytics, are helping companies embed
circular economy practices and increase the ability to
track resources and monitor waste capacity—contribut-
ing to sustainability goals.
Innovative
New technologies bring new opportunities to learn
more about customers and provide new products and
services that will attract and delight them. Digital
assistants and connected household devices allow cus-
tomers to place orders, track deliveries, and coordinate
returns from any location.
Wearable devices transmit data indicating customer
usage, location, and frequency. And there’s much more
to come, as the deployment of 5G is expected to fur-
ther boost e-commerce revenue by $12 billion by 2021.
Companies need to constantly evaluate how to
leverage these innovative technologies—considering
where they can be used to enhance both the internal
and external customer experience.
Embrace customer-centricity through
intelligent fulfillment
The world is moving quickly and customers are moving
with it, which makes attracting and retaining them hard-
er than ever. Companies need to redesign their supply
chains to be growth engines by creating customer-cen-
tric fulfillment capabilities that deliver the experiences
that customers crave.
With the right actions, supply chain leaders can turn
supply chain disruption into meaningful change and build
long-term resilience to outmaneuver uncertainty and
achieve growth. Those that do will achieve competitive
advantage now and in the future. •
LOGISTICSMGMT.COM

EXECUTIVE INSIGHTS FOR RECOVERY
People make it all work
Q&A with Marc Althen, President, Penske Logistics
Q: From your unique
perspective, what did you
see as the biggest logistics
and supply chain challenge
brought on by the pandemic?
A: The onset of the pandemic caused
a swift, severe reset in the supply
chain that is still being felt today.
Some supply chains completely closed
down, while others, such as the
grocery and healthcare sectors, surged
to unprecedented levels.
We responded swiftly, making
health and safety a top priority in our
operations with enhanced processes,
procedures, and support for our
associates who have performed with
incredible resiliency while ensuring
essential goods and services are
available and delivered to our
communities.
Q: As we move deeper
into recovery, how do you
suggest managers now need
to approach their logistics
and supply chain strategies
in 2021? How must tactics
change and improve?
A: While there is increased optimism
due to the new vaccines, it will take
some time before vaccines are widely
available. In the near term, supply
LOGISTICSMGMT.COM
ADVERTISEMENT
chain and logistics leaders should
be thinking about securing trucking
capacity at the factory, distribution
center, and store-levels.
Increased consumer demands
downstream at the final-mile delivery
point are creating increasingly complex
challenges for shippers upstream. As
a result, trucking capacity could be
tighter in 2021. Shutdowns continue
to affect various geographies causing
product demand surges.
Q: How is your organization
positioned to help logistics
and supply chain managers
through recovery?
A: Throughout the pandemic, Penske
Logistics has helped industry-leading
brands ensure their essential products
and services are readily available where
JANUARY 2021 | L O G I S T I C S M A N A G E M E N T
and when needed. In addition to our
enhanced operational health and safety
protocols, Penske Logistics is ready
to serve customers with continued
investments in expanding our dedicated
contract carriage, warehousing and
freight management capabilities.
We have also made significant
investments in our ClearChain®
technology suite to provide our
customers with leading-edge visibility,
supply chain optimization and
systems integration.
Q: What would you say are
the most important lessons
that the logistics and supply
chain community has learned
through this challenging year?
A: The most important takeaway
from 2020 is that people make the
supply chain work. I am so proud
and thankful for our truck drivers,
warehouse workers, operations
managers, technology workers,
engineers, leaders, truck technicians,
and everyone at Penske for their
outstanding performance in meeting
customer needs during these
unprecedented times.
The supply chain has demonstrated
incredible resiliency and is adapting
to new market demands. While
there are opportunities ahead for
automation, robotics, and technology
improvements, people make it all work.
19
 EXCLUSIVE
I
n its latest “World Flash” intelligence report, IHS
Markit economists note that as the dreaded second
and third waves of COVID-19 arrived in late 2020,
they crushed any illusion that the world could quickly
and easily control the spread of the virus. The resur-
gence was especially pronounced in Europe and parts
of the United States, where “pandemic fatigue” has
become a formidable challenge for governments.
“Even before the most recent surge in infections, we
were predicting that growth would fade in the closing
months of 2020 and the beginning of 2021,” says Nari-
man Behravesh, chief economist for IHS Markit. “That
fade is morphing into something worse. In the case of
the Eurozone and the UK, real GDP will contract in the
fourth quarter of 2020, and recovery will be limited in
the first quarter of 2021.”
However, prospects are a little less dire for the U.S.
economy, IHS economists maintain. After the United
States grows an expected 3.7% in the fourth quarter
of 2020, average growth in the four quarters of 2021
20 L O G I S T I C S M A N A G E M E N T | JANUARY 2021
should be a mere 1.9%. The outlook is brighter in much
of Asia, where the infection rates have remained low.
Other mainstream economists and multilateral organi-
zations—such as the International Monetary Fund—are
calling for more fiscal stimulus as the need to strengthen
struggling economies has overwhelmed notions of aus-
terity. Furthermore, with institutional and political con-
straints in Europe and the possibility of a divided govern-
ment in the United States, more limitations on budgetary
expansion in the emerging world mean hopes for big fiscal
stimulus are dashed or fading fast.
Meanwhile, central banks will continue to bear the
burden of stimulus, IHS economists contend. Despite
repeated pronouncements to the contrary, monetary
authorities around the world are not in retreat, as was
amply demonstrated during the 2008–2009 global
financial crisis. “The bottom line is that, once again,
the near-term global economic outlook has worsened,
and the most likely policy mix looks to be suboptimal,”
concludes Behravesh.
LOGISTICSMGMT.COM
 2021 RATE OUTLOOK:

HIGHER RATES
dead ahead
Freight transportation providers responded to COVID-19 pressures
heroically, becoming leaner, more collaborative and efficient. And while
this is good news for the nation’s freight network, shippers should
expect significantly higher rates across all modes in the months ahead
as the world moves through recovery.

BY PATRICK BURNSON, EXECUTIVE EDITOR

Energy enigma around the continued collective determination among

Within this context, no discussion of freight transporta-
tion costs can be understood without first looking at the
energy picture. Derik Andreoli, principal at Mercator
International and a frequent contributor to Logistics
Management, says that it looks like we’ll enter 2021 with
“significant headwinds” that will continue to suppress
oil demand and prices.
Andreoli maintains that oil demand is on track to
decline by between 8.5 million barrels per day and 9.0 mil-
lion barrels per day, while domestic production will likely
continue to dip at least through the first half of 2021, as
the global economy is expected to continue to struggle
with new waves of virus infections.
“The U.S. Energy Information Agency predicts that
demand will only grow by 5.9 million barrels per day in
the coming year, which will leave global demand around
3 million barrels per pay below 2019 levels,” says
Andreoli. “And for this reason, we should expect to see
oil prices continue to remain low, though uncertainty
OPEC members to maintain production cuts is likely to
cause price volatility.”
Andreoli adds that this volatility could be intensified
by a “global geopolitical reset” that could come about as
a result of change in U.S. leadership. “It’s unclear how
eager President Biden will be to re-engage Iran with a
new nuclear deal, resulting in increased Iranian oil pro-
duction,” he says. “Meanwhile, the entire Middle East
region—which has seen four historic peace deals bro-
kered in recent months—could destabilize.”
For these reasons, says Andreoli, logistics managers should
expect crude oil prices to be volatile throughout the coming
year. “But most needles point to persistently low oil prices,
and this should translate to low fuel prices,” he concludes.
Ocean: “Stratospheric” spot pricing
Despite a softening of energy prices, shippers may expect
a sustainable hike in ocean cargo rates, says Philip Damas,
director and head of the supply chain advisors practice at

