We are Living Off Investments Made in the 1950s and Headed Towards Third World Status, Mike Regan Says

A few weeks ago, SCDigest editor Dan Gilmore moderated an outstanding panel discussion at the annual conference of MHI, held for 2016 in the Hilton el Conquistador hotel near Tucson, AZ.

You can find Gilmore's overall review of the conference here: Trip Report - MHI 2016 Conference: Time to Cross the Chasm?

The panel discussion moderated by Gilmore was loosely connected to MHI's upcoming Materials Handling Roadmap, scheduled to be released in 2017. The first Roadmap was released in 2014, and was a solid piece of work, presenting a broad overview of the issues and technologies that will be central to logistics in coming years.

To produce the new report, MHI once again is holding a series of conclaves across the US (four in total) where 40-50 practitioners of all sorts gather for a day and a half to talk through a variety of issues, and that feedback then becomes core content to the final Roadmap.

Supply Chain Digest Says... "It's a mess and its only going to get worse," Regan said relative to infrastructure. What do you say? Click Here to send us your comments Click here to see reader feedback

This year, those discussions are oriented around four main themes: workforce issues, technology, the consumer, and infrastructure - all obviously very big and broad topics.

The conference panel moderated by Gilmore was then also organized along those same four themes. The discussion by the panel was so excellent, SCDigest wanted to report on the conversation in more detail. Given that the full session lasted 90 minutes, we are breaking our summary up, with one article each on the four themes over coming weeks.

Two weeks ago, SCDigest detailed the discussion related to workforce (see Detailed Recap of Outstanding MHI Conference Panel - Focus on Workforce). Two weeks ago, the focus was on the discussion around the very broad subject of supply chain technology. (See Detailed Recap of Outstanding MHI Conference Panel - Focus on Supply Chain Technology.)

Last week, we reviewed the discussion around "supply chain and the consumer (See Detailed Recap of Outstanding MHI Conference Panel - Focus on Supply Chain and the Consumer.)

The panelists at the MHI were: Jonathon Rader, FedEx; Mike Regan, TranzAct Technologies; Bill Ferrell, Clemson University; Fab Brasca, JDA Software; and Mike Kotecki, Dematic, and Gary Forger, MHI.

Gilmore started out by noting that for all the handwringing relative to US infstructure, there are in fact some mixed indicators out there.

For example, in its most recent assessment, the American Society of Civil Engineers (ASCE) gave largely grades of C's and D's for various types of US infrastucture, such as a D for roads, C for ports, and C+ for the rail network.

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However, earlier this year the bi-annual Logistics Performance Index from the World Bank rated the US as having the eighth best logistics infrastructure in the world, based on detailed assessments from hundreds of freight forwarders.

Time for the panel session was short by the time the infrastructure topic was reached, and that left only room for TranZAct's Regan to comment - but he had some very strong thoughts on the subject.

"One thing I hope everyone in this room does when you get back to your offices is to let your CEO and other executives know that we are basically living off an investment that was made in the 1950S when it comes to infrastructure, Dwight Eisenhower's interstate highway system" Regan said.

Why is this issue so critical, Regan asked? He noted that the American Trucking Associations recently estimated that freight volumes are going to increase 35% by the year 2027.

"Folks, where is that freight volume going to go?" Regan asked.

"What compounds the situation is that every commonsense solution to eliminate waste in freight movement and maximize results from the infrastructure we have is fought by rail interests," and thus far successfully, Regan observed, referring for example to measures that would allow heavier and/or longer trucks on US highways.

He noted that there is even some disagreement within the trucking industry, as some truckload carriers have been fighting the move to allow LTL carriers to use twin 33-foot trailers instead of today's 28-foot limit, worried that will make LTL freight movement more competitive with truckload carriage.

"It's a mess and its only going to get worse," Regan said relative to infrastructure. But he noted a group of Chicago area CEOs has infstracture as one of its top priorities, so perhaps business leaders really do understand the impact the status quo could have on their businesses and costs.

But funding of course is the key challenge.

The last highway bill "only provided about 20% of the funds we need build a competitive infrastructure, because even if the World Bank ranked us number 8 now, we are moving into third world status," Regan added. "You want ecommerce, you want supply chain - it take a substantial infrastuctuer, and we are losing it."

Gilmore then wrapped the panel sesson up by noting it is hard to know when added cost to business and shippers to improve US infrastructure starts to exceed the benefits.

Another outstanding discussion from the MHI Roadmap panel..

What strikes you relative to this discussion of infrastructure issues? What was left out? Let us know your thoughts at the Feedback section below or the link above to send an email.

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