Outsourced Logistics 200811

N o v e m b e r 2 0 0 8

A Penton Media Publication outsourced-logistics.com

• Greening in the Warehouse • Environmental Express AlsoChina Logistics on the High Road

• Greening in the Warehouse• Environmental Express

MeanLean& Green

811LTFC.indd 1 10/23/08 3:14:03 PM

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agilitylogistics.com

Hans MiedemaRegional Support Leader

Agility Global Account Team

When does Agility’s Hans Miedema consider a job done? When he successfully executes critical gas turbine shipments for his global energy customer? When he applies Lean Six Sigma Methodology to eliminate defects for his clients in Eastern Europe and India? For Hans, and more than 32,000 other Agility employees in over 100 countries around the world, success isn’t measured in parts assembled or products shipped. Success occurs when our partners achieve their goals. It’s an intimate approach to logistics that demands individual attention and personal ownership. It’s how Hans Miedema brings Agility to supply chain challenges.

YOU NEED TO SOURCE FROM EMERGING MARKETS.

YOU NEED HANS MIEDEMA.

811LTIFC_Agility.indd 2 10/23/08 3:49:20 PM

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We could be seeing some early signs of a restruc-turing of the global logistics industry.

Or it could just be some localized bad news.The whole North American parcel sector is challenged,

and current reports have DHL accelerating its restructur-ing to cope with worse-than-anticipated results in the US domestic market. Described as a critical link in its global network, the question has been posed whether DHL can return its US network to what it had before the Airborne Express acquisition or, alternatively, what effect a dra-matic downsizing or exit from the US market could have on its global network. That's only one example.

In a larger context, has the march to global dominance been stopped? Does this suggest that top-performing local or regional players will remain a key resource rather than a target for acquisition? In a word, will the consolidation that has been taking place in the industry turn from acquisition

to alliance?Arguing against ac-quisition is a tighter

credit market. Even those companies with good credit can find it more costly to bor-row. Those with a strong cash po-sition may find it advisable to put

that cash into the cur-

r en t

business and infrastructure rather than acquisitions.The US dollar has rebounded a bit on currency markets, so

the buying leverage the Euro had is largely mitigated. But the domestic economy may constrain a buying spree abroad.

Share prices have dropped, affecting another major source of cash for acquisitions (or leverage where a share swap is used for an acquisition).

Volumes and capacity affect pricing, which drives rev-enue and, returning to DHL for a moment, what happens to the $1 billion outsourcing deal with UPS if volumes are not sufficient to generate the expected base revenue? A similar case might be made for acquisitions. If the ability of the proposed acquisition to produce a certain level of revenue is impaired, the basic assumptions change. Is the return still there? If the timeframe has lengthened, is it acceptable to the acquiring company’s board and shareholders to delay the return on its investment?

Of course, lowered results and forecasts do create a bar-gain hunter’s paradise. Good companies with quality per-formance levels find their shares undervalued as an entire market segment drifts downward. For a group with access to cash, that may be a deal too good to pass up. And, if you’re that potential target, which way do you go? Look for an alliance partner who can help rebuild the volumes that prop up your higher valuation, or take the buy out?

Two quality players who value their independence might strike a deal and avoid acquisition, forestalling some of the industry consolidation that has dominated the logistics segment in recent years. If that’s the case, the leading regional player may remain just that.

Bargain hunting can backfire though and a company could acquire an operation that was teetering on extinc-tion only to drag down its own overall performance at a time when it should be enhancing its price/value proposi-tion. In that case, it may have been better to let the poor performer fail and move into that space with a brand extension that maintains its service promise.

Newton’s law of thermal equilibrium says that if you add hot water to cold, you get a tepid result. The global logistics market can’t afford more tepid performers. If these down markets are going to force some restructur-ing, let’s build for strength.

Editorial

Early Signs

Perry A. Trunick, chief editor, [email protected]

Outsourced Logistics | November 2008 | 1

Perry Edit.Final.indd 1 10/31/08 9:59:17 AM

mailto:[email protected]

6Global Markets

Supply Chain Flexibility—Are You Ready to Dance?

Community VoiceContainer Trade

Outlook Deteriorating

12Operations

Going Asset Light?

Community VoiceLeaning Toward Green: Green

Your Supply Chain with Lean Practices

34Logistics Services

It's What's on Top that Counts

Community VoiceCampaign for Your Supply Chain

Features18

Global MarketsChina Moves from Number 1 to Plus 1

China is still a major factor in sourcing, but strategies need to expand.

22Operations Green is Good BusinessIn logistics, best practice is green.

24Operations Greensourcing Strategies

An overview of what some are doing to improve their global footprint and increase sustainability.

30Field ReportGreening in the Warehouse

Nothing helps improve environmental conditions within distribution centers and warehouses as much as cleaner operating material handling equipment.

403PL FileSaddle Creek Corporation

Departments

1 Editorial Early Signs 39 Classifieds Advertiser Index

November 2008 Vo lume 1 , Number 6

2 | November 2008 | Outsourced Logistics

24

November Contents.Final.indd 2 10/31/08 2:14:40 PM

BUILT FOR THE LONG HAUL.

*The Cummins Turbo Diesel engine is protected by a separate Diesel Engine Limited Warranty, covering the engine for 5 years or 100,000 miles,

whichever comes fi rst. See your dealer for complete details. †Estimated fuel economy based on independent testing on 2008 models. When

properly equipped. Properly secure all cargo. Cummins is a registered trademark of Cummins, Inc. Independent testing on 2008 models has proven

Dodge Ram 5500 more fuel effi cient than Ford and Chevy Class 5 chassis cabs, helping you save.

DODGE RAM 4500 AND 5500 CHASSIS CABS. Inside these new trucks sits the 6.7L Cummins® Turbo Diesel, an engine that’s

Clean Idle Certified, when properly equipped. That means you can idle as long as you want, instead of hitting the 5-minute limit

you have in a Ford or Chevy diesel in certain states. This Cummins puts out 610 lb-ft of torque, and it’s rugged enough to be

backed by a 5-year/100,000-mile Diesel Engine Limited Warranty.* Paired with an available, commercial-grade AISIN 6-speed

automatic transmission, this powerful combination makes Ram 5500 Chassis Cab 14 percent more fuel efficient than Ford F-550

and 23 percent more than Chevy Kodiak 5500.† For more information, go to dodge.com/chassis_cab or call 800-4ADODGE.

*The Cummins Turbo Diesel engine is protected by a separate Diesel Engine Limited Warranty, covering the engine for 5 years or 100,000 miles,

whichever comes first. See your dealer for complete details. †Estimated fuel economy based on independent testing on 2008 models. When

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DODGE RAM 4500 AND 5500 CHASSIS CABS. Inside these new trucks sits the 6.7L Cummins® Turbo Diesel, an engine that’s

Clean Idle Certified, when properly equipped. That means you can idle as long as you want, instead of hitting the 5-minute limit

you have in a Ford or Chevy diesel in certain states. This Cummins puts out 610 lb-ft of torque, and it’s rugged enough to be

backed by a 5-year/100,000-mile Diesel Engine Limited Warranty.* Paired with an available, commercial-grade AISIN 6-speed

automatic transmission, this powerful combination makes Ram 5500 Chassis Cab 14 percent more fuel efficient than Ford F-550

and 23 percent more than Chevy Kodiak 5500.† For more information, go to dodge.com/chassis_cab or call 800-4ADODGE.

Untitled-1 1 10/29/08 12:27:07 PM

http://dodge.com/chassis_cab

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EASTERN REGION Jim Oot, Phone: 973-335-8902, Fax: 973-335-8903, [email protected]

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By Jaison Augustine

As the world watched the captivating fireworks and synchronized movements of hundreds of performers at the Beijing Olympics, the logistics industry was grappling with its own

synchronization efforts behind the scenes to keep critical supply chains in motion around Beijing.

The Chinese government had ordered the closure of several factories around the city in an attempt to improve the air quality ahead of the Olympic Games. They also imposed severe restrictions on the movement of cargo trucks around the city a month in advance. While these restrictions where challenging for companies operating and distributing in the local area, they also had ramifications for companies sourcing from Beijing, proving that global supply chains must be flexible to deal with surprises and disruptions.

Adverse market conditions and volatility in oil prices have instigated a crisis for businesses in general and the logistics industry in particular. Simple economics dictates that when there is a tightening of the credit market it lowers disposable incomes as well as the demand for products and services. Manufacturers have to lower production or reduce production costs to keep up with the rising costs of international transportation. This has a direct impact on the business of logistics.

The dramatic rise in oil prices generated extreme views from some analysts. The cost of shipping a standard 40-foot container nearly tripled since 2000, and most carriers are passing on the cost through fuel surcharges.

Some have predicted the end of globalization as the cost

Global Markets

of transporting goods from distant sourcing countries like China has begun to offset low production costs. While such predictions lack a credible base, companies are rethinking their sourcing strategies to include near-shore

production.Dean Scott Dawson of the Portland State University School of Business recognizes the

combination of rising wages in low-cost countries, corporate commitments to reduce carbon emissions and the high oil costs are combining to increase

manufacturing and shipping costs. Dawson believes that the high cost of operating overseas will lead to a “Made in America” renaissance.

According to a recent McKinsey & Company report, executives managing global supply networks are sharply scaling back offshore production plans and bringing manufacturing back to or close to the United States.

Nike, which works with manufacturers in China, Vietnam, Indonesia and Thailand to produce all of its footwear, manufactures its Air-Sole cushioning components in the US and ships them to overseas manufacturing plants for the final assembly. Nike is streamlining this process and evaluating bringing manufacturing back to the United Sates.

The American Trucking Associations (ATA) forecast “a mild recession” in the United States when truck tonnage took a sharp turn downward in August. According to ATA Economist Bob Costello, with freight volumes weakening, the industry is expected to be well into a mild recession later this year and early next year.

Similarly, ocean carriers have far too much capacity. Expect charter rates to fall and ship owners to delay deployment of ships that come off their leases rather than to try and re-charter them. Carriers may try to push back on the shipyards by canceling some orders, even if they have to pay a penalty to do so.

Matthew K. Rose, chairman, president and CEO of BNSF Railway, North America’s largest intermodal railroad, told analysts in July, “We’re not getting any indications at this point that there’s going to be any

Supply Chain Flexibility—

Global Markets.Final.indd 6 10/30/08 9:53:47 AM


do not need to own planes, ships, a fleet of trucks or a substantial fixed cost network. Of the thousands of 3PL providers globally, the ones that have innovative service offerings, better reach and the ability to offer technology solutions stand a better chance in this competitive industry.

Outsourcing of business processes is another important piece of unbundling the corporation. Moving back-office processes to business process outsource companies has advantages. Processes such as finance and accounting, human resources, contact center, procurement and several other transactional and rules based processes can be performed with greater efficiency.

For 3PLs, this could be a time of growth as companies seek to disband their fixed infrastructure to manage the complex logistics function and move to a more variable cost base.

All three segments need to think outside the box and challenge traditional operating paradigms to emerge successful from this overall downturn.

Are you ready to dance? While the credit

crisis in the US persists, economic woes

spread to European and Japanese markets,

and even China has seen a softening of growth

(which for the first time is below 10%).

The logistics industry must gear itself for a

period of uncertainty and weak economic

activity. Considering the intertwined nature

of the global supply chain, where the fates

of involved players are inextricably linked to

one another, there is a need to stay flexible

and move in step with your partner in the

chain — like those performers at Beijing, are

you ready to dance?

Jaison Augustine is vice president – Industrial & Infrastructure Services, WNS North America Inc.

significant peak season this year.”All this is beginning to show in the declining operating

results of companies. FedEx, for instance, posted a fiscal first quarter operating income of $630 million, down 23% from $814 million last year. According to an earnings release, “strong cost management actions were more than offset by global economic weakness, higher fuel prices and the related negative effects of higher fuel surcharges.”

FedEx has responded to the potential for near-sourcing to become a trend by launching next-day express service in Mexico. FedEx is expecting companies to consolidate their domestic shipping along with their cross-border (Mexican) shipping.

How should manufacturers or sellers of manufactured goods address this complex issue of flexible supply chains to adjust to the economic and competitive environment? A recent AT Kearney report focuses on network design, flexible supplier relationships, simplification of the transaction processing and IT connectivity. These are all elements that can enhance flexibility and allow companies to “substitute” one channel for the other during difficult times.

Increasingly, companies need a partner to manage logistics and other non-core processes allowing them to focus more on their business strategy, expanding markets and acquiring new customers. McKinsey & Company makes its case for “unbundling the corporation.” According to McKinsey, most companies are three businesses combined: one that focuses on customer relationships, another developing products and the third that supplies the infrastructure.

The culture and dynamics in each of these three components vary widely and, due to a forced integration into one entity, they cannot function optimally, often causing conflict. The case for moving “non-core” pieces to specialists is very strong and two major trends will begin to emerge as a result:

Outsourcing of the logistics function to 3PLs. According to Armstrong and Associates the size of the 3PL market in 2007 was roughly $122 billion. This has been growing every year. Following a non-asset based model, 3PL providers have more flexibility in a softer demand environment than asset-based carriers as these providers

Chain Flexibility—Are you ready to dance?



