By road, rail and water

Pandemic drives strong demand for transportation, logistics solutions

Posted on Mar 12, 2021 :: Cover Story
Jessica Thiel
Posted by , Insight on Manufacturing Staff Writer

When you’re sitting in the comfort of your home, few tasks feel easier than buying an item online — one click and wait for a package to arrive on your doorstep in an ever-decreasing window of time. 

What not so long ago was an expectation of receiving orders within two days from e-commerce behemoths like Amazon has given way to people wanting to get their items on the next day — or even on the same day. Swift delivery doesn’t just magically happen but instead requires both manpower and sophisticated logistical operations.

“We’ve got to make sure from tracking and visibility to freight and transit that we are able to digitally supply that to all of our customers as it relates to e-commerce,” says Dave Geyer, executive vice president and group president of transportation and logistics for Green Bay-based Schneider.

If e-commerce was on fire before the pandemic, it’s become an inferno in the past year. Looking at the 2020 holiday season alone, online shopping in the United States totaled $188.2 billion, an increase of 32.2 percent over 2019, according to Adobe Analytics.

The expansion of e-commerce will continue to drive changes to supply chains, Geyer says, underscoring the need for greater precision and execution, faster transit times and real-time visibility of the status of orders.

It’s not just e-commerce that’s driving demand for moving goods. During a typical recession, the service economy performs better than the manufacturing economy, but that hasn’t been the case during the coronavirus-induced recession, economist Elliot Eisenberg said at the Fox Cities Chamber’s annual economic outlook event in February. Throughout the past 12 months, people have shifted their spending to goods, from toilet paper to groceries to home improvement materials, he says.  

Driver deficit

While the aforementioned news is good for transportation companies, it doesn’t come without its problems. The pandemic has brought challenges to the industry’s workforce, especially professional truck drivers. 

Ben Schill, vice president of Paper Transport Inc. in De Pere, says the average age of professional drivers is higher than that of the average American worker, and the industry has seen a larger-than-normal exodus of older workers during the pandemic. Beyond that, driving schools had to shut down for a time and are still facing capacity limits, bringing in fewer entrants than normal to the field. 

“Overall, you combine high demand with a low supply of drivers and you kind of have a mess,” he says.

Rob Behnke, department chair for Fox Valley Technical College’s truck driving program, says the program is seeing strong enrollment, but COVID-19 has meant reduced class capacities due to distancing requirements and smaller student-staff ratios for the school’s Class A and Class B commercial driver’s license programs.

“There certainly are a lot of jobs. We just don’t have enough students to even take care of Northeast Wisconsin. We could double our capacity and we still wouldn’t meet the need,” he says.

In addition to eventually easing capacity limits, FVTC is looking at other ways to attract more people to the CDL programs. In Wisconsin and many other states, individuals 21 and younger can operate a commercial vehicle but must remain within state lines. There’s been discussion about trying to loosen that requirement, Behnke says, as 18- to 21-year-olds represent a prime source of new drivers. 

The college already has in place programs with several high schools in which students can earn a Class B license in high school and then upgrade to a Class A after graduating. “Let’s tap into those folks because if we don’t get them at 18 out of high school, a lot of times we lose them,” Behnke says.

PTI also is looking at ways to attract people, and that includes reaching out to a new pool of talent, including displaced workers. Schill says many companies only want to hire experienced drivers, who are in high demand. PTI launched its Accelerate new driver training program in November, and some of the students it’s brought in have come from the struggling hospitality and service industries.

While PTI still strives to attract experienced drivers, Schill says focusing on that strategy exclusively isn’t enough. “If we didn’t have (the Accelerate program), we’d be in a worse place than we are. We absolutely believe that’s the future,” he says.

To boost its ranks, Schneider has put special focus on attracting more women and minority drivers. One of the company’s experienced female drivers serves as an ambassador for the industry organization Women in Trucking, and Geyer says Schneider’s driver ranks strongly represent the diverse communities in which it operates.

Companies throughout the industry, including PTI and Schneider, have increased driver pay rates throughout the past several years. Beyond that, Geyer says Schneider also is investing heavily in new trucks, containers and trailers. “The newer the equipment, the more reliable the equipment, and that reduces downtime for drivers,” he says.

Schill says the strong push for technology in the industry — from optimization of freight networks to renewable fuels and electrification of trucks to safety automation and eventually autonomous vehicles — will only continue, creating an exciting and quickly evolving environment within the industry.

Right now, many transportation companies are placing a heavy emphasis on safety features. Many of today’s trucks are equipped with collision mitigation and anti-lane departure features. Testing also has begun on mirrorless trucks that have video display that allows drivers to see all the way down the side of the equipment, Geyer says.

Behnke says while the trend toward technology in trucks could be seen as a benefit or a drawback depending on the driver, companies that are adding safe, automated equipment are making a wise long-term investment. Safer trucks ultimately will attract people to the profession, he says, and already the profession is evolving from “driver of truck” to “operator of equipment,” which many will view as exciting. 

Beyond that, Geyer says the industry is dynamic and roles are changing. Drivers may choose to continue driving and earn good money, become driver trainers or instructors, pursue office jobs or purchase their own equipment and become a small business operator. 

That’s a message Schill hopes prospective drivers will hear. As it is, freight tonnage is down 8 percent year over year, and diesel consumption, which is strongly driven by Class A trucks, is down 7 percent. “That’s largely due to the steep decline in drivers available to move freight,” he says. “Everybody’s feeling the pinch.”