LOGISTICSMGMT.COM JANUARY 2021 | L O G I S T I C S M A N A G E M E N T 21

 EXCLUSIVE: 2021 Rate Outlook
London-based Drewry. “Manufactur-
ers and retailers should expect ocean
contract freight rates on most routes
to increase in 2021, following major
market changes since the COVID-19
outbreak,” he declares.
Damas adds that signs are obvious
in the spot market for ocean transpor-
tation that carriers have gained pricing
power and are managing ship capacity
to their advantage. “Some routes and
regions stand out as benefiting from
lower rates, but the vast majority are
After the U.S. grows an expected 3.7% in the fourth quarter of
2020, average growth in the four quarters of 2021 should be a
mere 1.9%. The outlook is brighter in much of Asia, where the
infection rates have remained low.
seeing rates rise—particularly trans-Pa-
cific eastbound—where the increases
are worryingly high for shippers and the
rates are much more profitable for ocean
carriers,” he says.
The “stratospheric” increases in
trans-Pacific spot rates and the current
shortage of capacity in Asia have led
regulators in China and the U.S. to
signal that they’re watching the compe-
tition situation closely, observes Damas.
China’s Ministry of Transport met
with most major carriers late last year,
requesting that carriers bring back more
ship capacity to the market.
At the same time, the U.S. Federal
Maritime Commission said that it’s
“actively monitoring” any potential effect
on freight rates and transportation ser-
vice levels, using a variety of sources
and markers, including the exhaustive
information that parties to a carrier
agreement must file with the agency.
“Particularly this year, shippers and
forwarders should track the devel-
opment of spot freight rates because
22 L O G I S T I C S M A N A G E M E N T | JANUARY 2021
they signal the tightness of the market
on some routes,” adds Damas. “They
may be a leading indicator of contract
rates, and could point to future prob-
lems of capacity availability.”
Trucking: Rates jumping
The domestic surface transportation
industry is also poised to take advantage
of spot pricing and capacity manage-
ment, says David Ross, transportation
analyst at Stifel Investment Banking.
He advises logistics managers to
—IHS Markit
begin analyzing truckload (TL) pricing
because it has implications for less-
than-truckload (LTL) and intermodal as
well—and it’s by far the largest market
in domestic freight transportation.
“It has been a wild ride this year, but
after a shaky start, the trucking market
has been a good one for carriers since
June, with spot rates rising each month
the last couple of quarters,” says Ross.
“Contract negotiations will lag, but the
industry pricing has already been reset
higher. Driving these increases has been
the combination of reduced industry sup-
ply—fewer drivers and fewer trucks—
and improving and steady demand after
we emerged from the lockdowns.”
Looking to 2021, Ross doesn’t see
the supply issues being quickly resolved.
However, the bigger swing factor will
likely be overall consumer demand. Still,
he sees rate increases up in the high
single digits in 2021 versus 2020 on the
contract side.
Meanwhile, with a positive backdrop
provided by the TL capacity issues,
Ross says he sees no reason why LTL
can’t continue its steady push of low-
to mid-single digit rate increases. “It
doesn’t need as much, because LTL
is a more consolidated industry with
steadier annual price adjustments, but
we expect the carriers to take advan-
tage of the rising tide and push closer
to 5% than 3% for rate increases in
2021,” he concludes.
Rail and intermodal:
Steep climb ahead
Navigating the road to post-pandemic
normalcy will be a major challenge for
rail and intermodal operators, says Jason
Kuehn, vice president of the consul-
tancy Oliver Wyman. He adds that third
quarter 2020 rail traffic data can be
described as nothing short of resilient
overall, with a handful of exceptions in
the bulk commodity areas comprising
coal, non-metallic minerals, metallic
ores and metals, and petroleum.
“Intermodal volumes have climbed
above 2019 weekly counts in the third
quarter and remain there in the first half
of fourth quarter,” says Kuehn. “A rela-
tively strong consumer market and very
constrained truck capacity have been
tailwinds for domestic intermodal rates
and volumes. In the meantime, a surge
of imports from overseas for replenish-
ing inventories coupled with the normal
peak for the Christmas shopping season
have tested both truck and intermodal
capacity at times.”
At the same time, spot truck rates
are up considerably. And while this
bodes well for first quarter 2021 con-
tract renewals and rate increases, the
long-term outlook for intermodal and
rail in general is still dependent on
longer-term, secular trends and dis-
ruptive shifts in supply chains and the
trucking sector.
The carload business—excepting the
LOGISTICSMGMT.COM
 EXCLUSIVE: 2021 Rate Outlook

bulk commodities—has also rebounded,
albeit at a much slower pace than inter-
modal. This also potentially sets up a
relatively strong pricing environment for
this line of business going into 2021.
Much of this business is housing related
or intermediate goods—inbound raw
materials—for the consumer space.
The heavy industrial sector—energy
and metals—remains weak, and for
Kuehn, this suggests that “caution is a
better emotion than euphoria.” Market
uncertainty is keeping metallic and
non-metallic ores and metals depressed.
“This all suggests that, while the envi-
ronment is robust now, we expect at
best a plateau and at worst some return-
ing weakness in 2021,” he adds.
Air & Parcel: Could be a bumpy ride
For Chuck Clowdis, managing director
at the consulting firm Trans-Logistics
Group, Inc. the coming year brings
even more uncertainties than usual for
the air cargo sector.
“Consumer spending will certainly be
a driver of air cargo volumes and higher
rates,” says Clowdis. “Manufacturing,
as demonstrated by auto sales, is also
a beneficiary of consumer confidence
and spending. Consumer and home
improvement items have likewise trans-
lated into more demand for airfreight
than anticipated.”
Furthermore, says Clowdis, COVID-
19 vaccines and treatment drugs will
buoy demand for airfreight capacity,
while new cell phones and tablets will
generate more business for consolida-
tors. “Rates are already rising and will
continue should there be changes in
import/export regulations, especially
in the international air space,” he says.
“Express and regional service carriers
will benefit as early vaccines become
available and more pressure comes from
every community for access to these
drugs—and rates will rise accordingly.”
However, available capacity will
remain a question mark. With parked
freighters and cargo conversions now
entering the market, ongoing pan-
demic concerns will have an impact
“We should expect to see oil prices continue to remain
low, though uncertainty around the continued collective
determination among OPEC members to maintain production
cuts is likely to cause price volatility.”
—Derik Andreoli, Mercator International
on crew capabilities as dedicated
freighter capacity continues to grow,
Clowdis maintains.
“Conversely as passenger flights are
canceled, belly space on passenger flights
drops,” says Clowdis. “Loss of this capac-
ity to even mid-sized communities can
have dramatic impact on shipments. As
example, Delta and American have also
announced cuts of more than 100,000
flights due to low demand in Decem-
ber,” he says. “A combination of ongoing
epidemic fears and belt-tightening by
consumers in 2021 may give air cargo
providers a prolonged, bumpy ride.”
Similar turbulence is expected to
confront logistics managers in the parcel
sector, says Jerry Hempstead, principal
of Hempstead Consulting. In particular,
“peak season fees” were plugged in as
capacity across the oceans diminished
due to the cancellation of passenger
flights. In turn, many air carriers had
a lot of cargo below deck, keeping air
cargo rates stable.
“Sheltering in place during the lock-
down caused us all to begin procuring
everything under the sun, and peak
season was almost all year in 2020,” says
Hempstead. “We’re now we seeing peak
on peak fees.” Exacerbating that reality
was the fact that some shippers were
told that there would be volume limits
on how many transactions they can ten-
der to the carrier during the “shipathon”
between Thanksgiving and Christmas.
“This is a new phenomenon for the
parcel industry,” says Hempstead. “The
UPS strike of 1997 might have given
us a glimpse, but this is new territory.
The problem for the carriers will be the
decision making on capital expense.
Do they add capacity for what may be
a temporary windfall? Or do they just
sweat the resources they already have in
their networks and deal with the service
complaints later?”
Hempstead adds that UPS has had
a 6% late payment fee for some time,
which is a key driver of revenue for
them. FedEx will be employing the
same strategy in January, which means
that logistics managers may be seeing
bills with 6% added to balances over
14-days outstanding.
“This is not going to be appreciated
by accounts payable,” says Hempstead.
“And it will leave shippers wondering
why their projections were off.” He
advises logistics managers to either figure
out what’s driving their costs with the
parcel carriers, or hire a professional.
“If you have a freight audit and pay-
ment service, make sure they under-
stand the ramifications of not paying
within term and hold them account-
able,” adds Hempstead. “Know that
the terms and the percentages charged
are negotiable.” •
Patrick Burnson is executive editor of
Logistics Management

LOGISTICSMGMT.COM JANUARY 2021 | L O G I S T I C S M A N A G E M E N T 23

 Transportation Best Practices/Trends

Freight Payment 2021:

Data analysis
for everyone
Freight payment providers are upbeat heading into recovery, offering a
diverse menu of solutions designed to take cost out of freight transportation
by helping shippers of all sizes to “think strategically, not transactionally.”

BY JOHN D. SCHULZ, CONTRIBUTING EDITOR

T
he burgeoning freight bill payment industry has evolved over the years from
the green eyeshade-wearing legal eagles who reviewed your grandfather’s
freight bills to the big data-driven analytical firms of today that offer every-
thing from “soup to nuts” on the bill-paying menu.
Indeed, over the years the industry has gravitated from mom-and-pop operators
to gigantic multinational banks and financial service companies. While there are
still scores of solid, family-run freight bill payment service companies, they’re being
squeezed by the big boys. Gone are the days, as one industry insider put it, “of doing
deals with your brother-in-law.”
Today, shippers have a menu of services from which to choose. There are sin-
gle-source options for both carriers and shippers offering the latest, data-driven
solutions. However, experts say that the real savings occur not from spotting the
occasional error in a freight bill, but rather from leveraging time-sensitive data—
from which carrier to choose to geographic lane and other customer-centric tools
for streamlining freight moves.
Nearly every freight bill company can process invoices accurately and efficiently,
but experts and industry officials contend that even more streamlining comes from
examining how to enhance working capital while providing carriers timely, pre-
dictable payments. A good freight bill payment analysis can help shippers improve
decision making with tools and services that can turn raw data into valuable insights
about their shipments.
Market players also contend that the key for shippers is helping them find new
efficiencies at every mile of their supply chains while using collaborative, web-based
tools to reduce errors and resolve exceptions quickly.

