Friday, March 12, 2010

Top 10 Logistics Challenges for 2010 (and Beyond)

(DC Velocity – Clifford F. Lynch)

Economists are in broad agreement that a recovery is under way, but that's not to say our troubles are over. In fact, it's likely the logistics/supply chain community will continue to experience difficulties throughout the year.

What are the biggest concerns? With apologies to David Letterman, I have developed a "Top 10" list of issues that bear watching in 2010. In no particular order, they are as follows:

1. The precarious health of the LTL industry. Weak volumes and cut-throat pricing have taken their toll on the LTL sector, which continues to struggle with inadequate earnings. YRC is the best-known example, but there are others as well. Con-way, for instance, lost $110 million in 2009. This will not change without a significant improvement in the economy.

2. The price of diesel fuel. After a temporary dip, fuel prices are once again on the rise. According to Department of Energy projections, the average retail price for diesel this year will be $3.00 per gallon. Although that's way down from a few years back, it's still high enough to be a major factor in the cost of moving goods. And we still have $80-a-barrel oil.

3. Rail regulation. A bill currently in Congress would eliminate antitrust law exemptions for railroads and change the way the industry is regulated. While captive shippers certainly deserve protections, I believe this bill, if passed, could be a dangerous first step toward more regulation.

Read the complete list here.