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November 2009 Newsletter

November 2009 Newsletter
Recession nearing end? Part II The Green Supply Chain Transportation in 2010

“For the remainder of 2009, I anticipate slowly building volumes,” reports a WI-based 3PL and market research firm, Armstrong & Associates, Inc. “We expect for the year, value-added warehousing will be down about 3%, but next year it will slowly build back up, and by the end of 2010 we’ll be back in good shape.”

According to another expert source, Dr. Robert Lieb, a professor of supply chain management at Northeastern University, analyzed responses from several dozen 3PL company CEO’s dispersed throughout this continent, Europe, and the Asia-Pacific regions. Lieb publishes an annual survey of these CEO’s, which is now in its 16th year.

Many of the 35 executives are optimistic about next year’s growth. These CEO’s expect continued consolidation, pricing pressures, and operational reductions this year. However, Lieb writes that “the opportunities for improved collaboration with customers, expansion into emerging markets and the possible addition of new management talent have many excited about the next several years.”

With regard to client relationships, Dr. Lieb reports that even before the recession, 3PL’s were pressured to reduce their prices. This trend has only intensified: the CEO’s reported that about one-quarter of their business relationships had become more adversarial. On the other hand 32% of their business relationships had become more collaborative. This should lead to better logistics. (Source: Robert C. Lieb, PhD; Northeastern University; Boston)

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The contemporary focus of moving toward a green supply chain includes the 3PL goals of visibility, efficiency, and cost reduction. Despite the potential for significant financial gains, most supply chain managers currently do not focus on environmental concerns. One reason for this is that cost accounting systems hide the frequency and magnitude of the “environmental costs” that companies may incur.

Within such systems, many overhead costs—upper management salaries and rent, for example—are appropriate. However, these approaches may lead to inaccurate cost analyses and ineffective decisions when significant costs—e.g., waste disposal, environmental permitting fees, and training expenses—are not allocated to the responsible products and processes.

The key to achieving cost-saving improvements is changing the 3PL decision-making processes to incorporate environmental data. For example, 3PL’s should routinely conduct Environmental, Health, and Safety performance reviews of the facility’s processes to determine levels of waste and pollution; health and safety risks; and effectiveness of environmental, health, and cost management systems.

These processes, improvements, and reviews will help sustain our environment, improve employee productivity, aid managers’ decision-making, and reduce costs to create a greener business.

Many 3PL companies have launched new sustainability initiatives during the year and some have expanded existing programs. The EPA recognizes that there seems to be commitment of some type among these companies. (Source: www.epa.gov)

Except for health care, re-authorization of “The Safe, Accountable, Flexible, Efficient Transportation Equity Act,” known simply as “The Highway Bill,” is the most expensive piece of legislation facing Congress. There may be an 18-month extension of the current $286 billion, five-year law that expired last Sept. 30. There likely will be a $450 billion-to-$500 billion, five-year bill sometime in 2011. (Source: US Department of Transportation)

President Obama’s administration has indicated that it will not raise fuel taxes during this recession. However, if the recession ebbs in 2011, truckers are bracing for an increase in the federal fuel tax, unchanged since 1993.

Message from ACME's CEO

It’s hard to believe that 2009 is nearly gone and that the holidays are just around the corner. As every organization works both harder and smarter to meet the challenges of the economy, we all hope to emerge with leaner operations focusing more intensely on our respective core competencies.

Doing more with less is a business reality in this 21st century global economy. Accepting anything less in what we provide to our customers is simply not an option.

Acme has been providing a wide range of professional logistics services since 1947 and continues to expand its menu to meet the needs of its current and future customers. Our offerings extend well beyond the traditional / main stream services and include such things as freight claims management and warehouse location modeling, to name only a couple.

Please check out our website or give us a call to see what we might have to offer. Let us help you think out of the box and maximize your resources.

Acme values your privacy and will never sell or share your contact information.