24 L O G I S T I C S M A N A G E M E N T | JANUARY 2021 LOGISTICSMGMT.COM

 “The state of the market is optimistic heading into
2021,” says Jeff Pape, senior vice president of product
and marketing at U.S. Bank Freight Payment, which
processes more than $24.5 billion in freight payments
annually for corporate and federal government clients.
“And while the market is good, it has a lot of chal-
lenges. The pandemic has certainly tightened capacity
and rates are going up.”
By the end of last year, most freight payment
indexes were showing total shipments and spending
increasing commensurately. “With improvements in
the economy, this freight market will rebound and be
strong,” adds Pape.
However, others in the industry describe a “code red”
situation due to the rapidly changing boom-and-bust
business cycles brought on by the pandemic. It’s no lon-
ger survival of the fittest, they say. It’s merely survival.
So, let’s take a deeper dive into the state of the freight
bill payment services market. We’ll examine how the
industry reacted to the pandemic as shippers learned to
work remotely and safely, and we’ll identify some best
practices in freight payment as we roll into 2021.
LOGISTICSMGMT.COM
The COVID effect
Like most businesses in general, and freight transport
specifically, the worldwide coronavirus pandemic sent
practitioners scrambling to keep supply chains moving
and their workers and customers safe—all while simply
trying to stay in business.
“COVID-19 has made an impact on all businesses,
but especially suppliers,” says Daniel Brachfeld, vice
president and general manager of supply chain solutions
at American Express, a considerable player in the freight
bill payment sector.
According to Brachfeld, over the past six months,
Amex heard from many buyers, including shipping and
freight companies, who were seeking ways to support
current vendors, find new ones, and keep their business
on track. “All of these challenges are placing pressure
on suppliers’ cash flow and liquidity, creating an even
greater need for early payment from the large freight
companies they do business with,” he says.
Mike Regan, chief of relationship development and
co-founder at TranzAct, a family-owned technology services
and freight bill payment company, says that it’s either “feast
JANUARY 2021 | L O G I S T I C S M A N A G E M E N T 25
Transportation Best Practices/Trends: Freight Audit & Payment
or famine” for his customers at this point.
“It’s a tale of two cities,” says Regan.
“Some are thriving, while others are
really struggling. We had five years of
business cycles in five months during
2020. We’ve been seeing things we’ve
never seen before—it’s code red.”
According to Pape at U.S. Bank, early
in the pandemic, many customers were
requesting greater visibility into their
operations to preserve cash. “So, we
added some additional capabilities for
managing their cash flow with increased
flexibility by putting more decisions in
their hands. The goal is maintaining that
balance through recovery.”
Digitization on the way
Another major trend that experts say will
blossom in 2021 is digitalization and the
greater use of analytics, as big data will
increasingly enable shippers to make
smarter decisions in their use of freight.
“The biggest emerging trend is quality
of data,” says Regan. However, he adds
26 L O G I S T I C S M A N A G E M E N T | JANUARY 2021
that the trick for shippers is to begin
looking at their operations “strategically,
not transactionally.” Some do, he says,
but most don’t.
“There are shippers that are focused
only on the lowest rate and are going to
the mat over finding 20 cents per bill
on 120,000 shipments a month,” says
Regan. “Shippers must end that type
of transactional thinking. The way you
manage freight spending is from the
inside out. The COVID world has really
highlighted the value of a strategic pro-
cess, and if you’re focused on controlling
your transportation spend by watching
for the cheapest rates and accessorials
you’re getting slaughtered right now.”
Regan says that a better way to man-
age freight is to look at the processes
inside your company that make an
impact on the consumption of freight.
“The 3PLs are trying to get there,” he
says. “But in order to get there, you need
to have good data. This isn’t new, but it’s
becoming increasingly important.”
The consensus remains that the
best freight bill payment companies are
emphasizing the need for accurate data
and ability to aggregate ancillary data.
“If I look at the tech-based companies,
they’re creating additional data elements
associated with the transaction,” adds
Regan. “I can do tracking and tracing
throughout the entire life of that ship-
ment. Now I can aggregate that into my
database. Now I have data on the time it
was picked up and delivered. Analyzing
that data is where the savings are.”
Along those lines, American Express,
which has been supporting the freight
industry in one form or another for the
past 60 years, recently enhanced its
“Early Pay” supply chain payment solu-
tion to give large companies—and their
suppliers—the ability to pay and get
paid when they want through an easy-
to-use digital platform.
Brachfeld explains that the idea was
to help buyers have greater control of
their accounts payable process for their
LOGISTICSMGMT.COM
 Transportation Best Practices/Trends: Freight Audit & Payment

B2B payments, generate extra cash from
early payment discounts, and finance
their payments should they need the
working capital. He adds that businesses
are more focused on digital transforma-
tion than ever before, with 84% of U.S.
business decision makers saying that
they feel positive about transitioning to
a digital payments system, according to
American Express research.
And it’s paying off. American Express
estimates that it’s realized some $8.84
billion in savings from freight discounts
through adoption and automation of its
payment discount functionality.
Follow the data
However, don’t get the impression that
giants like Amex and U.S. Bank dom-
inate the freight bill payments sector,
though they own sizable presence
in the market. There’s still plenty of
room for expert analytics provided by
smaller operators as well.
“You don’t need to be a large pro-
vider to deliver huge value proposition
to your clients,” says Alan Miner, pres-
ident of 98-year-old CT Logistics in
Cleveland, a company that got into the
freight bill payment business in 1984.
Demonstrating the flexibility of
the smaller guys, Miner says his
company recently made a six-figure
investment in a business intelligence
function call “QLIK.” It puts all cli-
ent data into a huge database that
analyzes their shipments and offers
insight into modal choices, packag-
ing, dimensioning and other minutiae
that amounts to huge savings.
“Our core competency is freight traf-
fic expertise,” says Miner. “Our analysis
of freight bill auditing is huge compared
to someone who just pays your bills.”
According to Ross Harris, CEO
of A3 Freight Payment, the sector is
changing so rapidly that his company is
in the process of reinventing and rede-
fining its service offerings. “The term
‘freight payment’ is getting outdated,”
he says. “What shippers are looking for
is transportation spend management
and tools associated with that. We’ve
always had reporting and visibility. Now
the expectation of shippers is to have
data within a couple clicks.”
This level of data availability was
formerly the domain of 3PLs and oth-
ers who had an office full of data anal-
ysis technicians. Now, with the help of
the right freight bill payments partner,
every shipper can access its actual
source of transport data. •
John D. Schulz is a contributing
editor to Logistics Management

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2021 Trade Update:

Time to shift
direction?
Shippers who are current on the global trade
landscape are assets to their service
partners and clients. Our global trade
expert provides us with a review of the key
trade topics that should be top of
mind as we enter 2021.

