TRENDS
NEWS & EVENTS SHAPING THE FUTURE OF LOGISTICS
‹ CONTINUED FROM PAGE 34
Supply Chain All-Stars E xhibiting superior supply chain capability and performance is a daily occurrence for the 25 compa- nies selected this year by consulting firm AMR Research for its annual Supply Chain Top 25. “Companies in this year’s Supply Chain Top 25 are able to respond quickly and efficiently to oppor- tunities arising from market or customer demand. They do not sim- ply excel at cutting costs,” says Kevin O’Marah, senior vice president of research at AMR Research. AMR evaluates the companies across basic metrics related to exe- cution–return on assets, revenue growth, and inventory turns, for example. The 25 companies that made the cut this year are:
Businesses are no longer as confident as they have been executing lean inventory strategies. Many shippers prefer to keep more product in the supply chain to accommodate shifting demand.
ton-miles rise 4.6 percent, according to Wilson’s report. But the real emerging story in 2006 was the continuing growth and importance of the warehouse and distribution sector. With inventory car- rying costs increasing at a double-digit clip–17 percent in 2005 and 13.5 per- cent in 2006–it has become clear that businesses are no longer as confident as they have been executing lean inven- tory strategies. Many shippers prefer to keep more product in the supply chain to accommodate shifting demand. Wilson also discussed overall 2006 trends by mode. Among the findings: Air ■ Airfreight revenue grew by $3 bil- lion during 2006, an increase of 7.6 percent–considerably lower than the 17-percent leap one year earlier. ■ Escalating fuel costs, which account for as much as 30 percent of the industry’s operating expenses, dampened revenue growth for the year. Still, preliminary figures indicate over- all ton-miles are up 4.4 percent over 2006 and have grown 22 percent since 2000. Trucking ■ Trucking costs increased by $52 billion in 2006, an increase of 8.8 per- cent over 2005. ■ Soft demand and new equip- ment purchases – largely a result of the EPA’s new emissions and engine standards – increased truck capacity but marginally weakened demand for trucking services. Larger carriers were able to grow their revenue by passing along fuel surcharges to their custom- ers; smaller operators, however, had less
leverage to do so as they faced increas- ing competition in a surplus market. ■ The driver shortage continues to raise concerns among industry experts, despite increased capacity in 2006. Last year, driver turnover in the long- haul segment increased 121 percent and the short-haul sector was not far behind at 114 percent, according to the American Trucking Associations. Drivers are migrating to companies that offer higher wages and substantial benefits. Rail/Intermodal ■ Rail freight costs increased 12 per- cent, with revenue for Class I railroads jumping 13 percent. ■ Since 2004, the rail freight indus- try has increased revenue nearly 30 percent, reflecting the industry’s commitment and capacity to meet intermodal demand. For the ninth consecutive year, the railroads have set records for total carloads carried, an indication that growing rail freight demand in the NAFTA corridor con- tinues to take the industry to new heights. Ocean ■ Maritime and domestic water traf- fic increased by 7.9 percent in 2006, to nearly $3 billion for the year, aug- mented by continued ocean freight growth. ■ Aging infrastructure and deferred maintenance are beginning to take a toll on ocean transportation. Diversified sourcing strategies through multiple ports have helped rationalize volume and accommodate growing inbound cargo traffic. -Joseph O’Reilly
1 2 3 4 5 6 7 8 9
Nokia Apple
Procter & Gamble
IBM
Toyota Motor
Wal-Mart
Anheuser-Busch
Tesco
Best Buy
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Samsung Electronics
Cisco Systems
Motorola
The Coca-Cola Company
Johnson & Johnson
PepsiCo
Johnson Controls
Texas Instruments
Nike
Lowe’s
GlaxoSmithKline Hewlett-Packard Lockheed Martin
Publix Super Markets
Paccar
AstraZeneca
— Amy Roach Partridge
36 Inbound Logistics • July 2007
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