Global Markets

Appearing at the Dallas Museum of Art until May 17, 2009, then moving on to Atlanta, Tutankhamun

and the Golden Age of the Pharaohs arrived from Egypt with the assistance of the American Airlines (AA) Cargo Division.

Organized by National G e o g r a p h i c , A r t s a n d Exhibitions International and AEG Exhibitions with the cooperat ion of the Egyptian Supreme Council of Antiquities, the current ex-hibition follows a highly suc-cessful US tour that began in June 2005 and drew 4 mil-lion visitors in Los Angeles, Fort Lauderdale, Chicago and Philadelphia.

For this event, Northern Trust is the Presenting Sponsor and AA Cargo, the official airline. The carrier’s respon-sibility was transporting 130 priceless artifacts to Dallas. The objects—some weighing as much as 1,750 pounds—include 50 of Tutankhamun’s burial objects, one of which is his royal diadem. Another

object the Museum describes as a gold and precious stone inlaid canopic coffinette that contained the king’s mum-mified internal organs. As part of this encore visit to the US is a selection of artifacts new to the exhibit that have never before been seen outside of Egypt.

“AA Cargo is honored to have been part of such a monumental assignment,” says David Brooks, President of the American Airlines Cargo Division. “The opportunity to transport this priceless exhi-bition with enormous histori-cal significance was certainly an exciting challenge for the professionals of AA Cargo. The move required precise han-dling and attention to detail, and we are proud to have han-dled it flawlessly.”

Proceeds from the exhibition are being used to help preserve Egypt’s treasures, including the construction of a new museum in Cairo where the antiquities will be housed.

New

s B

rief

s •

Nov

embe

r 08

Evergreen Air Chosen for US-China Cargo RouteThe US-China aviation agreement of May 2007 permits the US to name a new all-cargo carrier to

begin service in the market on March 25, 2009. The Department of Transportation (DOT) has chosen Evergreen International to be that airline.

With headquarters in McMinnville, OR, Evergreen International handles global air cargo transportation and charter services for major airlines and freight forwarders. Its hubs are at Rickenbacker International Airport in Columbus, OH, New York City’s John F. Kennedy International Airport and Hong Kong International Airport.

Citing its reasons for choosing Evergreen the DOT indicated the carrier’s proposal offered the best service for shippers because it “was in the best position to compete with current all-cargo airlines in the market.” Those carriers are FedEx, Northwest Airlines, Polar Air Cargo and UPS.

DOT noted as well that Evergreen would offer the first scheduled US-carrier all-cargo service to China both from Columbus and New York. It also was the only carrier applying for the service that uses all of the capacity of its aircraft for cargo. The agency also took into account Evergreen’s operating experience in the US-Asia market that includes ongoing US-China charter services. It currently operates services for the US military and US Postal Service.

If final authority is granted, Evergreen will operate six weekly round-trip flights to Shanghai from New York with additional traffic stops in Chicago, Dallas/Fort Worth and Columbus. Other airlines that applied for the rights to the service were Kalitta Air and TradeWinds Airlines. In the event that Evergreen is unable to begin the service, Kalitta will get the nod.

King Tut Wings His Way Back to the US

Putting the last nail into King Tut’s coffinette carton.


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Global MarketsN

ews

Bri

efs

• N

ovem

ber

08 Agility Extends Its China ReachWith its second major purchase this year, the provider of integrated

logistics solutions puts another building block in its domestic China dis-tribution network.

In mid-year, Agility acquired Cosa Freight with headquarters in Shenzhen. The full service ocean freight forwarder has offices in six key Chinese locations—Beijing, Tianjin, Dalian, Quigdao, Shanghai and Ningbo—as well as presence in Hong Kong, Europe, Canada and the US. Cosa Freight has particular strength in the Trans-Pacific trades and offers a full range of services in the retail vertical.

This most recent acquisition is Shanghai’s Baisui United Logistics. “We are pleased to welcome Baisui Logistics to the Agility network,” says Wolfgang Hollermann, Agility CEO Asia Pacific. “The company has an excellent reputation in providing a range of specialist services in the chemicals, automotive, and Fast Moving Consumer Goods sectors, which are growing strongly in China. The company also strengthens Agility’s do-mestic transportation capabilities both in eastern coastal China and inland China along the Yangtze River.”

Baisui has 300 employees and 15 locations through China, including Shanghai, Shenzhen, Tianjin, Wuhan, Nanjing and Chongqing. It man-ages eight logistics centers with more than 130,000 square meters of warehousing. It operates a private fleet as well as employing the services of more than 75 trucking companies

Easing Land Border Congestion as NAFTA Trade Grows

The Department of Transportation (DOT) is moving to cut border backups by speeding implementation of projects through a combination of public and private financing schemes.

Border crossings in California, Texas and Washington will be the beneficia-ries of these moves. “Congestion at our borders is choking both travelers and commerce with excessive wait times and negatively impacting air quality,” ob-serves US Secretary of Transportation Mary E. Peters. “By prioritizing the proj-ects, we can improve the movement of people and goods across our borders and help to maintain these important economic lifelines.”

Specific projects are:• San Diego’s Otay Mesa, CA East Port

of Entry that will create a new port of entry and a 2.7-mile, four-lane highway linking to the existing California high-way system in order to provide more capacity for traffic through the region.

• The East Loop Bypass Project at Laredo, TX will build a new rail bridge across the border and create a new rail bypass around the city, with the objec-tive of adding rail capacity and improv-ing safety.

• The Cascade Gateway Expanded Cross-border Advanced Traveler Information System at Blaine, WA. Its aim is to provide real-time border-crossing wait-times and other travel information through a combination of technologies.

Year over year through the first seven months of this year, surface transpor-tation trade between the US and its North American Free Trade Agreement (NAFTA) partners, Mexico and Canada, is up 9.6%, according to DOT’s Bureau of Transportation Statistics (BTS). Surface transportation between the countries makes up 88% of US trade by value with the two countries. Movements are by truck, rail and pipeline.

Descartes and Lufthansa Sign AgreementDescartes Systems Group, a global on-demand software-as-a-service

(SaaS) logistics solutions provider, announced that Lufthansa Cargo has signed a three-year extension of its membership to the Descartes GF-X Exchange to support Lufthansa Cargo’s global electronic cargo bookings.

Lufthansa Cargo has selected Descartes’ GF-X Exchange to manage its electronic cargo bookings, including the ability for freight forwarders to do instant queries of capacity availability and flight schedules.

“By working with Descartes and offering e-booking capabilities to our customers, we provide an easy and accessible service for our customers to make freight bookings. Descartes GF-X Exchange provides our customers with on-going access to our current carrier information and allows them to make electronic bookings 24 hours a day, 7 days a week, via a simple web browser with no software installation required,” observes Helge Krüger-Lorenzen, vice president Global Sales Steering of Lufthansa Cargo.

“Among the largest cargo carriers in the world, Lufthansa is providing a differentiated service by providing access to schedules and cargo capacity for air freight forwarders,” says Ed Ryan, executive vice president of Global Field Operations for Descartes. “With Descartes’ GF-X Exchange, Lufthansa Cargo is automating and standardizing the bookings process allowing them to streamline their operations and provide a value-added service to their customers.”

Descartes GF-X Exchange is part of the Descartes Global Logistics Network (GLN), which enables the world’s leading transportation provid-ers to connect to their trading partners and exchange information to drive delivery performance and customer service.


We do not expect 2008 to be a good year for con-tainer shipping. Look for red ink on shipping

companies’ financial accounts in the third and fourth quarters.

World ocean container trade activity is increasingly reflecting the slowdown in economies other than the already-weak US economy. The deterioration in the econ-omies of some of the developed countries in Europe and Asia has accelerated, causing IHS Global Insight to revise downwards our near-term forecasts of ocean container trade. The downward revision is from already-weak trade volumes forecast for 2008 and 2009. We have been con-cerned with the growing number of economic indicators for the European Union that point to a greater loss of con-sumer confidence than had been previously anticipated. Indicators now suggest that the EU is headed towards recession. Industrial production in the Eurozone fell 1.9% in May, according to recent Eurostat data, the sharpest drop since 1992. In Germany, the government is warn-ing that the economy could contract by as much as 1.5%, while both Italy and Greece have seen industrial produc-tion slump 6.2%.

Our new forecast reflects downward revisions in the drivers of the traffic on the three east-west trade lanes, namely the transpacific, the transatlantic, and the Far East-Europe trades.

The monthly freight flow forecasts of US ports also reflect the continued weakness in US container imports. The revisions to the forecasts for US trade lanes are minor, reflecting that our prior forecast was mostly in line with developments to date.

We now forecast that US containerized imports will decline 8.2% in 2008, which is slightly more pessimistic than our previous projection of a 7.1% decline. This revision is based mostly on a deteriorating outlook for imports through the Gulf ports. On the positive side, we have increased the 2008 US export growth forecast from 17.7% to 22.6%. Major US export destinations for which we revised our forecasts significantly upwards include Brazil, India, Indonesia, Malaysia, and South Korea. We expect, however, that export expansion will slow in the


second half due to the worsening production prospects in Europe and the appreciation of the US dollar.

On the European trade routes, our suspicion in the last forecast that Far East-to-Europe trade was in imminent danger of a sharp drop was confirmed by data released by the Far East Freight Conference (FEFC). The figures supported our pessimism and, despite having been the leading forecaster suggesting that this trade was in decline as early as November 2007, our new, intensive review of conditions has resulted in further revi-sions to the outlook.

It is clear the European countries are not de-coupled from the US econ-omy, and Europe’s consumers have reduced expenditures as a consequence of the housing financial crisis and rising inflation, especially oil and other primary and agricultural commodities. The European Central Bank and the Bank of England, unlike the US Federal Reserve, decided to combat inflation as the worse of the two evils. A slowdown in economic activity was permitted in an attempt to fight inflation. Interest rates have remained relatively high.

In Far East-to-Europe trade, we clearly see a dramatic year-to-date slow-down in growth when compared with 2007.

We believe the annual growth rate will be no more than 2% in 2008, with some further downside risk remaining. For the Mediterranean/Black Sea, trade growth will likely drop to less than 4%. We also believe that 2009 will remain weak, as the recessionary tendencies will be slow to work themselves through towards recovery.

Our forecast for the eastbound trade has remained very similar in aggre-gate terms to what it was in the June forecast. We have made some changes to individual Far East country figures, however, to reflect the actual vol-umes being lifted. The growth rates remain relatively weak.

With new container vessel deliveries coming at a time when both the transpacific and the Far East-to-Europe trades are weak, we believe the pressures on freight rates will be downwards if the steamship lines cannot continue to manage their capacity. We have already seen declining spot rates from the Far East, and the normal peak season surcharges are not being brought in due to weak volumes. The ability to add to vessel strings is substantially down from last year, when vessels were shifted from the transpacific to the Far East Europe trade lane, which has now resulted in overcapacity and utilization that has dropped well below the 90% level. At least two steamship lines have shifted capacity into temporary lay-up by skipping a voyage. This is equivalent to a 63-day lay-up.

Paul Bingham is managing director of IHS Global Insight’s Trade and Transportation Group.

Global Markets

Community Voice

Container Trade Outlook DeterioratingBy Paul Bingham



zations seek to gain at least some minimum amount of return on their investment. That’s why financial decision makers will evaluate whether the investment in equip-ment offers a return higher than their “hurdle rate.” That rate is usually defined as the company’s weighted average cost of capital plus a nominal premium. If they determine the equipment does not offer a return that’s higher than the hurdle rate, then leasing may offer an alternative. Additionally, many financial decision makers will perform a net present value analysis of the lease or loan payment stream, which allows them to review the payments in today’s dollar value.

When considering a lease or purchase decision, it’s important to conduct an ROI (return on the investment) calculation to determine whether your company should use equity or debt to finance the equipment. Lease ac-counting treatment, which falls into two main categories: on-balance sheet and off-balance sheet, can favorably im-pact a company’s key financial ratios like ROA (return on assets) and ROI. If your company is measured on a key financial ratio favorably impacted by lease accounting treatment, you should take this into consideration.

Most leasing companies can assist with the ROI analysis.Is transportation a core competency?

Companies must ask, are we a trucking outfit or are we in another line of business? Many organizations have determined that by leasing their trucks and assigning their maintenance, roadside service, fuel tax reporting, and other administrative headaches to leasing compa-nies, they can focus their employees’ and managers’ energies on activities central to their business. When

By Olen Hunter

With pressure on to reduce costs and capital spending in logistics, shedding assets sounds like a quick fix. There

are options to consider for vehicle fleets, one of the more capital-intensive logistics assets.

Truck and engine manufacturers have introduced numerous innovations in new truck models responding to ever-changing environmental regulations and the need to reduce the green-house gases that contribute to global warming. Volatile prices for diesel fuel that reached record levels in 2008 is also driving equipment manufacturers to provide new technologies that maximize driver productivity and fuel economy.

The complexities of choosing and servicing these new truck technologies, and balancing them with the company’s transpor-tation needs, can be challenging.

Vehicle leasing can be a crucial strategy in accomplishing transportation goals while taking advantage of the emerging technologies that have been advancing in shorter and shorter design and implementation cycles.

