2014 Supply Chain Issues

In 2014, I do not expect Supply Chain and Logistics managers will spend lots of time worrying about shipping by drones, but here are some of the concerns they might have.

The 2013 changes in hours of services have minimal affect on local and short distance regional trucking whose drivers are home every night. Those trucking operations which are overnight, the hours of service regulations has caused driver wages to go down and carries to have is less production, in the neighborhood of 5%. These changes  will increase cost for those type of operations above normal inflationary increases and limit capacity. Intermodal rail have been increasing at a level of twice the economic growth. The raising long distance truck rates are a strong part of this.

Likely the Federal Motor Carrier Safety Administration will issue a requirement of electronic logs. I suspect there will be a large amount of negative public comments, but really electronic logs are a cheaper way to operate for all but the smallest of operations, so I do not see this as having much effect.

I am not convinced that consumers will pay more for same day delivery. But prompt service will be important. So last mile delivery will continue to be key selling factor and will be very important in warehouse location and the services they offer.

The ocean shipping market will continue to be influenced by the 2015 opening of the enlarged Panama Canal. Ports and transportation companies will prepare for these changes and shippers will consider how they impact services and costs. There will be press about other Central American companies creating competitors to the Panama Canal. They are not likely to succeed.¬† Panama’s government and infrastructure has shown it can handle large projects and the canal (and the associated rail infrastructure) well. The other countries do not have proven expertise in these areas.

The Keystone Pipeline project will likely be approved. I believe President Obama has been using this as a bargaining chip for negotiating with the Republicans on some issue.

Petroleum transport by rail will continue to rise. There will be pressure to improve rail car tank car safety. However really there is no other way to transport the product efficiently to where it is needed. The economics of fracking oil to create jobs and lower costs will be too important to block.

Supply Chain / Logistics Software products will begin to mature. Ease of implementation and use and cost considerations will have a higher priority with customers.







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