Global Logistics and Supply Chain Strategies - April 2008 - (Page 65)

INDUSTRY VOICES Q: What is the feeling in the industry about the dollar? Reedy: Well, the two questions are these, is the currency situation going to change, and the other question that’s clearly out there is, what is happening with the overall economy in the U.S.? I don’t know that anybody has figured that out yet. In the meantime, we haven’t touched on fuel. That’s having a very big impact on our industry. It’s the key driver in the total cost, ultimately, for our customers. And as these costs continue to increase, they’re putting a lot of pressure on the supply chain, certainly. We’ve already seen some increases in the first quarter of 2008, and that certainly is not what we would like to see. Q: Fuel costs are up for all modes, but relative to ocean transportation, fuel is more expensive than airfreight. Are you losing any customers because of that? Reedy: Yeah, I think we’re seeing some of that. Certainly, what I hear from our customers is that there is some load shift to ocean. But I also see that there are customers who really demand or have a need for a high level of service in an express product. Our Expeditefs product is seeing tremendous growth. But as fuel continues to rise, that pushes customers to think about alternatives to airfreight for some commodities. Q: To stem the flow of customers to other modes, what can your industry do to add value to your services or to boost your customers’ productivity? Reedy: If our customer satisfaction levels are high, there are certain products that customers are likely to continue to use even with the rising costs of fuel. Perishables and electronics, for example, are likely to continue to use airfreight. I can tell you that the feedback we get from customers is to continue to focus on the level of service we’re providing, so we’re investing in technology, trying to eliminate service issues. Q: So what are you doing? Reedy: We’re investing quite a bit in our web sites and electronic booking, for instance. There’s much more of that than in the past. Five years ago, perhaps five percent of our transactions were done on the web, and now over 40 percent of booking transactions are handled that way. We’re trying to free up people, we’re eliminating phone calls, increasing track-and-trace. Q: Security must be like fuel—added costs passed on to the consumer. Some transportation industry groups want the government to pick up more of the tab for security. What about in the air cargo arena? Reedy: Is there an interest or an outcome? Certainly that discussion has been going on since day one, but I’m not aware of any real traction in moving these costs to the government. We’re actively engaged with the TSA and with customers and the trade industry to make sure that as we make changes to provide security that we don’t interrupt the needs of our customers and the service levels they need for their customers. What is needed by our customers, who are mostly forwarders, is to make sure that the programs that we are required to imple- ment are done so efficiently. It’s not just about cost of the transaction itself. The real question is, what do these security measures do to the level of service we can provide? For instance, does it change the amount of time we need in advance of the shipping to perform that screening? Does it change the products themselves that we offer? If cut-off times are changed dramatically, well then what is it that you are offering as an air cargo product? So we’re very focused on those issues. We know there are these three dimensions challenging us out there—the economy, fuel, security. So we’re tuned up on what customers need. We’ve got to make sure we’re on our game. To access this article online, visit The Digital Edition at www.SupplyChainBrain.com. Resource Link American Airlines Cargo, www.aacargo.com www.supplychainbrain.com GLOBAL LOGISTICS & SUPPLY CHAIN STRATEGIES 65 http://www.SupplyChainBrain.com http://www.aacargo.com http://www.supplychainbrain.com

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Global Logistics and Supply Chain Strategies - April 2008 Contents Editorial GL & SCS Exclusive Fast Forward Up Front Cover Story: Continuing to Add Ever More to Their Offerings, 3PLs Are - At Your Service Over the Long Haul Opinion: Freight Audit Bill Can't Show All Mistakes that Hurt the Bottom Line Opinion: The ‘Good-Freight’ and ‘Bad-Freight’ Trucking Customers Industry Voices

Global Logistics and Supply Chain Strategies - April 2008

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