Before making the decision to lease or buy a new piece of equipment, here are five questions you should ask: What is the best use of your company’s capital?

Every company is different. Depending on whether your company is privately or publicly held, how it’s capitalized and how it measures the success of business activities will determine the best use of its capital.

Companies finance their business activities through equity and debt. Financial decision makers (chief financial officers, vice-presidents of finance, etc.) spend much of their time ensur-ing that their companies leverage borrowing power (debt) and equity (retained earnings/stockholders equity) in a balanced manner to get the highest return possible.

When buying new equipment that depreciates, most organi-

Operations

Going Asset Light?Here are five questions to consider before making a fleet decision.

Operations.Final.indd 12 10/31/08 10:02:07 AM


mitting and compliance with US Dept. of Transportation regulations, can add up. Those expenses may or may not be captured at the fleet or unit level. These items, tradition-ally thought of as overhead items, contribute to the overall cost of ownership and must be considered when deciding whether to lease or buy trucks.

What information do you need to make a lease/own comparison?

There are 12 basic items or costs you need to identify to perform an accurate comparison—seven for ownership and five for leasing.

Ownership • Initial cost of equipment: the original purchase price,

including taxes, and additional equipment such as van bodies, tool boxes, auxiliary power units, refrigeration units, etc.;

• Interest rate if considering a bank loan, length of loan and down payment;

• Length of asset life—how long will you utilize the equipment;

• Corporate tax rate—used to determine your company’s net, after-tax benefits of depreciation write-off;

• Maintenance costs over the equipment’s life;•Administrative costs for licensing and tracking DOT

compliance, plus the general and administrative costs as-sociated with managing fleet maintenance;

• Net present value calculation of the monthly pay-ments, finance cost, and maintenance cost over the equip-ment’s lifetime.

Lease • Lease rate;• Variable cost (mileage rate) if a full-service lease;• Length of lease;• Net present value calculation of the lease payments

over the equipment’s lifetime;• Residual responsibility—is it yours or does it belong to the lessor?

Again, it’s vital to tally all associated administrative ex-penses under ownership and lease before making com-parisons. Once the data are gathered, you can perform a net present value calculation on the lease payment, the finance cost and the maintenance cost over the equipment’s lifetime. It’s also important to look at the net after-tax cash flows under ownership and leasing. This will give you the true picture of how depreciation impacts ownership and leasing cash flows. The net present value calculation will estimate the future cash flows of ownership and leasing in today’s dollars so you can make an informed financial decision.

employees and managers concentrate on delivering products, they can provide top-notch service and on-time performance to their customers. They also have time for customer-facing activities that help gain new business.

For many companies, investing time and resources in truck-ing related activity can be a slippery slope. Specifying the right equipment for trucks and handling maintenance requires the right knowledge. Transportation managers must keep up with the latest developments in trucking technology. Maintenance facilities must be properly equipped and staffed with well-trained technicians.

By outsourcing non-core functions related to trucking through a full-service lease, companies can use employee drivers while tak-ing advantage of the leasing provider’s equipment know-how plus equipment buying power and expertise.

Due to their sheer size, leasing companies can negotiate the best pricing on equipment, maintenance items and expendables and pass those economies of scale to customers. Without that benefit, a smaller fleet with fewer than 50 units can expect to pay a sizeable premium on parts, tires, outside repairs and other truck-related expenses due to economies of scale.

Leasing companies can also customize trucks with specialized equipment to meet individual client needs and help you realize operational efficiencies such as better fuel economy, greater pro-ductivity, and improved driver satisfaction. Do you know the true cost of ownership?

More specifically, do you know equipment maintenance costs? Most organizations have a good handle on their financing costs — equipment financing is fixed. Unfortunately, the cost of mainte-nance is often not well known or understood. But it should be.

Large fleet operators can tell you down to the penny, on a unit-by-unit basis, how much they spend on labor, parts, tires and outside repairs for their trucks. They can also tell you how those expenses are trending compared to their annual budgets. Think of this as a profit-and-loss statement on each truck. Those companies can also track trends that indicate poorly running units and units that experience repeat repairs. These trends influence future component purchasing and mainte-nance practices. Trends also help guide organizations to make replacement cycle decisions. By watching how these costs are tracking, organizations can fine-tune their trade cycles and op-timize their operating costs.

Unsure how to capture true maintenance costs for your trucks? You can purchase off-the-shelf software to help calculate this data. But the software usually can’t take into account your parts and la-bor pricing. Plus, off-the-shelf software that tracks expenses doesn’t usually take into account the administrative costs associated with managing a fleet. The time it takes to process repair orders, pay-ables and receivables, plus track warranty work, licensing, per-



Operations

New

s B

rief

s •

Nov

embe

r 08 Navistar Selects Menlo for Its Growth

StrategyNavistar International Corp. announced it has

selected Menlo Worldwide Logistics, LLC, as its global lead logistics provider to support Navistar’s global growth strategies as the company moves into new marketplaces.

Menlo will support Navistar’s strategies to achieve world-class performance and a competi-tive cost structure in its global logistics network. The contract includes management of global trans-portation providers, regional warehouse manage-ment, lead time planning and net landed cost modeling.

Navistar said the outsourcing initiative repre-sents a significant step forward for its plans to accelerate growth globally and speed the in-troduction of its products into new markets. Ed Melching, Navistar’s director, Global Logistics said, “Effective logistics operations are based on supe-rior processes and well-engineered supply chain practices. It’s fundamental to supply chain velocity and a competitive cost structure. Menlo is an ideal partner for Navistar as we build a world-class lo-gistics capability that will make us more profitable and enable us to better serve our customers.”

“We are very proud and excited to be selected for this highly strategic and mission-critical role supporting Navistar’s business objectives,” said Robert L. Bianco, Jr., president of Menlo Worldwide Logistics. “It’s clear that Navistar is determined to elevate their logistics and supply chain operations into a source of competitive advantage. The role of lead logistics provider is a tremendous opportunity for Menlo and we look forward to demonstrating the value of this engagement for Navistar and its customers.”

CorrectionLast month's editorial built a theoretical case where

major US logistics assets might require investment. It raised the question whether such opportunities might attract overseas investors, given the history of the DP World acquisition of P&O Ports and current DHL Express restructuring. In the process, the column over-stated the ownership stake AIG has in Ports America.

According to Ports America, its investor is, “a major infrastructure fund, Highstar III, which includes greater than 80 limited partners, mostly institutional investors. AIG is one of the limited partners with a less than 9% stake.”

What are the perceived benefits of own-ership and leasing?

The benefits of leasing trucks are financial and op-erational. Financially, a company can preserve capital for other parts of its business that generate a higher return. Operationally, it allows a company to focus on core func-tions of its business.

Truck ownership has been perceived to provide better control, which may or may not be the case. In many situa-tions, there is inherent risk associated with owning trucks. Some of these risks include the value of the equipment at trade-in time, unpredictable maintenance costs over the equipment life, obsolete or stranded assets due to improper replacement cycle and increased costs caused by hiring, training and tooling technicians to keep up with ever-changing truck technology. Those risks can make it difficult to maintain a stable cash flow. Equipment failures, even when they’re covered under warranty, can create delivery delays and adversely affect your company’s income.

Often, leasing can provide considerable flexibility to meet short-term and long-term equipment needs by cus-tom tailoring a lease and maintenance package that matches the truck’s useful life. A leasing company can, in many cases, offer a lower monthly payment than what you would pay to finance a truck since it uses the truck’s residual value in determining the lease payment. Some leasing companies offer substitute vehicle programs that can provide compara-bly equipped replacement units while your trucks are being serviced.

With the data to perform a cost-benefit analysis on the options of leasing or buying fleet equipment, it will be easier to make the decision that best fits your productivity, customer service and financial goals whether the overall economy is trending up or down.

Olen Hunter is director of sales for Bellevue, WA-based PACCAR Leasing Company (PacLease). He has 16 years of full service leasing experience. PacLease has 328 independent and company-owned full-service leasing locations throughout the United States, Canada, Mexico, and Germany.


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Mart and other retailers have recognized and driven into the manufacturing sector is that aligning green with lean across the entire supply chain drives both top line growth and margin improvements while gaining respect from customers and consumers.

Driving Lean throughout the Retail Supply and Demand Network

So what do we mean by sustainability? Sustainability is generally defined as, “The continued improvement of business operations to ensure long-term resource availability through environmental, socially sensitive, and transparent performance as it relates to consumers, business partners and the community.”

Wal-Mart, with its 50,000-plus suppliers, is taking a key role in building sustainability into its core strategies. We see similar efforts in other leading global retailers in-cluding Lowe’s, Target, Metro, Home Depot, Carrefour, and leading global manufacturers like Coca Cola, Kraft, Black and Decker, Hormel and Culligan.

However, according to a recent Grocery Manufacturers Association (GMA) report, many con-sumer manufacturing companies are adopting sustain-ability initiatives in response to internal drivers such as cost reduction, commodity risk management, and upholding corporate culture. The report also identified collaboration and operational integration as two of the four enablers (strategic alignment and governance being the other two) for a successful sustainability program. Closeknit collaboration between retailers, distributors and manufacturers appears to be the driver of success for sustainability initiatives.

Consumer pressure to be green. Street pressure to improve shareholder value. Regulatory pressure to maintain quality. Customer pressure to provide the right

product at the right cost to the right place at the right time. In these challenging economic times for manufac-turers, lean principles are the glue that holds this new paradigm together.

Lean manufacturing drives more effective and ef-ficient resource utilization, reduces waste and energy consumption, optimizes direct and indirect resources and helps ensure a better product at less cost. The lean philosophy, eliminating waste, essentially comes down to taking many small actions to create big results. The old green adage, “think global, act local” is no different. More and more manufacturers are extending lean prac-tices beyond the shop floor to enable green initiatives and meet sustainability mandates.

In a ”Perfect Lean Market” information flows unhin-dered to drive maximum efficiency throughout supply and demand networks. This vision for “The Perfect Lean Market” provides the framework for how manufacturers can expand lean philosophies and best practices into their sustainability initiatives. While the cost reductions and revenue potential are highly attractive, the potential upside for sustainability has barely been tapped.

Wal-Mart CEO Lee Scott has said, “Being a good stew-ard of the environment and in our communities, and be-ing an efficient and profitable business, are not mutually exclusive. In fact they are one in the same.” What Wal-

Leaning Toward Green: Green Your Supply Chain with Lean Practices By Phil Friedman, Vice President Consumer Industries, QAD Inc.

Operations

Community Voice



Driving Sustainability with Lean Principles

Manufacturing companies can proactively enable sustainability across all key business processes in their organization by implement-ing the principles of lean. The un-derlying principles build efficiency within the enterprise and across the entire supply chain, helping com-panies maintain success through continued process improve-ment.

A lean solution for manufacturing ensures that plants, lines and machines run at peak efficiency—a key component of enabling sustainability. It also ensures necessary spare parts for maintenance are aligned with production requirements ensuring minimum down time and optimizing runs.

In the extended supply chain, lean solutions help align de-mand to capacity to optimize production lines, and maximize energy and raw product utilization. For example, consumer companies can apply lean principles to tightly align packag-ing material to specific production events, resulting in more efficient use of materials, reduced waste and improved line and machine utilization.

Lean market solutions provide tools that support enhanced supplier and retailer collaboration, ensuring making the right product at the right place and the right time. Capabilities that reduce short run times and production cycles improve natural resource utilization and reduce expenses. The ability to fulfill many while shipping once can significantly improve truck utilization and reduce fuel and other transportation costs.

Lean market solutions provide tools that support enhanced supplier and retailer collaboration, ensuring making the right product at the right place and the right time. Capabilities that reduce short run times and production cycles improve natural resource utilization and reduce expenses. The ability to fulfill many while shipping once can significantly improve truck utilization and reduce fuel and other transportation costs.

Packaging producers, to global beverage and food manufac-turers, to furniture suppliers have all adopted lean solutions and best practices to drive business success. These manufactur-ers have leveraged lean principles in their manufacturing sites, and into their upstream and downstream supply chains. A

supplier visualization solution fos-ters supply chain collaboration and gives suppliers and manufactur-ers the ability to reduce inventory while getting the right material into the plant line when needed. Track-and-trace and capabilities in ERP applications help customers that adhere to ISO 14000 and 14001 sustainability standards document

compliance. From a world leader in high-end fashion jewelry to manufacturers of medical devices, these companies have implemented tighter integration and real-time collaboration with key suppliers to ensure that customer delivery commit-ments are made on time every time.

Sustainability Starts at the TopSuccessful sustainability programs require the full com-

mitment of company leadership and a top-down approach. Companies that do not begin to implement sustainability ini-tiatives on their own will soon find it being required of them by shareholders, customers, federal and state agencies and most importantly the consumers of their products.

Consider the potential effects of applying lean manufactur-ing principles to sustainability initiatives: gallons of water saved, gallons of diesel saved, shipping costs saved, plastic, resin and other toxic waste reduction, fewer out-of-stocks, labor dollars slashed. Could manufacturers improve margins? Could retailers improve selling space and same store sales? Could sustainability drive the next paradigm shift in collabo-ration?

