Tag Archives: drayage

RoadOne looks for right mix to keep drayage drivers

RoadOne looks for right mix to keep drayage drivers
William B. Cassidy, Senior Editor | Oct 13, 2014 JOURNAL OF COMMERCE

Like many over-the-road trucking operators, RoadOne Intermodal Logistics is looking for the right formula to attract more truck drivers and keep them. However, in the drayage business that formula quickly becomes pretty complex, said Ken Kellaway, president and CEO.

RoadOne’s drivers are owner-operators, and unlike over-the-road truckload drivers they’re not typically paid by the mile. “More often they’re paid a percentage of the revenue per load or by time-zone rates, so they’ll get a flat rate to go to a particular market,” Kellaway said.

Compensation by the hour is becoming more common to cover time lost to drivers because of port terminal delays and extended loading times, Kellaway said. “We’re doing more and more of that,” he said. “The drayage driver can’t be responsible for assuming all the risk.”

Frustrated by port congestion and chassis shortages, drayage drivers increasingly are looking for other jobs both in and out of trucking, Kellaway said. That “outward migration” of drayage drivers and trucks threatens to slow shipper supply chains to a crawl.

Incentives are becoming a more prominent part of RoadOne’s recruitment toolkit, however. “These drivers are entrepreneurs, and like any entrepreneur they’re trying to figure out how to maximize profit,” he said. “We’re trying to help them with all the line items in their business.”

For example, RoadOne guarantees tractor financing for its drivers through a third-party leasing company, ENG Financial Leasing. The owner-operators aren’t required to have credit or a down payment, according to RoadOne, to take advantage of the financing offer.

“We’re also trying to help reduce their operating costs by leveraging our buying power on items such as fuel, license plates and insurance,” Kellaway said. “If we can get those prices down for them, we can help them reduce operating costs and maximize their profits.”

During National Driver Appreciation Week Sept. 15-19, RoadOne recruited 13 owner-operators at a two-day Driver Appreciation Open House at its headquarters in Randolph, Massachusetts. As part of a company awards program, owner-operator Idilio Taveres received a $15,000 grand prize one full year of truck payments. With 40 locations and more than 1,000 drivers nationwide, RoadOne plans to hold more recruitment events.

But drayage drivers need more than perks and incentives. They also need freight that provides a profit, Kellaway said. “We’re trying to be selective about the freight, to get the best-paying freight and the freight that’s easiest to handle for them,” he said.

“The drayage business is also notorious for high empty miles, as you’re bringing empty containers back to terminals,” he said. “We’re trying to find ways to increase their loaded miles so we can pay them more.” Shippers, the party that ultimately foots the bills, need to help too. “We’ve been successful in getting our premier customers to help us with these delay time issues so we can retain drivers,” Kellaway said. That help includes better container scheduling and advance pickup notice. “It’s working, but going forward, those are the customers who will really get our capacity, the ones who help support us.”

Port delays driving dray drivers away, RoadOne says

Port delays driving dray drivers away, RoadOne says
William B. Cassidy, Senior Editor | Oct 13, 2014 JOURNAL OF COMMERCE

The shortage of truck drivers on U.S. highways is affecting drayage operations at port terminals and inland railheads, too. Frustrated by port congestion and chassis shortages, drayage drivers increasingly are looking for other jobs both in and out of trucking.

That “outward migration” of drayage drivers and trucks threatens to slow shipper supply chains to a crawl as container chassis shortages, port congestion and drayage delay times get worse, Ken Kellaway, president and CEO of RoadOne IntermodaLogistics, told JOC.com.

“So many significant changes in the intermodal supply chain have negatively impacted freight flow that the owner – operators and drivers are taking a hit,” said Kellaway, whose company is one of the largest international and domestic intermodal container haulers in the U.S.

With more than 1,000 drayage drivers operating from 40 U.S. locations, RoadOne is struggling with a rising driver turnover rate. The No. 1 reason drivers cite for leaving drayage, Kellaway said, is frustration with waiting times at rail ramps and at ports.

“It’s getting to the point where we could have a backlash,” he said. “The global supply chain is a $7 trillion sector, but it depends on the $10 billion drayage sector in the U.S. If we can’t get the freight from the ports to distribution centers, the entire model starts to collapse.”

For a glimpse of just such a catastrophe, look no further than the ports of Long Beach and Los Angeles, he said. The largest U.S. port complex is reeling from terminal congestion caused by strong cargo volumes, a severe chassis shortage and poor intermodal rail service.

The neighboring ports have struggled with chassis shortages, rail service delays and unusually long truck turn times for much of the year. In the early fourth quarter, the congestion continues to get worse, and port officials largely blame chassis “dislocations.”

“The root cause is chassis,” Jon Slangerup, executive director of the Port of Long Beach, told JOC.com last week. That complaint is echoed at ports across the U.S. Where shipping lines no longer provide chassis, locating chassis has become time-consuming and chaotic.

“The whole chassis conundrum has put extensive pressure on the drayage community,” Kellaway said. “The chassis pool has been put off-site, and that requires additional moves and waiting time. We’ve got to go get the chassis, wherever it’s located, and bring it back.”

That’s like going to a supermarket and being told you have to go to another store to get a shopping cart, Kellaway said. And offering chassis in separate, non-swappable pools is like being required to get one cart for the produce section, and another for the deli, he said.

