Shippers prepared for tropical storm, not ‘perfect storm’
Posted: September 12, 2018
INDIANAPOLIS, Ind. – Heading into 2018, Bruce Ridley, the vice-president of Packaging Corp. of America in charge of transportation, said the company was prepared for a tropical storm — but not the perfect storm that struck.
“I think most of us that are shipping knew if the economy took off at 2%, our capacity was going to be stretched. We didn’t see it hitting the numbers we are seeing today and we had no idea all modes were going to be as stretched as they are,” Ridley said at the FTR Transportation Conference. “We had budgeted 5-8% (cost increase) and thought that was high but realistic. We kind of saw it coming but not anywhere near the levels we’re at today.”
Mike Regan, co-founder of TranzAct Technologies, said “We are living in unprecedented times.” He said C-level executives who have ignored transportation for years are now facing a rude awakening. He cited a survey in April that found 148 of the S&P 500 CEOs said transportation is having a negative impact on their profitability.
To navigate the perfect storm, Ridley said his company is focused on relationships and keeping carriers happy.
“We have regular carrier meetings at each one of our mills, and we thank them,” Ridley said. “It’s day-to-day communication. Their lives change, too. What lanes fit them and what lanes don’t? By having our own fleet, that has helped us significantly by doing the hard-to-do stuff. If we have a hard-to-do lane we have to fill, our fleet will do that and we will reward the driver. That keeps our core carriers on the lanes they want.”
Ridley is aware carriers are now calling the shots, and he said his company has taken steps to turn trailers around in 15 minutes at its drop-and-hook lots.
“One carrier owner told me ‘I’ll turn down a high margin lane for a driver-friendly lane, because it’s too hard to get drivers and it costs me too much money.’ That has resonated with me. That’s the way it is out there today,” Ridley said.
He also said he’s fortunate to have a CEO that is very much in tune with transportation issues.
“Our CEO has one scheduled meeting a week and that’s a supply chain meeting,” he said.
Regan said other CEOs need to “stop blaming, and start supporting” their logistics professionals. But Ridley said it’s also important transportation managers keep CEOs informed of the issues that will affect the supply chain. As for the year ahead, Ridley isn’t expecting any softening of conditions.
“More of the same,” he predicted of 2019. “We are looking at what we need for lease (rail) cars, we’re still meeting with our core carriers, asking what lanes are working for you and which aren’t and shifting them around.”