Tom McKenna, senior vice president of logistics engineering and technology for Penske Logistics, will be a speaker on a March 18 Food Logistics webcast, 3PLs (Third-Party Logistics Providers). The complimentary event begins at 1 p.m. ET/noon CT/10 a.m. PT. Click here to register.
When shippers are seeking to turn over a substantial portion of their transportation to a dedicated contract carriage provider, there are some vital components that the dedicated carrier needs to possess. I will outline a few of them here.
Experience in the customer’s marketplace: The dedicated carrier needs to have first-hand experience in the shipper’s marketplace or demonstrate they have transferrable skills that can adapt to your requirements (think of inbound auto manufacturing and inbound appliance manufacturing; there are many similarities).
Is the carrier financially stable? It is important that the carrier has the ability to invest in new and replacement trucks and possess the necessary technology to be a good provider. Does the carrier have the scale to meet the shipper’s needs? Can they add extra resources for peak seasonal needs, promotions and surge for the holidays?
Can they customize? Today most shippers require some degree of customization and the right dedicated carrier needs to demonstrate experience with that type of customization. What is the shipper’s version of white glove delivery? What are the important parts of the delivery? What are the expectations for the customer experience of the shippers’ customer?
What is the carrier’s model for driver turnover? Recruiting and retaining quality CDL drivers is a big challenge for any carrier. Can the dedicated provider demonstrate they are an employer of choice?
How do they leverage technology? Do they provide delivery notifications? Will you have visibility of goods while they’re en route and can they give you projected delivery times? What IT resources are available for start-up and can they exchange data electronically? What does their standard set of reports and dashboards look like? Do you need custom reports and can the carrier provide those? Can the provider offer modeling? Does the carrier have the tools to simulate a baseline, project resources and cost for two, three and four years out?
Do they run a safe operation? Does the provider continuously train their drivers? What resources does the carrier have to promote safe operations on a daily basis and does the company itself have a strong set of CSA scores? For the drivers, do they provide the tools they need to be successful, safe drivers? Do they invest in state-of-the-art safety componentry for their vehicles: items like adaptive cruise control, collision avoidance, disc brakes, LED headlights, and do the show a continuous evaluation of new safety products? Are they dedicated to reducing their carbon footprint and minimizing fuel consumption?
Good luck with your search for the right dedicated contract carriage provider. Successful, world-class carriers make the investments in their business to be highly-efficient low-cost operators to ensure that deliveries are made intact, on time, every time.
By Tom Scollard
Scollard is vice president of dedicated contract carriage for Penske Logistics and can be reached here. He is based at Penske’s global headquarters in Reading, Pennsylvania. This column originally appeared in Global Trade magazine.
The popular phrase “third time’s the charm” doesn’t apply to Penske Logistics truck driver Neil Kirk after he was named a captain of the American Trucking Associations 2015-2016 America’s Road Team on his second attempt. The announcement was made last night at a Capitol Hill event in Washington, D.C.
“I’m really thrilled and humbled,” said Kirk, who spent his first day attending educational sessions and onboarding meetings. “It’s not just my win – it’s a company win. My friends and family supported me.
“I was glad that the company supported me and I feel good about my performance,” he explained. “I enjoyed meeting the other captains. I met some really good guys. I look forward to going back home and sharing this with the guys.”
“We are extremely proud to have Neil represent our company and our industry,” stated Jeff Stoicheff, Penske senior vice president of human resources, who was in attendance Tuesday evening.
“He was a winner from the start after being selected to represent Penske from the ranks of more than 3,000 PL drivers," he continued. “It was a great night for Neil, a great night for all of our drivers and a great night for Penske!”
Paul Emmert, Penske Logistics operations manager stated: “He worked extremely hard and learned a lot from the experience the last time. He really shined this time around.”
In a news release, Bill Graves, ATA president and CEO stated: “America’s Road Team represents the best of what trucking can be: dedication to safety, professionalism and pride in an industry that delivers life’s essentials every day. These 19 outstanding professionals join a select fraternity.”
According to the ATA, Road Team Captains will begin appearing as industry ambassadors. They will travel the country and preach safety to fellow drivers, make community appearances and interact with public officials at the local, state and national levels. They will continue work as full-time drivers.
Kirk has three main goals: show the level of professionalism in driving, explain the need for safety and illustrate how important trucking is within the fabric of our economy.
He has accrued in excess of 2.5 million accident-free miles during his career. Working from a Penske location in Montgomery, New York, he delivers vital medical supplies in Manhattan to hospitals, doctor’s offices and medical centers for a Fortune 500 customer.
