How Visibility Has Changed the Supply Chain Game

Visibility in a supply chain is simply a streamlined series of links, internal and external communication, and data exchange that allow multiple parties including suppliers, clients, customers, 3PL providers, etc. the ability to track, manage and control their shipping and deliveries. As always in the logistics world, these processes are extremely complex and require a proactive approach on all fronts to execute successfully. However once implemented, having increased visibility makes your company’s processes transparent; thus more efficient.

Today’s technology and society have created a world filled with instant gratification. From our phones to our food, almost all aspects of our life can be solved in a matter of seconds. This trend also sets a new expectation in shipping, especially to those who are well versed in e-commerce.
If our society were aiming towards immediate satisfaction and streamlined technology, then would it be safe to say that supply chain visibility is crucial for success?
Let’s look at some of the potential benefits:
  • Ability to measure, track, and improve performance with tangible data
  • Reduce lead times
  • Improve accuracy on predicted arrival times
  • Improved client to service provider relationships
  • Better and more trusting customer service and satisfaction
  • Lowering of in-process mistakes and the ability to fix them in real-time
  • Decreasing inventory costs and avoiding bottlenecks
  • More accurate budgets and estimates at fixed and variable costs
  • Ability to update customers on shipments with precision
  • Ease of mind; sleep at night with confidence
Choosing a 3PL provider that can help establish a way to make your supply chain more efficient is an important tool and benefit for any fledgling or existing business. Technology will continue to push the speed in which life moves and further develop ways to make all processes easier and more precise. Those not adapting to or utilizing the latest advances in technology will be left behind. In a world of instant gratification where customers expect to receive their packages on time and damage free, how can you afford not to have your supply chain efficient?

Why a Distribution Service Can Help Wake You From Costly Nightmares

Distribution is often linked or made synonymous with the word logistics. In everyday jargon, these two terms are often interchanged and replace one another in some form, but they are in fact quite different. Distribution is essentially the movement of relocation of sold goods. It is the processes, routes, and techniques it takes to get a product from point A to point B, C, D, and however many in between. Logistics, on the other hand, focuses on the bigger picture, the entire story of a product’s life from manufacturing to consumption. Logistics in itself can include distribution alongside fulfillment, warehousing, transportation, supply chain, etc.

In this post, we will focus on how a distribution service can help your company lower overhead costs, manage variables, and better predict future outcomes.
Many companies within the logistics and distribution industry say that besides the initial sale of an item, the biggest challenge retailers face is one that is hidden. That challenge is known as routing guides. If you are a retailer reading this, that term probably sends shivers down your spine because it can easily become a spider web of nightmares. For those not in the midst, essentially a routing guide is a system of steps and procedures a distributor must take in order to distribute and sell its goods in compliance with retailer contracts. That includes the packaging, labeling, and shipping methods. Where problems occur is when you sell to more than one store because routing guides differ from retailer to retailer. Thus, it is up to you as the supplier to alter your shipping methods to fit their standards.
This can be a major setback for companies, especially for those growing quickly because there is little time and few resources when it comes to avoiding mistakes and missed opportunities. In the past, suppliers would ship their goods any way they saw fit and retailers would accept them even though it went against their guide. When enough was enough, retailers began enforcing the guides by implementing potential chargebacks, which meant that companies could be fined for not abiding. The costs of the fines could be thousands of dollars a year and potentially create problems within stores such as empty shelves or shipments that are lost or damaged.
So how do companies get out of this downward spiral?
The answer is an outsourced distribution service. Many 3PLs that offer distribution services have professionals that know each major retailers guidelines and can easily implement a streamlined solution to help ensure your bottom line isn’t riddled with fines.
The potential benefits a 3PL distribution service can bring to your company:
  • Little to no fines due to routing guide chargebacks
  • Streamlined fulfillment of orders and correct shipping processes
  • Less overhead costs of hiring your own distribution team
  • More room for growth and better profits
  • Wider range of retailer outreach as a result of distribution and warehousing capacity
  • Happier and more trusting customers because they can rely on their packages or products to be in stock and arrive on time
  • Less stress on your company, thus allowing more creative freedom to build your business
Though logistics and routing guides can seem complex, it is the systems that keep things moving efficiently. By partnering with a 3PL and distribution company, you can rest assured that your product will get to its destination on time and without hidden penalties.

Expedited Shipping: When Time is Not Your Friend

Expedited Shipping: When Time is Not Your Friend

Many third party logistic companies, including us, offer a shipping service known as “expedited shipping”. What does that mean, and more importantly, how can it help your business? In it’s simplest terms, it basically means to speed up progress. That sounds easy, right? However, the truth behind expedited shipping is that it’s actually a very complex system built around many aspects that have to be operating at full potential.

Understanding Expedited Shipping and What Makes it Work
Expedited shipping requires extreme precision, but also exceptional communication. Regular standard shipping is taking all the standardized steps in order for the end person to receive their package at a low rate. This can typically range anywhere between 5 and 21 business days. On the other hand, with expedited shipping, everything is sped up and bypasses the standard steps and procedures. Trucks are on standby; airport freight is NFO (next flight out), and everything is visible and kept at maximum performance in order to meet strict deadlines. Innovations in data interchange, warehousing management, supply chain visibility, and airport logistics have allowed for late shipments and missed deadlines to be something of the past.

