THE MONKEYS ARE FIRMLY IN PLACE

Probably not many of us noticed, but on February 8 of this year we entered the Chinese Lunar Year of the Monkey. As we approach the end of the year, it is beginning to look as if this Monkey year might be one during which we may see more supply chain changes than we have in several decades. Monkeys are, by nature, intellectual and creative but often have trouble exhibiting these qualities. When that happens, monkeys seem confused. Nothing could be further from the truth however, as they thrive on being challenged. As Amazon seems to be entering so many logistics businesses, they are behaving much like the monkey – appearing to be confused about their business model, but whatever it is, pursuing it with a vengeance. From bookseller to “almost everything seller”, to movie and TV producer, to ground and air delivery services, they continue to break new ground. While the company denies it, it seems to most industry watchers they plan to try to compete seriously against FedEx and UPS. Other retailers such as Target are getting serious about mounting Amazon-competitive attacks by investing more resources in their supply chains, as well. Target has announced spending initiatives for technology and supply chain of as much as $2.5 billion annually by next year, and Walmart has set similar goals.

Even the Superbowl set a tone for change this year when it morphed from Superbowl XLIX to Superbowl 50, abandoning the Roman numeral designations.

The long awaited Panama Canal expansion opened in May of this year. Although the traffic flow consequences of the enlarged canal are still a little unclear, it most certainly will result in significant changes in international shipping patterns, particularly to and from East Coast ports. Already ships are going from large to huge, requiring extensive modifications to port facilities. One German shipbuilder has found a unique way to widen Panamax ships, increasing their capacity by 30%.

Legislative changes are not too likely until the new Congress goes to work, but several seeds have been planted. Drivers’ hours of service, CSA 2010, and other legislation affecting the motor carrier industry are still a little confused; and will pretty much stay that way for a while. One major piece of legislation reauthorizing funding for the Federal Aviation Administration is being handled much like the highway reauthorization was – delays and disagreements. One major provision, of critical interest to the aviation industry, provides for the privatization of air traffic controllers; but don’t expect anything there soon. The big question mark, of course, is the new president’s infrastructure plan. It sounds aggressive, but funding sources are still unclear.

E-Commerce continues to grow and logistics service providers still continue to find ways to participate in this new era of retail deliveries, Amazon notwithstanding. I believe they will continue to do so.

No discussion of monkeys should be complete without some mention of the election process we just went through; but alas, this is not a political column, and I will refrain from doing so. Keep in mind however, that this actually is a fire monkey year, and fire monkeys are intelligent and intuitive. They also excel at both setting goals and meeting them. The new administration promises change, but the extent of it remains to be seen. In the meantime, we would do well to stay alert and follow the lead of the monkeys.

Written By: Clifford F. Lynch