Chain Reaction is Sourcing Journal’s discussion series with industry executives to get their take on today’s logistics challenges and learn about ways their company is working to keep the flow of goods moving. Here, Steve Raetz, director, research and market intelligence of C.H. Robinson, discusses how the company’s technology is built by and for supply chain experts to bring faster, more meaningful improvements to its customers’ businesses.
Name: Steve Raetz
Title: Director, Research and Market Intelligence
Company: C.H. Robinson
What does C.H. Robinson bring to the table?
C.H. Robinson solves logistics problems for companies across the globe and industries. With $28 billion in freight under management and 20 million shipments annually, we are one of the world’s largest logistics platforms. Our global suite of services accelerates trade to seamlessly deliver the products and goods that drive the world’s economy. With the combination of our multimodal transportation management system and expertise, we use our information advantage to deliver smarter solutions for our 100,000 customers and our 85,000 contract carriers.
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What is your company doing to make the movement of goods more sustainable?
Improving the world’s supply chains is our mission, and we’re committed to driving out supply chain waste. We provide shippers with insights, technology and supply chain efficiencies to help them create a more sustainable future. Our technology for carriers helps them quickly find loads in optimal locations, reducing the miles they drive empty and the unnecessary use of fuel.
Last year, we built an industry-first tool, Emissions IQ, that instantly enables any company to measure the carbon output of their freight transportation and instantly surfaces opportunities for carbon reduction. This technology is already helping our customers meet their sustainability pledges to their consumers, investors and other stakeholders. Now with the U.S. Securities and Exchange Commission proposing rules that would require many companies to disclose the greenhouse gasses emitted in their supply chain, this technology has taken on new importance by collecting data that would otherwise have taken thousands of hours.
What is the one thing brands and retailers could be doing to make better use of technology to improve logistics?
Technology enables shippers to operate differently, especially retailers and their consumer-packaged goods (CPG) suppliers because they have some of the most sophisticated supply chains.
Shippers are using technology to refine how they procure transportation. All freight is not created equal, and not all shipping lanes are created equal, yet the traditional request for proposal (RFP) process has been a one-size-fits-all proposition. Our technology allows shippers to plot their freight against data on three million shipping lanes to see where it makes sense to purchase their transportation differently. They can see the lanes where it’s most beneficial to award their truckload freight directly to one carrier, which lanes to put out to bid and where to purposefully put their freight in the spot market.
What area of logistics isn’t receiving the industry attention it deserves?
Transportation. Though, given that I am in the transportation services sector of logistics, I realize my answer is a bit biased. However, from a shipper perspective, our clients regularly express that securing funding for talent and technology—that will further enable a sophisticated transportation strategy—is an ongoing challenge.
When it comes to creating efficiencies, there are quick wins and longer plays. What are a few things your company is doing to help its partners succeed on both fronts?
As a leading third-party logistics company (3PL), both quick wins and longer plays are important to our success.
The truckload spot market offers a quick win when a digital relationship is created between the shipper’s transportation management system (TMS) and its spot market providers. Many of the TMS providers already have spot market service provider connections established. A shipper can work with a provider like C.H. Robinson by enabling the existing functionality of their TMS. Incorporating a digitally enabled spot market relationship can speed up access to the spot market when the route guide fails. This helps ensure broader access to capacity, saves time within a transportation team, and ultimately saves money.
A longer play for a truckload strategy is to leverage some of the other researched insights C.H. Robinson has worked with universities. A few examples include:
- Rationalizing the supplier base
- Including brokerage in the truckload strategy
- Using best performing suppliers
- Ensuring each supplier has a defined strategy in the route guide
- Respecting the market corridors supply and demand balance within the strategy
What about the all-important holiday season? What is your forecast for getting the right amount of goods to the right places on time?
We expect the retail peak season to be considerably different than last year. This is the biggest inventory correction in decades and it will take several quarters for retailers to work through.
With all the disruptions getting goods out of China last year, retailers compensated by ordering more than they needed in hopes of getting a fraction of their merchandise in time for the holidays. When port congestion got even worse at the beginning of this year, some retailers continued to pull inventory forward for this year while still receiving delayed merchandise from last year. For example, artificial Christmas trees arrived at the ports in May.
Our retail customers are pleased with the pace we’ve been able to get their overstocks to their stores for sales and moved out of their supply chains to discounters and liquidators. That part of our reverse-logistics business is double and triple what it was last year. A more typical inventory correction would take a quarter to work through; the magnitude of this one will take at least several quarters.
Are you optimistic about the state of supply chains in the next few years?
I started my career in 1989 and I have often thought that I entered this industry at the best time possible. “Supply chain” was an emerging term, and transportation was only in its ninth year of federal deregulation. Colleges and universities were only starting to offer degrees in transportation and logistics. The industry was ripe for evolution.
Today, supply chain and its portfolio of functions are supported by educated talent, existing and rapidly evolving tools, and ever-emerging strategies to further optimize and enhance the value supply chain brings to business and the broader modern lifestyle. The future of the supply chain is extremely exciting and full of opportunity!