Getting Your Product Out In Time Means Everything
The benefits of expedited shipping, especially through a great 3PL service provider, are priceless. Why? Because we have all had the 2 A.M. feeling of anxiety and worry that something won’t be shipped out in time. Having the option and choosing expedited shipping ensures that this streamlined process gets your items to their destination as planned. Whether it is life saving medicine or components for the huge project starting tomorrow, Langham provides that confidence, piece of mind and even Zzz’s at night.

To Langham a happy customer equals a repeat customer. If you want to avoid anxiety over not getting your products there on time, be sure to visit our website and learn about our expedited services and how we can help.

What can Langham do for you?

At Langham Logistics, we like to partner with companies who share a similar mind-set and use forward thinking as part of their innovative strategies. The clients that work with us know that while we provide supply chain management solutions that save time and money, also know and understand that we don’t rely on off-the-shelf solutions. At Langham, we like to do it our own way by allowing our clients to be part of the process while customizing and tailoring our systems to meet their needs. Intrigued? Read on.

Understanding Langham Logistics
Before you can truly understand how we can help you, let us introduce you to our company. We have been around since 1988. We’re known in our industry as a global leader in domestic and international transportation, freight management, fulfillment, warehousing and distribution. Our customers love us and trust that we can help provide them with supply chain and logistics solutions. We have built our name on trust, integrity, and honest communication, and strive everyday to distinguish ourselves from the market clutter.

Why Our Custom Solutions Work
Our philosophy is simple. We listen to our clients, ask the right questions and provide impactful solutions. Our client’s challenges are our own, and we take full responsibility to ensure that we are answering those requests. We frequently offer perspectives, ideas and innovations to the most complex client’s processes.

Going Beyond the Traditional 3PL Role
We aren’t just another 3PL. We love what we do and built this company on doing whatever it takes to get the job done. We value our relationships with our clients and know that when they choose Langham, they are choosing a partner that can help make their business successful.

Calm. Cool. Delivered.
We understand that things don’t always go as planned. Whether you need your shipment to Denver by dawn or your pharma to Philly by 5, our team will work to make sure that your products get where they need when they need to be there. Accountable, controlled, and secure for your piece-of-mind.  If your in panic mode, visit our transportation 911 site and let us know how we can help you sleep a little more soundly tonight.

Need more reasons to work with Langham? Our multidisciplinary team of experts is empowered to always work in the best interest of our clients, using best-in-class logistics technology, tactical operations support, accurate data collection, and a centralized communication hub. Visit our website or give us a call at 855-214-2844 and see what it is that Langham Logistics can do for you.

Langham’s New Hire

Dan Straus joins the leadership team and brings 30 years of regional sales and operations experience in the LTL transportation industry.  As Director of LTL Business Development Dan will develop quality partnerships with clients as well as carriers.  The segment of the business will give Langham Logistics a complete service offering to our customers.

A Look Back at Langham’s 25 Years: 2003 President George Bush Visit To Langham

September 5, 2003:
When President George Bush announced he was going to visit Indianapolis in September, he said he would be speaking in the 300,000 square foot warehouse of a small company called Langham.  People asked why? What is Langham? What sets them apart? And who is Cathy Langham?
The President wanted to promote the Jobs and Growth Act, a 10-year, $350 billion tax cut he signed into law that is advantageous to small businesses.  And Langham fit the bill.  Indianapolis Chamber of Commerce and National Federation of Independent Business had mentioned her name to the White House Eventually an administration official called her to find out more about the company.  When we found out for sure he was coming it got very, very exciting at Langham.  The advance team came on August 31st and the U.S. Secret Service arrived the next day to secure the building.  There was a week to make all of this happen.  Cathy requested that she have some time to speak with the President alone.  She was met with dead silence from the other end of line.  Finally, the administration official asked, “What do you want to talk about with him?”
After the speech, she and her brother John and sister Margaret, who are co-owners, joined him in the company break room to talk about cargo security and how the administration was helping small business grow. He then went into the company boardroom to talk to three couples about the child tax credit.
“He made good eye contact and listened,” Cathy says.  “I really felt he heard what we were saying.  He was genuinely nice and interested about what we were saying.” It was a great honor and great experience.  People still come up to Cathy and remember that event.

Langham Logistics adds new Business Development Manager

INDIANAPOLIS, January 14, 2013 – Langham Logistics continues its commitment to being one of the region’s top logistics management resource by adding a new and highly experienced logistics professional to its leadership team.
As Langham’s newest Business Development Manager, Michael Rootes brings over 11 years’ experience in successfully helping companies better manage their logistics costs and inefficiencies. Michael has extensive skills at helping companies analyze and measure their performance at managing their logistics costs and practices along with helping companies achieve financial and operational best practices for their logistics operations.
“As a leading logistics management firm, we have always placed the trusted partnership between Langham and its clients as the cornerstone of our success”, said Cathy Langham, CEO/Co-Owner of Langham Logistics.  “I believe that Michael’s abilities to work transparently and openly with companies as they address their logistics challenges will add to Langham’s reputation as both a trusted and knowledgeable logistics management resource.”
 “As the current economy continues to struggle, companies are being forced to find sources of cost reduction and streamlined operations as never before.  I believe Langham’s abilities to help these companies take an honest assessment of their logistics model will be the difference between those companies that thrive and those that don’t” said Langham’s newest addition, Michael Rootes. “I look forward to growing the trusted partnership between Langham Logistics and those companies faced with such challenges.”
Stay up to date with all the news from Langham Logistics and its customers with the Langham Logistics website ( and on Twitter – @LanghamLogistcs
About Langham Logistics:  Langham Logistics, Inc. is a 24-year-old global freight management organization specializing in supply chain optimization and consulting services, domestic and international transportation, fulfillment, warehousing and distribution operations.  Langham operates from their global headquarters center in Indianapolis, IN, Compton, CA and maintains strong partner relationships across the globe to assist with tactical operations for its customers.