“I enjoy being out on the open road and being responsible for my own work,” Kirk said.
As a Smith System trainer for Penske, he works with fellow drivers to ensure they drive professionally each and every day.
His safe driving philosophy is rooted in common sense: be aware of what other vehicles are doing, anticipate their next moves and be in position to avert possible danger. “Well-trained drivers can mitigate those risks,” Kirk pointed out.
“I am proud to be a truck driver,” he said. “I have a lot of heart and pride as a driver. Once it’s in your blood as a career it stays in your blood.”
Kirk (who drives a Volvo tractor) is looking forward to touring a Volvo plant tomorrow in Roanoke, Virginia.
America’s Road Team was formed in 1986 and has been sponsored by Volvo Trucks since 2002. The ATA noted there are 3.2 million professional drivers in the United States.
Click here to view past “Move Ahead” articles featuring Kirk.
By Alen Beljin
Photo identification of Penske Logistics associates, from left: Jeff Stoicheff, senior vice president of human resources; Shane Keller, manager of organizational development; Neil Kirk, ATA America’s Road Team captain and truck driver; and Paul Emmert, operations manager.
Penske Logistics is a recipient of the 2014 Green Supply Chain award from Supply and Demand Chain Executive magazine. It is the second straight year the company has attained this honor.
According to the publication the award highlights: “companies making green or sustainability a core part of their supply chain strategy, and are working to achieve measurable sustainability goals within their own operations and/or supply chains, in the areas of sourcing/procurement, fulfillment/logistics, operations, product life cycle management, and other areas of the supply chain.
Neil Kirk will be the first to say you can’t keep a good man down for too long. For the second time in his career, the experienced Penske Logistics semi-truck driver is one of 32 finalists for the American Trucking Associations America’s Road Team, which is a national outreach program consisting of professional truck drivers who share superior driving skills and safety records. Kirk was a bit overwhelmed with the vetting process the first time through two years ago but he is making certain it won’t happen again.
“I've been looking forward to this opportunity for two years,” said Kirk, a truck driver in the New York City metro area, who became a Penske Logistics associate in 2008. “I’m better prepared this time around. Last time, I walked away bruised. I won’t be nervous or intimidated now.”
Kirk is always up for a challenge. He skillfully navigates his rig through traffic-congested New York City and delivers medical supplies to hospitals down the city’s narrow alleys and tight loading docks on a daily basis.
To aid his candidacy, Kirk has submitted a professional video and is fine-tuning his presentation skills for his in-person meetings with ATA judges in Arlington, Virginia. He will present 3-5 minutes on a subject in trucking in January, followed by a Q&A.
“I have the benefit of that first experience and I have grown personally from it," Kirk noted. "Now I can better articulate my positions in the industry.”
Kirk went on to explain the experiences of U.S. senator Cory Booker and how he learned from losing his first mayoral race in Newark, New Jersey. “Booker doubled down and worked harder after his loss,” Kirk said. Booker enjoyed success as Newark’s mayor before being elected to the senate last year.
Kirk wanted to be more impactful in the industry so he has taken a part-time job as a truck driver instructor. “While the driving school teaches new recruits what is needed to pass the driving test, I talk to them about the industry, safety and the important role that trucking plays in our everyday lives,” he detailed.
“I share with them how being a professional truck driver has changed my life for the better.”
Kirk will no doubt be a strong candidate for America’s Road Team this time around.
By Alen Beljin
Read more about Kirk here.
Global third-party logistics providers are optimistic about the current state of the industry along with the future revenue growth of both their individual companies and the regional 3PL industry as a whole. Among service providers in North America, Europe and Asia Pacific, e-commerce and near shoring are among the factors contributing to the most significant growth.
Those findings were reported in the 21st Annual Survey of Third-Party Logistics Providers authored by Dr. Robert Lieb, professor of supply chain management at Northeastern University and sponsored by Penske Logistics.
Of the 27 global 3PL companies participating in the survey, three quarters said they either met or exceeded their regional revenue projections in 2013.
Moreover, 20 reported their companies were profitable during 2013, two reported breaking even and three reported that their companies were unprofitable. Lieb said, “Things have stabilized financially within the industry in the last few years.”
The major industry dynamics reported by CEOs in the North American market are the growth of near shoring, Amazon’s impact on supply chain management, capacity problems in several modes and a variety of labor issues.
More than 75 percent of North American CEOs said customers are shifting at least some manufacturing activities to Mexico from China. “Manufacturing is clearly headed back in that direction,” Lieb said.