While the issue of sustainability continues to mature and evolve, companies looking to take a leadership position and enhance their business advantages can get started by implementing and expanding lean manufacturing solutions across the entire supply chain to address the many aspects of meeting their sustainability—and revenue—targets. When lean goes green, everybody wins.

Phil Friedman is Vice President, Consumer Products, QAD, a global enterprise software firm. Friedman has more than 30 years of experience in consumer industry manufacturing, sales, market-ing, consulting and business management.

While the issue of sustainability continues to mature and evolve,

companies looking to take a leadership position and enhance

their business advantages can get started by implementing and expanding lean manufacturing

solutions across the entire supply chain to address the many aspects of meeting their sustainability—and revenue—targets. When lean

goes green, everybody wins.


China is still a major factor in sourcing, but strategies need to expand.

There is too much already invested in China for it to disappear as a sourcing center, says Mike Ksiazek, an independent sourcing consultant. There’s too much in-frastructure and too many products outsourced there for it to disappear. The reality is, says Ksiazek, “Five years ago, I had 17 factories, and today I have three. Those 14 factories, the buildings are gone, the equipment is gone, the people are gone, and the technology is gone. It’s all over in an Asian supplier somewhere.”

It's not a choice where you can say, "China’s not viable bring it back," he continues. China’s going to be there. Where there are opportunities, start looking at other countries, he suggests. One of the countries getting a lot of attention is Vietnam. Ksiazek notes he has been able to take a fair amount of commodity products from China into Vietnam. In his case, it wasn’t driven by cost as much as it was by dumping duties on the imports into the US. “You have to be cognizant of the market condi-tions. Be focused on what’s changing in your environ-ment. And have your strategy in place and your means in place to determine what you need to go off and do to be successful,” he says.

One solution for Ksiazek was to revisit a former sourc-ing location, Egypt. Earlier, he had used Egypt for some products, but the currency value went up and costs rose, and so he had shifted sourcing elsewhere. Now, he’s looking at Egypt again, but he points out that it isn’t always easy to move around. Commodity products can shift pretty easily when a lower-cost opportunity

By Perry A. Trunick

The ripples from the US banking crisis have spread far and fast, reaching China’s key production areas as US and European consumers slow purchases and retailers cut back on orders. Steve Trussell, VP Global Sourcing & Procurement for Applica Inc., commented during a presentation at the Council of Supply Chain Management Professionals (CSCMP) annual conference that he had heard

that as many as 20,000 businesses in China had closed. “Bleak is a strong word,” he added, saying that there were still plenty of opportunities in China.

Aware that there is more talk now of companies pulling some or all of their sourcing out of China and moving it closer to home markets (Eastern Europe for the European Union and Latin America for the US), Trussell and his fellow panelists supported an approach described as China Plus One where some sourcing may be shifted to another market to take advantage of some cost savings.


China Moves From Number 1 to Plus1

China Report.Final.indd 18 10/31/08 2:17:43 PM

China but outside the current highly developed regions. As with India, though, one of the issues is infrastructure. But China does have the ability to mobilize quickly and it will develop the infrastructure to support develop-ment in target areas like Western China.

“We think of it as almost sourcing from another coun-try,” says Ksiazek. “Five years ago 80% of my factories were in the south of China, today 50% are in the south.” The center of gravity may still be largely in the south, but there is a strong draw to the North and West.

Finding resources can be a complex process, and the procurement experts agree that while many companies get started by working with brokers or trading compa-nies, the transparency is important along with the rela-tionship with the supplier. Matteo says even when he’s using a broker or trading company, he likes to be able to go to the factory and see it, touch it, feel it, kick the tires and have a relationship with the factory owner. It’s often beneficial to have a third party involved for sourc-ing because you don’t have the “feet on the ground” he continues.

Trussell sees an advantage to using a broker or trad-ing company when the sourcing arrangement is a “small spend” where there isn’t the justification for putting people in place. Or, he says, a broker can be valuable if you’re new to the environment or country. He points out that he’d rather control his own destiny in his sourcing and even when using a broker, he wants to see the fac-tory and have that transparency.

presents itself, but more highly engineered or value-add products are harder to move. That’s where each of the sourcing professionals stresses relationships. It’s an opportunity to work with your current supplier to help them improve efficiency, productivity and their own profitability to strengthen the bond.

There’s no one-stop shop that can pick up all of China’s manufacturing, says Ksiazek. India may be put forward as an option, but it has infrastruc-ture problems. Vietnam can take some of the work, but it has a limited workforce and no deepwater ports. The reality in Vietnam, says Mike Matteo, SVP, ThreeSixty Sourcing, is that it has a workforce population of 22 or 23 million people, about the size of a province in China. Some key industries have already staked a claim on much of that working popula-tion, including the apparel industry and the furniture industry. Finding qualified workers can be a challenge. But in a China Plus One strategy, where you are looking for a way to mitigate some risk, it is one means to balance the supply chain by moving some of the less highly engineered products to a sourcing country like Vietnam.

In fact, says Matteo, there are no deepwater ports in Vietnam so goods moving from there will transit to Hong Kong or Taiwan on feeder vessels before being shifted to larger ships for the bulk of the journey to the US market. That can add cost, so you need to look at the best total-cost deci-sions. That comes back to knowing your suppliers and their strengths and weaknesses.

For those value-added products, says Ksiazek, it may be harder to shift to a new source, so you need to focus on working with some core suppli-ers to increase their productivity. “Focus on their success because you just can’t find another $150 million cost of goods appliance maker out there. They’re just not there.”

An alternative for some of those commodity goods can be within


China but outside the current highly developed regions. As with India, though, one of the issues is infrastructure. But China does have the ability to mobilize quickly and it will develop the infrastructure to support develop-ment in target areas like Western China.

“We think of it as almost sourcing from another coun-try,” says Ksiazek. “Five years ago 80% of my factories were in the south of China, today 50% are in the south.” The center of gravity may still be largely in the south, but there is a strong draw to the North and West.

Finding resources can be a complex process, and the procurement experts agree that while many companies get started by working with brokers or trading compa-

presents itself, but more highly engineered or value-add products are harder to move. That’s where each of the sourcing professionals stresses relationships. It’s an opportunity to work with your current supplier to help them improve efficiency, productivity and their own profitability to

There’s no one-stop shop that can pick up all of China’s manufacturing, says Ksiazek. India may be put forward as an option, but it has infrastruc-ture problems. Vietnam can take some of the work, but it has a limited workforce and no deepwater ports. The reality in Vietnam, says Mike Matteo, SVP, ThreeSixty Sourcing, is that it has a workforce population of 22 or 23 million people, about the size of a province in China. Some key industries have already staked a claim on much of that working popula-tion, including the apparel industry and the furniture industry. Finding


needs to be verification. “Every container I ship out of China is 100% inspected,” he points out. “This is just another rea-son to say I have to have transparency throughout that supply chain.”

Offering the example of trying to get “green” certification for a line of prod-ucts, Ksiazek notes that requirements can extend back to knowing where the power came from that powered the plant that made the product. If you’re working with a broker, you don’t even know where the plant is, he says. “It comes back to having a supply chain in China that is transparent, that is visible, that you understand and know how it works.”

A major challenge operating in China is the need to have people in place and finding the right people. Not only is it difficult to assess experience and skills (what’s on the resume may not resemble actual experience) but also competition is heavy to recruit similar skills from one talent pool.

The manager you hire may be lured away by a 5% salary increase at a plant across the street. And the problem can be even more dramatic in a China Plus One context where the wage inflation can run much higher. If you don’t provide it, the worker can get it at the plant across the street. So, if the first problem is recruit-ing, the second is staying ahead of the wage inflation to retain good workers and managers.

As current economic trends play out, China and other Asian sourcing sites continue to be a significant part of many supply chains and will remain so. Flexible strategies that supplement China sourcing with back up sources and suppliers in Asia or closer to the consuming market and strong rela-tionships with suppliers are critical to maintaining quality and a smooth flow through extended supply chains. And, say the experts, there is no substitute for visibility, regardless of how many layers exist in that supply chain.

uct. At the same time, you have your unpaid bills as financial leverage to get the issue resolved.

Dual sourcing does come back to the China Plus One strategy in that the al-ternative source can be outside China, but the three procurement professionals agree that it also works to have a second source inside China.

Safety and security have become an ever-larger issue for products originating in China. On the procurement side, as new safety regulations come into force, they are added to product testing and quality control procedures. But on the issue of security, one of the ongoing ar-guments, says Matteo, is who should be responsible for input of all of the infor-mation that is required by US Customs and Border Protection (CBP). The cus-toms brokers are saying it should be the forwarders, the forwarders say it should be the steamship lines, and the steam-ship lines are saying “No, not us,” says Matteo. The truth is, the importer is ulti-mately responsible, he points out.

New regulations such as the 10+2 rule won’t add much if you have already been complying with the regulations that were in place, continues Matteo. Ultimately, he says, the importer will end up enter-ing the information or the importer’s lo-gistics agent will have that responsibility.

In addition to the safety and security compliance issues, says Ksiazek, you have social compliance issues like child labor laws, working rules, health condi-tions and hazardous materials. There’s a very different level of trust you need to have with your Asian suppliers, he con-tinues. There can be trust, but there also

Ksiazek adds that everyone starts with brokers and trading companies because that’s how they gain experience and knowledge in different markets, but fac-tories in low-cost countries like China are more sophisticated now and the ac-tually want to work directly with the customer, they want that relationship themselves, they don’t want a middle-

man between them and the customer.Relationships are very important, not

only to achieve the goals of the contract, but for resolving disputes. Often the con-tracts will state what recourse is available in a dispute, says Matteo. Arbitration is often the vehicle specified, but the real-ity is that enforcement may be difficult. Most suppliers will sign documents and agree to the terms and conditions of the purchase order, but part of the rea-son they will sign is because they know the enforcement will be extremely dif-ficult, continues Matteo. “It comes back to the leverage you have with that sup-plier either through your relationship or through financial means.”

In China, everything is negotiable, says Ksiazek, even something you ne-gotiated yesterday. He includes arbitra-tion clauses in contracts, but agrees that actual experience indicates the resolu-tion will come down to the relationship. Trussell points out that while you’re arbi-trating an issue with your supplier, you can run into serious customer service is-sues. You back yourself up by being dual sourced, by having back-up choices. That creates competitive tension, adds Ksiazek and your supplier is less likely to “hold you hostage” because they know you have the ability to move that prod-


Flexible strategies that supplement China sourcing with back up sources and suppliers in Asia or closer to the consuming market and strong relationships with suppliers are critical to maintaining quality and a smooth flow through extended supply chains.

uct. At the same time, you have your unpaid bills as financial leverage to get

Ksiazek adds that everyone starts with brokers and trading companies because


Untitled-6 1 10/29/08 12:40:18 PM

http://kencogroup.com

Look at the list Tony Hollis offered recently at the

Council of Supply Chain Professionals annual con-

ference and it is clear that a well-run supply chain

contributes to sustainability. The director of innova-

tion and technology management for Exel says it is

one of the responsibilities of an outsourced logistics

provider to increase value for the customer by improving efficiency

and productivity. His view of the partnership between user and

supplier targets five areas to focus attention on sustainability. Each

contributes to overall best practice and greater productivity and

efficiency. In effect, doing what’s right for logistics is also improving

the environment.

First on his list is fleet optimization. At 27.9%, transportation

is second only to electricity generation for producing greenhouse

gases in the United States. One gallon of gasoline burned is equal

to 20.4 pounds of CO2, according to Christopher Polovick en-

vironmental protection specialist, US EPA Smart Way Transport

Partnership. A gallon of diesel fuel burned produces 22.2 pounds

of CO2. To reduce greenhouse gases, Polovick suggests moving

more product per shipment, using less fuel to move each unit

(through steps like shifting to more efficient modes), and he sug-

gests reducing the number of moves and handling between origin

and the final consumer. Basically, his prescription is for fleet and

network optimization.

Next on the list for Exel’s Hollis is energy efficiency. He sug-

gests opportunities exist for companies of all sizes to benefit. One

example he offers is a lighting initiative at a California distribution

center. Replacing existing lighting with new fluorescent technology

and motion sensors required an initial investment of $185,000,

he points out. The local utility was offering an incentive which

amounted to $79,000, yielding a net investment of $106,000.

For the first year, the estimated savings were pegged at $118,349.

When final calculations were done, the actual first-year benefit was

$181,777, amply paying back the actual cost and nearly reaching

the level of the unadjusted investment.

Putting that into perspective, Hollis offered numbers calcu-

lated by GE Lighting indicating CO2 emissions were reduced by

3,613,632 pounds.

Innovative technology plays into Hollis’ list, including automa-


Is Good

Business

In logistics, best practice

is green.By Perry A. Trunick

Is Good Business

Green

Green Benefit.Final.indd 22 10/29/08 1:57:21 PM

A report by the Pew Center for Global Climate Change notes the

economic impact has been imperceptible. The European economy

was not “wrecked” by the program, says the report, nor has there

been any evidence of “carbon leakage” through trade.