BY JULIE GIBBS, DIRECTOR, BPE GLOBAL

 Global Logistics
T
he year 2020 was the year of “pivoting” in terms of
international trade. The pandemic had a devastat-
ing impact on trade, as supply chains throughout
the world were faced with reduced available transporta-
tion capacity and congestion in many ports that brought
with it many extra costs and surcharges. In short, ship-
pers had to rethink how to safely and cost effectively
move their freight.
Meanwhile, shippers also had to cope with Section
232 and 301 tariffs, ongoing Committee on Foreign
Investment in the United States (CFIUS) investiga-
tions, the new United States-Mexico-Canada Agree-
ment (USMCA) regulations among other new trade
related initiatives.
Now, with a new U.S. regime change, here are some
key international trade areas shippers need to under-
stand heading into 2021 as they consider whether they
need to continue to alter their trade compliance and
supply chain strategies.
Continued retaliatory tariffs
The new administration under President-elect Biden
will most likely work with U.S. allies to put pressure on
China to stop its unfair trade practices. Biden has made
statements that he would be tough against China and its
predatory tactics on stealing U.S. technology.
So, right now, there’s no indication that the Biden
administration will eliminate the Section 301 tariffs on
Chinese goods, at least in 2021. The whole point of the
Section 301 tariffs against China was because of the
extensive violations on U.S. intellectual property—and it
appears this will continue to be a concern.
However, on the flip side, there are still opportunities
to file lawsuits for refunds of Section 301 tariffs for List
4A. There is a two-year statute of limitations to file for
refund cases under 28 USC 1581(i), so it’s too late for
List 3, but List 4A was not published until August 2019,
so the deadline is August 2021 for items under 4A.
Brexit: New tariffs and requirements
The European Union imposed $4 billion in tariffs on
U.S. goods on November 17, 2020. The list includes
a 15% tariff on Boeing airplanes and a 25% tariff on
LOGISTICSMGMT.COM
a range of products including tractors, whiskey, suit-
cases, games, and exercise equipment. These tariffs are
related to a disagreement over government subsidies
given to Airbus and Boeing. A full list of HTS numbers
can be found here: hts.usitc.gov/
Note that effective January 1, 2021, companies
importing goods into the UK must have a UK val-
ue-added tax (VAT) or a Pseudo Turn number. A Pseudo
Turn number is a nine-digit number issued for use on
goods imported for trade purposes (for example: resale,
commercial use, etc.) when the importer/exporter is not
VAT registered with a legal entity. More information can
be found here: gov.uk/vat.
New military end use regulations
The definition of “military end use” used to include
both direct use and indirect use (such as items intended
for development, production, or use of military items).
As of June 2020, the definition of military end use has
expanded to include ancillary applications and now
covers items that support or contribute to the operation,
installation, maintenance, repair, overhaul, refurbishing,
development, or production of military items.
The new regulations states that you may “not export,
reexport, or transfer (in-country) any item subject to
the U.S. Commerce Department’s Export Administra-
tion Regulations (EAR) listed in Supplement No. 2 to
part 744 to the People’s Republic of China (China),
Russia, or Venezuela without a license if, at the time of
the export, reexport, or transfer (in-country), you have
‘knowledge,’ as defined in 772.1 of the EAR, that the
item is intended, entirely or in part, for a ‘military end
use,’ as defined in paragraph (f) of this section, or ‘mili-
tary end user,’ as defined in paragraph (g) of this section,
in China (including Hong Kong), Russia, or Venezuela.”
The U.S. Department of Commerce’s Bureau of
Industry and Security (BIS) clarifies that there are
two types of military end users. A “military end user”
means the national armed services (Army, Navy,
Marine, Air Force, or Coast Guard), as well as the
National Guard and national police, government intel-
ligence or reconnaissance organizations, or any person
or entity whose actions or functions are intended to
JANUARY 2021 | L O G I S T I C S M A N A G E M E N T 29
Global Logistics: Customs Regulations
support “military end uses.”
License exception GOV is still available for exports to
U.S. government entities under EAR 740.11. So, make sure
you have updated your end user statement process with
these new regulations.
Committee on Foreign Investment in the U.S. (CFIUS)
CFIUS is a committee made up of 16 inter-government
agencies authorized to review certain transactions involving
foreign investment in U.S. transactions in order to deter-
mine the effect of such transactions on the national security
of the U.S. The 16 agencies include the International Trade
Administration (ITA) and the BIS, which throws export con-
trols into the CFIUS decision-making process.
Trade Tip for 2021:
Know your import tariff and
export classifications
I t’s key to understand how your products are classified
under the Harmonized Tariff System (HTS) for import
purposes. Your HTS classifications will determine duty
rates (including Section 301 and 232 tariffs, antidump-
ing, and countervailing duties), government agency
requirements (i.e. FDA, FCC, ATF, etc.), and whether
your products qualify for certain free-trade agreements.
Tariff wars will continue to be an issue in 2021, so it’s
important to be able to quickly analyze the duty impact of
the countries you ship to as well as the HTS numbers for
your products as it will allow you to perform this analysis.
Export classifications, otherwise known as Export
Control Classification Numbers (ECCN), will determine
the export controls on your products in terms of export
licensing, government reporting and other shipping
restrictions. ECCNs apply not only to products and soft-
ware, but also to technology.
If you employ foreign nationals (e.g. H1-B visa holders),
the technology they work with is known as a “deemed”
export because they will most likely leave the U.S. with
this new knowledge of technology, therefore “exporting” it
to their home country.
So, depending on the ECCN of the technology they
work with, it could require an export license for the in-
dividual while they’re in the U.S. In the U.S., we’re also
going to see new regulations surrounding emerging
technologies such as artificial intelligence. It’s very pos-
sible that in 2021 we’ll see new ECCNs for emerging
technologies, so it’s important to stay up to date on
regulatory changes.
—Julie Gibbs, BPE Global
30 L O G I S T I C S M A N A G E M E N T | JANUARY 2021
Effective October 15, 2020, the determination as to
whether a CFIUS filing will be required is entirely depen-
dent on whether a U.S. export authorization would be
required to export the company’s “critical technology” to
certain foreign persons involved in the transaction, regard-
less of whether an actual export of the technology has or
is intended to occur. The new Treasury rule eliminates the
NAICS code as a trigger for reporting or investigation.
Companies are now on the hook for determining their
technologies and whether they fall under the CFIUS
risk profile for a mandatory filing. It’s important to note
that CFIUS only considers certain license exceptions
as valid—License Exception Technology and Software
Unrestricted (TSU), License Exception Encryption Com-
modities, Software, and Technology (ENC), and License
Exception Strategic Trade Authorization (STA).
ACE reports
All of these trade-related issues require the analysis of data
to decide whether a shipper has to shift their supply chain
strategy. Many shippers are unaware that they can have
access to all of their U.S. import and export data regardless
of freight forwarder or customs broker.
The Automated Commercial Environment (ACE) is a free,
secure, on-line portal for shippers to obtain their data. It’s
administered through U.S. Customs and Border Protection and
more information can be found on their website. ACE import/
export transaction reports can help shippers understand where
they’re incurring the most costs in terms of duties and fees;
they provide the origin of goods if changes need to be made
to their supply chains due to retaliatory tariffs; they provide
visibility to errors in declarations; and they provide the data
needed to analyze whether if there are opportunities to take
advantage of a free trade agreement. It’s also a wealth of infor-
mation for shippers to calculate their trade compliance metrics.
The year 2021 will bring many of the same issues for ship-
pers that 2020 did, but the new administration under Biden
will most likely be more methodical in trade related changes
and allow for shippers to have time to pivot their supply chains.
Biden will most likely try to reverse or modify many of the
executive orders that Trump put in place, but it will take time
to do so. So, stay patient, and hopefully 2021 will be more
predictable and less turbulent than 2020. •
Julie Gibbs is a director at BPE Global, a global trade
consulting and training firm. You can reach her by email at
Julie@BPEGlobal.com.
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 Warehouse/DC Management

RUCK SER
TT IE
IF

S
L

•
ERIES •

LIFT TRUCK
L

KS
UC
PART ONE
ROBOTICS

IS NOW THE TIME FOR

ROBOTIC LIFT TRUCKS?
Though robotic industrial trucks are still a small slice of the market,
expectations are growing for them as operations seek to speed up their
processes while lessening the struggle of trying to find enough operators.

I
BY ROBERTO MICHEL, CONTRIBUTING EDITOR

f ever a time was ripe for robotic lift
truck sales to take off, right now might
be it. With the COVID-19 pandemic
accelerating e-commerce for many
types of goods, fulfillment centers and
manufacturing plants need to move a
high volume of pallets to keep stores
stocked up and e-commerce order
picking systems or manual pick loca-
tions topped off with goods.
And while unemployment has risen
since last year, it remains challenging
to secure enough workers—including
skilled lift truck operators—to keep
goods flowing to consumers. Sales of
driverless robotic trucks stand to benefit
under these conditions.
Vendors say that return on investment
(ROI) in two years or less is possible for
automated lift trucks, but some com-
plexities are involved, like knowing how
to phase them into an operation and
identifying automated or semi-automated
applications that make the most sense.
The other reality is that auto-
mated lift trucks are still a drop in
the bucket in terms of total lift truck
sales. User companies will have to fig-
ure out how to justify them and think
through how the technology is not just

32 L O G I S T I C S M A N A G E M E N T | JANUARY 2021 LOGISTICSMGMT.COM

 Fully autonomous robotic lift trucks
continue to evolve to be able to
handle more applications, including
lifts at higher rack positions.

LOGISTICSMGMT.COM JANUARY 2021 | L O G I S T I C S M A N A G E ME NT 33

 Warehouse/DC Management: Lift Truck Series
another type of lift truck, but a tool in
their automation strategy.
Approximately 5,000 automated lift
trucks were shipped in 2019, according
to Ash Sharma, managing director with
analyst firm Interact Analysis. That may
sound like quite a few, but with more
than 1 million lift trucks of all types
shipped last year, it amounted to 0.3%
of the market. However, with a sharp
increase in e-commerce in this pandemic
year and added pressure on warehouses
and other industrial sites to improve on
cost efficiencies and order cycle times,
Interact Analysis predicts robust growth
for robotic lift trucks, which it sees as
inclusive of vehicles based on automatic
guided vehicle (AGV) technology or
those that use autonomous navigation.
Through 2028, Interact Analysis
predicts a compound annual growth
rate of 64.5% for robotic lift trucks, up
from a rate in the 20% to 25% range
the last couple of years, according to
Sharma. The relentless pressure to find
34 L O G I S T I C S M A N A G E M E N T | JANUARY 2021
further costs efficiencies, as well as a
higher level of safety for automated lift
trucks, are key drivers.
“Like other automation areas, one
of the key drivers is cost savings,” says
Sharma. “A company will invest in
automated trucks that do cost more
upfront, but it will save costs in the long
run because the technology reduces
the need for operators, and all the costs
associated with that, like dealing with
training and employee turnover. The
other major factor is that with robotic
lift trucks, you get improved safety.
There are accidents which happen with
human-operated lift trucks, and using
automated trucks is far safer, not only
in terms of human safety, but also in
reducing the risk of damage to inven-
tory, trucks or to facility assets.”
While COVID-19 has driven up
unemployment this year, finding enough
skilled operators remains a concern that
impacts automation decisions. “The mar-
ket environment in terms of employment
Robotic lift trucks that are “infrastructure
free” enable operations to quickly automate
repetitive pallet moves.
has shifted somewhat versus last year,
but over the longer term, the labor avail-
ability issue is a concern that will help
drive this market segment,” says Sharma.
Eyeing growth
Lift truck providers agree that automated
vehicles are bound to grow in popularity
given the continued challenges. And
while warehouse efficiency efforts often
focus on automated order picking solu-
tions, goods also need to be handled,
staged or stored at the pallet level, which
presents opportunities for automating
pallet moves.
“I firmly believe this pandemic will
accelerate the adoption of automated
lift trucks, as well as many other forms
of materials handling automation,”
says Brett Wood, president and CEO
of Toyota Material Handling North
America (TMHNA) as well as a senior
executive officer of TMHNA’s parent
company, Toyota Industries Corpora-
tion (TICO). “Part of the reason is the
difficulty in finding enough skilled
operators, but beyond that it’s the
increased level of customer expec-
tations around a rapid and flawless
materials handling process. Customer
requirements are demanding more
efficiency than ever before and that in
turn drives the need for more process
optimization—including automation.”
Wood adds that automated lift trucks
can be a good fit for maximizing the
efficiency of repetitive movement of pal-
let loads. “I think automated lift trucks
will help with the need to meet higher
efficiency goals, because if repetitive pro-
cesses exist in which goods need to reg-
ularly move from Point A to Point B, why
shouldn’t that be automated?”
LOGISTICSMGMT.COM
 Warehouse/DC Management: Lift Truck Series

