Journal

According to the last reports by Forbes, there’s an emerging category of business – supply chain risk management – of which many companies aren’t yet aware.

You could only imagine the exposure of a large oil company when a supplier they hired makes a mistake or even causes an all-out disaster? Then try to imagine how much worse any such disaster would be if in the fallout it’s determined the organization you approved has failed to meet compliance requirements or carry proper insurance?

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The level of risk, the cost and the complexity of managing an increasing network of partners an organization may use has made this a jugular issue and a vital area of business that enterprise organizations know well.

Another aspect of supply chain risk management

Avetta’s leader of the Integrated Supplier Organization at the company’s Utah headquarters, Richard Parke, in conversation with contributing editor for Forbes, David K. Williams, talked about another aspect of supply chain risk management that applies to the majority of smaller organizations and contract suppliers as well.

Avetta provides a cloud-based supply chain risk management and commercial marketplace platform. Their global solution is uniquely designed to connect the world’s leading organizations with qualified suppliers, driving sustainable growth. Avetta has created one of the strongest networks of qualified supplier organizations.

Closer explanation: beyond meeting the requirements for hire by the organizations Avetta supports (such as major oil & gas concerns, construction, online marketplaces, etc.), participation in the system helps suppliers grow their businesses faster and better.

Importance of Risk Management Overview

Globalization, outsourcing, and extended supply chains are effective strategies to increase efficiency and achieve economies of scale used by many organizations. However, these benefits are accompanied by the significantly increased risk of quality, safety, business continuity, reputation, and more.

Commitment to and practice of effective supply-chain risk management (SCRM) is now essential to running a successful and sustainable business.

Avetta helps the world’s leading organizations identify and manage risk in their supply chains through: supplier prequalification, supplier audits, worker management, insurance monitoring and analytics.

What Are the Main Steps of the Process

First of all, identifying risk in the supply chain. Organizations are always at risk for losses through cost volatility, supply disruption, non-compliance fines, and safety incidents that cause damage to their brand and reputation. Knowing what’s at stake is the first step to understanding, measuring, and managing risk in your supply chain.

One of the most significant priorities for companies across all industries, safety concerns are often magnified in chemical, oil and gas, construction, and manufacturing. Workplace accidents can jeopardize contracts, result in fines, and cause significant damage to a company’s reputation.So the second step would be supply chain safety.

Focus on supply chain quality control should be one of the priorities. Do your vendors and suppliers meet your standards for quality and consistency? Customers are quick to react when they perceive a drop in quality; and, even the smallest product issues can be difficult to recover from.

Any disruption to the supply chain due to financial challenges has the potential to impact business continuity and, ultimately, your bottom line. Taking a proactive approach to understanding supplier financial strength can prevent disruption and unnecessary costs.

Are your contractors insured? Do they have the right type of insurance, the right limits? Knowing this information will help you to manage insurance risk and avoid potentially costly litigation. Always have on mind supply chain compliance!

Damage to a company’s brand or reputation can be long-lasting, extremely costly, and sometimes unrecoverable. Committing to a supply chain risk management strategy can not only prevent brand damage but can also serve to foster new partnerships with organizations that share like values which will save supply chain reputation.

You should definitely think of supply chain sustainability. It’s no longer enough to assess risk within the traditional construct of a supply chain. Organizations must look beyond and consider environmental impacts and corporate social responsibility, including adherence to labor laws and sustainable practices.

How to Mitigate Risk?

Mitigating risk in the supply chain starts with the procurement process and is dependent on having an effective methodology for evaluation. When the managing contractor and supplier relationships, loss control or risk mitigation is most effective when you can:

1. Communicate expectations,
2. Select contractors based on qualification standards,
3. Evaluate progress,
4. Monitor contractors using a real-time database.

We are glad to announce to all of our customers, that Love Freightways business is doing good and we are expanding and moving our location to accommodate our growth. We are moving our Head Quarters to Las Vegas, Nevada, the #1 upcoming city for business.