Two major chassis-leasing companies, DLCI and TRAC Intermodal- will add 3,000 chassis over the next few weeks at the Port of Long Beach as part of a short-term relief effort. But in the long run, the ports need a “gray” pool of interchangeable chassis, Kellaway said. “It needs to become one gray pool so whatever chassis we grab, we can use it,” he said. In addition, Los Angeles and
Long Beach “have to figure out what to do with these larger vessels coming in, and they’ve got to a get a labor agreement finished” with longshore workers.

Kellaway also says port terminals need to get better at moving drivers, and containers, through their gates. “A lot of terminals, whether they’re going through a technology change, are low on staffing, or are handling larger vessels, they’ve got longer wait times,” he said.

The shift from picking up pre-mounted containers on chassis at port terminals to “live lift” operations once an unloaded chassis from a pool arrives at the terminal adds hours to the time it takes to get a container from a port to a customer and return the chassis, he said.

“The result is fewer turn times per drivers, which means a dramatic reduction in revenue for the drivers, and no one wants to step up and take responsibility for that,” Kellaway said.

“There are multiple stakeholders, and we all need to take responsibility for the parts we affect.”

Some terminals only measure drayage driver wait times from their gates, which is like “a coffee shop saying there’s no line before you arrive at the register,” he said. If a driver can’t get through the entire process in two hours, “then he should get delay time,” he said.

“Trucker dissatisfaction with marine terminals is not a local phenomenon,” Bruce of the PierPass extended-gates program at Los Angeles-Long Beach, said during a drayage panel at the JOC’s 2014 TPM Conference in March. “It’s a symptom of the real problem, which is the traditional delivery process most terminals have in place today.”

Transportation consultant Tioga Group estimates that drayage delays add $348 million a year in unnecessary costs to the supply chain including 15 million hours of lost work time and 9 million gallons of diesel fuel. Unfortunately, progress toward a better process is slow.

At the end of the day, “Somebody has to pay the drivers,” Kellaway said. “We need to get these guys justly compensated so they can make a decent living. At least we have to make it more attractive for those who are interest ed in being in the blue collar sector.”

Otherwise, those owner-operators hauling containers will take their trucks and go to the energy business, or over -the-road trucking companies that desperately need drivers.

New England Motor Freight, a regional less-than-truckload carrier with waterfront headquarters at the Port of Elizabeth, New Jersey, gets plenty of “walk-in” driver applicants from drayage operations, President Tom Connery said in an interview. “We have no problem recruiting in places like Elizabeth where there’s a lot of heavy truck traffic,” he said.

Those truck drivers can get LTL delivery or line-haul jobs where they’ll be home every day, or truckload jobs or even drayage jobs at NEMF, which has its own fleet of chassis.

In the past 10 years, port drayage has grown from a negligible business for NEMF to represent 8 to 10 percent of the company’s revenue, Connery said. “There were such delays in getting chassis that we bought our own, and that’s worked out very well,” he said.


RoadOne Driver Appreciation Event Fosters Driver Community Entrepreneurship and Strengthens RoadOne’s Driver Network

$15,000 Grand Prize Announced — 1 Full Year of Truck Payments

RANDOLPH, MA–(Marketwired – Oct 6, 2014) – RoadOne IntermodaLogistics, a leading single source intermodal, distribution, and logistics services company, announces today that Idilio Tavares is the winner of its $15,000 grand prize, one full year of truck payments. During National Driver Appreciation Week, September 15-19, RoadOne held a two day Driver Appreciation Open House at its headquarters in Randolph, Massachusetts. The aim of this event was to show gratitude to its drivers for their hard work and dedication, expand RoadOne’s driver team and promote owner-operator incentive programs to help drivers start their own business.

RoadOne guarantees tractor financing for its drivers with 3rd party leasing company, ENG Financial Leasing, who provides financial support. Drivers are not required to have credit or a down payment. In addition, Massport attended the Open House to help drivers apply for a $25,000 Green Truck Grant which is directly applied to their vehicle purchase.

The Open House was immensely successful for attracting drivers from the northeast. The event resulted in 13 new RoadOne owner-operator drivers signing up. Through an ongoing commitment to driver incentive programs, RoadOne will expand its driver network to meet intermodal trucking demand. Additional driver recruitment events will be held throughout the U.S. in the coming year.

“Today, it’s critically important to provide the support necessary to recruit and retain intermodal drivers. RoadOne strongly believes in assisting owner-operators in their goal of establishing sole proprietorship businesses,” said David McLaughlin, RoadOne’s COO.

RoadOne IntermodaLogistics’ 2-day Open House welcomed drivers with a BBQ lunch and an array prizes including: Gas grills, truck tires, $100 gift card, air hoses and the grand prize of 1 year of free truck payments.

Video explaining RoadOne IntermodaLogistics’ Owner-Operator Perk Program.

RoadOne IntermodaLogistics, based in Boston, was launched January 2013 by industry veterans Ken Kellaway and David McLaughlin. The Kellaway-McLaughlin leadership team was established in 1993 when they joined forces to run Kellaway Intermodal & Distribution Systems.