“The EU has done more than any other nation or set of nations in

limiting green house gas emissions,” said Eileen Clausen, president

of the Pew Center. “The implementation of their cap-and-trade

system has been a key part of their efforts,” she continued. The EU

experience offers valuable lessons for the US Congress as it considers

a cap-and-trade system for the US, said Clausen.

The extension of the carbon trading system to the aviation indus-

try has drawn fire from the International Air Transport Association

(IATA). The trade association representing international air carriers

says the decision by the European Union Council was made without

discussion and now the 27 EU member countries will be required to

turn the directive into national law within 12 months. “Crisis is not

the time for rubber stamps,” said the IATA leadership, referring to

the rapid adoption process of the cap-and-trade system.

IATA Director General and CEO Giovanni Bisignani pointed out

that the airline industry is not opposed to emissions trading and has

adopted positive initiatives to address climate change. IATA suggests

that sealing the trading scheme into law will create a €3.5 billion cost

for the industry. Under the EU Council decision, airlines flying into

or out of European Union airports will be included in the emissions

trading program from January 1, 2012 and emissions will be capped

at 97% of the annual average for the years 2004 to 2006.

As the second largest producer of greenhouse gases, transporta-

tion will clearly receive significant attention from regulators as

emissions programs move from voluntary industry efforts to legal

requirements. On a more individual level, efforts to optimize sup-

ply chain performance and efficiency will continue to yield financial

benefits for the entire supply chain at the same time they quietly

and almost invisibly help to green the supply chain. However, more

members of the global supply chain community are making noise

about their green initiatives. Many fit easily into the five areas Exel’s

Hollis highlighted: fleet optimization, energy efficiency, innovative

technology, changing behavior and sharing responsibility. The fol-

lowing pages offer some examples of how carriers, logistics service

providers and their users are meeting the greensourcing challenge.

tion inside the distribution center. He notes that accreditation

under the Leadership in Energy and Environmental Design (LEED)

program targets five areas for facilities. Energy and atmosphere

receive 27% of the consideration, indoor environment quality is

23%, sustainable sites is 22%, materials and resources 20% and

water efficiency 8%. There are many options that contribute to

these areas and can provide near- and long-term savings and ben-

efits. Solar and alternative energy sources for a portion of the opera-

tion reduce emissions and save energy costs. Packaging reductions

and recycling lower consumption of materials and resources.

Sustainable supply chains will be evolutionary, not revolutionary,

says Hollis. The combination of implementation cooperation and

collaboration with supply chain partners and changing the behavior

of employees and suppliers will take time and close communication

of sustainability as a value. Including green initiatives in measurable

performance indicators and as part of continuous improvement

goals also ensures they are taken seriously and become a part of

day-to-day operations. (Many of the continuous improvement tools

such as network optimization also contribute to green initiatives.)

Initiatives are about to become more formal and externally

driven. The US is putting voluntary programs in place, such as the

SmartWay Partnership. SmartWay is designed to include shippers,

carriers and intermediaries. In the Carbon Disclosure Project, com-

panies define their current carbon emissions profile. The Regional

Greenhouse Gas Initiative involves electric utilities in 10 eastern

seaboard states. A similar Western Climate Initiative extends to

seven western states and four Canadian provinces.

The European Union has moved forward with an Emissions

Trading Pilot Program. The program started in 2005 and measures

CO2 emissions only. There are 27 countries in the program, which

is described as a cap and trade type program.

The cap and trade program sets a maximum limit for emissions

but allows companies to sell unused portions of their quota to

other companies. For the system to work, close monitoring is re-

quired. The EU experience has shown no indications of abuse and

it has resulted in modest carbon emissions abatement, according

to Johannes Wieczorek, head of division, Freight Transport and

Logistics, German Federal Ministry of Transport Building and

Urban Affairs.


program targets five areas for facilities. Energy and atmosphere






tion reduce emissions and save energy costs. Packaging reductions

and recycling lower consumption of materials and resources.

Sustainable supply chains will be evolutionary, not revolutionary,

says Hollis. The combination of implementation cooperation and

collaboration with supply chain partners and changing the behavior

of employees and suppliers will take time and close communication

of sustainability as a value. Including green initiatives in measurable

performance indicators and as part of continuous improvement

goals also ensures they are taken seriously and become a part of

day-to-day operations. (Many of the continuous improvement tools

such as network optimization also contribute to green initiatives.)

Initiatives are about to become more formal and externally

driven. The US is putting voluntary programs in place, such as the

SmartWay Partnership. SmartWay is designed to include shippers,

carriers and intermediaries. In the Carbon Disclosure Project, com-

panies define their current carbon emissions profile. The Regional

Greenhouse Gas Initiative involves electric utilities in 10 eastern

seaboard states. A similar Western Climate Initiative extends to

seven western states and four Canadian provinces.

tion inside the distribution center. He notes that accreditation

under the Leadership in Energy and Environmental Design (LEED)

program targets five areas for facilities. Energy and atmosphere program targets five areas for facilities. Energy and atmosphere






Green Benefit.Final.indd 23 10/29/08 1:57:34 PM

An overview of what some are doing to improve their global footprint and increase sustainability.

Many Steps to SmartWay Awards

There are 27 winners of the 2008 SmartWay Excellence Awards. The organizations rec-ognized took a number of different mea-sures that earned these awards. For ex-

ample, many of those recognized invested in trucks that the US Environmental Protection Agency (EPA) says qualifies for its SmartWay Certified mark as the cleanest, most efficient available today. Some took efforts to op-timize delivery routes, while others modified shipping and receiving practices that enabled reduced idling.

SmartWay was created by EPA in early 2004 to ad-dress environmental and economic challenges within the freight industry. It describes itself in the simplest form as a brand that identifies products and services that reduce transportation-related emissions. It is a partner-ship among government, business and consumers to protect the environment, reduce fuel consumption and improve air quality.

SmartWay claims its partners are saving 595 mil-lion gallons of diesel fuel annually that translates into elimination of 6.8 million tons of CO2 emissions. Those participants receiving recognition this year are:

Freight Carriers: American Central Transport, Inc., Celadon Trucking Services Inc., Challenger Motor Freight Inc., Con-way Freight, Covenant Transport, Inc., Dillon Transport, Inc., Gordon Trucking, Inc., J.B. Hunt Transport Services, Inc., NFI Pacific Harbor Line, Inc., Quad/Graphics, Roehl Transport, Inc., Schneider National, Inc., Stan Koch & Sons Trucking, Swift Transportation Company, Trailer Bridge, Inc., UPS, Watkins, Shepard Trucking, Inc.

Shippers: HP, Kohl’s Department Stores, Kimberly-Clark Corporation, Lowe’s Companies Inc., Sharp Electronics Corporation, Logistics Companies, APL Logistics, Hub Group, Inc. , Transplace.

Affiliates: Cascade Sierra Solutions.


Greensourcing Strategies

green sourcing.Final.indd 24 10/31/08 1:46:41 PM

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How shippers are using near-shoring and postponement to regain efficiencies

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Strategies for rethinking inventory levels and distribution center placement

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Untitled-7 1 10/29/08 12:41:17 PM

http://www.smc3.com/go/Q1Conf

cluding local Riley Children’s Hospital in Indianapolis and national Make a Wish Foundation (Phoenix).

In 2007, Toyota Material Handling started a partnership with the Arbor Day Foundation (Nebraska City, NB) that led to more than 20,000 new trees being planted across the country. “For every 8-Series lift truck delivered in 2007, we planted a tree through the Arbor Day Foundation,” says Wood. The commit-ment in 2008 extends to every Toyota lift truck delivered. “The number of trees we will plant in 2008 should rise to more than 30,000.”

Things go Better with Hybrid Electrics and More

Coca-Cola Enterprises has pur-chased 120 new trucks that use

Eaton Corp.’s hybrid-electric drivetrain. The company bought 20 of the trucks last year. Utilization of the trucks has resulted in a 32% decrease in emissions and a 37% decrease in fuel consumption over Coca-Cola’s conventional fleet.

The beverage manufacturer’s corpo-rate director of fleet procurement, Dave Leasure, says, “In addition to the en-vironmentally friendly advantages that hybrid vehicles deliver, we are also happy to report that driver acceptance has been highly favorable, especially in high start-and-stop applications. They hybrid drive units have been perform-ing very well in communicating with the electronic engines, always giving us the necessary torque and horsepower when it is needed.”

Navastar is using the Eaton parallel-type diesel-electric hybrid architecture that Coca-Cola is experiencing with its truck. The manufacturer has introduced a diesel electric hybrid Class 7 tractor, the International DuraStar hybrid, aimed at serving needs of general freight haulers as well as food and beverage distributors.

lift trucks sold in North America are manufactured at the Columbus, IN., facility, known as Toyota Industrial Equipment Manufacturing (TIEM). The 870,000-square-foot TIEM plant is no ordinary manufacturing base. Since opening in 1990, facility operations have been based on green goals written di-rectly into Toyota’s corporate philosophy.

In November 1999, the facility earned ISO 14001 environmental management system certification, a voluntary standard that verifies a formal environmental pol-icy, along with established mechanisms for continuous improvement. Since then, the plant has achieved a 33% reduction in volatile organic compounds (VOC) emissions, 80% reduction in hazardous air pollutants (HAP), 40% reduction in energy consumption and 65% reduction in natural gas consumption.

“The Columbus plant is a zero-landfill facility,” says Wood. Rather than dump-ing its trash at local landfills, Toyota has the waste transported to a fuel-to-en-ergy facility that helps power downtown Indianapolis.

TIEM is one of only 14 Indiana busi-nesses inducted as a charter mem-ber of Indiana’s new Environmental Stewardship program. To be members, businesses must have good environmen-tal track records and continue to make improvements in pollution prevention. TIEM is also a member of the Indiana Partners for Pollution Prevention (P2) organization, a voluntary program for Indiana businesses to benchmark and share their successes in environmental improvement. TIEM has also been hon-ored with Indiana’s Governor’s Award for Environmental Excellence for the past five years, according to Wood.

TIEM involves its associates in its en-vironmental stewardship. Employees are encouraged to recycle paper, aluminum cans and toner cartridges, and all pro-ceeds are donated to four charities, in-

All Green Moves are not Rosy

Sponsored by Penske Logistics and conducted by Dr. Robert Lieb,

Professor of Supply Chain Management at Northeastern University, this year’s 15th annual 3PL Provider CEO Perspective survey includes insights on going green as it relates to overall busi-ness success. Those responding include 20 North American CEOs, 10 European CEOs and nine in the general Asian-Pacific region.

While the survey indicates that over-all the 3PL industry has moved ahead with making environmental responsi-bility part of broad corporate goals, at the same time respondents feel these capabilities are “relatively insignificant in winning new business or retaining existing customers.” In Europe, 100% of respondents held this view. In North America, the same response came from 95% of CEO participants and 89% held the same view in the Asia-Pacific region.

According to the survey while CEOs are increasing green spend, the motiva-tion is guided more by understanding it is part of corporate social responsibility than demand from customers.

With the corporate undertakings: 79% have formal sustainability programs; 87% have formal sustainability state-ments; and 74% have a formal leader of sustainability. However, the survey indicates that globally fewer than 3% of customers have performance metrics to track their 3PLs ability to help them achieve green goals.

Toyota’s Green TIEM

Toyota’s “Global Earth Charter” is deeply embedded into everything

the company does, says Brett Wood pres-ident of Toyota Material Handling USA Inc.—right down to lift truck manufac-turing.

Wood says more than 80% of Toyota




transport

More than 120 C-level and senior level executives from 3PLs,carriers, manufacturers, retailers and oil companies will gatherto discuss how higher fuel prices affect your business and howyou can achieve significant bottom line savings.Topics such as how to overcome the challenges of fuel price volatility through:� optimising routing and supply chain management technologies,� negotiating better contracts,� establishing long term fuel pricing strategies,� proposing alternate energy options,� conceiving alternative ports and hubs and alternative service providers, and developing multi modal

strategies, among many others.

Already confirmed to speak are C-level executives at• Estes-Express • CHRobinson • Greatwide • CSX Transportation • Transplace • General Electric • Raytheon Missiles• Coors • Honda • Samsung • Motorola • ATC Logistics and Electronics • Agility • Kelron • Genco among many others.

www.eyefortransport.com/fuelpriceMore information by going to http://events.eyefortransport.com/fuelprice

or contacting Rodrigo Canete at rcanete@eyefortransport

www.eyefortransport.com/fuelpriceMore information by going to http://events.eyefortransport.com/fuelprice

or contacting Rodrigo Canete at rcanete@eyefortransport

‘The impact of High Fuel Prices on theLogistics Industry’ Conference‘The impact of High Fuel Prices on theLogistics Industry’ ConferenceDecember 8th and 9th, Intercontinental Century Los Angeles Hotel, California

Taking the LEED in Buildings

Stirling Capital Investments has brought what it claims is the first

project-wide Leadership in Energy & Environmental Design (LEED)-registered green buildings to California’s High Desert. The ultimately 60 mil-lion sq ft of commercial and industrial space is designed to handle warehousing and logistics operations at the Southern California Logistics Centre (SCLC) at Victorville, CA.

To earn LEED Certification, many process reviews are undertaken, includ-

ing such project parameters such as water efficiency, energy conservation, materials and resources usage, indoor environ-mental quality and innovation in design. The standards were created by the United States Green Building Council.