CONTACT: Holly Reynolds, (317) 471-5145,

Site Selection: An All-Star Lineup of Logistics Hot Spots

When it comes to siting manufacturing and distribution facilities, these locations don’t just get on base; they knock it out of the park.

U.S. manufacturers and distributors rely on a roster of locations ideally situated for quick turnaround and efficient transportation to points across the globe. These sites step to the plate with geographic, workforce, economic, transportation access, and business climate benefits that give local companies a home field advantage.

Kentucky leads the line-up of great U.S. logistics sites. “Kentucky is at the center of a 34-state distribution area,” says Larry Hayes, secretary, Kentucky Cabinet for Economic Development.

Two-thirds of the U.S. population lies within one day’s drive of Kentucky, but the state’s logistics assets are by no means limited to over-the-road traffic. For example, Louisville International Airport houses UPS’s worldwide air hub.

“If you are eating fresh lobster in Singapore, it probably spent last night in Louisville,” says Hayes.

Kentucky’s strategic logistics location helps explain the concentration of third-party distribution facilities near Louisville International Airport and the Greater Cincinnati Airport in Florence, Ky., located minutes away from DHL Worldwide Express operations in Erlanger, Ky.

“The two facilities give shippers global reach,” says Hayes. “More than 200 flights leave Kentucky daily to every part of the world.”

The presence of UPS, DHL, and other logistics providers has earned Kentucky recognition among global logistics professionals. “Kentucky’s role in global logistics is acknowledged abroad,” says Hayes. “Distribution has become a major industry in Kentucky; so has automobile and truck manufacturing. There’s more to the state than bourbon and horses.”

Although much of the state is rural, local communities are accustomed to foreign companies having a major presence. Thirty percent of new investment, and more than 20 percent of new jobs announced in the state in 2011, resulted from foreign direct investment (FDI)—investment by foreign-owned companies.

“Kentucky has the second-highest number of Japanese-owned businesses in the United States per capita, after Hawaii,” Hayes says. “Many Americans might be surprised to learn that.”


Indiana: Positioned For Power

When pitching to site selectors, Indiana serves up three main advantages: low costs, excellent highway access, and a collaborative business environment.

Indiana’s Hoosier Energy Power Network provides electricity to developed sites and industrial parks along the I-70, I-65, I-64, and I-74 corridors. Hoosier Energy’s workforce lives in adjacent metropolitan areas such as Indianapolis, Louisville, Cincinnati, and Evansville. That fortunate geography benefits the companies and agencies, such as Henry County, Ind., that fall within its midst.

“Henry County is strategically situated along Interstate 70 between the two key logistics markets of Indianapolis and Dayton,” says Robert Grewe, president and CEO at New Castle/Henry County Economic Development Corporation. “The area’s considerably low development and operations costs allow companies to take advantage of these logistics hubs while avoiding the steep development costs typically associated with urban markets.”

With three exits along I-70, Henry County is preparing to conduct a market-based planning initiative that will identify optimal design considerations to accommodate the logistics sector. The area’s other transportation connections include U.S. Highway 40, which runs parallel to I-70 through eastern Indiana. The four-lane highway provides a redundant route should I-70 experience delays.


Nebraska: Grand Slam Central

Nebraska is another power hitter in the U.S. logistics lineup. “Geographically, Nebraska is central to both regional and national markets,” says Ken Lemke, Ph.D., economist for the Nebraska Public Power District (NPPD). As the state’s largest electric utility, NPPD’s chartered area includes 91 of Nebraska’s 93 counties.

Passing through the state, Interstate Highway 80—the most traveled east-west transcontinental route of the interstate highway system—offers 482 miles of quick access to everywhere in the nation. Through Nebraska’s roadways, goods delivered by truck reach more than 25 percent of the U.S. population in just one day. Within two days, that percentage rises to more than 90 percent.

Moreover, the nation’s two largest rail companies—BNSF Railway Company and Union Pacific Railroad—provide service to many Nebraska communities. Ten freight railroads operate more than 3,200 miles of track throughout the state. No major city in the United States is more than five days by rail from Nebraska.

Also of particular importance to logistics leaders is having a geographical position amid a large regional customer base. The Illinois-Missouri region of the United States enjoys precisely that advantage.

“The population base within an eight-hour driving radius of some sites in the area approaches 78 million people with above-average income,” notes Cheryl Welge, business development executive in the Economic Development Department of electric power provider Ameren Corporation.

“The region offers unsurpassed transportation infrastructure, particularly in its well-distributed transportation network of interstate and other highways, railroads, and commercial and cargo airports,” she continues. “Most highways in Ameren’s territory receive high marks for quality of design and maintenance, and for absence of traffic congestion and bottlenecks.