RoadOne IntermodaLogistics

RoadOne delivers comprehensive single source logistics solutions to customers by providing high quality, reliable port and rail container drayage, terminal operations, dedicated truckload solutions, transloading, warehousing and distribution solutions nationwide. RoadOne operates in over 40 locations with 1,000 drayage tractors throughout key intermodal locations across North America.

RoadOne is committed to serving the changing logistics and transportation service needs of customers throughout North America. This vision of consistently offering diversified service offerings means that RoadOne will grow and innovate to help customers meet not only their business requirements but also increase the satisfaction of their customers. For additional information: www.roadone.com

Two RoadOne Employees Promoted to Director of Business Development Positions

Two RoadOne Employees Promoted to Director of Business Development Positions

– Corporate culture encourages development of young, innovative, in-house talent –

Randolph, Massachusetts, April 22, 2014RoadOne IntermodaLogistics, a leading single source intermodal, distribution, and logistics services company, announces today that Jessica Cohen and Kendall Kellaway have both been promoted to Director of Business Development positions.  Jessica will be responsible for sales and customer engagement in the Midwest and Kendall will take over the reins in the Northeast.  RoadOne IntermodaLogistics is committed to developing its internal resources, especially young executives that provide fresh ideas, new energy and creative solutions.

With over 10 years of intermodal experience, Jessica Cohen possesses the industry and sales knowledge to deliver excellent, value-added experiences to customers in the Midwest region.  After several years in customer service and dispatch at another leading provider of intermodal trucking services, Jessica moved on to become a key account representative and eventually customer service manager at RoadLink.  Most recently, she’s served as operations manager for RoadOne’s Chicago branch.

After graduating from Babson Business School in 2011, Kendall helped lead key marketing initiatives at both Bluedrop Water , a water purification company, and E*Fill America, a national leader of distribution solutions, prior to joining RoadOne.   Both companies are affiliates of RoadOne IntermodaLogistics today.

“I am extremely pleased to promote these fine young executives from within the RoadOne organization to lead our sales efforts in their respective regions.  By investing in our young executives and helping to build their careers, we make a long-term investment that strengthens our management foundation with leaders that understand our culture and business,” said Ken Kellaway, CEO of RoadOne IntermodaLogistics.

Jessica Cohen, Director of Business Development, Midwest Region, Chicago, IL – 815.521.9200, jcohen@roadone.com

Kendall Kellaway, Director of Business Development, Northeast Region, Randolph, MA – 855.476.2366, kkellawayIII@roadone.com

RoadOne IntermodaLogistics


RoadOne delivers a comprehensive single source logistics solution to customers by providing the highest quality, reliable port and rail container drayage, terminal operations, dedicated truckload solutions, transloading, warehousing and distribution solutions nationwide.  RoadOne operates in over 40 locations with 1,000 drayage tractors throughout key intermodal locations across North America.

RoadOne is committed to serving the changing logistics and transportation service needs of customers throughout North America.  This vision of consistently offering diversified service offerings means that RoadOne will grow and innovate to help customers meet not only their business requirements but also increase the satisfaction of their customers.  For more information, visit: www.roadone.com


Connect with RoadOne:  https://www.facebook.com/RoadOneIL

Company video: https://www.youtube.com/watch?v=6kxA4AS9kSk


Kendall Kellaway III, RoadOne IntermodaLogistics, 855.476.2366, info@roadone.com

Carol Lerner, CKL Communications, 973.635.6923, ckl.communications@gmail.com

Annual Review & Outlook 2014: RoadOne IntermodaLogistics

Ken Kellaway, President and CEO 

There are many factors that are weighing heavily on the intermodal drayage business and exacerbating the contraction of drivers in the industry.

The transitional state of chassis equipment, changing over from steamship line management to drayage industry control, has resulted in inconsistent practices and inefficiency for drivers. The lack of standardization and diverse chassis options, including off-site and live-lift programs that require multiple stops, reduce driver productivity and motivation to remain in the drayage sector. As the economy picks up, new opportunities are opening up in other areas of trucking, such as truckload and construction, further reducing the driver pool.

Another factor that has had a major impact on intermodal drayage is government regulation. The hours of service rule that limits the number of hours a driver can be on the road has already reduced truck capacity by 3 to 5 percent and caused driver recruitment to decline. These industry events are counterintuitive to what needs to be done to support and build intermodal driver capacity. What can be done to preserve the drayage driver pool and prevent disruptions to the transportation of goods?

Price adjustments must become part of the solution to address the decline in intermodal driver capacity, especially with the significant growth in intermodal services, domestic and international. Increased pricing in the drayage sector will help preserve jobs and keep supply chains running efficiently. There also needs to be an increased focus on productivity, faster, more efficient turn-times, better chassis maintenance to reduce delays, and significantly improved chassis management to benefit drivers as well as supply chain performance. Additionally, the industry needs to support quality carriers who operate in a compliant, safe and efficient manner. The industry, all facets, must work together to reduce inefficiencies, standardize chassis, and develop solutions that prevent the drayage industry from becoming extinct.

Ken Kellaway is President and CEO of RoadOne IntermodaLogistics

A Brave, New World of Home Delivery

A Brave, New World of Home Delivery

By Dan McCue, July 2014, World Trade

The toughest part of the supply chain just became the front line in the battle for the consumer.

The push of e-commerce and changes in how we all live in the early 21st century — some dramatic, others less so — are altering the face of home delivery and recasting the role of the big-box store around the corner.