In commenting on the development, Brian Parno, vice pres-

The Eaton system incorporates an electric motor/generator between the output of an automated clutch and input of the automated manual transmission. The hybrid-electric system recovers energy during braking and can add power back into the driveline during start and acceleration.

The International DuraStar Hybrid.


http://www.eyefortransport.com/fuelprice

http://events.eyefortransport.com/fuelprice

provide the latest customized software so-lutions and business processes for a com-plete transportation solution.”

According to Enviromodal, clients will be able to reserve equipment on a round-the-clock basis, have access to real-time equipment availability, manage their Enviromodal shipments, use a one-stop rail billing feature, have visibility to real-time billing information, and submit questions about charges in real-time.

Enviromodal is currently offer-ing capacity in the market lane from Jacksonville, FL to Secaucus, NJ. It promises the opening of additional lanes by the end of the year.

Airbus and Boeing Will Work Together on Environmental Issues

The two strong competitors in the manufacture of aircraft will col-

laborate to speed improvements in the world’s air transportation management system. The goal of the initiative is to help both those in aviation and gov-ernment to determine the most direct path to a modern system that will both increase efficiency and eliminate traffic congestion. As the producers explain, their work is one of three parts aimed at improving the environmental per-formance of aviation. The other two prongs are competition—which is criti-cal for environmental and technologi-cal advances that result in new aircraft programs such as the Airbus A380 and Boeing 787—and support for industry alignment on environmental positions where appropriate.

“Airbus and Boeing are great competi-tors,” notes Scott Carson, president and CEO of Boeing Commercial Airplanes. “This has been a critical element that has sharpened our focus and efforts toward making aviation more efficient. While our approaches often differ, we are work-ing towards the same goal—to reduce aviation’s environmental impact.”

ferry. The test confirmed that the paint effectively reduced temperatures inside the ferry and saved electricity by reduc-ing the load on the vessel’s air condition-ing system.

The heat-shielding paint used for the test helps block heat generated by sun-light. In addition to improving passenger and crew comfort, boosting air condi-tioning efficiency, and cutting CO2 emis-sions, the paint is durable and weath-erproof, and will cut ship maintenance costs. The paint is already used on land for buildings, large bridges, factories, tanks, plants, warehouses, vehicles, and railroads. However, this test marks the first use on a large vessel.

Yield Management Has Positive Environmental Impact

Jacksonville FL-based Enviromodal has opened its doors. It describes

itself as a brand-neutral, financial- and environmental-focused transportation initiative.

Enviromodal will manage, market and sell domestic surplus transportation ca-pacity and offer that capacity to clients through real-time, web-based technology, according to the group. It will provide intermodal, railcar and marine-shared assets to fulfill transportation needs utiliz-ing either Enviromodal’s negotiated rate contracts or those of the shipper.

Through collaboration with various transportation and information technol-ogy providers, Enviromodal says it will yield-manage rail and truck assets for its clients, increasing asset utilization and reducing empty miles. This, in turn, will lead to less consumption of fos-sil fuels and lower air pollutants, says Enviromodal.

“Enviromodal will achieve this by bring-ing visibility and easy access to empty ca-pacity,” said Doug Baland, program di-rector, Enviromodal. “To accomplish this, Enviromodal has partnered with REZ-1 to

ident with Stirling Capital Investments, observed, “We believe sophisticated cor-porations value the importance of being environmentally prudent, therefore, we are aligning ourselves with that mission by taking a proactive approach in devel-oping green buildings at SCLC.”

ProLogis is installing a 534 KW solar power system on the roof of its 246,000 sq ft distribution center (DC) at ProLogis Park PDX in northeast Portland, OR. It is scheduled for completion in December. This is the largest of three Portland DC solar power installations. The other two, designed to provide a total of 574 KW more energy, will be on separate nearby DCs at ProLogis Park PDX Corporate Center East.

Five miles southeast of Portland International Airport, ProLogis Park PDX, Building 4, the largest of the in-stallations, was built according to LEED certification standards.

This project is the second large-scale, rooftop solar installation for ProLogis in the US, notes Jack Rizzo, the com-pany’s managing director of global con-struction. “ProLogis is committed to implementing enough renewable energy systems to obtain a combined genera-tion capacity of over 25 million kilo-watt hours (KWh) per year by 2010,” he said. “This project will certainly help us achieve that goal.”

Paint Me Green

Mitsui O.S.K. Lines, Ltd. (MOL, President: Akimitsu Ashida) an-

nounced test results showing the benefits of a heat-shielding paint that can save fuel, reduce CO2 emissions, and reduce long-term vessel maintenance costs.

The Technology Research Center in MOL’s Technical Division has completed a yearlong test of heat-shielding paints from 10 manufacturers. Along with group company M.O. Engineering Co., Ltd., MOL applied a test coating of the highest-rated paint to the deck of a large



Untitled-8 1 10/29/08 12:42:42 PM



Nothing helps improve environmental conditions within distribution centers and warehouses as much as cleaner operating material handling equipment.

Greening in the Warehouse

Brett Wood, president of Toyota Material Handling USA (TMHU), says there is a green awareness in the material handling industry he hasn’t seen before. “Customers are asking us questions about emissions,” he says, and adds he is encouraged

so far by market acceptance of green lift trucks.Local and federal tax incentives—offered for replacing

older lift trucks with newer, cleaner models—may be driving some interest for those looking at the bottom line. However, side benefits of going green, including productivity, reduced operating costs and smaller vehicle designs, are also catching attention of cost-conscious end users.

“The market has started investigating green lift trucks,” agrees Calvin Tanck, vice president of marketing at Hyster. “But, as there is no green standard or definition, this will be an evolutionary acceptance, as technologies that both improve productivity and enhance the bottom line will be delivered with better utilization of existing and future power sources.”

First Stop: ElectricWhen many manufacturing and distribution facility

managers consider moving to green, they first think about

Field Report

By Mary Aichlmayr

Friendly to the environment, Toyota Material Handling’s new line of 8-Series AC reach lift trucks is designed for use in distribution centers, retail operations, refrigerated warehouses and third party logistics (3PL) applications. It is offered in three models including a single reach lift truck in 3,500- and 4,500- pound lifting capacities and a 3,000-pound capacity double reach model.

Field Report.Final.indd 30 10/29/08 1:59:22 PM


Hyster Co. also offers low-emission IC lift trucks that are CARB 2010 compliant, according to Tanck. The company looks beyond fuel sources, too, to find other ways to reduce waste generated from operating lift trucks. For example, Tanck says Hyster was “an early innovator with AC technology, which offers better power usage and less parts wear.” In addition, “we see our advanced transmission technology as a way to reduce tire and brake wear, which corresponds to less waste.”

Fuel CellsThough electric lift trucks have zero emissions, there

are still some drawbacks, including environmental hazards associated with the disposal of lead-acid batteries.

Additionally, batteries take time to recharge, are prone to voltage drops as power discharges and cause downtime during battery changeouts, says the US Department of Energy Hydrogen Program, an organization dedicated to increasing adoption of fuel-cell technologies. The federal program offers a tax credit up to $1,000/kW for the use of fuel cells in material handling operations.

According to the organization, “Fuel cells can be rapidly refueled, eliminating the time and cost associated with swapping batteries. The voltage delivered by the fuel cell

electric lift trucks. That’s a natural reaction. “Based on Industrial Truck Association (ITA) numbers, 56% of all lift trucks sold in the US from January to November 2007 were electric powered,” says Wood.

There’s good reason for the growing demand for electric lift trucks. They do not produce emissions, such as carbon monoxide. They make little noise. And, they are generally smaller, so they can maneuver in narrow aisles.

Clean ICStill, Wood believes internal combustion (IC) lift trucks

shouldn’t be left out of the green game. TMHU offers its 8-Series IC lift truck, available with liquefied petroleum gas (LPG) and compressed natural gas (CNG) powered engines, all of which produce 70% less smog-forming emissions than allowed by current federal standards, according to Wood. The new trucks’ 4Y engines use closed-loop fuel systems that automatically adjust air-fuel mixture ratios. With the help of the lift trucks’ three-way catalytic mufflers, hydrocarbons, oxides of nitrogen and carbon monoxide emissions are minimized, according to the company. TMHU’s 8-Series diesel model meets EPA’s more-stringent Interim Tier 4 regulations. They emit 26% less particulate matter than currently required 2008 Tier 3 standard.

811LT30-33.indd 31 10/31/08 10:21:00 AM

http://www.cornerstonelogistics.com

EVERY TRUCK TELLS A STORY. XATA® has the fl eet management technology and human expertise to help you identify issues, translate data and determine the

SC-based LiftOne, division of Carolina Tractor, have signed a distribution agreement and are receiving funding from the Greater Columbia Fuel Cell Challenge to deploy hydrogen fuel-cell powered lift trucks at several manufacturing facilities and DCs in the state.

is constant, as long as hydrogen fuel is supplied. Using fuel-cell powered lift trucks can boost productivity by eliminating trips to the battery-changing station. With no chargers, battery storage or changing areas or equipment needed, more warehouse space is available.”

Real-World TrialsFuel cells are getting a lot of interest thanks to numerous

trials currently being conducted by some of the biggest players in the material handling industry.

Three of the most recent newsworthy trials include the Greater Columbia Fuel Cell Challenge; beta trials conducted by Plug Power Inc., at two Ohio-based Wal-Mart DCs; and a Raymond Corp. two-year study conducted in partnership with the New York Energy Research and Development Authority (NYSERDA) and the New York State Power Authority (NYPA).

The Greater Columbia Fuel Cell Challenge—a collaborative effort among the City of Columbia, SC; the University of South Carolina; EngenuitySC; and the South Carolina Research Authority—supports deployment of fuel-cell and alternative energies through private-sector grants.

Hydrogenics Corp. of Mississauga, Ont. and Columbia,

is constant, as long as hydrogen fuel is supplied. Using

Field Report

Jungheinrich Lift Truck Corp. offers its new EFG 2 and 3 Series trucks. Not only are these AC-controlled electric lift trucks attuned to answer environmental concerns, they deliver higher levels of performance in terms of travel speed, lift and lower speed, acceleration and ramp handling ability. They are offered in capacities ranging from 2,500 to 4,000 lbs.

811LT30-33.indd 32 10/30/08 10:45:17 AM

© 2008 XATA Corporation

has the fl eet management technology and human expertise to help you identify issues, translate data and determine the most cost-effective operations for your fl eet. Visit xata.com/expert.

as a “living laboratory for fuel-cell technology,” said Chuck Pascarelli, Raymond’s vice president of sales and marketing.

At a $1.2 million price tag, the Raymond project is the largest of 11 green projects being conducted in New York. The state has set a goal to reduce its energy use 15% by 2015, notes Gunnar Walmet, program director of the Industry and Buildings Research and Development program at NYSERDA. “There is no single silver bullet that will replace fossil fuels,” he says. “We must look at a portfolio of solutions, one of which is hydrogen.”

Despite the material handling market’s evolving interest in green lift trucks, there will always be naysayers who claim the move to green is nothing more than one big publicity stunt by manufacturers and end users.

However, if environmental—and bottom-line—benefits really do exist in the real world, does the underlying motivation matter?

Referring specifically to fuel cells, TMHU’s Wood says: “We will be selling lift trucks being powered by something different. That is exciting for us as an industry.”

Mary Aichlmayr is editor-in-chief of our sister publication, Material Handing Management.

Hydrogenics is conducting fuel-cell trials. It is currently engaged in a two-year study of 19 fuel-cell powered lift trucks at General Motors of Canada. Hyster Co. is working with Hydrogenics on electric fuel-cell lift truck implementations at General Motors and FedEx, according to Tanck.

Canadian Cellex Power Products Inc.—acquired in 2007 by Latham, NY’s Plug Power—has completed field testing of 12 Cellex CX-P150 fuel-cell powered rider pallet trucks at two Ohio Wal-Mart DCs.

Working in continuous operation for more than 18,500 hours, the pallet trucks, supplied by Crown Equipment Corp. and Nissan Barrett, met and exceeded uptime, fueling, environmental and safety targets, Cellex reports. Pallet truck operators refueled the trucks more than 2,100 times. Refueling took less than two minutes per truck. The indoor fuel-dispensing area required only 200 sq ft of space, compared to 4,000 sq ft for a lead-acid battery room, the company says.

A two-year Raymond Corp. project that began January 2007 is currently testing the performance of hydrogen fuel cells in lift trucks in a real-world plant environment. Raymond’s Greene, NY, manufacturing plant is being used

811LT30-33.indd 33 10/30/08 10:45:06 AM

http://xata.com/expert


sight and experience with the use of solar technology, the array has exceeded expectations in producing 4.9% more power than was expected. Further, since its deployment, the company has reduced CO2 emissions by 1 million pounds since its installation in 2003.

Further north in California, in 2005 FedEx Express activated a solar ar-ray at its West Coast Hub at Oakland. It included 300,000 Sharp solar cells incorporated into 5,769 photovoltaic modules. The 904 KW system is able to meet 80% of the facility’s peak energy demand. In all, the 5,700 solar electric panels that comprise the system cover some 81,000 sq ft. An addi-tional benefit is that the panels provide some additional insulation, helping to reduce heating and cooling costs.

