You might be a transportation consultant if…

You might be a transportation consultant if…You get excited when you see a truck and know that you have never driven one

You might be a transportation consultant if…You know what a dock plate is but not how to operate it

You might be a transportation consultant if…You know the on-highway retail diesel price, but not how to use it

You might be a transportation consultant if…You can put together a deck of power point slides in 30 seconds and it actually makes sense

You might be a transportation consultant if…You have played consultant’s challenge and spoken intellectually about a random slide a colleague has protected on a screen

You might be a transportation consultant if…You have frequent flyer miles on 25 airlines and have gold status on 5 of them

You might be a transportation consultant if…You are never more than 2 feet away from a laptop

You might be a transportation consultant if…You know the acronym TMS and 20 just like it

You might be a transportation consultant if…You measure age by who remembered deregulation

You might be a transportation consultant if…You worked for Cleveland Consulting Associates

You might be a transportation consultant if…You know what FAK means and can actually explain it

You might be a transportation consultant if…You are accused of not having a job

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Wall Street Journal reports on diesel prices

An article in the Monday, November 17^th edition of the Wall Street Journal outlines some of the reasons diesel fuel is likely to remain much more expensive than gasoline.

In addition to the tax difference (diesel has higher taxes on it in the US – a point the WSJ did not mention), there are world-forces pushing the cost of diesel. Key factors include:

• Buyers of new European cars are now specifying diesel engines more than 50% of the time. In France and Belgium, 70% of all new cars are diesel because consumers recognize diesel as being more efficient, better environmentally, and in Europe, there are lower taxes on diesel.
• Refinery capacity for diesel is going beyond tight. Europe buys a big portion of its diesel from elsewhere. Russia, one of the biggest suppliers of the 700,000 bbl/day of diesel imported to Europe, has old refiners and may have difficulty meeting standards for the ultra-low sulfur (cleaner) diesel. At the same time, European refineries have not invested in diesel cracking equipment – which is more expensive than gasoline production facilities. An interesting bye product of this is that Europe exports a lot of gasoline to the USA. The only new refinery capacity is coming on line in India – which will generate 580,000 bbl/day of diesel.
• China is using diesel to make electricity. The recent downturn in electricity demand in that country (4%) may have freed up a lot of diesel – as China has a huge “base” generation capacity in coal fired plants. As China’s economy and infrastructure projects pick up steam, this will put a lot of pressure on fuel-oil supplies.

This can all be summarized by a quote from Pands Cavoulacos – President of the European Petroleum Industry Association – “I don’t see how we can add sufficient capacity over the next decade to handle the increasing demand for diesel in Europe.” ...and since it is a world market, expect what hurts Europe and Asian supplies will impact us here in the US.

While Europe will change taxation of fuel cost to favor diesel, this will not overcome the added power and efficiency of diesel and its position as the preferred fuel for cars. And, if current model introductions in the US are any indication, more diesel cars and SUV’s will be using more fuel here in the US.

The bottom line: More demand, fixed production capabilities, and global transfers means that diesel will continue to be a premium cost fuel for the next 10-15 years.

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Ruthless Standardization – a blessing to IT but a curse to Operations!

Talking with the logistics director of a Fortune 50 Company, he related their conversion to SAP. He described it as “Ruthless Standardization.” Immediately, images come to my mind of a group of IT geeks on horseback, armed with axes and swords, riding through the ranks of Operations people – indiscriminately slaying them.

While my imagination may be a little far fetched, Operations do appear to be the victims in standardization. In this instance, Operations loses its ability to:

• Increase load size using optimization technology
• Move orders. For example – a full load of product made in Atlanta must ship to a Seattle customer from the local warehouse rather than direct from the plant

How is it that the complexities of the US market are ignored in the quest for standardization? Why are small countries, like my native land of New Zealand – with 4 million people – and one DC treated the same as the great US market? I have a conspiracy theory. My belief is that the IT folks believe that the millions of dollars spent in the operations area is hidden. At the end of the project, they can point to IT head-count reductions and “hard savings.” Operations expense, after all, is often confused by the various “world” changes. Operations costs increase but it is all blamed on fuel or insurance… not paucity of systems. In the case of the Fortune 50 Company, the cost will be many millions in one division alone.

I am not sure if it is possible to convince the IT folks that “keep it simple” (KIS) is stupid. If this were me, I’d add a line to my budget – “the cost of ruthless standardization” – and track all the cost to that.

The bottom line: IT rules the world – resistance is futile!

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Stimulus package or highway funding?

We all know that the infrastructure is under pressure. Congested roads, bridges that are in urgent need of repair, and roads that should have been ripped up years ago are everywhere. Yet both presidential candidates are talking about a stimulus package – giving money to consumers who will buy flat panel TV’s made in China. Here is an idea: invest the same amount of money in the roads and bridges we use every day. While we don’t need or envision anything on the scale of the “New Deal”, a focus on bridges, for example, will create good jobs for construction workers, steel manufacturers and equipment manufacturers. The value to industry is huge. The trickle-down impact will be great – and the country gets lasting benefits from stimulus. Can somebody please tell Mr. McCain & Mr. Obama?

The bottom line: Consumers and the economy will benefit from investment in infrastructure

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CFO's finally recognize fuel costs as a concern

A July 11 article in CFO magazine entitled “What Keeps CFOs Up at Night?” - http://www.cfo.com/article.cfm/11731286/c_3805465 - has senior writer Kate O’Sullivan politely pointing out that with oil at $140 a barrel, the cost of fuel has officially registered on finance executives radar screens. About time! The impact that $4.70/gallon diesel will have on the economy, and each company, is large. Consider the fact that most consumer product companies provide free freight to their customers, when they order a truckload of product. This means that the only way they can recoup the additional cost is to increase the prices of their products. If product costs go up – you and I are the ones that pay at the store. Hello inflation! Hello higher interest rates! Hello a big slow down!

CFO’s should be kept awake at night by fuel costs as their companies’ margins are under fire. Some how they need to support their operations team’s efforts to reign in the fuel monster. What is this somehow? Since IT normally works in the finance side of the house, the CFO needs to influence his IT people into providing genuine support – not, as I heard from a client, “we are getting SAP in 5 years, that will solve all your operational problems.” You could not make this kind of stuff up! Who can wait that long? How many gallons of diesel will need to be wasted before we stem the flow?

The bottom line: CFO’s need to help operations

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Why aren’t all trucks slowing down to save fuel?

When you talk to many car drivers, they complain of “nearly being run off the road” by speeding trucks. Many of us have cut our speed but a wide range of owner operators and small fleets don’t seem to have got the message:

“SLOW DOWN – SAVE FUEL”

Time must be – to them at least – more valuable than money.

During the oil embargo of the 1970’s, speed limits were dropped to 55 mph. The concept of doing this is totally repugnant to us all… but the simple fact remains, we are, as a nation, spending too much on oil. The balance of payments can’t afford this huge spike in imports.

The bottom line: Truckers need to slow down before they are forced to slow down

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