In an environment in which consumers now take it for granted that they can “want” and “have” in virtually the same breath, major retailers are striving to sate that appetite by getting as close to “pizza delivery” style service as possible, no matter what their customer has ordered.

What that has done, the experts say, is turn local delivery — once perceived as the sleepy end of the supply chain — into, in many respects, the front lines of the retail sector.

And in the process 3PLs are increasingly being asked to take a traditionally fragmented, mom-and-pop dominated segment of the logistics chain and make it act — and more importantly, respond — like a deeply integrated whole.

The main driver in this space, of course, is Amazon, the online retailing behemoth that over the past 20 years has become the most hated — and in equal respects, copied — competitor to retailers large and small.

In 2013, Amazon’s sales revenues topped $74.5 billion, and many market analysts predict the company will have revenues exceeding $100 billion by 2015.

This growth has been accompanied by the development of an extensive network of order fulfillment centers. As of March 2014, the company operated 108 fulfillment centers, including 55 in North America.

And according to several published reports, Amazon is likely to add a dozen more centers to its North American portfolio by the end of the year.

But there’s more to Amazon’s distribution strategy than the velocity with which it can break ground on new order-picking facilities — and the strategy in place is rapidly evolving, something that no doubt keeps many e-commerce and retail executives up at night.

When the company was founded by Jeff Bezos in 1994, its distribution model was relatively simple, relying on two fulfillment centers, in Seattle and Delaware, and on the parcel carriers FedEx and UPS. As Amazon grew, it added distribution centers, choosing the sites based on sales tax considerations rather than the new or prospective locations’ proximity to markets served.

The ability to avoid charging customers sales tax was initially a huge competitive advantage to the company. However, as more states introduce Internet sales tax laws, that advantage is evaporating.

So Amazon has adopted a new distribution strategy based on allowing same-day delivery as an option in all major metropolitan areas in the United States. Making that plan a reality has been the tailwind driving the pace of fulfillment-center construction.

As part of this new paradigm, Amazon has announced its intention to move in a significant way into the grocery sector. Called “AmazonFresh,” the service — enabling the customers to order groceries for same day delivery — is already in operation in a few West Coast cities.

In response, the big-box retailers are striving not only to catch up and match Amazon, delivery to delivery, but to do something with tangible goods that Amazon has so far been unable to accomplish — getting it into the consumers’ hands not in a day, but within hours.

“Consumers want immediate gratification,” says Ken Kellaway, CEO and president of RoadOne IntermodaLogistics and chairman of E*Fill America.

“So the pressure is to expand the web of distribution and migrate away from the mindset where you can establish three or five regional distribution centers and handle all your orders from them,” Kellaway says.

“Now it’s imperative to have multiple smaller locations around the country so that you can offer that same-day or second-day ground transportation delivery capacity,” says Kellaway.

People are responding in a number of ways, but the responses essentially boil down to these: either investing in expedited service from existing distribution facilities or, on the brick-and-mortar retailer side, adopting an “omni channel” approach to order fulfillment in which e-commerce deliveries are actually handled directly out of their stores.

“In this case the distribution center still exists, obviously, but in the scheme of online order fulfillment, their role is to feed into the store networks,” Kellaway says.

What happens on the store level is certainly evident to people who venture into one of the stores. While moving from aisle to aisle, they’ll encounter a “shopper” who somehow doesn’t really look or act like one.

“It’s actually someone from the back room ‘picking’ an e-commerce order, which is then going to be tendered to a local trucking company to try to get it to the customer that same day,” Kellaway says.

The new wrinkle is the greater emphasis on speeding goods to the consumer. If the plan is to feed the goods into the retail store and fulfill online orders from there, that’s going to come with one set of requirements.

If the plan is to fulfill e-commerce orders from the distribution center, there are going to be a whole other set of considerations — do you need to be next to a big FedEx or UPS hub, or does it make sense to use a regional player?

“There really isn’t a one-size-fits-all approach to dealing with e-commerce yet, and there may never be,” Kellaway says. “But what there is, is a balancing act.

“You need to be fairly close to the port so your inland costs aren’t too high on your inbound goods or materials, but you also have to determine who your preferred outbound carrier is going to be, and that’s very customer specific.”

While Amazon is certainly a driver in the local delivery space, other macro trends are also propelling change.

One is personal vehicle size. According to several analyses, the average American vehicle is about 20 percent smaller than it was 15 or 20 years ago. What that means is that the average person doesn’t have the ability to throw a new chair or table in the back of his car, let alone a Stairmaster, or something along those lines.

In short, home delivery is becoming more in vogue simply because it has to be.

Another factor driving home and local delivery dynamics is families in which both adults work. Given the demands they already feel on their time, they don’t want to expend time and energy going to buy a product and then taking it home and setting it up.

“As a result, there’s a huge and growing demand for value-added home delivery in which a consumer orders a good, has it delivered, and then has the deliverer actually set it up in his or her home,” Kellaway says.

“Ten years ago home delivery was at much more of a stage of infancy,” Kellaway says. “The quality of the service simply wasn’t as strong as it is today.

“Now, with the dramatic expansion we’ve seen in e-commerce, consumers are getting a much higher service level, much more visibility as to when the driver is going to be there and even instances where we can ping the customer to let them know if we are running late. In addition, there are all kinds of customer service surveys to help us identify where improvements can be made.