While cost increases in China have been a major driver of this shift, the pro-business Mexican government and the incentives they have offered companies are playing an important role in the change.
As manufacturing within Mexico increases, so does the need for the transportation and ancillary services 3PLs provide. “Mexico’s star is rising as an economy, a place to do business and a place to manufacture products,” said Joe Carlier, senior vice president of sales for Penske Logistics.
Carlier added that those with in-market experience navigating the nuances and complexities of the region will reap the most benefits.
“Penske Logistics has operated in Mexico for 20 years and has 1,300 associates, and we’re continuing to expand,” he said. “The ongoing growth has prompted us to make additional investments in the region, from adding staff to investing in our overall infrastructure.”
Nearly all of the 3PLs participating in the study already support some e-commerce customers with services ranging from warehousing through fulfillment and reverse logistics.
Not only did CEOs report substantial growth in e-commerce over the past year, they also see the long-term growth potential of that marketplace and real opportunities for 3PLs as e-commerce continues to expand, particularly in the business-to-business space.
However, they all acknowledged the impact that Amazon has had on the field of supply chain management. The online retailer has been known for serving the business-to-consumer marketplace, but it is also moving into the business-to-business space through Amazon Supply.
Many of the CEOs noted that although Amazon is a customer of theirs, it is also a competitor. That competition may increase due to the scale of the logistics infrastructure the company has built. “If you look at what Amazon is doing in the marketplace, they are doing everything a 3PL would do,” Lieb said.
While 3PLs are experiencing new opportunities, they are also working through challenges. In North America, CEOs are focused on finding and keeping management talent, facing continuing margin pressures and coping with capacity shortages. “Capacity problems are huge in the U.S. but not as prevalent globally,” Lieb said.
Nearly 70 percent of North American 3PL CEOs reported capacity shortages across several modes, including truckload, less-than-truckload, intermodal and rail. The capacity crunch has led to higher rates and longer transit times with some 3PLs struggling to meet on-time service goals and cost targets.
Carlier stated: “Transportation service providers throughout the supply chain are experiencing capacity concerns, but that can create additional opportunities for reliable providers. We’re seeing a growing number of shippers engage 3PLs to ensure that they have the capacity when it is needed. In turn, 3PLs can utilize their expertise in transportation and warehouse management to minimize the effect capacity constraints have on their customers.”
In the Asian Pacific region, the most important problems cited are poor infrastructure and low-quality transportation services in emerging markets, a crowded 3PL marketplace and depressed margins.
European 3PL CEOs said they are facing intense competition in a slow growth market. They are also addressing labor issues, trying to differentiate their companies from their competitors and managing poor forecasts.
North American 3PLs said they expect to grow 10.39 percent over the next year with an anticipated industry growth rate of 6.62 percent.
In the Asian Pacific market, 3PL CEOs said they expect 15 percent growth over the next year with a 7.6 percent industry growth rate.
In Europe that number dropped to 7.71 percent for companies with a 4 percent industry growth rate. “The numbers are good in all three markets. Europe is still lagging behind, but even those operators are optimistic about their company situation,” Lieb said.
In all three regions the CEOs expect to see a resumption of the 3PL consolidation movement, but they project relatively little revenue growth related to mergers and acquisitions during the next three years.
Only three of the 27 companies were involved in significant merger/acquisitions during 2013, and the CEOs generally believe that revenue growth through acquisitions will be very modest over the next three years.
CEOs said there is a lack of attractive candidates and that it is becoming harder to find someone they want to merge with or acquire. Respondents also said they have achieved sufficient scale to achieve growth targets through organic growth. Many cited negative experiences with previous acquisitions. “They have said that the acquisition and merger process can be a painful,” Lieb explained.
By “Move Ahead” Staff
Third-party logistics providers and the shippers doing business with them are continuing to collaborate and strengthen their relationships. That collaboration is contributing to the positive results they are experiencing from their partnerships, and a majority of shippers—92 percent—reported that their relationships with 3PLs generally have been successful. Among 3PLs, that number increased to 98 percent.
The findings are part of the 19th Annual Third Party Logistics Study: The State of Logistics Outsourcing.
The study, which is produced by John Langley, a clinical professor of supply chain management and the director of development for the Center for Supply Chain Research at Penn State University, along with Capgemini Consulting, Penske and Korn Ferry, found that among shipper/3PL relationships, the most frequently outsourced activities tend to be those that are more transactional, operational and repetitive, such as domestic and international transportation, warehousing, customs brokerage and freight forwarding.