“All seven U.S./Canadian Class I railroads serve Ameren territory,” Welge adds. “Many communities and sites are served by more than a single carrier—and offer the associated negotiating benefits such competition brings.”

Seventeen intermodal terminals lie in, or within, driving distance of Ameren’s service territory. “Intermodal is vital to the wholesale trade sector,” Welge says. “As much as 80 percent of the materials passing through some distribution centers travels by dual modes.”


A Pitch For Joplin, Missouri

In Missouri, Joplin provides another advantageous location for siting manufacturing and distribution facilities. The Joplin region is comprised of 10 communities and five counties in southwest Missouri and southeast Kansas. Economic development efforts throughout the region are promoted through the Joplin Regional Partnership. Joplin is the hub of the region’s market area, home to nearly 250,000 people. The overall market reach within 60 miles of Joplin is more than 700,000 people.

“The Joplin region is located near the population center of the United States, and is situated nearly equidistant between Los Angeles and New York, as well as the Mexican and Canadian borders,” says Rob O’Brian, president, Joplin Area Chamber of Commerce.

An excellent highway system that includes east-west Interstate 44, north-south U.S. Highway 69, and interstate-grade U.S. Highway 71—currently being converted to I-49—creates connections throughout North America.

Three Class I and two regional shortline railroads also are important parts of the transportation system. These rail lines provide direct access to major ports on the Gulf of Mexico and Pacific Ocean.

In addition, the Joplin Regional Airport and three other airports within 60 to 90 minutes drive time provide air cargo service to markets throughout the world.

Elementary, Watson

Through the twin ports of Los Angeles and Long Beach, the West Coast provides the Pacific gateway for products manufactured in Asia. Some logistics experts predict that, even after the Panama Canal expansion opens in 2014, it may still be faster and less expensive to route freight to the West Coast and transport it via landbridge to the Midwest.

That’s one value proposition of Watson Land Company, which is celebrating its centennial this year. The company develops, owns, and manages industrial properties throughout southern California. Watson Land Company has developed several million square feet of master-planned centers within four miles of the ports of Los Angeles and Long Beach, and maintains a footprint that includes facilities in Carson/Rancho Dominguez, Chino, Apple Valley, Fontana, and Redlands, Calif.

Most recently, the company leased a 553,963-square-foot industrial property to M. Block & Sons in Redlands. The building is a part of Watson Land Company’s Legacy Building Series, an initiative to develop and offer highly flexible, Class-A industrial facilities with distinctive architectural detail. The property will be used for warehousing, distribution, and managing third-party logistics.

Watson Land Company’s legacy extends back two centuries to the Rancho San Pedro Spanish Land Grant. Today, the company is among the largest industrial developers in the nation. Watson holds a Foreign Trade Zone (FTZ) designation on more than eight million square feet of its distribution buildings. The FTZ designation allows customers to significantly reduce operating costs through such methods as single weekly entry of containers, which reduces merchandise processing fees and duty deferral.

Watson Land Company affirmed its commitment to sustainable design by becoming the first developer in southern California to design and construct speculative buildings in accordance with the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) guidelines.

Each LEED-certified building features design elements, materials, functionality, and construction procedures that reduce environmental impact, enhance energy efficiency, and reduce operating costs. Watson Land Company has completed construction on more than two million square feet of speculative industrial buildings designed for LEED certification.


Power Hitters

Operating costs are a key factor in site selection, and one major element of their total is utility costs.

Ameren Corporation works to promote energy efficiency for its 2.4 million electric and more than 900,000 natural gas customers in Missouri and Illinois. Ameren ranks as the largest electric power provider in Missouri, and Ameren Illinois ranks as the third-largest natural gas distribution operation (in total number of customers) in Illinois.

In Indiana, Hoosier Energy makes the most of the strategic advantages offered by the region it serves. “Hoosier Energy can effectively leverage these assets by providing competitive electric rates to the area,” says Harold Gutzwiller, Hoosier Energy’s manager of key accounts and economic development.

In Nebraska, NPPD’s industrial utility rates are 26 percent lower than the national average. “NPPD is the state’s largest electric utility, and uses a diverse mix of generating facilities, such as nuclear, coal, gas, oil, hydro, and renewable energy to meet customer needs,” says Lemke. “In 2011, NPPD relied on carbon-free energy sources for more than 40 percent of its overall energy mix.”

More than 5,000 miles of high-voltage transmission lines make up the NPPD electrical grid system, which delivers power to one million Nebraskans. As a member of the Southwest Power Pool, NPPD has the advantage of selling its excess power into the regional marketplace.

“Nebraska’s status as the only public power state in the union provides significant advantage to businesses that choose our state,” says Lemke. “It means the primary goal of Nebraska’s electric utilities is to provide low-cost power, rather than shareholder profits.”


Leadership And Labor

If cost is a key to progress, teamwork is a key to cost. That means, to qualify as a great logistics site, a region must enjoy a commercial climate in which the forces of business, government, and labor are moving in the same direction.

Nebraskans understand that essential truth. No matter how temperatures may fluctuate on the plains, the business climate in Nebraska is characterized by far more sun than rain and snow.

“Nebraskans take pride in the quality of their work, and the workforce consists of productive, dependable, educated, and well-trained individuals who care about what they do,” says Lemke. “This contributes to high productivity and success rates, and low absenteeism and turnover rates.”