“In short, we’re now in an environment where customer demand is driving the expansion of home delivery, and the improvements that need to be made to meet that demand are the customers’ experience and further increasing demand for the service,” he says.

Facilitating Consolidation

Another person striving to make sense of all this is Rob Howard, CEO of Grand Junction, a company founded ten years ago to manage local delivery programs for others — “almost like a 3PL for local delivery,” he says — and has since gone on to create a technology platform that gives his clients a single point of contact for scores of carriers in previously disparate markets.

“The vast majority of our clients are large companies that have a significant need for local delivery but historically had little integration with local carriers,” Howard says as he describes the scope of need and opportunity in the local and home-delivery sector.

Office Max, had 20 percent of its sales volume moving through local trucking firms, but essentially let it leave its facility blind — with no visibility of the status of the order, and effectively no quality or cost control.

“We went in and took the 60 or so local carriers that they were using and put them all under the Grand Junction umbrella, and with that, the first thing Office Max was able to do was rank those carriers on quality: which had the worst on-time performance? Okay, now that we know, let’s get them out of here. And, which were the most expensive? Okay, let’s get them out of here,” Howard says.

“Most importantly, we were able to empower visibility so that their call center was able to look in real time and see what was going on in every local movement across the country. That was important because, prior to that, it was a black hole.”

“So now Office Max, in terms of the last mile, says, ‘Wow, I’ve got this figured out. I’ve got a national platform. I’ve got a high-quality delivery experience. I have really good visibility. And I feel good that I’ve got the best market-based price,” he says.

Overcoming Challenges

As great as that example is, Howard admits getting to the point where a 3PL could offer such a solution — and where a client realized he needed it — was a long time coming.

“This industry is very vibrant, but it’s also very fragmented,” he says. “There are 4,000 different local delivery companies in the U.S. alone.

“As you can imagine, it takes a lot of effort to integrate these local carriers into a cohesive system, particularly because they don’t have a lot of technology,” Howard says. “So as we work with a client to create this cohesive system for them, we build technology — customer relationship management (CRM) systems and GPS alerts — that the local carriers would have a hard time building for themselves.”

Another client that’s benefitted from this approach is I-O Metro, a retailer that’s a significant presence in a dozen markets in the Midwest.

In I-O Metro’s case, pre-paid delivery orders are automatically sent to the Grand Junction platform, from which they are routed to a local carrier who then arranges for pickup from the store or distribution center and then delivers it directly to the customer.

“Along the way we’re getting updates from the carrier.” Howard says.

Lessons for the Future
Omni-channel shipping can be as much of a challenge as it is a solution, according to retail consultancy Kurt Salmon.

In a recent report, the consultancy analyzed the fulfillment performance of 70 retailers on orders placed on Cyber Monday (December 2, 2013), the biggest online shopping day of the year. Among its findings was that of the retailers who promised Christmas delivery, only about 80 percent got the presents under the tree in time.

According to the study, top performers excelled in quick turnaround, especially during crunch time, with the top five retailers on the list averaging 1.6 delivery days for multi-unit orders placed on Cyber Monday. The average delivery time across all retailers examined in the study during peak season (between Black Friday and Christmas) was nine days — including 3.4 days for processing and 5.5 days for shipping.

“Many retailers are still playing catch-up with the omni-channel movement; they are investing heavily in their in-store Black Friday promotions but aren’t similarly preparing for an influx of online shopping over the course of the Thanksgiving weekend,” says Michelle Bogan, a partner in Kurt Salmon’s Retail and Consumer Products Group. “For the past two years, online sales have outpaced in-store purchases during Thanksgiving weekend, and while Cyber Monday remains the biggest online shopping day of the year, Black Friday is quickly catching up.”

Most of the purchases examined in the study were shipped from a retailer’s fulfillment center; only 14 percent of orders were shipped directly from stores. When retailers did ship from their stores, the average delivery time tended to be significantly shorter.

In the study, 38 percent of orders originated from two or more shipping points (including stores and distribution centers), indicating that some retailers did not have the necessary inventory or systems in place to efficiently fill orders. While most of these multi-location orders were filled across two or three shipping points, nearly 10 percent came from three or more locations.

“What we are seeing is a trend to leverage store inventory to ‘save the sale’ and maximize margins when a fulfillment center or a single store might not have the inventory to support the entire order,” Bogan says.

Tweaking Perspectives

“I know it’s a cliché, but we really do have to understand our customers’ business and where they are going with it, because if we don’t understand their business, we can’t react properly, and we can’t build our network properly,” Kellaway says.

Putting an even finer point on this, he explains, “The most important thing is understanding what their ultimate end game is and what the overall trends in the marketplace are; those are key for us all the time, because in the 20 years we’ve been doing this, we’ve seen dramatic swings in concepts and methodologies.

“Fifteen years ago, for instance, everybody was using one distribution center that was simply feeding into retail stores; Now, with the advent of e-commerce, it’s a multi DC distribution point feeding into retail stores that are really designed now to carry out order selection and home delivery.”

What does that mean for the logistics services provider?

“It means you have to follow the macro trends in the marketplace and then partner with your customers to make sure all parties are on board and understand the direction things are headed in,” Kellaway says.

