Supply Chain Frontiers issue #37
The future rarely moves in predictable, incremental ways. Often, seemingly small changes in technology, demographics, regulations, economics, or a myriad of other factors have dramatic and unintended consequences for how companies source, manufacture, distribute, and operate in general.
The MIT Center for Transportation & Logistics (MIT CTL) is helping freight transportation planners at the state and federal levels to better plan for future challenges through its Future Freight Flows project. Sponsored by the Transportation Research Board (TRB) of the National Academies, the project will continue through June 2011. The objective of the study is to identify the key driving forces and critical uncertainties that will impact the US freight transportation system over the next 30-plus years.
An example of how difficult it is to anticipate these changes is the introduction of the freight container. Few people would have foreseen the global trade implications of Malcolm McLean’s modest experiment in April, 1956, to move 58 metal containers on the ship the Ideal-X from Newark to Houston. The original intention was to reduce traffic congestion on the highways by switching cargo to short sea shipping routes along the US East Coast. But the consequences of McLean’s innovation were much more profound. For instance, containerization has played a key role in making the off-shoring of manufacturing in low-cost locations across the globe economically viable. While this impact might seem obvious in retrospect, it certainly was not at the time.
There is every chance that we are overlooking similar groundbreaking ideas today. Ten, twenty, thirty years from now, will people look back and be amazed that we were unable to predict the full impact that some new innovation had on the economy? For example, will personal micro-fabrication technology become widely adopted and transform the CPG industry? Imagine if every consumer had the ability to manufacture (and personalize) the majority of the products they use every day within their own home using only basic raw materials. How would that change the industry, and the roles of logistics providers and the retailers? Will such a concept ever take hold?
It isn’t just technology that is unpredictable. Consider the impact of changes in government regulations. Suppose that environmental regulations within the next 20 years require the tagging and tracking of potentially hazardous or recyclable materials with the retailer being responsible for safe disposal? What new challenges and market opportunities would this create?
While it is very difficult for a company to try to plan for these different potential outcomes, it is even more challenging for the government to do so—especially when it comes to infrastructure investment. Public-sector investments require consensus across a wide array of diverse and competing stakeholders. The planning lifecycle of public infrastructure projects is measured in years and often decades, as opposed to months in the case of most businesses. A project that is entering the planning stage today will probably not be ready for use until 2020 at the earliest and most likely 2030 or later.
Take, for example, one of the most successful freight infrastructure projects in recent memory, the Alameda corridor. This 20-mile, partially sunken intermodal corridor links the ports of Long Beach and Los Angeles to the transcontinental rail lines near Los Angeles. While initial planning began in 1981, approval did not occur until 1994; construction began in 1997; and the corridor finally opened for traffic in 2002. Interestingly, construction only took five years, while gaining approval for the project took 13 years.
The Future Freight Flows project aims to help government and industry stakeholders to anticipate the changes that will influence future investments in infrastructure. To initiate the project, more than 70 supply chain and planning professionals along with thought leaders in economics, politics, sustainability, technology, and demographics, convened at MIT in March 2010 to discuss the trends that are shaping the demand for freight networks. The participants also brainstormed on the critical factors affecting freight flows in the United States over the next 30-plus years. Following this symposium, a survey was sent out to a wider set of practitioners to assess and prioritize the potential drivers. The input will be used to develop a set of fully described future scenarios. These scenarios will be tested in a series of six workshops across the country in late 2010 and early 2011. Each of the workshops will include shippers, carriers, 3PLs, and government planners.
Planners and decision makers at federal, state, regional, and local levels need better ways to plan and execute freight infrastructure projects. The Future Freight Flows initiative aims to deliver these tools.
For more information on the Future Freight Flows project, contact Dr. Chris Caplice, Executive Director, MIT CTL.