This year’s Annual 3PL Study reports that 67 percent of the shippers surveyed are increasing their use of outsourced logistics services, but there is evidence that shippers will choose not to outsource operations where they feel they can serve their customers better.
Research for the study found that 3PL service providers are delivering measurable benefits, with cost savings being among the top benefits shippers report. Shippers participating in the study reported an average logistics cost reduction of 9 percent, an average inventory cost reduction of 5 percent and an average fixed logistics cost reduction of 15 percent.
In addition, 73 percent of shippers and 77 percent of 3PLs said they have received open, transparent and effective communication from their partners. Shippers said they are also experiencing improvements in their order fill rate and order accuracy, resulting in greater customer service for all of those involved.
That improved customer service is becoming even more important in today’s business environment where end customers are demanding greater shipping options and requiring a near-perfect experience from the companies they do business with.
Improved technology means shoppers are no longer constrained by a store’s hours, and they have come to expect an always-on, always-open shopping opportunity. They also want their orders to be filled quickly and to have visibility into a shipment. As a result, retailers are investing in new technology, redesigning their supply chain and testing new fulfillment options, the study reported.
While creating convenience for the end consumer is important, the number of order channels multiplied by the number of delivery options creates a complex operating environment for shippers and logistics providers.
For many companies, their existing infrastructure simply cannot support a true omni-channel network, and they have to determine how much of their current infrastructure they are willing to take apart to build new delivery channels.
Nearly one-third of those participating in the study said they are not prepared to handle omni-channel retailing and only 2 percent of respondents rated themselves as high performing in the omni-channel space, demonstrating that the market segment is still maturing.
Technology is also allowing businesses to streamline global workflows and processes, provide executive-level visibility to commercial leaders, identify inefficiencies and bottlenecks in commercial operations and provide real-time information into operational performance.
More and more shippers are expecting a certain level of technological expertise from their business partners, and in this year’s study, 40 percent of shippers indicated that their bid processes place emphasis on 3PLs utilizing capable customer relationship management technologies.
One benefit of the greater visibility technology provides is improved risk management throughout the supply chain. The whole concept of risk management within the supply chain is garnering the attention of top executives as companies increasingly focus on providing a perfect customer experience.
Those participating in the survey said 3PLs are placing greater emphasis on the risk management services they provide clients and this appears to be a prime area for collaboration between 3PLs and their customers.
A move to near shoring and the positioning of manufacturing facilities closer to the point of consumption is helping companies minimize the risk of disruptions. Manufacturing hubs are shifting and more businesses moving to Mexico from Asia, driving significant growth within the manufacturing industry in Mexico.
Within the Third Party Logistics Study, 40 percent of respondents said they have already moved some of their operations to Mexico, citing reduced freight transport time and closer proximity to sources as the most important factors driving the change.
About 80 percent of Mexican exports ship to the United States, and respondents in the U.S. and China are the largest percentage of those that are moving operations to Mexico.
For Mexico’s business to be successful and remain cost competitive, the effective movement of goods is crucial. The rise in manufacturing within Mexico is creating opportunities the freight movement and for ancillary services 3PLs provide, the study found.
Among those offering logistics services in Mexico, 68 percent of study respondents said they are currently buying or providing domestic transportation, international transportation and warehousing. Twelve percent said they plan to invest in those areas in the next 12 to 18 months.
Mexico’s logistics industry does face certain challenges, including a lack of quality infrastructure and certain regulatory aspects. What’s more, despite the increased use of technology globally, there is little use of information technologies by small and medium-sized companies in Mexico, and most companies see technology as an expense rather than an investment.
Respondents reported that technologies, such as warehouse management equipment and software and asset and vehicle tracking solutions, need to be increasingly adopted to ensure cost effectiveness. They also noted that this could create advantages for 3PLs that already have expertise in these areas.
Other challenges respondents noted related to the workforce within the supply chain. Nearly 50 percent of those participating in the study said they are already having difficulty in finding or attracting talent, and managing the workforce will be particularly important for the 3PL industry in the future as it is expected to face a shortage of talent.
The average hiring growth rate within the supply chain industry is expected to be higher than the average growth rate across other occupations, with estimates showing that 60 million people will exit the industry by 2015 with only 40 million people to fill the gap.
Compounding potential difficulties in hiring is that existing positions within the industry are changing rapidly. By 2015, three out of four jobs within the industry are expected to change.