Right now, the experts agree, Amazon is setting the baseline for everybody, in terms of both price and service.

“This is very challenging because, as we know, Amazon has decided to operate at aggressive price points,” Kellaway says. “Some would argue they are not making any money at what they are doing today in order to build density and acceptance in the market, but that puts tremendous price pressure on other retailers who are trying to compete and who might have dramatic erosion if Amazon were allowed to simply pursue this course unchallenged.

“The big challenge is how do these existing big-box retailers use the existing assets they have at the highest and most optimal way possible,” he continues.

“Interestingly enough, when we first started talking to the big retailers about morphing over to e-commerce, it was looked at as taboo to do fulfillment out of the retail stores,” he recalls. “But what’s happened is they’ve since realized they already have 1,000 to 3,000 distribution centers in their system — they just happen to be called retail stores.

“Once you realize that, the question become one of how best to take advantage of that fixed asset, and time and again the conclusion has been, ‘if the customers aren’t going to come into the store, let’s bring the product to them from the store,’” Kellaway says. “To me, that’s been the interesting migration we’ve seen over the past couple of years, and it’s changing the way business is done from what we all think of as the traditional retail store.”

Canada’s Model

How does the situation look from an international perspective? The closest example of what we’ve been talking about is, of course, Canada, where Purolator International is a major player servicing U.S. companies that sell into that market.

Canada is the United States’ number one export destination, and typically e-commerce companies and direct marketing firms that are expanding outside the U.S. turn to Canada or to Canada and the United Kingdom first, due to the commonality of the language and the ease of transitioning their materials, marketing and even their websites to those markets.

“As a result,” says John Costanzo, Purolator International’s president, “while focusing on Canada may sound limiting to some, for what we do, which is helping U.S. companies exporting products, Canada is a pretty good position to be in.”

But that’s not to say there aren’t also challenges that come with the cross-border aspect of local and home delivery.

“The assumption a lot of folks who are new to the Canadian market make is, ‘Well, it’s a common language, similar culture, its adjacent to the U.S. and, in many cases, some of the largest Canadian markets are closer to their home markets than some U.S. cities, so it looks like an easy entry,’” Costanzo says.

“Now, it’s easier to enter than some other countries in the world, but it is another country and there are complexities to getting shipments into those markets cleared and delivered. Even more importantly, I think something people don’t often take into account when they first enter Canada is how you get returns back to the U.S. market, because you have to get through U.S. customs in a seamless way.

The typical product being sent into Canada for local delivery is a consumer product, and on the surface there’s nothing inherently complex about them. But Costanzo says many people are surprised by the requirements attached to such innocuous products such as perfume and cosmetics.

“You have to make sure Health Canada is satisfied that what you’re importing satisfies all of the regulatory concerns and issues they have — and in a case like that, having the right classification of entry for the product destined for home delivery is very important,” he says.

“One of the things we do for clients is we help classify their shipments for them up front, before we handle one, to make sure all of the regulatory issues that may impact the delivery are handled and dealt with,” Costanzo says.

“Another one that people often forget is that most goods today are not manufactured in North America. The majority of goods sold and shipped between the U.S. and Canada are likely manufactured someplace else … so the origin country is another criteria to establish up front. Canada and the U.S. have great agreements in place related to goods manufactured in North America, to encourage trade, but if the product is manufactured someplace else, some of those benefits don’t exist.”

In May 2013, Purolator and Canada Post — the two entities that together handle about 70 percent of Canada’s small package deliveries — combined the strengths of their networks, integrating the IT and the clearance system for low-value items, and created PuroPost, a product that targets e-commerce shippers in the United States.

“It’s been very, very successful,” Costanzo says.

One reason is that the density of home deliveries in many parts of Canada is much less than what is typically found in the United States, and many parcel deliveries are made into community mailboxes.

“I think the goal of Canada Post is to get 65 percent of parcel deliveries through those boxes, which make home delivery very convenient for consumers because they know if they are expecting a package, they will find it in that box when they get home at night rather than finding a little note on their door,” Costanzo says.

“Now, with the combining of our two networks, which gives us access to the community mailboxes, the clearance system that we offer and all the assets we have now in the States, that project has really taken off — particularly in regard to e-commerce,” he says.

Like their American counterparts, Canadian retailers are also trending toward an omni-channel model of delivery, using their brick and mortar stores as vehicles to pick and fulfill online orders placed by consumers.

Typically the logistics chain begins with a large distribution center in the U.S., which transfers goods destined for home delivery to a secondary distribution center in Canada. From there, orders are either fulfilled directly, or the goods are sent on to the store or outlet closest to the consumer and shipped from there.

“There are multi-channels for delivery, and it’s really important to be on top of that,” Costanzo says.

“The thing to remember about home delivery is, on a lot of levels, customer experience is going to drive the decisions customers make, and [in terms of the future] our customers are already showing us that what they are looking at is what method of delivery can provide the fastest order fill rate,” he continues. “That’s going to be a dynamic that gets more and more important over the next few years.”

The other dynamic at place in the home delivery space in Canada revolves around the issues of returns — a reality Costanzo believes is often overlooked.

“Returns can be as low as 2 or 3 percent and go as high as 20 to 30 percent, depending on the nature of the commodity and the ability to get those returns back, to make sure you’ve cleared them and to make sure they are in good shape to be restocked, or perhaps not, and need to be sent back to the U.S. or destroyed … that’s a factor that I think is going to become a pretty important one,” he says.