Nebraska maintains an unemployment rate that is about half the national average. Unemployment insurance costs and worker’s compensation insurance also are lower than the national average.

And while business benefits from a favorable workforce, so, too, is it assisted by agencies dedicated to its success.

NPPD’s Economic Development Team helped hundreds of companies find productive and profitable locations in Nebraska. Services range from supplying requested information to guiding firms through the entire site selection process, including gathering community proposals, identifying information and financial resources, or facilitating final negotiations at the local level.

“NPPD, in conjunction with the Nebraska Department of Economic Development and other allies, aggressively targets the logistics sector through advertising, trade show attendance, and personal visits with decision-makers,” says Lemke.

The Nebraska Advantage Act includes expanded incentives for investment and/or job creation, including incentives targeted to small business, research and development, microenterprises, and rural development. Nebraska also offers additional development assistance programs, including tax increment financing, community development block grants, customized job training programs, and industrial revenue bonds.

Henry County and East Central Indiana also offer ample workforce resources to support continued logistics growth.

“From a quantity perspective, large pools of workers are looking for new employment opportunities as a result of the local auto industry’s restructuring,” says Grewe. “The quality of the area’s talent is positioned to increase, because Henry County has partnered with Ivy Tech Community College to build a new $3-million campus in New Castle. Ivy Tech has a strong track record of providing training that meets the needs of logistics and manufacturing companies.”

Henry County is constructing a spec building in the county’s industrial park, located 1.5 miles from I-70. “To capitalize on logistics opportunities, the building is designed with 32-foot clear height ceilings, and 50,000-square-foot initial buildout, with site prep that allows for immediate expansion to 200,000 square feet,” says Grewe.

The Illinois-Missouri region served by Ameren also has distinct business and labor cost advantages.

“The expenses of labor and other key aspects of distribution center operations have risen at a demonstrably lower rate in most of Ameren’s territory, averaging 17 percent below the national average,” says Welge.

In addition, she notes, the region boasts an available labor pool with experience in all aspects of wholesale trade, distribution, logistics, and related businesses.

Selected business costs in the region are at least 18 percent below typical or national average costs for DCs. Even more relevant is that these costs in most of Ameren’s territory are up to 32 percent below certain competing locations in the Midwest.

“While Ameren remains focused on providing reliable and reasonably priced electricity and natural gas, we are more than just an energy consultant,” says Welge.

“Ameren’s economic development team helps facilitate new projects throughout the entire development process, including community assessment, site selection, infrastructure planning, and incentive review,” explains Mike Kearney, manager, economic development for Ameren. “Whether in Illinois or Missouri, the team offers a comprehensive approach, bringing decades of experience in real estate development, engineering, operations, and urban planning.”

In Illinois, Ameren recently introduced a 10-year Modernization Action Plan (MAP) that involves investing $625 million in thousands of infrastructure projects. Ameren will create up to 450 new jobs during MAP’s peak year.

“Customers can expect enhanced reliability, convenience, service, efficiency, and savings,” says Welge. “Smart sensors and switches detect and isolate outages, so we can fix them faster. Meanwhile, new software and technology helps us pinpoint problems more precisely to reduce outage duration and frequency.”

The Missouri Public Service Commission recently approved Ameren Missouri’s filing under the Missouri Energy Efficiency Act, which calls for Ameren to invest $147 million in energy efficiency programs over the next three years. Annual energy savings from these programs are expected to total nearly 800 million kilowatt-hours..


Getting On Base With Site Selectors

For the Joplin region, the Joplin Regional Partnership provides site selection assistance, incentive and business tax information, key contacts in business and local government, demographic and economic data, and other services.

“Through this unique partnership, site selectors have access to information about multiple locations throughout our area that meet their specifications,” says O’Brian. “This can reduce the number of inquiries a site selector has to make, and help expedite the selection process for companies looking to move, expand, or begin operations.”

In Kentucky, state government works side-by-side with companies seeking to create or increase business. This collaborative relationship has resulted in a staggering level of success. Hayes says that UPS, with the help of state agencies, has helped bring 140 companies to the state.

“We work closely with UPS to identify prospects,” he says. “Then we help identify workforce, training, and tax incentive needs.”

Because as every successful logistics provider—and the leadership at every great logistics site—knows, teamwork at all levels helps create an all-star logistics site.

Rail Intermodal: Where Rail Meets Road

Double Stack APL train heading East on the Gila Sub between Yuma and Tucson Arizona

Intermodal solutions gather steam as shippers track the financial and efficiency benefits of combining truck and rail transport.

The U.S. railroad has always been measured by time. At the outset, it was a uniform system to mediate time differences across the United States, and build reliability into an erratic and rapidly expanding rail network. Railroad time remains a lasting standard.

By the time the Staggers Rail Act of 1980 rolled around a century later, however, the railroad’s relevance as a mass means for moving non-commodity freight had waned considerably. It was no longer symbolic of an industrial and cultural awakening; rather, it became an indictment of an archaic and constrained mode of transport that had been quickly passed by a freewheeling motor freight industry.