Moreover, the truck driver shortage is intensifying, and the impact the shortage will have on the supply chain is significant. New supply chain models and mobile devices may be making just-in-time ordering and fulfillment all the more possible, but the final delivery of goods relies on professional drivers, making them one of the most critical links within the supply chain.
If freight demand grows as it is projected to, the driver shortage could balloon to nearly 240,000 drivers by 2022. Bob Costello, chief economist for the American Trucking Associations, has said that the trucking industry needs to add nearly 100,000 drivers annually over the next decade to keep pace with freight.
The effect the truck driver shortage will have on the supply chain is significant. Already manufacturers, distributors and other intermediaries operating private truck fleets are outsourcing their trucking to 3PL providers as a solution. This may be a short-term solution, but to truly address their concerns, companies may begin making upstream adjustments, such as shifting distribution patterns, relying on intermodal transportation and shipping larger quantities at one time.
Trucking and logistics companies are doing everything they can to attract and retain truck drivers, including offering higher wages, signing bonuses, concierge-type services, benefits, perks and better routing to get truckers more at-home time.
However, this all contributes to a higher cost of doing business. In the future, shippers and 3PLs will likely need to consider the effect a driver shortage will have on their fulfillment capabilities and may start to have preferred shippers in times of tight capacity.
By “Move Ahead” Staff
Cupid’s arrow may have been a little off the mark, but a fateful tire change led to love for a pair of truck drivers.
“We started talking and found out we were going the same way from the middle of Ohio to Eastern Pennsylvania,” said Penske Logistics driver Francis “Frank” Hanson of the first time he met his future wife Tammie in a tire shop more than 20 years ago.
After a job change led them to work for the same company, they were paired to drive as a team in the same truck. “We figured after two years we were getting along good,” and soon after they were married, Hanson said.
They spent 20 years driving together, but now Hanson drives without his wife, who has since retired from truck driving life. An experienced driver in his own right, Hanson has been driving for 23 years and will soon mark his first year as a Penske Logistics driver.
Prior to becoming a truck driver, Hanson was in the Air Force for 13 years and chose truck driving because “it is always a challenge. You are adapting to what you see in front of you,” Hanson said.
“Personality-wise you have to be very responsible. It’s your pride and reputation that you build. Going down the road you have to be a Boy Scout; you have to be prepared,” he added.
After all those years living on the road, Hanson was looking for something closer to home and chose to drive for Penske because of the company’s “excellent reputation” and equipment quality.
Safety plays an important role and is something that Hanson, a safety team member, is very passionate about.
Penske drivers take the Smith System professional driver training course to become subject matter experts, with many sharing their passion for safety as certified Smith System instructors.
Smith System is the nation’s leading provider of collision avoidance driver training, helping drivers see, think and react to driving challenges through classroom and hands-on training.
Being safe “is the only realistic way to do the job. It is a lot of taking care of your surroundings and being observant and knowing your equipment, and if something goes wrong, knowing what you have to do to take care of it ,” he said.
Hanson’s approach to safety is more than appreciated by his supervisor.
“He recognizes and understands the nuances of our safety initiative and is quick to embrace those initiatives and communicate them to other drivers,” said Thomas Bosson, Penske Logistics manager of operations, Knoxville, Tennessee. “Frank’s participation and input on our safety team is invaluable. He has credibility with other drivers in a way that is difficult for management to duplicate.”
His pride in his work is matched only by his participation as an escort with the non-profit Wreaths Across America organization, which coordinates wreath-laying ceremonies at Arlington National Cemetery in Virginia, as well as other veterans’ cemeteries across the country.
As a veteran it was a cause close to Hanson’s heart. “As ex-military, I thought it was an honor to do it,” he said.
When he is not driving, Hanson spends his time enjoying many hobbies, including model railroading. “It is a nice way to go out and use your imagination and go off into your pretend world and do what you want to do.”
Most of all, Hanson is happiest to spend time with his wife.
With the thousands of miles of roads they drove together, one question still lingers: Who was the better driver: Hanson or his wife?
When asked, Hanson gave the only answer he could: “Yes.”
A safe answer from a safety team member.
Interested in a driving career with Penske? Visit GoPenske.com/drivers. The company offers competitive wages and a wide range of benefits. Penske is an Equal Opportunity Employer.
Editor’s Note: In recognition of National Truck Driver Appreciation Week Sept. 14-20, Penske is celebrating our 3000 dedicated drivers who ensure safe, prompt and seamless delivery of our customer’s goods while maintaining the highest level of safety and customer service.
By Bernie Mixon