In response, Purolater International maintains a returns center in Toronto and has launched a logistics division that will handle warehousing and inventory of returns for customers and will inspect material and so on, rather than having to send those items back down to the U.S.

“I think that’s going to become a bigger and bigger part of this whole home delivery operation,” Costanzo says, adding, “Our partnership with Canada Post will play an important role in this as well.

“That’s because with the PuroPost product I mentioned, a consumer can simply return a product they received via home delivery to their local store, and it will be returned directly to the e-commerce company providing that shipment in the U.S.

“That’s an easy way to return a shipment for sure, and I think that’s going to be a key part of this emerging business,” he says.

Domestically, Grand Junction’s Howard says, returns currently make up about 8 percent of the firm’s business, and the return of a large item, like a washer or dryer that’s been swapped out for a new model is simply considered a second delivery.

“We don’t do repackaging or repair,” he explains. “So what we do is gather items at the local carrier, and then the shipper or a third party will come and collect them over a predetermined period of time,” he says.

Exceptional Delivery

The key to managing home delivery as it is in other aspects of the supply chain is managing exceptions, those instances when things don’t quite go as planned.

“Frankly, in our world, the ones that go through and go well are not the ones we care about,” Howard says. “We’re happy, of course, but it’s the deliveries that don’t go well that we really hone in on.

“Whenever there’s a contact, it’s in our CRM system, so our client can see every driver associated with every delivery, and can respond whether there’s a one-off event or a developing trend,” he says. “What we want to know in both cases is, ‘why’?’

“For instance,” Howard says, “‘Why is driver 44 constantly getting complaints?’ or ‘Why is his on-time performance so bad?’ Having a platform that provides visibility into your local delivery processes empowers the client to make a change, or, if it is a small carrier company, you could suggest that to keep your business the company might want to retrain that driver.

“The goal, always, is to make sure the exception is removed,” he says.

Developing Flexibility

All of this may raise the question, “What about the cost of all this visibility?” Given the disparate nature of “local” delivery, how can a big-box retailer reduce or effectively manage its expenditures while going toe-to-toe with Amazon and other e-tailers?

“Well, let’s go back to the Office Max example,” Howard says. “Traditionally, each distribution center the company operated had gone out and found a local carrier, and then the bill would be sent from the local carrier back to the local distribution center.

“As you can imagine, it is very difficult to audit these bills,” he continues. “They come in and it’s for a delivery that happened two weeks ago, and you have no way of knowing whether the rate was appropriate or if it even actually happened, and you’ve got 56 different people auditing or not auditing those invoices. So that’s the first-level problem — the audit.

“In our environment, the rates are entered into our system and the payment is direct-deposited into the local carrier’s checking account. So we don’t deal with invoices. We control the rates, and there’s no possibility for overcharging. That’s the first cost saving.

“The second one is making sure you have an effective price across markets,” Howard continues. “For example, why is a delivery in Lake City twice the cost it would be in San Antonio? You can’t do that kind of comparison with a platform in place that allows for visibility into disparate markets, and once you have that you can make constructive decisions that will allow you to manage those costs.

“Lastly, I’d add, better quality also improves the cost equation,” he says.

Kellaway says one way his team has found to keep costs down is handling multiple clients in the same facility.

“It’s a strategy of marrying up companies in fulfillment centers that are complimentary in some way — for instance, pairing a home and garden company that does a lot of business in the spring with a more holiday-related company,” he says. “That way, you can time-share your assets, if you will, whether the asset you’re talking about is the building infrastructure or conveyors or forklift trucks or staff and technology.

“Blend those situations correctly and get a good synergy going, and you achieve significant savings from a fixed cost perspective,” he says.

On the transportation side, Kellaway believes the success or failure of a local delivery effort comes down to a single factor: outbound density.

“So, say you want to do ‘milk runs’ from a specific DC or even a retail store,” he explains. “To make that work, you have to create enough density to make it cost effective. You need fluid deliveries and route optimization to make sure you are maximizing the utilization of that truck.

“But that’s very hard to do. There’s no question about it. And it’s critical because any time you have diffuse deliveries without a lot of density, it drives up costs significantly,” he says. “So what we have right now is an environment in which people are working very hard to figure out how to optimize their systems in a morphing world, and it’s morphing and changing so much today that the challenge is never entirely behind them.”

A Changing Landscape

Given the ease of e-commerce and the increased comfort people feel about buying online even in the face of threats like identity theft and hacking, it’s a certainty that an ever-growing number of purchases will find their way into the home delivery supply chain.

Howard and others predict that as the online tide continues to rise, more and more companies will shift toward using local delivery instead of using their own fleets or using full truck loads.

“That shift is possible because they now have a viable alternative to the way things used to be,” he says.

But there’s something else pushing traditional retailers into the local delivery space — Amazon’s same-day delivery.

As a result, experts agree, a growing number of traditional retailers feel Amazon has thrown down the gauntlet on their home turf, challenging them to take it on by offering customers same day or even one hour delivery.