FedEx claims that 3 million KW hours of renewable energy have been generated by the system through its three years of operation with avoidance of 1,000 tons of CO2 being released into the atmosphere. The company has created additional solar systems, from BP Solar, at its California facilities in Whittier and Fontana.

FedEx Express has broken ground on creation of a new Central and Eastern European hub at the Cologne/Bonn, German airport. Planned to be

Logistics Services

It’s What’s On Top that Counts

With the large number of assets needed by the world’s major expedited and express delivery providers to best serve their cus-

tomers, it’s small wonder they all are taking re-sponsible measures to reduce energy use. Results are reduced expenses as well as helping to clean the air in their parts of the globe.

Lighting up has made it easier to be green for these companies. One step among many UPS, FedEx and DHL have undertaken is to deploy solar technology on the roofs of their facilities around the world.

At its 23,000 sq ft Palm Springs, CA, sorting facility, UPS employs a 104.5 KW solar panel ar-ray system to produce 70% of all electricity the building requires. Shell Solar installed the system on the rooftop. The array consists of three rows of 145 panels, a total of 864 individual modules.

Sorting operations at the facility occur in the late evening or early morning, when the sun isn’t shining. As a result, solar energy generated by the array isn’t used directly during sorting. Instead, solar energy generated during daylight hours is sent to the California power grid. As energy is required during hours of darkness, energy from the grid is used. This type of exchange is called “net metering.” UPS claims that it achieves almost zero kilowatt per hour of annual consumption.

UPS explains that in addition to gaining in-

Expedited/express carriers are taking advantage of technology to decrease impact on the environment while increasing the bottom line.By Roger Morton

The solar array at the UPS Palm Springs facility is the size of a football field.

Logistics Services.Final.indd 34 10/30/08 9:57:06 AM


by combining savings from its unique heat and power plant with the photovoltaic system.

The hub is the first DHL facility to meet its require-ments for electricity, heating and cooling in a greatly self-sufficient manner. The facility uses a cogeneration unit for heat and power generation. The gas-fired power plant produces energy to heat buildings in the winter and cool warehouses in the summer.

Rainwater is collected in two cisterns at the hub. The 3,000 cubic meters of water are then used for such things as cleaning of aircraft and for industrial water supply. This reuse takes the place of what would be drinking water for the same purposes.

With the understanding that the world’s transport sector generates about 14% of global CO2 emissions, Dr. Frank Appel, Chairman of the board of Deutsche Post WorldNet, owner of DHL, says, “We realize we have a responsibility for environ-mental protection. There is no denying that climate warming is coming. But we have the ability to control the degree of change. For this reason, we launched a global environmental protection program called GoGreen in which we voluntarily focus our actions on standards laid down by the Kyoto Protocol. Specifically, this means one thing: We intend to cut car-bon-dioxide emissions for every mailed letter, every

transported container and every used square meter of space by 30% by the year of 2020.”

DHL is not alone in its efforts to improve the environment through its efforts and the use of solar energy is not the only tool being used by the express community.

FedEx has developed a customized lighting solution it has installed at its facilities, offices and retail locations. The result has been a 93% reduction in energy consumption. In its Geneva, Switzerland station, FedEx has a geothermal system that utilizes a system of pipes running deep underground that warm the

completed in 2010, the new facility will have a 1.4 mega-watt solar power system that will generate 1.3 gigawatt hours of electricity a year. Solar panels will cover the roof of new ramp and sort facilities, a total surface area of 16,000 sq meters.

Mitch Jackson, the com-pany’s director of environmental affairs and sustainability, observes, “On-site renewable energy generation has been extremely efficient and successful for FedEx, and we are con-tinuously looking for new investments. The solar energy instal-lation at the Cologne hub will nearly double FedEx’s use of on-site solar energy.”

Further east in Germany DHL opened its new European air freight hub at the Leipzig/Halle airport in late May. In creating the facility, the carrier gave special attention to environmental protec-tion, one aspect of which is a photovoltaic unit containing 1,000 square meters of solar cells on the roof of the workshop. DHL ex-pects to receive 100,000KW of electricity per year from the array. Further it expects to save 3,000 tons of CO2 emissions each year

The DHL combined heat and power plant at its new Leipzig/Halle hub.

One of the first gasoline hybrid-electric delivery trucks in commercial use: the FedEx Azure Dynamics hybrid with a Ford gasoline engine and chassis.



building in winter and cool it in the summer.The carrier has integrated cleaner vehicles into

its fleet around the world to help reduce emis-sions. It points to several locations that serve as examples of its overall commitment to improving environmental conditions. In Japan it is collabo-rating with General Motors to test operations of a fuel-cell delivery truck. In London FedEx is us-ing liquefied petroleum gas in 39 Mercedes-Benz sprinter vans that have reduced carbon emissions by 12%. Vehicles in FedEx fleets in Vicenza and Milan, Italy, operate on compressed natural gas.

UPS has become the first shipping company to join the US Environmental Protection Agency’s (EPA) Climate Leaders program. As UPS explains, this is an industry-government partnership in which participating companies commit to under-take corporate-wide inventory of greenhouse gas emission, set aggressive goals for reducing them and annually reporting progress to EPA.

Scott Davis, UPS chairman and CEO, explains, “Our decision to join the Climate Leaders pro-gram is just the latest demonstration of a long commitment by UPS to operating in an environ-mentally responsible way. UPS has been investing in more efficient technologies for more than 80 years and already leads the industry in fuel and energy conservation.”

Davis notes several of the company’s most recent accomplishments in helping to reduce its environmental impact. UPS claims it operates the industry’s largest private fleet of alternative fuel vehicles. This year it has added to its fleet with the purchase of 500 hybrid electric and com-pressed natural gas vehicles.

Administrative changes have resulted in sav-ings for UPS, as well. It saved 3 million gallons of fuel last year through optimization of delivery routes in order to minimize left-hand turns. Its airlines reduce the number of engines used in taxiing in order to save on fuel. They are now us-ing a new flight planning system to calculate the most efficient routes based on weather, terrain, winds and other factors.

Along with many others in transportation, these companies are taking very seriously their membership in the world community. Their ef-forts are not only contributing to a cleaner envi-ronment, they are finding positive reinforcement on many levels, not the least of which is increas-ing the bottom line.

Logistics Services

New

s B

rief

s •

Nov

embe

r 08 Con-way Launches Freight Brokerage

Con-way Inc. announced that it has launched Con-way

Multimodal, providing expanded freight brokerage capa-

bilities and services in the third-party logistics and multimodal

freight transportation business. Based in Portland, OR, Con-way

Multimodal operates as a division of Menlo Worldwide Logistics.

Con-way Multimodal succeeds the company’s previous bro-

kerage operation, known as Con-way Truckload Services. “The

relaunching and expansion of our truckload brokerage com-

pany and its new leadership will help accelerate our growth

in this segment with a strong market offering and a clearly

defined and delineated brand,” said Douglas W. Stotlar, Con-

way president and CEO. “The flexibility inherent in brokerage

operations is a key component of the capacity mix for many

shipping customers. Delivering an effective, scalable capability,

with a solid base of reliable third-party carriers, is a natural fit

that complements our enterprise business portfolio.”

Leading Con-way Multimodal as its president will be Tyler S.

Ellison, who joined the organization as a 12-year veteran of the

transportation and logistics industry. “Tyler brings to Con-way

Multimodal proven experience developing highly valued trans-

portation solutions for shipping and logistics customers,” said

Robert L. Bianco Jr., president of Menlo Worldwide Logistics. “His

strategic insight and innovative ideas will help this business unit

develop and grow as the brokerage marketplace evolves.”

Ellison is responsible for the development and execution

of business strategy and operations for Con-way Multimodal,

which arranges third-party carrier services for over-the-road,

intermodal, flatbed, heavy haul and specialized transporta-

tion for truckload freight shipments. The company’s reach will

extend throughout the United States and into Canada and

Mexico.

Prior to joining Con-way Truckload Services, Ellison served in a

variety of increasingly responsible leadership roles at Schneider

National, Inc. Most recently, he was senior vice president of the

Global Client Group where he directed a team of sales leaders

focused on meeting the global supply chain needs of large

multinational customers. Previously, he was vice president and

general manager of Schneider Transportation Management at

Schneider Logistics, Inc. Ellison began his freight transportation

career with Schneider National in 1996.

The name change for Con-way Multimodal will become ef-

fective upon the receipt of the requisite government approval.


Building a Better Cool-Chain Container

Tednologies Inc. was founded by Don Harman to market TEDBOX, his Tracking Environmental Deviation System, a container to preserve product between 32 and 89 degrees F. When dry ice or gel packs are added to the container goods may be cooled as low as 14 degrees F (-10 degrees C).

Located in Anchorage, Alaska adjacent to Ted Stevens International Airport, TEDBOX was designed to meet the needs of rural Alaska retailers and fish processors—Harman’s slogan is “from boat to throat and from farm to fork”—as well as more usually thought of perishables, such as foods, flowers, air carri-ers, commodity forwarders, restaurateurs and pharmaceutical companies.

Features incorporated in the container design are external time and temperature recording through the use of RFID that provides instant printed readouts. The unit’s active cooling sys-tem maintains temperatures within 2 degrees F for more than 110 hours without the need for recharging, or indefinitely while plugged in. Recharging of the six batteries takes a maximum of 15 hours through the use of a 110 or 220 VAC wall plug-in or a


separate DC charger.When compared to current industry offerings Harman claims

TEDBOX net shipping weight increase is as much as 24% more and net shipping volume is 49% greater. The increase is accom-plished by putting the cooling unit inside on the floor rather than at the head as with other containers. To learn more, visit the web site: www.tedsbox.com.

Don Harman and his TEDBOX.

DP Partners To Develop $37 Million Las Vegas Site

DP Partners recently acquired 19.89 acres of

improved land in the North Las Vegas industrial

corridor it plans to develop as an industrial park.

The LogistiCourt at Lincoln, as the development

has been labeled, will involve an investment of

$37 million.

“Because the infrastructure improvements are

complete and the land is pad-ready,” said Bradley

J. Myers, partner-Las Vegas for DP Partners, “we

plan to develop three speculative buildings total-

ing 408,750 square feet.”

The facilities, which will be built simultaneously,

will be suitable for tenants requiring 15,000 square

feet and 50,000 square feet of industrial/office/

warehouse space, Myers added. It can also pro-

vide facilities up to 210,000 square feet in Building

B, a cross-dock facility. Building C will be a 123,750

square-foot, rear-loaded facility.

The LogistiCourt will be located in Clark County

at the southwest corner of the Cheyenne Avenue

and Lincoln Road intersection within two miles of

Interstate Highway 15.

Norfolk Southern Links With Short Lines for Short Hauls

With high diesel prices, a new program seeks to convert short freight movements from truck to rail. Called the Empire Link, short line railroads can now market their excess rail freight ca-

pacity by allowing cargo movement along the Norfolk Southern (NS) main line be-tween Binghamton and Silver Springs, NY.

Branch lines between Corning and Geneva as well as Waverly and Ludlowville in New York may also be used.

“The Empire Link provides our New York short line partners with the tools and resources to design and offer rail transportation services that are truck-competitive in lanes that are less than 500 miles,” says David Lawson, NS’s vice president industrial products.

The 10 Empire Link short lines are the Bath and Hammondsport Railroad; Central New York Railroad Corp.; Finger Lakes Railway; Livonia, Avon and Lakeville Railroad; the New York, Susquehanna & Western Railway Corp.; Ontario Central Railroad; Owego & Harford Railway; Rochester and Southern Railroad; Wellsboro and Corning Railroad; and Western New York & Pennsylvania Railroad. Rich Timmons, president of the American Short Line and Regional Railroad Association, observes, “We expect positive results for shippers, communities, and big and small railroads alike. If the Empire Link performs as we anticipate, it could serve as a model for future Class I and short line business arrangements.”


http://www.tedsbox.com

Campaign for Your Supply Chain By Eddie Capel

Grammy award-winning singer and songwriter Sheryl Crow once crooned “A Change Will Do You Good.” And it seems as though in the

recent campaign both John McCain and Barack Obama marched to the same beat. However, when it comes to managing change within the supply chain, many profes-sionals can quickly find themselves caught off guard in a complicated and suddenly shifting landscape.

The critical stream of people, tasks and events that make up today’s supply chain operates in a world of multiple channels, wide variances, increased competi-tion, fickle loyalties and unyielding economic realities. In 2002 alone, the value of goods transported inside the United States was $13 trillion. This freight moved over 4 million miles of roadways, 140,000 miles of railway and 26,000 miles of navigable waterways. So what happens when there’s a disruption along the way?

Professionals need to be able to see—and react to—change across the entire network, without risking un-foreseen consequences such as unexpected costs or service-level violations. And while unplanned change is inevitable, it is how well you consistently manage this change that will determine how successful you will be over the long run.

Embracing ChangeAt the beginning of this past political season, nomina-

tions for both parties were wide open. Throughout the recently concluded political campaign pundits were pre-dicting outcomes that didn’t resemble final results.