However, we are still keeping our Santa Fe Spring, California branch office. Our new premises are at 2565 Chandler Ave, Las Vegas NV 89120, Unit #3.

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In addition: Our new truck shop is coming in December 2019

Also, In December 2019 we plan to finish our brand new project that we are working on! The company is currently working on the design and construction of a new truck shop, yard and restaurant, one of the biggest projects to date.

This kind of experience will help all truck drivers and definitely ease their hard work. Our dedicated team is aware of how much this project is meaningful and important. We are hoping to do our best with this project as well as the future ones with our growing business and you as our allies by our side.
Keep in mind that we here in Love Freightways are your partners, and we are looking forward to growing together and making all our plans come to life! We may have changed our address, but our work ethics and devotion remain still.

PennDot (The Pennsylvania Department of Transportation) is currently reviewing industry responses to its request for input on the prospect of initiating a public-private partnership to help the state address its shortage of truck parking.

According to Jan Huzvar, PennDot spokeswoman, truck stops and companies in the logistics, construction services and traffic management software businesses were among those filing responses. A total of 19 responses were received and are now under review by PennDOT’s P3 office, she added.

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“Plans to facilitate one-on-one meetings with some of the responders are underway to dive further into their ideas. A decision will follow as to whether there is an opportunity for a P3.” Huzvar said.

According to motor carriers polled in a separate PennDOT survey, limited overnight parking is the highest-ranked problem in the state; Pennsylvania’s Transportation Advisory Committee has identified a shortfall of nearly 4,400 parking spaces across the state.

Natso insidted on ways to lower the private sector’s costs

This latest request for information — which opened Nov. 20 and closed Dec. 12 — was meant to help the agency determine the private sector’s role in the truck parking problem and ways in which the state can encourage partnerships with the freight industry. It also was meant to help PennDOT identify which parking technology solutions perform well and what constitutes a safe and successful parking facility.

In its response, today’s Natso — formerly the National Association of Truck Stop Operators — urged PennDOT to explore ways to lower the private sector’s costs in building truck parking capacity and avoid regulatory measures that would impede private truck parking providers. Private truck stops and travel plazas provide 90% of the truck parking capacity in the country.

“PennDOT should harness the collective wisdom and expertise that private travel centers can provide to increase truck parking capacity in the state,” Natso spokeswoman Tiffany Wlazlowski Neuman said. “Any initiative should center around improving the incentives for private companies to invest more money in truck parking capacity.”

Natso’s comments also discussed how public policy interests can clash, making it difficult for federal, state and local government agencies to work together. For example, Neuman pointed out that federal truck parking efforts, such as the U.S.

Lack of truck parkings – one of the industry concerns

Department of Transportation’s National Coalition on Truck Parking, don’t always align with the work of local government agencies, which frequently balk at truck stops. “Such obstacles frequently preclude the private sector from advancing a project that would otherwise have added truck parking capacity to an area,” Neuman said.

A nationwide lack of available truck parking ranked No. 5 on the American Transportation Research Institute’s list of industry concerns, which was released Oct. 29.

Trucking activity expected to grow in Pennsylvania

“Truck volumes need to be considered from a traffic perspective and this process to hear from the public and explore innovative delivery options works toward our goal to ensure safe operations and options for the people moving all of these goods on our roadways”, PennDOT Secretary and P3 Board Chairman Leslie Richards said in PennDOT’s notice announcing the request for information.“Pennsylvania’s status as a critical freight connection and distribution point is growing every day and we expect exponential freight growth in the future.”

Pennsylvania is important for freight movement, and trucking activity is expected to grow in the state in the coming years. According to PennDOT’s Comprehensive Freight Movement Plan, the state’s infrastructure network carries 1.1 billion tons of freight, a figure that is expected to increase to 1.9 billion tons by 2040.

Since the economic outlook is not as rosy as it was a year ago, and everything points to the fact that this year, it is going to be even more eventful.