Given the size of the to less damage to assets and

installed base for conventional inventory, can also be fac-
lift trucks, and the value and tored in.
flexibility they provide, the “Robotic lift trucks are
makeup of fleets toward auto- an entire system,” says Par-
mated trucks will be gradual, amore. “When we go to mar-
Wood adds. Some companies ket with them, there is a lot
may choose to use automated of discovery with each cus-
lift trucks for only certain work- tomer organization, finding
flows or transition by initially out what they want to auto-
using semi-automated lift truck mate and achieve. We work
features. With a semi-auto- with them to understand
mated lift truck, guidance tech- their goals with automation,
nology can automatically drive and position it in terms of
a lift truck along a given route, ROI falling within two years
but the operator can take over or less.”
when applicable. Over the last few years, adds
“Automated lift trucks Paramore, many companies have
are definitely a trend, but an piloted robotic lift trucks, and
operator driving a lift truck some of these are now rolling
will never go away,” Wood Semi-automated lift trucks carry some of the benefits of full more out to additional sites or
automation such as automated route efficiencies.
says. “There will always be for more workflows. “We’ve had
demand for lift trucks with human the high turnover rate in warehouses, and quite a few customers who’ve gone into
operators. A human-operated asset is rising labor rates as part of what some [robotic lift trucks] with a demo mindset
inherently flexible, and technologies call the Amazon effect, that makes the of, ‘let’s go in with two to eight robots for a
such as telematics can provide data- return on investment timeframe shorter given process to prove out the technology
driven insights on their use to help for robotic lift trucks, down to two years and see if there are unknowns that exist,’”
with the need for increased efficiency.” or less for multi-shift operations,” says Paramore says. “As they see these initial
Before the pandemic, factors like Paramore. “As a result of all these trends, projects working well, they’ll be ready to
record low unemployment and rising we expect to see sales of robotic lift trucks automate more lift truck processes within
wage rates had already made robotic lift increase going forward into the remainder the same facility or deploy them at addi-
trucks attractive to some operations, of the year and into 2021 and beyond.” tional facilities.”
says Kevin Paramore, emerging technol- Companies considering robotic trucks
ogy commercialization manager for Yale do face a much higher price tag for a Robotics evolution
Materials Handling Corp. robotic unit versus a conventional equiva- The types of robotic lift trucks also have
Now as the economy and the materi- lent, but in effect, it’s unrealistic to com- expanded in recent years, such that
als handling world deals with pandemic pare unit costs, explains Paramore, since robotic trucks can not only perform hor-
effects like higher unemployment, the robotic units are a system that provides izontal moves or short lifts, but also lift
labor situation is different, but due to both vehicle and operator capacities. and handle at higher rack positions.
health and safety policies put in place For robotic trucks, a more apt com- For Yale, says Paramore, it has a driv-
that keep workers who are feeling ill at parison is the cost of a robotic truck erless truck that can reach and handle
home, it remains challenging for DCs compared to a conventional truck loads at just more than 30 feet high, so
to count on having enough workforce. plus the cost of two or three full-time the “scope” of lift truck applications that
The end effect is that more operations operators, plus other costs of using can be automated is less limited than it
will see robotic lift trucks as part of the operators, like employee turnover and used to be. With the technical barriers
automation answer to labor shortages. training. Other factors, such as safer less of an issue for robotic lift trucks,
“When you consider all the factors like operations with robotics, which leads what remains are operational factors like

LOGISTICSMGMT.COM JANUARY 2021 | L O G I S T I C S M A N A G E M E N T 35

 Warehouse/DC Management: Lift Truck Series
available workforce, rising labor rates
and increased cycle times, all of which
stack up in favor of increased use of
automated lift trucks.
Some vendors with robotic lift trucks
based on autonomous mobile robots
(AMR) technology say that infrastruc-
ture-free solutions will open up the mar-
ket for broader use of robotic lift trucks.
AMR-based lift trucks have evolved in
recent years to cover more applications,
progressing from hauling with auton-
omous tuggers to AMR-based pallet
stackers and high-bay models that can
autonomously lift pallets with no need to
install guidance infrastructure cues for
bay and pick locations.
“What we offer are fully autonomous
robots where you don’t need guidance
infrastructure,” says Rob Sullivan, presi-
dent of AutoGuide Mobile Robots. “Hav-
ing units that truly do their tasks autono-
mously is the key enabler to delivering on
the promise of warehouse efficiency.”
Sullivan notes that the AMR-based
AutoGuide offers leverage of the same
base vehicle unit and autonomous tech-
nology, but have different “adapters.”
That means the same base AMR can be
a tugger, pallet stacker or a high-bay fork-
lift depending on customer need. “It is
a similar design approach to [arm-type
picking] cobots, which use a base unit
with different end effectors for different
tasks,” says Sullivan.
AutoGuide recently launched what
it calls a Mobile ASRS, which rather
than using traditional automated storage
and retrieval system (AS/RS) infrastruc-
ture, makes use of AutoGuide’s AMRs,
its software, and conventional racking,
which Sullivan says is lower cost than
pallet shuttles or unit-load AS/RS solu-
tions, but achieves similar efficiencies.
Overall, he adds, the need is growing
for operations of all sizes to automate
the movement of pallets to overcome
36 L O G I S T I C S M A N A G E M E N T | JANUARY 2021
“Automation is not a substitute for defining and optimizing
those processes, and automation won’t fix a broken
process. You’ll just get broken or flawed results faster—
and on a larger scale.”
—Brett Wood, Toyota Material Handling North America
labor availability issues.
“There are many operations that
just can’t hire enough people and many
others that struggle with high turnover,”
says Sullivan. “Autonomous robots can
reduce these challenges by automating
some key workflows, enabling operations
to take their best employees and put
them on higher value tasks.”
Sullivan also sees the ROI for auton-
omous robots coming in at two years
or less, with both leasing and buying
options, although payback time varies
based on labor rates and other factors.
Sullivan says AutoGuide has looked at
how robotics as a service, or “RaaS,”
might work for paying for robotic lift
trucks, but the model gets compli-
cated and isn’t really needed given the
attractive equipment leasing rates that
exist and relatively short payback time-
frames for the AMRs.
Getting there
Perry Ardito, general manager of the
Warehouse & Automation Products
Group for Mitsubishi Logisnext Amer-
icas, also expects strong growth for
automated lift trucks, but many custom-
ers will phase them in by using them
for select workflows, while using more
conventional lift trucks for other tasks.
Another steppingstone to use of fully
automated trucks is to use semi-auto-
mated products such as semi-automated
order pickers or turret trucks.
A semi-automated vehicle, says
Ardito, still has an operator on board,
but it also has warehouse navigation and
sensing technology to obtain task and
location instructions from a warehouse
management system and automatically
takes the vehicle and the operator to the
correct location by the most efficient
route. Such vehicles come in at a less
expensive price point than a fully auto-
mated vehicle of the same type, but carry
some of the same benefits such as use of
optimal routes, and complete accuracy in
arriving at the right location, says Ardito.
“For operations that aren’t yet ready to
jump into a fully automated solution, or
the application doesn’t justify full auto-
mation, a semi-automated vehicle pro-
vides many of the same efficiencies you
get with full automation when it comes
to productivity, efficient routes and pick-
ing accuracy,” says Ardito.
Semi-automated lift truck technol-
ogy is proven and has been around for
years, adds Ardito. Under the multiple
lift truck brands offered by Mitsubishi
Logisnext Americas, Jungheinrich has
semi-automated options for order pick-
ers and turret trucks, and launched its
first such semi-automated products
more than 10 years ago.
Operators still have to engage the
throttle to make a semi-automated vehi-
cle move, but a semi-automated vehicle
finds each location accurately, with-
out the operator having to count rack
positions or numbered placards, which
tends to distract the operator from other
duties. A semi-automated vehicle can
also pre-position forks for rapid, accu-
rate engagement and lifting of pallets.
“Semi-automated technology makes
the operator and the vehicle more
productive,” says Ardito. “To go from
conventional lift trucks to large scale
deployment of fully automated trucks
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Warehouse/DC Management: Lift Truck Series
can be a big leap. Semi-automation can
be one way to achieve some of the ben-
efits for full automation, as can using
fully automated trucks for select work-
flows, and then expanding on that use
once you start seeing the benefits.”
Jack Kaumo, director of iWare-
house Technology Solutions for
The Raymond Corp., agrees that
semi-automated vehicles can be good
way to step into the benefits of fully
automated vehicles. Semi-automation
makes it so operators do not have
to think about the optimal routes or
focus on finding the correct picking or
drop-off points—all they need to do
is progress the vehicle with a simple
movement. “What that does is reduce
the amount of errors that can occur in
a process,” Kaumo says.
Infrastructure-free, automated lift
COMPLETE LINE OF STRETCH WRAP
COMPLETE CATALOG
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trucks based on natural feature recog-
nition will also help grow the market
because it streamlines deployment
details, Kaumo adds. “The infrastructure
free-piece makes it so the customer can
literally have an automated truck up and
running in one day,” says Kaumo.
Raymond’s fully automated vehicles
are gaining momentum, too, Kaumo
adds, but the shift from conventional
lift trucks to fully automated ones will
be gradual simply because of the huge
installed base for conventional trucks
that are meeting current needs, and
the need to assess which workflows
should be automated. “It will be a
gradual process in moving to automa-
tion, but that’s OK, because you want
to optimize processes before you auto-
mate them,” he says.
Since robotic lift trucks act as a
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system to automate a set of material
movements, you need to carefully
assess factors like rack and storage
layout or staging points versus what
existed before. That’s just fine with lift
truck vendors, who’ve evolved from
mainly being hardware-focused vendors
of conventional industrial trucks.
As Wood sums up the need at arriv-
ing at optimal material flows for robotic
lift trucks, “Automated systems are only
as efficient as the other facility pro-
cesses they support,” Wood says. “Auto-
mation is not a substitute for defining
and optimizing those processes, and
automation won’t fix a broken process.
You’ll just get broken or flawed results
faster—and on a larger scale.” •
—Roberto Michel is a contributing
editor for Logistics Management
uline.com
37
 A SPECIAL SUPPLEMENT TO:

What’s next:
Implementing “touchless”
DCs through advanced
warehouse systems
The ability to automate DC operations by employing AI
technologies that include a closer convergence of WCS, WES and
WMS solutions is on the horizon. Designing touchless operations
that reduce the dependence on traditional labor sources will better
position supply chains in their quest to provide an uninterrupted
flow of goods and improved resiliency.

B
BY MARK NEWBERRY, DEANNA rown cartons whisk by at breakneck speeds
RAINWATER, ANDY CRANE
& KAREN RAUCH, as the sound of pneumatic triggers divert
TATA CONSULTANCY SERVICES the cartons onto a separate path or down
a chute. Red laser light beams sparkle and scan
shiny white labels on the cartons checking their
contents and determining their destination.
Okay, we’ll admit that it’s a little difficult to ro-
manticize warehouse automation, but it’s amazing
to watch in action. All these cartons, conveyors
and laser lights are part of a highly sophisticated
system that continues to advance into the realm
of autonomy and artificial intelligence (AI).
At the heart of this automation are two types
of system working together to execute the seem-
ingly choreographed performance: the warehouse
management system (WMS) and the warehouse
control system (WCS). While these systems have
existed since the 1990s, a revolution is afoot to in-
crease the level of sophisticated autonomy through
a warehouse execution system, or WES.

38 L O G I S T I C S M A N A G E M E N T | JANUARY 2021 LOGISTICSMGMT.COM

LOGISTICSMGMT.COM JANUARY 2021 | L O G I S T I C S M A N A G E M E N T 39
Special Report: What’s next? A SPECIAL SUPPLEMENT TO LOGISTICS MANAGEMENT

The pandemic underscored the

COVID-19 and warehouse
automation
The impact of COVID-19 on warehous-
ing and distribution could well outlast
the pandemic itself, as labor health
concerns, hampered supply chains and a
new wave of automated warehouses and
distribution centers continue to emerge.
Warehouses, distribution and
fulfillment centers were crippled, as
health and safety issues became top
of mind, especially as cases spread in
high-profile operations like Amazon.
However, the impact of the pandemic
has also prompted renewed assessments
of DC operations on everything from
the degree of automation and advanced
software necessary in a warehouse today
to the importance of building size, work
area design and location.
growing prevalence of e-commerce
fulfillment and the increasing need to
mitigate labor and productivity risks
through providing a safer, less congest-
ed work environment largely enabled
through increased automation.
It’s important to keep in mind that
systems and automation capabilities were
developing rapidly before the pandemic.
However, COVID-19 brought an accel-
erated awareness and actuated bringing
those changes to light. In short: It’s been
a wakeup call for some, an affirmation for
others. What’s more, experts agree, when
the pandemic finally moves on, its impact
on warehouses and distribution centers
certainly won’t dissipate any time soon.
The rise of warehouse
execution systems
A traditional fulfillment warehouse em-
ploys a WMS to receive inventory, locate
and track its movement within the ware-
house. When fulfillment orders are sent
from the ERP or OMS, the WMS creates
a “wave” of work based on the available
inventory and resources to pick, pack and

WES key function benefits:

Dynamic labor balancing
• Provides real-time, system-directed labor balancing across
multiple work zones
• Bases decisions on current priorities and workload de-
mands
• Synchronizes the operation of all work zones
• Accounts for “zone transfer” penalties in excessive worker
movements
Sorting machine optimization
• Real-time optimized decision item sortation
• Increases sortation capacity by 28%
• Reduces “problem orders” by 75%
• Reduces processing and material handling labor
• Allows workers to work to their own capacity
Next-order optimization
• Makes real-time decision of the next order to release
• Bases decisions on order priority, ship requirements, order
ages, picker locations and available inventory
• Allows nearly immediate processing of priority orders
• Determines what orders are “not picked” in resource-limited
operating conditions
Revolving batch picking
• Eliminates low productivity wave transition periods
• Maximizes continuous resource utilization
• Levels processes, eliminating harmonic peaks and
valleys behavior

40 L O G I S T I C S M A N A G E M E N T | JANUARY 2021 LOGISTICSMGMT.COM

Special Report: What’s next? A SPECIAL SUPPLEMENT TO LOGISTICS MANAGEMENT

ship the orders within the

committed order cycle time.
The WMS is a passive
system that requires input
from users indicating tasks
have been completed. Op-
timization of the inbound/
outbound processes is typ-
ically engineered into the
operations and not through
the WMS.
Fulfillment warehouses
that utilize automation—
such as conveyors, sorters,
and pick/put to light—em-
ploy warehouse control
systems. The WMS sends
information to the WCS
regarding the objective of
the automation, and then
the WCS utilizes the information from walls of the warehouse to prioritize pickers within the zones containing
the WMS to control the automation to an inbound receipt for an emergency the inventory, the units are picked into
move or route product to a destination order. Using predictive analytics and multiple bins, and then the bins are
or turn on a light in a pick-to-light rack. complex algorithms, a WES can detect routed by the WCS to be expedited.
Both WMS and WCS work in rela- issues and prescribe a solution without To further explain the value of
tive isolation. These systems are unable human interaction. WES, let’s use a pouch sortation sys-
to react to changes in production, tem such as SDI’s Joey sorter. Individ-
bottlenecks, service-level commitments WES in action ual items are scanned and placed into
or emergencies. They require human Here’s an example of how a WES can pouches. Using advanced algorithms,
intervention to re-prioritize, re-route or function within a fulfillment center to the pouches are sorted and shuffled
expedite an order or process. coordinate the expedition of a last min- until the items on the order are next to
A warehouse execution system, on ute, high priority order. one another and advance to the begin-
the other hand, can coordinate and A next-day air delivery order for ning of the line for packing.
direct all resources: labor and material multiple items is dropped on a ware- The pouches are then routed to a pack-
handling equipment in real time. The house. The WES can prioritize a ing station where they’re cartonized and
reactive WES moves production in a receipt of an inbound shipment con- sent by the WCS to the overnight ship-
continuous flow to optimize service taining the necessary inventory and can ping lane in time for next day air pick-up.
levels and can react to production is- allocate receiving resources and assign
sues and reprioritize workload such as available dock doors and automation. Resource visibility
the ability to drop a high priority order Upon scan of the inbound carton, the A WES has visibility to all available re-
to the warehouse without creating a WES coordinates with the WMS to sources and can coordinate activities to
new wave (waveless picking) or dis- send the carton to replenishment. meet committed service levels. Integrat-
rupting the current production flow. The WMS/WES issues a task to ed with wearable devices and scanners,
WES can also work to improve replenish the inventory. A pick com- a WES has visibility to individual activi-
production and service beyond the four mand is generated without a wave to ties and can identify production delays.