“The thing every retailer is thinking is, ‘How do I differentiate myself from Amazon?’ Well, Amazon can’t do one-hour delivery. I can. How do I do that? Well, you have to use local delivery to do that,” Howard says. “In our view, the rise in service levels growing out of this competition bodes well for a general increase in local delivery — and we think we’re pretty well positioned to take advantage of that.”

For his part, Kellaway posits that big-box retailers will continue to try to figure out what to do with their assets, and as fewer people come to the retail store, he says, “I suspect you are going to see more of the locker concept come to the retail store.

“We have retail outlets up here in New England, like Stop and Shop, who have adopted a model in which they will do the shopping for the consumer and then place the item in a locker outside the store where the customer can pick up their order and go.

“The virtue of this is that it eliminates the cost of final mile delivery, which can be expensive, while still providing a service and encouraging the consumer to shop with you,” Kellaway says. “I think that’s what will further develop in the marketplace as people try to figure out what do you do with these big retail stores.

“In the long run it may be that the big retailers turn their stores into consumer pickup-and-delivery places, locations where the customer can come and pick up shipments not only from this specific retailer, but from multiple businesses. I really wouldn’t be surprised to see something like that occur, especially as retailers continue to grapple with how to take the cost out of final mile delivery,” he says.


Beating Congestion

While talk of drones delivering individual parcels captured the imagination of many and headlines around the world, DHL was relatively quiet about its own plans for upping the ante in time-sensitive delivery.

One of the challenges facing any delivery company trying to maintain service levels in a highly populated urban area is traffic congestion. DHL has decided to rise above all of that — literally.

To meet urgent delivery commitments in the midst of traffic gridlock, DHL introduced a new helicopter service for several major banking customers in the downtown Los Angeles area.

DHL Express introduced the helicopter service into its Los Angeles operation as a way to guarantee early morning 9:00 a.m. delivery service regardless of traffic bottlenecks. Used by specific financial services customers, this service will expand to include additional customers in the Los Angeles area.

“DHL is always looking for innovative ways to move our customers’ shipments with the greatest speed and reliability,” said Mike Parra, CEO of DHL Express U.S.

International shipments arrive at the DHL LAX Gateway, with specific packages transported by helicopter to a dedicated heliport in downtown Los Angeles. A DHL courier meets the helicopter and provides the final mile deliveries.

The DHL helicopter, a “Twinstar” Eurocopter AS355, is operated for DHL by Helinet of Van Nuys, Calif., and can transport up to 800 lbs. of letters and packages.

A DHL helicopter service is also used in New York, providing lifts from the DHL JFK gateway to prime U.S. bank headquarters and Federal bank locations, making stops in downtown Manhattan and at New Jersey’s Teterboro Airport to speed deliveries of important financial and legal documents.

Don’t expect helicopter deliveries to reach residential neighborhoods any time soon, but it does make those drone experiments sound a little more realistic

RoadOne IntermodaLogistics Appoints Rick Longerbeam as Norfolk Terminal Manager


Randolph, Massachusetts, November 4, 2013 – RoadOne IntermodaLogistics, a leading single source intermodal, distribution, and logistics services company, announces today the appointment of Rick Longerbeam as terminal manager for RoadOne IntermodaLogistics’ Norfolk, Virginia location.   Rick will lead RoadOne’s expansion in this market to support the intermodal needs of customers in this important Southeast trade region.  RoadOne’s recently established agent drayage and brokerage affiliate, US IntermodaLogistics, also has a terminal operation in Norfolk and is slated for national expansion.

The RoadOne Norfolk terminal is located at 2309 County Street, Portsmouth, Virginia.

With the Panama Canal expansion due to be completed late 2014, RoadOne is committed to solidifying its position as a premier national, intermodal transportation provider with a strong presence on the U.S. East Coast.

Most recently, Longerbeam was terminal manager for Port City Transportation and prior to that G&P Trucking.  As terminal manager he was responsible for all daily operations including:  on-time delivery, customer service, driver recruitment, and sales and marketing.  Prior to these positions, Rick was service center manager at Roadlink Transportation Solutions where he managed the international and domestic drayage operations.

“I am pleased to have Rick on board as he brings a wealth of intermodal operations management experience to RoadOne IntermodaLogistics.  As RoadOne pursues bold national expansion of its S3, single source solution, service portfolio, we’ll continue to position key personnel, such as Rick, in key roles to ensure our customers receive superior logistics and transportation services,” said Ken Kellaway, CEO, RoadOne IntermodaLogistics.

RoadOne IntermodaLogistics, based in Boston, was launched January 2013 by industry veterans Ken Kellaway and David McLaughlin.  The Kellaway – McLaughlin leadership team was established in 1993 when they joined forces to run Kellaway Intermodal & Distribution Systems.  This strong management partnership continues today with the recent launch of RoadOne IntermodaLogistics.

RoadOne IntermodaLogistics

RoadOne delivers a comprehensive single source logistics solution to customers by providing high quality, reliable port and rail container drayage, terminal operations, dedicated truckload solutions, transloading, warehousing and distribution solutions nationwide.  RoadOne operates in over 40 locations with 1,000 drayage tractors throughout key intermodal locations across North America.

RoadOne is committed to serving the changing logistics and transportation service needs of customers throughout North America.  This vision of consistently offering diversified service offerings means that RoadOne will grow and innovate to help customers meet not only their business requirements but also increase the satisfaction of their customers.  www.roadone.com