Can’t Drive 55 March 17, 2008
Posted by Randal Stocker in Actionable Intelligence, Supply Chain Visibility.Tags: 55, consumer goods, dependence on foreign oil, domestic motor carrier, economic slowdown, I can't drive 55, just-in-time inventory, national maximum speed, Supply Chain Visibility, Yorktown aircraft carrier
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This weekend I drove from Atlanta, GA to Charleston, SC to see the Yorktown aircraft carrier (a great tour for those who haven’t been). As I was driving back early Sunday morning on interstates 26 and 20 I couldn’t help but notice the semi-tractor trailer trucks that were passing me. I was not going slow, about 5 over the speed limit to 75 mph but many of those trucks were easily doing 90 mph.
The Nixon administration passed the national maximum speed law in 1974 primarily as an energy conservation response to the 1973 oil crisis. It was predicted that 2-6 mpg would be saved for every car and truck on the road. Most consumer products and much of the raw materials for discrete manufacturing in the country are transported using motor carriers (18 wheelers). One of the contributing factors to the slowed growth of the economy from 1974-82 was the loss in shipping productivity.
When the national maximum speed law was repealed in 1995 some of the arguments for it were economic growth due to increased shipping productivity and there was no longer a fuel crisis. Fast forward to 2008 – nearly $4.00/gal for diesel, increased sensitivity to global warming and an economy that’s in rough shape. The radio chatter is that a 2009 democratic administration could resurface a maximum speed law for environmental and dependence on foreign oil reasons.
Are you prepared for increases in shipping/in-transit times? Are your just-in-time inventory and replenishment systems smart enough to adjust? Do you have the supply chain visibility for at-risk promise dates and the ability to track carrier performance?
What’s in my MP3 player today. “I can’t drive 55” by Sammy Hagar (honest, it is) 
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Just as the fuel crisis of the early 70s brought about changes in the way we do things (as a nation and as citizens and as businesses), so will we have to change the way we do things now – thirty years later….
Advancements in the efficiencies of trucks and other forms of transportation have been made in the past 30 years, and it’s time for this to happen again. Whether we (as businesses) change our practices to change our lead times and in-transit times or we change our practices to order more and keep a higher inventory cost – that remains to be seen.
It could be that many large retailers, for example, may change the way that they move their goods from location to location – by either utilizing more common carriers and drop shipping directly to their stores (via UPS or FedEx or similar) or by establishing more warehouses and distribution centers in further reaches of the country, eliminating and/or cutting down on their own internal transportation costs.