Logistics Management Solutions Blog

There’s a term we use in the transportation industry – force majeure.  It’s a state of emergency, or a condition that allows a company to forgo its contractual obligations.  It’s an act of God, an unanticipated or uncontrolled circumstance.  Basically, if there’s a tornado, hurricane, or the world ends, a provider isn’t responsible for ensuring your freight gets to where it needs to be.

Hurricane Sandy easily constitutes force majeure.  No questions asked.  It was the largest Atlantic tropical storm on record.  When it made landfall near Atlantic City on the evening of October 29, it brought winds of up to 90 mph.  Its wrath was fierce and far reaching.  Millions across the Eastern Seaboard battled rising floodwaters and long-lasting power outages. So far, damage has been estimated to exceed $62 billion.

I live in the Midwest, so I was not directly affected by this super storm.  But, LMS Logistics has offices and employees in the Northeast, and these staff members are responsible for ensuring smooth operations for our supply chain clients in that region.  When the storm hit, nearly our entire staff lost power at their homes.  Needless to say, so did our facilities and our clients’ facilities.  But that didn’t stop our staff.

Per our contingency plans, offsite folks in the Midwest and Canada pitched in to ease the operational burden.  But our Northeast employees still needed to be in the mix, working alongside our clients who were also experiencing  operational disruptions.  And, with plant, port, and carrier closings, managing freight became more difficult than ever.

Our employees did not complain; they did not make excuses.  They fired up their battery-operated laptops and went to work.  And, when they ran out of batteries, they worked from the homes of friends or family members who had power.  Some camped out in local restaurants and coffee shops that were equipped with WiFi.  Whatever they needed to do, they did.

Even when power was restored, the phone lines were down.  Additionally, many cell towers had been damaged in the storm, which made cell phone usage unreliable.  But our team pooled their resources and at one point, they were having a conference call with a client by huddling around a single cell phone with a signal.

And then there were gas shortages.  Some so severe that they prevented employees from commuting to work, and those people continued to work from home.  Those who could commute came early and stayed late.

Regardless of what was going on in the office or at home, our employees came through and went above and beyond to help our clients weather this unprecedented storm.  Hurricane Sandy was an act of God, an unanticipated and uncontrolled occurrence that could not be avoided.  But our staff did not fall back on force majeure; they went to work.

Special thanks to our northeast teams and the staffs that supported them.  You make us proud.

Look around.  Everything you see, everything you have, has spent time on a truck.

Your laptop, your pens – even that goofy koosh ball you keep on your desk.  All these things were delivered to their retail destinations via trucks driven by truck drivers.  So if you appreciate having the necessary (and unnecessary) possessions that fill your life, thank a truck driver.

This is National Truck Driver Appreciation Week (September 16 – 21).  It doesn’t get a lot of press, Hallmark doesn’t offer a selection of greeting cards, but it’s important to recognize the role truck drivers play in our economy, in our lives.

There’s an estimated 3.5 million truck drivers in the U.S. and the American Trucking Associations (ATA) says they logged nearly 400 billion miles in 2011.  That’s a lot of time spent on the road, in traffic, sleeping in truck cabins and most significantly, it’s a lot of time spent away from home.  Long haul drivers can be on the road for more than a week at a time.

It’s not an easy job.  In fact, truck and delivery workers are ninth on CNN Money’s list of Top 10 Most Dangerous Jobs.  According to the Bureau of Labor Statistics, more truck drivers and delivery men die on the job than any other vocation.  Truckers also report health issues such as high blood pressure, ulcers, and neck and back injuries.  Sitting in an immobile position for hours on end isn’t easy.

The median annual salary is $35,000.  Long haul drivers make a bit more, around $48,000.  Being a truck driver is not the most glamorous job, but it’s an important one and we need more people to fill driver’s seats.  According to Bob Costello of the ATA, the trucking industry is short 20,000 to 30,000 drivers.  And as the economy improves and freight volumes rise, we could face a severe driver shortage in coming years.

So let’s start showing our appreciation now.  Everything from medicine to koosh balls is delivered by a truck.  If you see a driver today, say thank you.

I’ve never been anxious to see summer come to an end, but this year is different; in fact, it was record breaking.

For 11 days this season, St. Louis temperatures have climbed to 105 degrees or higher. The last time we even came near these stats was before 1934. I’ve lived in this area my entire life and I can take Missouri heat, but this summer I had to limit outdoor activities. On some days, it was even too hot to swim.

But complaining about this type of lost opportunity seems trivial. This summer’s weather has impacted more than half of our country, which is facing the worst drought in more than 50 years. And it has directly affected the livelihoods of those who depend on basic things – like rain. Farmers aren’t seeing crop yields and this affects ranchers, who are also watching their watering ponds go dry.

LMS Logistics is exceptionally invested in this segment as many of our clients are in the agriculture industry. Therefore, I was relieved to hear of the measures taken by the federal government earlier this week. You can see an overview of the measures here, which include everything from financial assistance for livestock and crop producers, to easing trucking regulations to ensure farmers and ranchers get much needed supplies.