Switch tracks to the present, and history is repeating itself. The transportation industry is turning back time. Supply chains have become more sophisticated in accurately forecasting and responding to demand. In turn, this flexibility allows for longer transportation moves, making time slightly less relevant. Cost and capacity are critical flashpoints, so shippers are willing to trade lead times for space availability at a lower price. They also recognize the advantages they can gain by pairing over-the-road flexibility with longer-haul economy. Past misconceptions about rail are now largely muted as industry moves toward an intermodal tipping point.

Over the past 30 years, the rail industry has made great strides re-inventing itself within a 21st-century supply chain defined by efficiency, economy, and sustainability—all hallmarks of today’s railroads.

“This is not the old railroad. In the past, rail deliveries took up to two weeks,” says Jim Kleist, vice president of operations for Railex, a Riverhead, N.Y.-based rail distribution company. “Companies that shipped by rail lived with long lead times because they had no other options. It was the nature of the system.”

“Twenty years ago, shippers perceived intermodalism as unreliable,” says John Lanigan, executive vice president and chief marketing officer for Fort Worth, Texas-based BNSF Railway. “Over time, their concerns have been erased.”

Uncorking Efficiencies

Woodinville, Wash.-based Ste. Michelle Wine Estates takes great care with its product shipments. In the wine industry, every ounce of attention and detail helps ensure the product’s quality remains uncompromised from source to cellar to sommelier. Rail transport was never a viable option for Ste. Michelle—until it began working with Railex.

Railex, which began operations in 2006, is a transportation company moving in a 3PL direction. Its U.S. network features three rail-served, refrigerated mega-transload distribution centers in Delano, Calif.; Wallula, Wash.; and Rotterdam, N.Y., and a 55-car refrigerated unit train with multiple weekly departures. Railex’s service can transport the equivalent of 220 trucks of refrigerated merchandise coast-to-coast in five days.

The rail carrier’s on-time assurance turned Ste. Michelle in its direction. “Railex is located just 40 miles from the Columbia Crest winery, our major production facility,” says Rob McKinney, vice president of operations at Ste. Michelle Wine Estates. “The price of fuel was rising, so we consulted Railex.”

The winery had explored rail transportation before, but never found the appropriate circumstances or partner to meet its stringent requirements.

“We evaluated rail shipping, and considered the metrics of breakage, product damage, and temperature control, but couldn’t find a way to bridge our quality concerns to minimize damage and move shipments efficiently,” says McKinney.

Careful attention to temperature control and handling during warehousing and intermodal transport helps ensure the quality of Ste. Michelle Wine Estate’s products.

In previous test runs, the rigors of intermodal transit resulted in bottle scuffing and product damage. Temperature is the biggest concern. If it’s too cold, certain wines produce sediment or tartrate fallout; conversely, too much heat can push the cork and oxidize the wine. Ste. Michelle’s second-highest expense after the wine is its packaging. Damage to either is unacceptable.

But the winery’s business was growing, and it needed a partner to manage its transportation and logistics. “We had been our own distribution point and warehouse, and oversaw truck traffic and orders,” McKinney says. “We reached the point where it would require significant capital to expand infrastructure.”

Railex was well aware of Ste. Michelle’s expectations when the carrier entered the picture. “When you ship French fries, for example, you deal with experts in moving frozen food,” says McKinney. “But when you manage wine, you may be dealing with the winemakers. It’s their passion, their creation—an art form.”

Railex proved to be up to the task, providing reliable and secure five-day service from Wallula to Rotterdam. The railcars are temperature-controlled, and Ste. Michelle can track the shipments during transit. With pre-determined temperature thresholds in place, it can be alerted if conditions change. Then Railex can coordinate with its rail partners—Union Pacific in the western United States and CSX in the eastern states—to manage the problem.

The transportation company’s value to shippers is its capacity to be multi-dimensional. In addition to moving product by rail, it also stores inventory and arranges truck transportation—which is especially convenient for Ste. Michelle on the East Coast, where it imports product from partners in Italy. Railex can move shipments via truck out of its Rotterdam facility instead of sending them to the West Coast for re-distribution.

Prior to working with Railex, Ste. Michelle was transporting approximately two million cases per year by truck, in 10 to 15 loads daily. While it still uses over-the-road transport to make shorter-haul deliveries in the west, the rail/intermodal component now serves a large share of its business.

Railex moves roughly one million cases annually, and stores about 500,000 units. More telling, it can squeeze three times as much wine on a train than a truck, which provides considerable sustainability gains in terms of reducing fuel use and carbon emissions.

Pulling the Trigger

Ste. Michelle’s patience in waiting for the right opportunity to come along before it made the switch to intermodal has served the company well. For other intrepid users that jumped in early on, experiences weren’t always successful.

“Some shippers started using intermodal extensively, and the results weren’t always what they expected,” says Dave Howland, vice president of land transport services for APL Logistics, a global third-party logistics (3PL) provider with U.S. headquarters in Scottsdale, Ariz. “Companies coming back into the marketplace now are more disciplined—opening one lane, then another. They are working their way into the business rather than jumping in with both feet. That works better, because they are in a more controlled environment.”

The 3PL only recently re-entered the domestic market after a 10-year absence following ocean carrier NOL’s acquisition of its steamship line and divestiture of the intermodal business. APL Logistics continued to invest in and develop intermodal capabilities elsewhere around the world, and by 2011, the time was right to get back into the U.S. domestic game. “Many ocean shippers were asking when we’d begin serving them domestically again,” Howland explains.