LOGISTICSMGMT.COM JANUARY 2021 | L O G I S T I C S M A N A G E M E N T 41

Special Report: What’s next?
Based on these shifts in production,
the WES can re-assign tasks to avail-
able resources to increase efficiency
and throughput.
The IoT (Internet of Things) revo-
lution will provide a greater number of
devices and equipment for which the
WES can utilize in the optimization
of the fulfillment workflow. Wearable
devices can be tracked for location,
productivity and feedback, while driv-
erless trucks can be deployed to pick
a pallet for replenishment. Inbound
trailers can be geofenced and assigned
a dock door with allocated resources
to unload the merchandise.
Incorporating WES functionality to
advance automation
For larger, complex operations that
include a high degree of automation,
both a WCS and WMS are going to be
needed. WES is not usually going to
be a replacement for WMS; but rather
will work in combination with it. And,
in the future, it’s foreseen that WMS
will include enough intelligence so
that WCS/WES can be rolled into the
WMS solution.
This integration could relieve some
pressure from implementation and will
reduce the costs of running multiple
“warehouse management oriented”
systems in one facility. For heavily
automated solutions, approximately
20% of the implementation effort will
be required to manage the integration
of the warehouse systems.
Looking to the future
In the future, there may be standard mes-
saging systems developed that will allow
for simpler integration of warehouse auto-
mation and their management systems.
The warehouse execution of the
42 L O G I S T I C S M A N A G E M E N T | JANUARY 2021
A SPECIAL SUPPLEMENT TO LOGISTICS MANAGEMENT
future will likely include increased
use of autonomous mobile robots and
artificial intelligence capabilities such as
cognitive computing and machine learn-
ing and may also contain automation
control knowledge in larger amounts
than they do currently.
Many WES vendors are building
modular solutions to alleviate the need to
integrate across all processes. Companies
can select which aspect of their fulfill-
ment process needs WES functionality
and purchase a purpose-built module.
Applying these “NextGen” technologies,
WES proves to be much more flexible
in nature compared to a WMS or WCS
that must encompass all aspects of the
fulfillment process and automation.
AI and warehouse execution
In the past, fulfillment warehouse deci-
sions were based on historical data anal-
ysis. However, the impact of COVID-19
is causing consumption behavior to
bullwhip in more sporadic ways than ever
before, and no one really knows what to
expect for day-to-day operations. Com-
panies are guessing as to which patterns
will remain and which are temporary.
Artificial intelligence can help solve
these unforeseen challenges. Looking
to the future, predicting customer
demand requirements will utilize
significant amounts of data from new
sources, such as the IoT and external
partner collaboration to determine
the next optimal move in a fulfillment
center. AI transforms an overwhelming
amount of data into usable insights to
support a multitude of decisions in the
fulfillment center.
WES application landscape
Companies are rushing to develop
fulfillment execution systems to enable
the advanced features and increased
automation opportunities. The solutions
are currently being developed by WMS
and WCS software providers, material
handling and automation vendors as
well as standalone WES developers.
At this point in time, one solution
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Special Report: What’s next?
does not typically meet all require-
ments. Companies are challenged to
find the right combination of WMS,
WES, and WCS that works best for
their future requirements—in more
automated facilities that are designed
to mitigate labor and productivity risks.
It’s now more challenging than
ever to identify the right partners to
implement warehouse solutions. And,
it begs the question of having a single
software solution or multiple software
solutions in place to plan, manage,
control and optimize a fulfillment
distribution center.
Touchless fulfillment is
right around the corner
With the disruption of normal rou-
tines and standard business practices
Freight Audit & Payment since 1923
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due to COVID-19, organizations
are now looking for emerging digital
technologies to ensure they’re better
prepared for the future. The leaders
are seizing the opportunity to advance
competitively.
The pandemic taught our supply
chain teams a hard lesson to look
beyond the current technologies and
traditional ways to setup, organize and
operate DC Operations. Historically,
warehouse design and technologies
were deployed and implemented with
the primary focus of maximizing space
utilization, throughput and productivity.
Other than a few ergonomic con-
siderations, little was done to design
facilities in a way that also mitigated
labor and productivity risks due to
previously unknown threats such as
JANUARY 2021 | L O G I S T I C S M A N A G E M E N T
disease spread.
Automating DC operations and em-
ploying AI technologies that include
a closer convergence of WCS, WES
and WMS solutions is on the horizon.
Designing touchless fulfillment cen-
ters that reduce the dependence on
traditional labor sources through inno-
vative technologies will better position
supply chains in their quest to provide
an uninterrupted flow of goods and
resiliency to its customers regardless
of the circumstances. •
TCS Consulting & Service
Integration Logistics Team:
Mark Newberry, consulting partner;
Deanna Rainwater, director;
Andy Crane, senior manager;
Karen Rauch, engagement manager
43
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 2020 Virtual Summit:
Building in supply
chain resilience
This year’s summit helps attendees shake off the impacts
of a difficult year and use digital transformation, risk
management, reshoring and other tools to reimagine their
operations for success in 2021.

T he spotlight on supply chain and logistics shone pretty brightly in 2020 as organiza-
tions worked to overcome a global pandemic, subsequent economic impacts, labor
shortages, U.S. wildfires, and an unusually active hurricane season.
In a year where Murphy’s Law reared its head on multiple occasions, the editors of
Logistics Management and Supply Chain Management Review were in the trenches with
supply chain professionals, reporting on the latest activity and offering sage advice to com-
panies across a wide range of industries.
And during a year when online conferences effectively supplanted live, in-person events,
the “2020 Virtual Summit: Building in supply chain resilience” attracted an impressive
lineup of keynote and session speakers as well as a broad audience of participants. In fact,
2020 marks the 15th year that Logistics Management and Supply Chain Management Review
offered readers a virtual lineup of educational sessions designed to prepare logistics and sup-
ply chain operations for the year ahead.
Here’s a snapshot of each presentation and the key takeaways offered by the experts who
participated in the 2020 Virtual Summit.

KEYNOTE

Rethinking risk and resilience in

the aftermath of the pandemic
A major shock to supply chain operations,
COVID-19 exposed the weaknesses of
the current supply chain paradigm and forced
firms to consider the challenges of rebuilding
their supply chains due to supplier exits.
For some industries, the pandemic even
forced a major rethinking of business mod-
els. And while these are all valid pain points,