That’s a message professionals can identify with as they attempt to keep abreast of what is changing or shift-ing along their supply chains. Once companies make a decision to buy certain goods, they must start the plan-ning process—much like candidates do at the start of every new state primary or caucus campaign. But plans

alone are not enough. Like in the political season, many external and uncontrollable factors come into play to disrupt all best-laid plans. In order to be able to handle the kinds of disruptive changes common in the supply chain, companies need to develop a big-picture view with deep visibility into reliable data. This much-needed depth perception gives them the ability to quickly correct course, manage the impact of disruptions and develop options for remediation.

It’s All About the DataWhether running a Presidential campaign or managing a corporate

supply chain, one needs to gather intelligence to create greater visibil-ity into what is happening on the ground. It all begins with good data coming from a reliable source. Just as candidates cull electoral demo-graphic data (e.g., income, race, location, etc.), supply chain profes-sionals need to gather key information (inventory levels, shipments, transportation capacity, manufacturing capacity, costs, lead times, etc.) from suppliers, hubs, carriers and customers, and then combine it with information within their own organization so they can see what’s happening—as it happens. Supply chain visibility needs to op-erate across disparate systems at detailed levels, throughout the entire global supply chain.

But there’s no value in great data if it’s hard to access or understand. With a complex supply chain, many individuals within an organiza-tion need to have the same meaningful, real-time data to make the best decisions for a company.

When retail inventory doesn’t arrive in time for a sale, managers need to know, now, where the shipments are, what’s causing the delay and what additional options with costs and lead times they have in order to get the goods delivered on time.

Without real-time, accurate data, professionals cannot identify and respond to events before they start to create problems within the sup-ply chain. It’s imperative to know how supply chain disruptions will affect the company and, ultimately, its customers. It may only be a minor disruption—a missed shipment or damaged goods—a major interruption, such as a factory strike or natural disaster. Regardless, having a supply chain event management system in place allows managers to track all disruptions as they occur, so immediate re-sponse and corrective action can take place before it’s too late.

Logistics Services

Community Voice




CAREER OPPORTUNITIES

Search & Recruitment - Since 1968NATIONWIDE

Distribution - Warehousing - Traffic

John McMillanMcMILLAN ASSOCIATES, INC.

4969 Alamanda Drive, Melbourne, FL 32940(321) 254-4423 Fax (321) 254-4820

[email protected]

LOGISTICS

MATERIALS MANAGEMENTNationwide Executive Search

Warehouse Management-LogisticsTransportation-Distribution-Traffic

Degreed only-All levels of experience; fees/relocation paid; resume to: Emery J. Zobro,

CPC, The John Michael Personnel Group, Inc.,P. O. Box 4437, Chattanooga, TN 37405

423-756-6544 Fax: 423-266-5334Email Address

[email protected] Address

www.johnmichaelpersonnel.com

COV2 Agility Logistics ..agilitylogistics.com

15 Averitt Express ...................InandOutoftheSouth.com31 Cornerstone Logistics .........www.cornerstonelogistics.com

3 Dodge..........dodge.com/chassis_cab

27 Fuel Price Logistics ........................... www.eyefortransport.com/fuelprice

21 Kenco Group, Inc......kencogroup.com

COV3 Old Dominion Freight Line Inc ................................... www.odfl.com

29 Richmond Events ................www.richmondevents.com

COV4 Ryder .........................www.ryder.com

9 Saddle Creek Corporation .......................... www.saddlecrk.com

25 SMC3 .... www.smc3.com/go/Q1Conf

5 UT Center for Executive Education ..............................TheCenter.utk.edu

32-33 XATA Corporation ....xata.com/expert

Ad IndexPg. Company/Website

Quickly Remedy DisruptionsSupply chain professionals can use in-

formation on specific events to ensure their plans remain in sync with actual shipments, deliveries and orders, and they can track total costs to make better decisions for their companies. This type of intelligence allows companies to stay flexible and agile enough to change on the fly and shift transportation modes and routes to satisfy cost and service-level goals. Information such as this also pro-vides a variety of options for remediation when a disruption occurs, for example:

• Do I switch transportation modes from ground to air freight if Interstates are closed due to snow and ice?

• Should I source goods from a differ-ent country if I’m having trouble getting through customs?

United States Postal Service

Statement of Ownership, Management, and Circulation (Requester Publications Only)

1. Publication Title: Outsourced Logistics

2. Publication Number: 1547-1438

3. Filing Date: 10/1/08

4. Issue of Frequency: Monthly

5. Number of Issues Published Annually: 12

6. Annual Subscription Price: Free to Qualified7. Complete Mailing Address of Known Office of Publication (Not Printer): Penton Media, Inc , 9800 Metcalf

Ave., Overland Park, KS 66212-2216Contact Person: Tyler Motsinger

Telephone: 913-967-1623

8. Complete Mailing Address of Headquarters or General Business Office of Publisher (Not Printer): Penton Media, Inc. 249 West 17th St, Fourth Floor, New York, NY 10011-5390

9. Full Names and Complete Mailing Addresses of Publisher, Editor, and Managing Editor - Publisher: David Colby, Penton Media, Inc., 1300 E 9th St., Cleveland, OH 44114-1503; Editor: Perry Trunick, Penton Media, Inc., 1300 E 9th St., Cleveland, OH 44114-1503; Managing Editor: Roger Morton, Penton Media, Inc., 1300 E 9th St., Cleveland, OH 44114-1503

10. Owner - Full name and complete mailing address: Penton Media, Inc., 249 W 17th St, Fourth Floor, New York, NY 10011 - 5390; Penton Business Media Holdings, Inc. (owns 100% of the stock of Penton Media, Inc.), 249 W 17th St, Fourth Floor, New York, NY 10011 - 5390

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12. Tax Status (For completion by nonprofit organizations authorized to mail at nonprofit rates) (Check one)The purpose, function, and nonprofit status of this organization and the exempt status for federal income tax purposes: N/A

13. Publication Title: Outsourced Logistics

Average No. CopiesEach Issue During

Preceding 12 Months

No. Copies of Single Issue Published Nearest to Filing

Date14. Issue Date for Circulation Data: August 2008

15. Extent and Nature of Circulation

a. Total Number of Copies (Net press run) 53,618 36,794b. Legitimate Paid and/or Requested Distribution (By Mail and Outside the Mail)

(1) Outside County Paid/Requested Mail Subscriptions stated on PS Form 3541. (Include direct written request from recipient, telemarketing and Internet requests from recipient, paid subscriptions including nominal rate subscriptions, employer requests, advertiser’s proof copies, and exchange copies.)

50,867 34,673

(2) In-County Paid/Requested Mail Subscriptions stated on PS Form 3541. (Include direct written request from recipient, telemarketing and Internet requests from recipient, paid subscriptions including nominal rate subscriptions, employer requests, advertiser’s proof copies, and exchange copies.)

0 0

(3) Sales Through Dealers and Carriers, Street Vendors, Counter Sales, and Other Paid or Requested Distribution Outside USPS®

445 223

(4) Requested Copies Distributed by Other Mail Classes Through the USPS (e.g. First-Class Mail®) 0 0

c. Total Paid and/or Requested Distribution (Sum of 15b (1), (2), (3), and (4)) 51,311 34,896

d. Nonrequested Distribution (By Mail and Outside the Mail)

(1) Outside County Nonrequested Copies Stated on PS Form 3541 (include Sample copies, Requests Over 3 years old, Requests induced by a Premium, Bulk Sales and Requests including Association Requests, Names obtained from Business Directories, Lists, and other sources)

822 885

(2) In-County Nonrequested Copies Stated on PS Form 3541 (include Sample copies, Requests Over 3 years old, Requests induced by a Premium, Bulk Sales and Requests including Association Requests, Names obtained from Business Directories, Lists, and other sources)

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0 0

(4) Nonrequested Copies Distributed Outside the Mail (Include Pickup Stands, Trade Shows, Showrooms and Other Sources)

191 66

e. Total Nonrequested Distribution (Sum of 15d (1), (2), (3), and (4)) 1,013 951

f. Total Distribution (Sum of 15c and 15e) 52,324 35,847

g. Copies not Distributed 1,294 947

h. Total (Sum of 15f and g) 53,618 36,794

i. Percent Paid and/or Requested Circulation (15c divided by 15f times 100) 98.06% 97.35%

16. Publication of Statement of Ownership for a Requester Publication is required and will be printed in the November 2008

issue of this publication.

17. Signature and Title of Editor, Publisher, Business Manager, or Owner DateTyler Motsinger, Sr. Audience Marketing Manager 10/1/08

I certify that all information furnished on this form is true and complete. I understand that anyone who furnishes false or misleading information on this form or who omits material or information requested on the form may be subject to criminal sanctions (including fines and imprisonment) and/or civil sanctions (including civil penalties).

PS Form 3526-R, September 2007 Facsimile

• Is it necessary to flow directly to a store versus through a distribution center in order to meet the deadline for an in-store promotion?

When it comes to political issues changing positions will be scrutinized and characterized in extremes. Change in the supply chain, on the other hand, is not such a black and white proposi-tion. It demands dynamic solutions that provide real-time visibility into order, inventory and shipment information—giving key resources at every level in an organization the information they need to make more informed supply chain decisions.

Eddie Capel is executive vice president, product management and global customer support, Manhattan Associates.


http://agilitylogistics.com

http://InandOutoftheSouth.com

http://www.cornerstonelogistics.com

http://dodge.com/chassis_cab

http://www.eyefortransport.com/fuelprice

http://kencogroup.com

http://www.odfl.com

http://www.richmondevents.com

http://www.ryder.com


http://www.smc3.com/go/Q1Conf

http://TheCenter.utk.edu

http://xata.com/expert


http://www.johnmichaelpersonnel.com

http://www.mcmillanassoc.com



3PL File

Mission Statement: To provide 1st class 3rd party logistics solutions and services for our customers - Whatever It Takes!

Capabilities: Saddle Creek is a nationwide third-party logistics company specializing in dedicated and shared warehousing, transportation, contract packaging, and logistics. Saddle Creek integrates these core service offerings into customized solutions designed to help companies increase supply chain efficiencies, manage operational costs and streamline their businesses.

Ancillary Services Offered: Among its Value-Added Services are packaging, light manufacturing, assembly, labeling, testing and reverse logistics. It offers sequencing, JIT, manufacturing support, Supply Chain and logistics services.

Technology Advantages: Leading-edge technology is a key component of Saddle Creek’s innovative logistics solutions. The company’s warehousing, transportation, contract packaging, and integrated logistics services are backed by best-in-class software tools from Infor, TMW and SYSPRO. Saddle Creek also offers full web-enabled, integrated reporting systems that include real-time order, delivery and exception information; ISO-compliant processes and controls; and integration capabilities, including full suites of database, web-based and traditional EDI services.

Modes of Transportation Utilized: With both asset-based and non-asset based transportation solutions, Saddle Creek offers flexibility to manage freight transportation needs. Saddle Creek Transportation Inc. offers a full range of capabilities nationwide, including van, reefer, flatbed, intermodal, air and LTL and consolidation services.

Specialized Logistics Services: Saddle Creek provides flexible and creative turnkey solutions for companies in the food and beverage, health and personal care, consumer goods, tobacco, alcohol, retail, cosmetics and paper industries.

How It Differentiates ltself: Saddle Creek is committed to bringing customers innovative ideas for managing costs and increasing efficiency. The company is known for delivering on its commitments and service level expectations. This comes, in large part, from the integrity and personal relationships that are company cornerstones. In every aspect of business, Saddle Creek strives to fulfill the company promise – Whatever It Takes!

Company Name:Saddle Creek

Corporation

Ownership: Private

Stock Symbol: N/A

US Headquarters: 3010 Saddle Creek Road

Lakeland, FL 33801Sales: 888-878-1177

Corporate: 863-665-0966

Website URL:www.saddlecrk.com

Foreign Locations/Markets Served: National service with

23 offices in the U.S.

Key Personnel:David Lyons, Founder

and Chairman Clifford Otto, President

Michael DelBovo, Senior Vice President,

Saddle Creek Transportation Inc.Stephen Cook, Vice

President, Marketing & Business Development

Mark Cabrera, Senior Vice President, CFO

Year Founded:1966

Number of Employees:

1,500

Third Party Page.Final.indd 40 10/29/08 9:28:09 AM


811LTIBC_OldDominion.indd 41 10/23/08 3:47:32 PM

http://odfl.com

YOU NAME IT

S U P P L Y C H A I N , W A R E H O U S I N G & T R A N S P O R T A T I O N S O L U T I O N S

We’ll Customize A Supply Chain Solution For ItWhatever you manufacture or wherever you store and distribute your products, Ryder’s end-to-endsupply chain solutions are designed to fit perfectly with your company’s unique needs.Unmatched experience, flexibility and innovative thinking. This is what we offer to hundreds ofcompanies around the world, from electronics and car makers to consumer product and aircraftmanufacturers. We can do the same for you. Call 1-888-88-RYDER or visit www.ryder.com.

©2008 Ryder System, Inc. All rights reserved.

811LTBC_Ryder.indd 42 10/23/08 3:48:41 PM

http://www.ryder.com

Outsourced Logistics 200811

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