APL handles half a million intermodal loads annually, including 100,000 automotive moves between the United States and Mexico, so getting back into the U.S. game didn’t require a huge leap of faith. Plus, U.S. market demand for intermodal has been on a marked growth trajectory.

In the first quarter of 2012, domestic intermodal container volume increased 14.9 percent year-over-year, according to the Intermodal Association of North America’s Intermodal Market Trends and Statistics report. Gains were largest in the east, where intermodal faces more competition from trucking.

In 2011, intermodal container volume set a new record with 12.4 million moves, surpassing 2007’s record year by nearly four percent. Over the past five years, international and domestic growth has progressed at a steady clip, despite the recession (see chart, below).

The reasons for this surge are myriad. Welch’s, a Concord, Mass.-based food manufacturer famous for its grape juice, made the switch to intermodal about four years ago—largely to offset rising fuel costs, but also to achieve sustainability gains.

Intermodal Traffic: Movin’ On Up

Over the past five years, international and domestic intermodal traffic has grown steadily overall, despite the recession. In 2011, more than 12.4 million intermodal containers moved worldwide.

Source: IANA Intermodal Market Trends and Statistics

“Intermodal was a less expensive approach,” says Dan Biggs, director of customer logistics, Welch’s. “The downside lies in the longer lead times, which are not always well-received by customers.” Consignees often fear rail service is inconsistent, or that they will have to hedge risk by carrying more inventory.

Intermodal is a small part of the total freight mix for Welch’s. The company has used it in certain lanes—such as between Michigan and the Pacific Northwest, and from Erie, Pa., to Florida—where it doesn’t have a distribution presence or can get competitive transit times. It also has the ability to switch between intermodal and truck transport, as it plans to do in the Pacific Northwest per promises to customers.

While some shippers foreign to intermodal are still cautious, there are also reasons for optimism. For example, on-time delivery times are becoming more competitive with trucks in certain lanes.

“Intermodal services are becoming more dependable, with most service lanes in the high-90 percentile for on-time delivery,” says Howland. “Industries across the board are coming to us. If fuel costs stay high and the driver pool remains tight, intermodal will be more competitive in the 700-mile length of haul. In the eastern United States, it is used for even shorter distances.”

Improved service levels, the environmental benefits of converting truck to rail, and the availability of capacity are all intermodal drivers. “The flex capacity that rail brings—such as the ability to add units or train starts—allows responsiveness not available to motor carriers that are overbooked or short of drivers,” says Lanigan. “The threat of a driver shortage has caused shippers to hedge bets in case the trucking industry experiences capacity issues. The move to intermodalism is a combination of all these factors. Are they weighted equally? No. Each shipper has its own trigger points.”

After the Conversion

Ste. Michelle’s trigger was recognizing it could transport product across the United States more economically and sustainably without sacrificing quality. That its partnership with Railex has moved beyond a functional need and now allows it to grow more organically on its own is an added bonus.

“Handing off transportation to an expert allowed us to focus on our core business,” says McKinney. “We’re maintaining our staff; we haven’t reduced labor. We’re taking the opportunity internally to re-train employees and build a flexible, agile, cross-functional work team that can float anywhere within our winery operations.”

As Railex expands its network—it is considering a distribution location in the Southeast—Ste. Michelle benefits by being able to deliver product closer to customers via rail, reducing the last-mile dray. Intermodal also provides a security blanket as looming capacity concerns threaten transportation economy and efficiency.

“Shippers are weighing two factors: transportation costs and space availability,” says Kleist. “Where is capacity, and what will it look like down the road?”

Ste. Michelle’s conversion has also compelled it to evaluate all the inbound raw materials it transports via truck—empty glass and packaging, for example—to determine if there is an opportunity to use rail.

“We transport thousands of barrels by truck annually,” says McKinney. “We can analyze our freight needs to determine if it makes sense to leverage rail and Railex’s buying power with other carriers. We’ll consider anything that increases efficiency and improves quality.”

Ste. Michelle expects Railex to eventually take care of special projects, such as export orders that require compliance labeling. The service provider may also manage Ste. Michelle’s direct-to-consumer business, because it is already tasked with storing inventory and building orders. All these functions are currently performed on- site at the winery’s Columbia Crest facility. In the future, they will be transitioned to Railex to free up space and resources.

“If we’re holding all the product, we need to be able to perform the peripheral tasks,” says Kleist. “Our focus is on ensuring we provide the necessary care, custody, and control through the rest of the chain, from pickup to delivery. Ste. Michelle and Railex are finding all the savings possible in the entire process.”

No Time Like the Present

As a transportation concept, intermodalism is far from new. It has always been an important part of the global supply chain. Motor freight is the anchor at both ends of the divide, with air and ocean in between. But on the U.S. domestic side, intermodal has never been compulsory. Ample opportunities exist for shippers and consignees to leverage the economy of rail transport—whether it’s converting truckloads to railcars, or expediting containers in and out of congested cities and ports.

Intermediaries such as Railex and APL Logistics understand the value of pushing more freight onto the tracks, as well as their importance in liaising between railroads, shippers, and truckers.

“We view our role as being an integrator,” says Howland. “Many shippers have outsourced transportation management, not just intermodal, to us. Our goal is to take the entire book of freight, find the best solution, and uncover more intermodal and load consolidation options. We’re converting 10 to 15 percent of over-the-road moves to intermodal with many customers.”