In the past couple of months, some notes of caution and uncertainty have started to creep into discussions about the health of the economy. It’s not doom and gloom or clouds on the horizon, necessarily, but things do seem a little foggy, especially the farther you get down the road.

Economic expansions do not die of the old age

This is the second longest economic expansion in our history, and American Trucking Associations Chief Economist Bob Costello says there’s “no reason it shouldn’t be the longest.” He notes that economic expansions don’t die of old age; they die of something else. Economic growth as measured by gross domestic product, or GDP, increased 3.5% in the third quarter, which while down from 4.2% in the second quarter, was nothing to sneeze at.

Generally what I’m hearing is that there’s plenty of momentum in the economy to take us at least through the first half of the year. FTR economist There are some economic indicators that are troublesome, like the stock market and housing, and the fact that a lot of the Trump tax cut is going to stock buybacks as opposed to capital investment. The biggest concern is the uncertainty brought about by tariffs and trade wars. Some economic experts are predicting a slowdown going into 2020.

With the right moves, economic boost expected

According to HDT’s contributing economic expert, Jeff Kauffman, looking at industrial production and inventories, we’re still at a good place in the business cycle, which is what he also wrote in his Behind the Numbers column last month.

I liked how FTR senior economist Bill Witte described his outlook in a November conference call: “My model is that 2019 is essentially going to be a sequel of 2018 – with a caveat: sequels are almost never as good as the original.”

If Congress manages to overcome its partisanship and pass much-needed infrastructure reform, that could lead to an economic boost.

The Freightos Baltic Index, that measures the spot rate for shipping 40-foot containers from China to North America’s West Coast, has fallen from $2,110 to $2,051 over the past two weeks – an indication that there has not been a significant impact to shipping capacity in the maritime market. In other words, don’t expect a big shot of containers hitting the market prior to the March 1st deadline.

The Los Angeles market is still repositioning all the inbound freight it received from the previous months as outbound volumes remain elevated, averaging 10% more than last week. Short haul – length of haul 100-250 miles — rejection rates from the market have been on the increase over the past two weeks, climbing 213 bps. These loads are having more trouble finding capacity than any other length of haul, averaging 5.08% rejection rate compared to the market average of around 2.4%.

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The fact the warehouses seem full, and maritime rates have fallen leading up to the CNY, would suggest we will not see a big impact from inbound freight prior to the March 1st tariff deadline. With that being off the table, the chances for surging volumes prior to the standard spring seasonal push seem slim. That being said, volumes are not falling rapidly, and rejection rates are essentially flat through the first week of February.

Holiday season to blame

The Chinese New Year (CNY) began February the 5th, but that will not have an impact to the freight market for a few weeks if at all. Weekly rail intermodal volumes, which are heavily tied to imported containers, have declined over 8% since peaking in early December and are roughly 9% lower than this time last year. Intermodal volumes had been trending higher throughout 2018 but appear to be softening in early 2019. This has a spillover effect to the truckload market as this means there are fewer intermodal shipments to haul.  

The first week of February has been remarkably stable regarding freight market volatility. The National Tender Rejection Index has only moved 14 bps higher over the past 7 days.  Volumes have fallen about 1.1% from end of month levels but have had no significant swings. The market has at least stopped falling for the moment, meaning capacity is not loosening any further with the same amount available this week versus last. With this being the slowest time of year, both economically speaking and in terms of freight volumes, does this mean the market has found its bottom?

March brings relief

A freight market bottom would be where capacity is as loose as it has been with heavy downward pressure on rates. With the market in a holding pattern over the past week after being on a slow decline from mid-January, there simply isn’t much further to go with a rejection rate of 7.8%. March is just a few short weeks away and the southern tier of the country will start heading back outdoors to start building houses and buying patio furniture. Store shelves will need to be stocked with seasonal inventory.

This push of freight normally doesn’t begin in earnest until early to mid-March. There is still room to fall, when it comes to the freight market overall, however, and historically speaking February has as much chance of finding a floor as January, but each passing week the odds get smaller for falling any further.