UPS exec shares logistics insights at OTA Convention

Truck News

TORONTO, Ont. — Stephen Flowers, president of UPS Global Freight Forwarding, kicked off the 84th annual Ontario Trucking Association (OTA) convention with a look at the evolution of logistics while providing some insight into what may be on the horizon.

Flowers recalled UPS’s first foray into Canada in 1975, when the company used taxi cabs to deliver packages because it didn’t have an operating authority here. Today, the company has 2,700 vehicles in Canada and 12,000 employees, which shows just how far logistics has evolved over the past few decades.

The biggest change today, Flowers noted, is that economies outside the US are showing the strongest growth and presenting new opportunities. As an example, Flowers pointed out Germany grew its exports by 22.5% in the second quarter while its imports grew 10%.

“Germany is in a trade surplus position, something Canada will hope to get to at some point in the future,” he said. “The US is no longer a magnet for goods. Now, in the wake of the financial crisis, the pull is greatest in Asia and emerging economies. The gravity of trade has shifted. That’s certainly a big change and we’ll now feel the effects of economic events around the world. The North American market is no longer in the saddle, but an active participant in the global economy.”

With that in mind, businesses need to think globally, Flowers advised. And supply chains need to adapt to take advantage of emerging opportunities.

“Logistics is key to ensuring global trade continues to expand and thrive,” he said. “Logistics is a rapidly changing process. Under the old logistics, firms developed processes internally and things got bogged down. With the new logistics, shipments are traced electronically and businesses have clear transparency of their shipments’ movements.”

Flowers also spoke of the need to provide the efficient movement of goods across secure borders, especially in light of some scares UPS itself recently experienced when potentially hazardous packages were intercepted by security agencies.

Flowers urged everyone in attendance to get involved with two key security programs: Customs-Trade Partnership Against Terrorism (C-TPAT) and Partners in Protection (PIP).

“UPS believes it’s critical for companies to enroll and comply with these programs,” he said, while also urging government to make participation more rewarding. “Benefits need to be dialed up by the requisite government bodies.”

Flowers identified three trends at play in the North American supply chain: A new emphasis on sustainability and the ongoing efforts to green the supply chain; a move towards near-sourcing versus outsourcing, as rising fuel prices cause companies to reconsider outsourcing product from outside North America; and a stronger interest from companies to take control of their own supply chain, handling inbound logistics internally so they can better control the way products come into their warehouses, how they’re received and so they can improve shipping efficiency.

“Companies are now adding and integrating professional supply chain and logistics teams into their organizations so they can work with sales, finance, production and their facilities to turn their supply chain into a competitive advantage,” Flowers observed. “There’s a much stronger emphasis on being strategic and satisfying the needs of what they want, how they want it and when they want it.”

Flowers said tightening truckload and intermodal capacity is a concern for logistics professionals going forward. Shippers will continue to turn to 3PL providers to ensure they’re getting the best price and for expertise, he predicted. Flowers advised companies to embrace technology, as it will help improve supply chain efficiency.

“With technology, we save money and put a smile on our customers’ faces,” he said. “We must continue to adopt new technologies and new ways of thinking, not just to survive but to thrive.”

When asked for his outlook on the US economy, Flowers said UPS expects to see low single digit growth in 2011.

“We’re just getting back to 2008 levels,” he said, adding he expects to see moderate growth in the future. However, he shared a personal observation that is less encouraging. In the process of relocating from Florida to Atlanta, Flowers has been personally shocked and concerned about the large number of homes that are either vacant or in foreclosure.

“So there’s a lot of work to be done to get people back to work,” he concluded.

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