Story of a Cross-Dock ... and the Transportation Sector
on Jul 24, 2012
My tour of a cross-dock revealed some of the reasons for the chronic labor shortages in the transportation sector and why they will get worse. As well, how advanced technology is meshed with tried and true manual methods in these settings.
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Sean Durgin gets to work every day (including Saturdays) by 4AM. He is Terminal Manager for New England Motor Freight’s (NEMF) Pawtucket Terminal which runs 24/7.1 Their busiest hours are 4AM-9AM2 so Mr. Durgin has to be there by 4:00 every day. How many of us want a job with those hours? The hours are just one reason the transportation industry has trouble finding enough qualified people, even in these times of high unemployment. The problem will only get worse as the economy picks up, and especially once the construction sector (which competes for the same labor pool as transportation) eventually starts to come back. Transportation’s aging workforce reflects the chronic shortage of drivers and qualified mechanics, with no end in sight. (One shipper’s approach to dealing with transportation shortages is outlined in “Coping with the Crunch: How J&J Optimizes Transportation Capacity”)
Mr. Durgin was kind enough to give me a tour of the Pawtucket Terminal that he manages. It is a mid-sized cross-dock facility—~100,000 square feet, 80 dock doors (40 on each side)—handling about 200 daily pickups, comprised of 600 Bill-of-Ladings, via 75 daily pickup and delivery routes. Because it is a cross-dock, most freight is in the facility for only a few hours or less.
Combining High Tech and Low Tech
One thing that struck me was the mix of high technology and low tech (i.e. manual) methods used in the terminal, which I think is typical of most transportation facilities today. A low tech example: they use a couple of old iron girders to mark the “don’t put anything here” zone between both sides of the cross-dock, so that fork lift drivers always have an open lane between the inbound and outbound sides (Figure 1). During busy hours, every other piece of free space gets filled.
Figure 1 - I-Beams Mark "Don’t Put Anything Here" Zone
Another example was how space was allocated and marked for sorting the boxes by destination—by simple chalk marks on the floor (Figure 2).
A high tech example: each of their propane powered forklifts is outfitted with an electronic scale. The driver scans the BOL and then weighs the load. Their system automatically compares actual vs. declared weight. By doing this, they recover $10K-$15K of revenue per month due to understatements of shipping weight. They also inspect to make sure the freight is properly classified as freight charges are based on weight and class of freight (because some types of goods take up more cubic volume per pound). As they say “you’re shipping pillows, but telling me you’re shipping rocks.” When they first started those inspections, this facility was recovering about $50K/month from misclassification of shipments. That number has decreased as shippers have come to realize misclassifications will be discovered.
The use of technology can even be customer-specific in some instances. For example, the Pawtucket Terminal handles freight coming from a major retailer’s DCs3 in Kentucky and Rhode Island, destined for their stores in Boston, New Hampshire, and Maine. The boxes are scanned coming off the truck and scanned again when placed on the store-specific outbound pallet. Then NEMF’s system associates each box with its pallet’s license plate number, and finally the pallet is scanned onto the truck headed for the store. This provides a scan-based electronic trail of every box moving through the facility for that retail customer. In contrast, for most other customers and shipments, there is no scanning, either inbound or outbound. It is all recorded manually.
Planning with Technology, Leveraging Human Experience
The inbound supervisor comes in the night before at 11:00 PM by which time all the bills4 should have been cut. It all goes into a master plan—based on the destination zip code, the goods are sorted by truck and assigned a load sequence within each truck. These plans are built by software, but the determination of the optimal load sequences are based on the experience of the truck drivers over the years. The drivers give input into how various destinations should be sequenced.
The Price of Thrift
Mr. Durgin concluded that transportation is extremely price driven, with very little loyalty to particular carriers. If another carrier is a penny less, the customer will go with them. If you can prove you have lower damage claims or faster service, they might pay a little for that, but only pennies if you’re lucky. This places constant pressure on their wages, since labor is such a high component of their cost. This downward pressure on wages is yet another reason that there is a shortage of skilled labor such as drivers and mechanics. This all starts with the consumers who, with a few exceptions, are more price conscious than ever these days. Consumers reward retailers who can deliver the lowest price. In turn, the retailers that can trim the most cost out of their supply chains—while maintaining good service, selection, and customer experience—tend to be the winners. Transportation is at the receiving end of that price pressure and will continue to be a very cost-driven business for a very long time to come.