Freight Doesn't Vote

Sept. 1, 2008
This isn't the first time logistics has become a political issue, though it is probably one of the issues that will escape public notice. Often progress comes slowly and quietly

Summer films aren't usually meant to inspire much more than pure escapism. “Swing Vote” may be prophetic for the logistics community.

Recent events paraphrase the film's premise that a single vote will decide the presidential race. In the real-world example, a single letter swayed a politician who mobilized to support a position held by the logistics community that resulted in the first-ever definition of a third party logistics provider in US legislation. (See pg. 11.)

This isn't the first time logistics has become a political issue, though it is probably one of the issues that will escape public notice. Often progress comes slowly and quietly.

Much louder are the arguments over the DHL decision to outsource its North American air lift to UPS. That decision isn't so much the subject of the debate as the resulting loss of business for ABX and the Wilmington, OH hub which had supported the DHL operations. The fact that DHL did not withdraw from the US market and that air freight volumes it handles will move through the UPS WorldPort two hours south of Wilmington seems to have been missed as the small Ohio community reels under significant job losses — or job displacement.

DHL's expansion in North America may have been more carefully planned than its contraction. As it proceeded with its bid to buy Airborne Express, the German-owned company ensured the air operations were shifted to an American-owned and American-controlled group to avoid US restrictions on foreign ownership or control of a US airline. That group, ABX, became DHL's prime contractor for airlift.

DHL had learned from the experience of DP World, the Dubai group that acquired UK-based P&O Ports and with it, terminal operations in the US. It had also noted at least three separate failed attempts by British Airways to merge with US airlines.

Ohio is important to the presidential candidates, so the DHL issue and Wilmington's plight won't go away. The term “foreign owned” has been used in an accusatory rather than factual tone when referring to DHL. Logistics, by its nature, is global and the companies providing logistics services have complex pedigrees. US-based firms hold assets and pay salaries to workers around the world just as non-US logistics companies operate terminals, warehouses and provide jobs for Americans.

The larger global issues affecting logistics (oil, trade, etc.) make big, sweeping turns. Closer in, at the DP World and DHL level, the turns are tighter and faster. The issues driving them are much more localized and often more difficult to see developing. Whether real or imagined concerns such as security at New York's ports (DP World), mortgaging key infrastructure to non-US owners (Indiana's toll road), and job losses in Ohio can lead to restrictive legislation and regulation that ultimately constrains logistics and damages trade. As difficult as these issues are to uncover and address as they develop, they are even more difficult to reverse once they have gained momentum.

The definition and role of a third party logistics provider were buried deep inside consumer product safety legislation that was responding to recent cases of tainted foods and lead paint in toys. One diligent logistics professional noticed the language and started the process that averted future restrictions.

US companies alone spend over $1 trillion per year on logistics. Freight may not vote, but the logistics community does. It's time to become a more vocal constituency.

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