The railroads play their own unique role, as well. For example, BNSF Railway’s Next Generation Intermodal service provides a platform for trucking companies and shippers to work together more collaboratively.

“We’re rewriting the script on what an acceptable dray is from a length-of-haul standpoint, and how shippers can access denser markets and take advantage of intermodal opportunities by draying a little farther to origins and destinations,” says Lanigan.

Then there’s the matter of site selection. Railex’s Wallula distribution center is 40 miles from Ste. Michelle’s Columbia Crest winery, providing a relatively short truck haul by West Coast standards.

“In eastern Washington, many frozen and fresh food processors are migrating from the west side of the state closer to where the product is being grown,” explains Kleist. “Companies may follow a similar pattern with transportation. Businesses gain options if they are located near an intermodal facility. Intermodal won’t be the complete answer for every company, but it can be a bigger part of the solution.”

Some companies are looking to locate even closer to intermodal ramps so they can radically reduce trucking costs. Lanigan cites retailers that move a high volume of low-value product and can pad the bottom line by using rail. Craft supply retailer Michaels Stores, for example, has a major distribution center near BNSF Railway’s intermodal facility in Fort Worth. Companies that locate DCs in these areas can greatly reduce drayage time and expense.

This type of exposure is having a sea-change effect within the transportation and logistics sector. As more well-known brands make the jump, they raise the profile of intermodal solutions, making them an easier sell for carriers such as BNSF Railway. “When you can show a prospective customer a list of top companies that are moving freight with you, it’s pretty tough for them to say intermodal can’t work,” notes Lanigan.

The change in industry’s perception of intermodalism is pervasive enough that the only pockets of resistance Lanigan sees among shippers tend to be generational—people who were around 15 to 25 years ago and had a negative experience in intermodal’s early days.

Industry has come a long way in mediating the complexity of moving freight between modes and ensuring visibility through interchanges. The execution piece is no longer the sticking point. “What challenges us now is skepticism,” says Kleist.

For companies such as Ste. Michelle, Welch’s, and Michaels Stores, few doubts linger about intermodal’s potential. Its time is now.

Crossdocking Streamlines Freight Movement

How can an organization eliminate or reduce waste and increase speed in their supply chain? One answer is to replace warehouses and/or manufacturing locations with crossdock facilities or “landing pads.”

Tremendous pressure from global competition and just-in-time (JIT) operations in the marketplace has spurred many manufacturers to adopt a lean production philosophy—and a lean supply chain that supports that philosophy. An important element in the identifying and designing such supply chains is an effective line-haul/crossdocking end-user operation.

Crossdocking involves processing inventory or goods on incoming shipments so they can be easily sorted at a terminal, warehouse, or landing pad for outgoing shipments based on final destination to end user or distributor. The items are line-haul cleared as one shipment; moved from the incoming-vehicle docking point to the outgoing-vehicle docking point; then transported to the end user or distributor.

For example, business units headquartered in either Canada or the United States within 500 miles of the border should consider moving shipments by line-haul to crossdock facility and on to the end user. Many companies manufacture product in both the United States and Canada, duplicating their effort, risking product integrity, sourcing raw material and components from the same suppliers, and adding endless inventory to the bottom line—never mind the labor cost in managing that inventory.

Seamless Distribution

As companies strive to be more effective and cost conscious, many have taken distribution and crossdocking to another level by eliminating their current cross-border manufacturing and warehouse facilities. This allows them to secure product integrity and reduce major overhead expenses such as buildings, maintenance, and labor costs, while servicing the end user through seamless distribution. Having total control of customer orders and the ability to invoice the orders and control end-of-month target figures makes this operation favorable to many organizations.

Note that not only outbound shipments can be crossdocked, but also inbound raw materials and supplier components can be handled in this manner, resulting in a cost-effective and controlled distribution environment.

Inbound raw materials and components that are centrally crossdocked, then line-hauled to final destination, support Lean manufacturing and ensure JIT inventory for the organization’s needs and procurements goals.

A major consumer goods manufacturing organization based in Seattle, Wash., had major issues with inbound raw materials and component shipments being released by their East Coast suppliers. These orders were entered by purchasing, then released and tendered to common carriers with basically no tracking or correspondence from the supplier as to when the manufacturer could expect the product.

This organization was in the process of moving to JIT manufacturing, and the lead times of the raw materials and components weren’t going to further those goals. The costs of multiple LTL shipments were also adding up, and the lack of communication was a major factor.

The Seattle company identified where these valued suppliers were located, and developed a crossdocking operation. Suppliers released orders based on manufacturing requirements, and shipped goods directly to the crossdock location in Chicago. The crossdock facility documented the order details, then relayed them back to the company’s purchasing team, providing flexibility in loading the line-haul releases from Chicago to Seattle. The new process saved time and transportation spend, and gave the company more control.

Thinking Bigger

The landing pad concept can be used in strategic geographical locations, not only domestically but also internationally. These locations can service multiple needs, such as warehousing short-term product for tender; acting as a will-call destination serving a company’s field sales force or master distributor; and staging small and low-priority inventory for future needs.

In this economy, organizations are being forced to think outside the box for not only effective distribution practices as a cost-effective way of operating, but to be more efficient and customer-focused on service needs and staying far enough away from the competition.