The latter is of particular interest to those of us in the transportation industry; here’s an overview of what’s been implemented:

• Hours-of-Service (HOS) regulations will be waived for states where a drought emergency has been declared by the governor or appointed official. This waiver applies to carriers providing emergency assistance.
• For states that do not have an emergency declaration, federal rules regulating large truck operations may be waived in certain situations. The DOT will process these requests within 7-14 business days.
• In July, Obama signed a transportation bill that enables the states to issue special permits for overweight vehicles and loads that can easily be dismantled or divided in an emergency. These permits will be available beginning October 1, 2012. The DOT says this may provide states with a means of hauling heavy loads of grain and livestock for drought relief.

It’s a good start and hopefully it will go a long way to help ranchers and farmers recover from this record-setting drought. Temperatures are dropping and rain is falling, but those affected by season’s weather are just beginning to see a little bit of relief. Let’s look to brighter (and cooler) days ahead.

They say necessity is the mother of invention and I know this to be true.  Necessity is what brought us to develop and launch our own transportation management system (TMS), TOTAL, back in 2001.  And, eleven years later, necessity is what drives the evolution of this system, which continues to be recognized for its innovation.

We just learned that LMS has – for the ninth consecutive year – earned the title of “Top 100 IT Logistics Provider” by Inbound Logistics magazine.

Every April, we compete with hundreds of companies to earn a spot on this list.  Inbound editors use questionnaires, personal interviews and other research to select award recipients.  The complete list can be found here.

What’s interesting is that LMS did not begin as a technology company.  We were a 3PL specializing in logistics execution; our staff members directed freight movements using clients’ TMS products.  However, in doing so, we discovered something – there wasn’t a single system that could do what our clients needed it to do.  We then set off to find and buy the system we envisioned, but it didn’t exist.

So we built it ourselves.

We hired software engineers and worked with them closely, very closely.  You see, we had come to believe that most TMS products were developed by talented developers who had no working knowledge of the supply chain industry.  An effective TMS had to manage transportation operations in the “real world.”

The system also had to be financially viable.  The products we encountered entailed huge costs and lengthy implementations.  Our clients needed a system that could produce a quick return on investment (ROI).  And, TOTAL is engineered to produce an ROI within 90 days.  It was – and continues to be – an unprecedented standard in the industry.

When LMS first made this list, it was exciting.  However, it’s one thing to get on a list like this and another to stay on it, especially when you consider the pace of technology.  In 2001 we didn’t just launch a system; we made a commitment to technology.  We hired a full-time staff of talented software engineers so we could continuously improve our product and meet clients’ evolving needs.

This is why we repeatedly appear on the Top 100 list.  According to Felecia Stratton, editor of Inbound Logistics, LMS “continues to be flexible and responsive, anticipating customers’ evolving needs.”

TOTAL was designed to manage shipping operations from planning to execution to tracking and tracing.  But, our clients needed more.  Today the system features a business intelligence solution that gives users an endless array of data vantage points that can lead to operational improvements.

And that’s just one example.  Our technology has evolved and will continue to evolve because, for our clients, it’s a necessity.

Four years ago we ran one of my favorite ads, the “Horse and Buggy” ad.  In 2008 fuel prices were climbing and diesel peaked at $4.207/gallon on August 18.  Shippers, carriers, consumers were struggling with rising fuel charges and everyone was looking for ways to cut transportation costs.

It may be time to run the ad again.

This week the Department of Energy (DOE) announced that the average price of diesel rose .5 cents to $4.147 a gallon, which is the highest diesel has climbed since that summer day in 2008.  I believe it won’t be long until we reach the $4.207/gallon price and, more than likely, surpass it.  This is the ninth straight increase we’ve seen, and in the past three months the average price for a gallon of diesel has risen 36.4 cents.

Fuel costs are on an upward trajectory and shippers need to get resourceful, creative.  Of course horse-drawn transportation hasn’t been a viable option since the 1800s, but the point is made.  My advice: Don’t lament the situation, leverage it.

Now is the perfect opportunity to step back and really dig into your freight operations.  Fuel costs are beyond our control, so we must control what we can.  When was the last time you explored opportunities for freight optimization?  Shipment aggregation, consolidation, co-loading, continuous move routing, mode-shifting.  Even a small reduction in deadhead miles will contribute to your bottom line.

Maybe you don’t think these practices are an option for you, but odds are in your favor.  Over the years we’ve worked with countless shippers whom have been surprised to discover that yes, freight optimization can work for them.  And, what’s more, they don’t have to make trade-offs between cost reduction and customer satisfaction.

LMS has published a white paper that explores optimization tactics in detail – “Ten Best Practices for Motor Freight Management.”  It’s a good place to start and it’s free; you can request it via this link.  Better yet, we can perform a free analysis of your transportation data.  Using our proprietary technology, we will quickly review your freight activities to identify viable optimization opportunities within your network.  If you are interested, contact us (info@lmslogistics.com).

Regardless of how you choose to go about your research, know that it is an important exercise that can help you mitigate the effects of rising fuel costs.  Chances are great that your efforts will lead you to viable cost-saving initiatives, and, chances are, none of them will involve horses.