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there’s a silver lining to all of this: The pan-
demic is giving companies a chance to rethink
supply chain resilience.
In this keynote session, Steven Melnyk,
professor of operations and supply chain
management at Michigan State University,
discusses how companies will rebuild while
also creating a better, stronger supply chain
for the future. After all, the foundations for
doing so have been there all along, and most
systems and people are ready for change.
In his presentation, Melnyk highlights
risk and resilience, examines the risk impacts
from COVID-19, and shows what risk and
resilience 2.0 will look like post-COVID.
“The current situation has accelerated cer-
tain developments, which were present prior
to the pandemic,” he says, “but which have
now been exposed or opened as a result of
the pandemic.”
Defining supply chain risk and resilience
as “the ability of a supply chain to both resist
disruptions and recover operational capabil-
ities after disruptions occur,” Melnyk says
SESSION 1: DIGITAL TRANSFORMATION
How the pandemic accelerated
supply chain technology trends
T he push to integrate more technology
and automation into the supply chain
was already well underway pre-COVID,
with the unexpected health crisis—and
subsequent supply chain shocks—greatly
accelerating the trend.
For example, technologies such as
the Internet of Things (IoT), artificial
intelligence (AI), robotics, real-time data
46 L O G I S T I C S M A N A G E M E N T | JANUARY 2021
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the two major capabilities are resistance and
recovery, both of which are measured along
with time, quantity, strategy, and stock price.
“Economically,” he notes, “the pandemic has
been a disaster.”
The hidden, overlooked impacts of
COVID-19 include the vulnerability of small-
to medium-sized businesses, which bore the
burden of the pandemic. These small businesses
are extremely important to the supply chain, he
explains, even though they are often “hidden.”
Looking ahead, Melnyk says companies
must rethink risk and resilience by managing
multi-tier supply chains—a weak point for
many. “The new form of resilience builds on
prioritization, being a good customer, and sup-
plier development,” says Melnyk, who wraps
up the keynote with a list of success tips for
2021 and beyond.
He ends his session with this piece of
sage advice to all supply chain operators and
logistics leaders: “We have to stop thinking in
silos, and we have to work toward a
collaborative supply chain.”
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analytics and communications platforms
that facilitate telecommuting all provide
visibility into supply chains and also enable
contactless, paperless operations. And while
these technologies were used to deal with
the immediate impacts of the pandemic,
they will also have long-term benefits for the
performance and resilience of supply chains
and businesses.
In this session, Yossi Sheffi, the director
of the MIT Center for Transportation and
Logistics, examines how the pandemic has
accelerated the development and adoption of
these technologies and the implications they
have for supply chain resilience—both now
and in a post-pandemic world.
“Every disruption is different,” says Sheffi.
“It comes with its own litany of causes and
effects and problems. No two are the same.”
He goes on to say that risk management
involves prevention, detection, and response.
SESSION 2: RESEARCH
29th Annual Study of Logistics
and Transportation Trends
T he speed of technological and societal
change no longer affords companies
the luxury of slow incremental improve-
ments or adaptations. Instead, logistics and
supply chain managers must look forward
and dare to ask the hard question: Are we
willing to change?
The “29th Annual Study of Logistics and
Transportation Trends” posed this question
to logistics and transportation professionals
to gain added insights into how organizations
are responding to the disruptive pressures of
48 L O G I S T I C S M A N A G E M E N T | JANUARY 2021
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Many companies have some kind of emer-
gency management, he adds, be it physical or
virtual (the latter of which came about due to
the pandemic).
To address crisis management, Sheffi says
companies need good communication with
customers, suppliers, employers, and beyond.
“Even if you don’t have all the information,
good communication includes what we know,
what we don’t know, and what we’re working
with,” says Sheffi. “This helps with uncertainty.”
Pointing out that many companies have
had to make COVID adjustments (i.e.,
moving their operations online), Sheffi says
IKEA now has an augmented reality app to
see what items look like in your home, and
Sephora is giving beauty tutorials online
instead of in-store makeovers. “This is the
supply chain professionals’ finest hour,” he
explains, “and a time where they can step up
to solve these challenges.”
new technology, rising customer expectations,
and a global pandemic.
In this session, Christopher A. Boone,
Ph.D., assistant professor at Mississippi
LOGISTICSMGMT.COM
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State University and Karl B. Manrodt, Ph.D.,
professor at Georgia College and State
University, review the survey results, discuss
key trends, and offer recommendations for
current and future supply chain success.
“Most respondents think transportation
is fundamentally changing,” says Manrodt.
“The majority also agree that they will see an
increase in funding for transportation, too.
Normally that’s not the case, and usually
they’re just on their own when it comes to
dealing with change.”
Boone says that we’re also seeing a shift
in meeting customer expectations and that’s
driving the shift into smaller individual orders
and shipments. “This is how companies are
responding to customer expectations,” he ex-
plains, “and the impact that’s having on how
they’re spending transportation dollars.”
The speakers then discuss types of tech-
nology companies are looking at this year,
SESSION 3: SOFTWARE
TMS: Essential to efficiency
E specially amid disruption, transpor-
tation management systems (TMS)
help companies carve out a path for effi-
ciency and productivity for their modern
supply chains. For supply chain opera-
tions, end-to-end transportation visibility
increasingly includes TMS integration
with upstream and downstream systems,
as well as granular data analysis to priori-
tize and optimize shipments.
In this session, Howard Turner, project
director at St. Onge Company, takes a
closer look at how businesses of all sizes
can use TMS solutions to drive efficiency
50 L O G I S T I C S M A N A G E M E N T | JANUARY 2021
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such as visibility, predictive analytics, AI,
robotics, electronic bills of lading, and the
Internet of Things. They say funding for
transportation technology initiatives is in-
creasing and that, across the board, “every-
one should be investing more in technology
than they did in the past.”
“COVID is a catalyst both on the carrier
side and the shipper side for transformational
transportation projects,” says Manrodt. For
instance, he says companies really need to
think more about partnerships and working
together to be successful.
Technology will serve as the catalyst that
helps solidify those alliances and that puts
companies on the path to success. “Technol-
ogy isn’t just enabling us to do some of the
things we’re doing now a little bit faster or a
little bit better,” says Boone, “it’s really giving
us the opportunity to rethink how we can do
things completely differently.”
and flexibility while proactively positioning
themselves for success.
Turner starts with a quick overview
of TMS and its capabilities, noting that
the software manages inbound, internal,
and outbound shipments. Transportation
LOGISTICSMGMT.COM
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networks are extremely complex with mul-
tiple suppliers and stakeholders that can
be hard to manage, he says, and increas-
ing visibility and securing transportation
capacity are extremely important in the
current landscape.
“A TMS is a tool that assists with
analyzing and determining the optimal
means to achieve your transportation goals,”
Turner points out, noting that the software
is typically integrated into the enterprise
resource planning (ERP) system, then can
be downloaded to a warehouse management
system (WMS) for fulfillment.
Explaining that on-premises and Cloud
SESSION 4: E-COMMERCE
Last-mile fulfillment: Solving
an ever-complex puzzle
C OVID-19 accelerated the move to
e-commerce for everything from grocer-
ies to classic cars, challenging existing B2B
and B2C supply chain models. Amid this
disruption, a flurry of innovation has thrived,
including ship-from-store, curbside pickup,
and hyper-local fulfillment, all of which have
gone from fringe to mainstream.
Concurrently, new last-mile delivery
models are shaking up the balance of power
in package delivery. Alan Amling, a fellow at
University of Tennessee and CEO at Thrive
and Advance, LLC, uses this time to explore
the emerging last-mile landscape—from
fulfillment to the front porch—and provide
alternatives to consider as companies navi-
gate a world where disruptions are the rule,
and not the exception.
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TMS deployments come with their own
pros and cons, Turner says that either
option can handle the consolidation of
orders for larger shipments, transportation
optimization, real-time tracking, carrier
performance measurement, transportation
planning, and process automation (among
other functionalities).
“Strategically investing in and properly
deploying the right systems can allow your
business to withstand and potentially thrive
in an ever-changing landscape,” Turner
concludes. “Properly using tools to navigate
transportation disruptions can have a direct
impact on your company’s bottom line.”
COVID-19 has accelerated e-commerce
by five years in just five months, Amling
says. It has also boosted innovation, with
supply chain companies and retailers inno-
vating and pivoting to keep up with chang-
ing customer demands. “There has been sort
of a butterfly effect,” he explains, “where
one small change has built up into a larger
impact. These small changes compound to
produce industry shaking impacts.”
LOGISTICSMGMT.COM
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Amling then discusses the distinct e-com-
merce leaders that are setting the pace,
like Walmart and Amazon. They are setting
the bar on service when they do things like
moving from two-day to one-day shipping
or Walmart doing same day delivery for gro-
ceries, he notes. “As a result, new last-mile
fulfillment models are taking shape, such as
ship from store and drone delivery.”
SESSION 5: ROBOTICS
State of robotics: Consider
robotics in 2021
R obots, including autonomous mobile
robots (AMRs), are seeing a rapid up-
tick in logistics and supply chain operations,
with their usage projected to increase as the
world recovers from the pandemic.
In this session, presenter Jeff Hedges,
president at JHedges Consulting, offers
attendees an in-depth look at the different
types of robots coming into the market,
and examines the value proposition behind
these various approaches. He also explores
how operations can better tie robotics in
with automation and the workforce as
logistics and supply chain operations work
to build their long-term resilience strategy.
“There’s a lot of hope and a lot in interest
in these technologies as we see dozens, if not
hundreds, of venture capitalists and private
equity firms continuing to invest,” says Hedg-
es, who estimates that the robotics market
will reach $4 billion by 2025. The industry is
also seeing more investment in AI, even as a
standalone technology, he adds.
Explaining that autonomous mobile
54 L O G I S T I C S M A N A G E M E N T | JANUARY 2021
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Pointing out that the future of delivery
revenue goes beyond just shipping and
delivery cost, Amling says smart companies
are “playing offense,” versus attempting to
defend their territory. “This is the era of or-
ganizational velocity,” he adds, “which is the
ability to observe, accept (or not), and act (or
not) on threats and opportunities facing the
firm with speed and agility.”
robots (AMRs) are vehicles made to trans-
port an item from point A to point B, Hedges
says these vehicles don’t eliminate the
picker; they just decrease travel time. Pick-
ing robots are made with more of an item
picking focus, and are improving in the area
of handling or sorting returns, kit assembly,
and order verification and accuracy, while
also making operations more cost effective.
During the coming year, Hedges expects
labor availability to be a major concern—yet
another reason why more companies are
turning to robotics for help. “We’re past the
early adopter phase,” he says. “Companies are
definitely accelerating implementation plans.”
LOGISTICSMGMT.COM
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SESSION 6: RESHORING

Global strategy: The pros

and cons of reshoring
H igh transportation costs, supply
chain interruptions, and global trade
wars are all pushing companies to reexam-
movement in America,” she says.
To companies that are considering this
move, she says the first step is to evaluate
ine their global manufacturing and sourc- your total cost of ownership (TCO). Factor-
ing strategies. Some of them are bringing ing in variables like automation, proximity
their operations back to the U.S. through to markets, order fulfillment times, logistics
a process known as “reshoring.” costs, the value of “Made in USA,” custom-
This session finds Rosemary
Coates, executive director of
the Reshoring Institute, walking
attendees through the offshor-
ing timeline and showing why
reshoring may be a good choice
for organizations now and in the
aftermath of the global pandem-
ic. “In the 1990s and 2000s,
offshoring to China was the
economic strategy for many U.S.
manufacturers,” Coates says. “Fast forward er preferences, and economic incentives.
to 2020, and companies are looking to move “Every company is different and deci-
away from China and back to the U.S.” sions cannot be made on numbers alone,”
Coates says that the catalyst for she explains. “Doing your cost of ownership
reshoring was the 2012 election, although is not simply a comparison of costs; you
companies didn’t immediately start mov- really have to look at the whole strategy of
ing their operations. “It was the turning reshoring in order to make an effective case
point and beginning of the reshoring for bringing manufacturing back.” •

56 L O G I S T I C S M A N A G E M E N T | JANUARY 2021 LOGISTICSMGMT.COM

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