Beyond the truck 

In the face of transportation challenges including driver shortages and highway congestion, companies turn to additional solutions to move their goods as well as store them. 

The latter is what drove RGL Logistics to purchase the former Mills Fleet Farm warehousing and distribution campus in Appleton. The 70-acre property includes five buildings encompassing 450,000 square feet of space, boosting RGL’s total warehouse space to 4 million square feet.

RGL CEO Joe Lemerond says both the state and nation are facing a shortage of warehousing space. Increases in inventory levels, warehouse utilization and warehousing space costs made this the ideal time to pursue the move, he says.

“Looking at supply chains (during the pandemic), there’s a lot more safety stock that’s needed now. The length of supply chains is shortening,” Lemerond says.

With brick-and-mortar retailers increasingly shifting to e-commerce, e-fulfillment has become a big focus, leading to the need for more warehousing space. In addition to warehousing and distribution and e-fulfillment, RGL offers transportation solutions, machinery storage, co-packing, crating and shrink wrapping, and in-plant and port services.

On the e-fulfillment front, Lemerond says Amazon couldn’t adequately serve small- to medium-sized customers over the holiday season, and he sees an opportunity for RGL to assist. “We know that there’s opportunity to support those small- to midsized customers probably a little bit better than some of the big guys.”

The pandemic has brought a lot of uncertainty for the logistics industry, and Lemerond says RGL can help manage some of that by helping customers adjust quickly to changes in demand. For example, large retailers can apply penalties for orders not received on time or in full. A solid capacity and operations management plan can help mitigate that issue and get trailers loaded and on the road in a timely manner, he says.

Addressing longstanding issues in the transportation industry also is the goal of a new partnership between GKM WI and Midwest Carriers. GKM recently named Kaukauna-based Midwest Carriers as the chief operations control execution manager for its GKM WI TEU Circuitous Platform. Midwest Carriers’ international import/export TEU (truckload equivalent unit) processing complex in Joliet, Ill., will serve as chief operations center for Wisconsin businesses needing an intermodal supply chain solution.

Midwest Carriers’ 350,000-square-foot processing complex recovers TEUs, then processes and prepares them for transit to GKM WI Platform clients based on their load specifications and priority. Midwest Carriers then loads outflows onto 53-foot trailers for delivery.

The platform addresses manufacturing and distribution companies’ concerns about container turns and drayage shortages. In addition, it’s designed to stabilize flows, help clients manage costs and increase supply-chain efficiencies for companies using Chicago, the largest inland port in the world.

CEO Garry Moss says GKM WI offers a supply-chain solution that uses theory and the Six Sigma model. The platform offers patented formulas using algorithms to determine how best to service a volume of businesses.

Historically, Chicago’s congested rail system has caused service and reliability issues for Wisconsin shippers, according to research completed by the Center for Freight and Infrastructure Research and Education (CFIRE) at the University of Wisconsin-Madison.

The CFIRE study, “The Potential for Mode Conversion to Rail Service in Wisconsin” found that Wisconsin shippers often must send a truck to Chicago to pick up empty containers that then travel back to their home city before returning to Chicago for shipping through its port, an inefficient process.

“Many of the shippers had to pay double the cost, not only to pick up their goods but to pay for … drayage companies to return back to their point of origin,” Moss says.

CFIRE concluded that “GKM Global Supply Chain Management has turned Chicago’s proximity into a positive for Wisconsin companies that import and export products.”

Throughout the pandemic, GKM has helped ensure its clients using the platform understand exactly what’s going on with their product internationally. The tools the platform provides offer greater visibility and allow firms to better plan for events like the pandemic, Moss says.

“Everyone had problems, but they were able to manage their inflows of raw materials and finished goods more effectively by using the platform,” he says.

On the web:

To learn more about the partnership between GKM WI and Midwest Carriers, including a link to information about the CFIRE study, visit drivemidwest.com/coc-execution-manager. For details on upcoming information sessions on the GKM Wisconsin platform, visit bit.ly/3kyMIJK.

Grant will help expand port operations

A $500,000 grant awarded to Brown County in January is aimed at helping the county increase the reach of another vital means of transportation, the Port of Green Bay.  

For years, the port has wanted to acquire the decommissioned Pulliam Plant property, which was owned by WPS. Receiving the grant from the Wisconsin Economic Development Corp. was vital in helping toward the purchase, says Dean Haen, port director. 

Acquiring the property will allow the port to greatly expand its services, as the site is located in the deepest part of the port and has rail and highway connectivity, he says. “We can get into new commodities; we can have new port users; we could allow our existing port users to expand.”

Haen says that while the pandemic negatively affected tonnage numbers for 2020, especially compared to the strong year that 2019 was, last year wasn’t bad overall. Strong output in agriculture, construction and manufacturing helped keep the port going. 

As for 2021, Haen says if a season ends strong, as it did in 2020, it usually portends a strong beginning of the next season. The outlook for the rest of the year is less certain, he says. However, if manufacturers believe they will be producing a lot, they will order more raw materials. In addition, construction and state investment in highway improvements continue to go strong, leading to the need to bring in cement and asphalt. This all bodes well for the port.

In the long term, Haen says the port serves as a vital conduit and works with both trucks and trains. A Northeast Wisconsin freight intermodal study is underway to determine whether there’s a need for a truck-train intermodal facility. If one is needed, he says it would make sense to locate it near the port. He sees the possibility of building out a marine component for the shipping season and moving finished products and containers around the Great Lakes, an often-underestimated natural resource.

“If the Great Lakes was its own country, we’d have the third-largest economy in the world,” Haen says.