Logistically Speaking: They can obfuscate, they can pontificate, but they sure can't collaborate

April 4, 2006
Public utility companies are angry and frustrated, it seems, at the railroad companies. While the prices of oil and natural gas continue to skyrocket,

Public utility companies are angry and frustrated, it seems, at the railroad companies. While the prices of oil and natural gas continue to skyrocket, coal prices have remained comfortably constant. Even better, the U.S. produces most of its own coal and is no danger of depleting its reserves. So why are power companies running out of coal, and why are they blaming the rail providers? Simple answer: The trains aren't running on time.

The main reason for the delays dates back to last year when derailments of shipments out of Wyoming's Powder River Basin led to bottlenecks throughout the coal supply chain, and the railroads have been slow in recovering. According to a recent Wall Street Journal page one story (March 15, 2006), a number of major utilities are tired of excuses, high prices and low supplies. So what are they doing about it? They're petitioning Congress to hold hearings about the railroads' problems in delivering coal.

Apparently the utility companies haven't been paying very close attention to the news coming out of Washington; if they had, they would've realized that there is virtually no evidence to indicate that Congress has the slightest idea of how the nation's logistics network operates and how the supply chain works. If that conclusion seems unnecessarily harsh, consider the alternative: If you believe that Congress does understand logistics, then you have to conclude it has willfully and consciously decided that political posturing supersedes leadership.

If ever there was an opportunity to educate the American public about how our national supply chain operates, it was the Dubai Ports World situation. We could have seen, for instance, a levelheaded debate about why terminals at so many U.S. ports — Seattle, Tacoma, Oakland, Los Angeles, Long Beach, Houston, Hampton Roads, and New York/New Jersey — are operated by foreign port companies. We could have participated in a national debate on how effective the C-TPAT and CSI initiatives have been and how much work still needs to be done. Are the nextgeneration security seals and tracking devices doing the job? Is the greater danger in allowing a foreign company to operate port terminals or in allowing so many imported goods to come into the country in the first place? And what policies are in place that have led so many American companies to source their products from overseas, and indeed, have made the operation of our own ports itself a role that apparently foreign companies can do better (i.e., profitably) than companies based in the U.S.?

If any member of Congress directly addressed any of those issues, I'm afraid I missed it. And yet, these are precisely the types of questions they should be asking every day. Instead, we're left to wonder if the whole point of the DP World brouhaha was to make some political hay over a security issue that was more imagined than real (U.S. agents — not terminal operators — manage security at every port in the country).

In any event, DP World backed down, and Congress promptly lost interest in the story of the decline of America's maritime industry. I suppose we shouldn't be surprised, though. According to a recent study conducted by the MIT Center for Transportation & Logistics, the majority of the shippers and carriers surveyed say they never talk or meet with government agencies concerning freight transportation issues. What's more, 83% of shippers report that they never interact with metropolitan planning organizations.

While there has been increased dialogue between carriers and shippers to develop new approaches to critical transportation issues, the government — particularly at a planning level — has been notably absent from these discussions, the survey shows.

There's certainly a degree of truth in the old clichè that "freight doesn't vote," but we're well past the point where our government can be excused for not understanding the importance of transportation and logistics to the nation's economic health. That being said, the only likely spur to get our "do nothing Congress" to actually do something will be at the ballot box this fall.

In the meantime, I would suggest that the utility companies redouble their efforts to engage the railroads in dialogue rather than asking Congress to intervene. The railroads, after all, might actually listen.

David Blanchard,

[email protected]

About the Author

Dave Blanchard | Senior Director of Content

During his career Dave Blanchard has led the editorial management of many of Endeavor Business Media's best-known brands, including IndustryWeek, EHS Today, Material Handling & Logistics, Logistics Today, Supply Chain Technology News, and Business Finance. He also serves as senior content director of the annual Safety Leadership Conference. With over 30 years of B2B media experience, Dave literally wrote the book on supply chain management, Supply Chain Management Best Practices (John Wiley & Sons, 2021), which has been translated into several languages and is currently in its third edition. He is a frequent speaker and moderator at major trade shows and conferences, and has won numerous awards for writing and editing. He is a voting member of the jury of the Logistics Hall of Fame, and is a graduate of Northern Illinois University.