FLOW initiative gets mixed reviews

Taking another step to address what it labeled “supply chain vulnerabilities and congestion,” in tandem with addressing “the longer-term weakness in our nation’s supply chains,” coupled with decades of underinvestment, outsourcing, and offshoring, the White House is rolling out a new initiative geared towards a digital infrastructure to connect the supply chain—the Freight Logistics Optimization Works (FLOW).

While the White House described it last week as an information sharing initiative to pilot key freight information exchange between parts of the goods movement supply chain, FLOW has played to mixed reviews.

While the 18 supply chain stakeholders from private business to ports are enthusiastic, feedback from industry stakeholders about FLOW varied, for different reasons.
Ben Gordon, Managing Partner of Cambridge Capital, an investor in niche supply chain leaders, and also Managing Partner of BGSA Holdings, a leading mergers and acquisitions advisory firm focused on the transportation, logistics, and supply chain technology sector, said the while the FLOW initiative is interesting and a great idea in principle, it leaves open the question of how it works in reality.

“Why is the White House forming a supply chain data initiative but not including any supply chain software companies? Who is putting this initiative together? Where are the actual industry leaders in supply chain data?” said Gordon. “We hosted over 300 supply chain CEOs and leaders at the BGSA conference in January at our annual conference. The Biden Administration could have picked a dozen supply chain software leaders out of the audience, any of whom could bring much deeper insight and experience.”

Gordon was not alone on this front, as Dave Ross, Executive Vice President for Roadrunner Freight, a Downers Grove, Ill.-based, national less-than-truckload (LTL) services provider, with a focus on long-haul metro-to-metro shipping, observed that it is just indicative of how little the government understands the supply chain.

“I don’t expect it to gain much traction,” said Ross. “Domestic freight transportation is significantly under-represented in that list of 18 initial partners. Truckload represents >80% of annual U.S. freight spend, and there is not one truckload carrier in the mix (C.H. Robinson doesn’t count—they’re a 3PL). No Knight-Swift?  No Schneider?  No Werner?  Actual infrastructure has been the main problem, not the digital infrastructure. The government has underinvested in long-term strategic transportation infrastructure for nearly 40 years. You can’t email a pallet to someone, so we should focus on improving the physical capacity for goods movement.”

Larry Gross, president of Gross Transportation Consulting, explained it is commendable that the Administration is aware of the problem and trying to help.

“It is certainly true, in my opinion, that the supply chain difficulties have been exacerbated by poor information flow between the parties, which has tended the magnify the bullwhip effects,” he said. “That is not to say that information flow is the only problem, as a core issue is individual links in the supply chain acting in their own self-interest to the detriment of other players, particularly downstream. Better information flow will only be helpful in such instances to the extent that the players are prepared to act. Having said that, I note the absence of both dray carriers and railroads. Both will need to be a part of this effort if it is to succeed.”

Evan Armstrong, president of Milwaukee-based supply chain consultancy Armstrong & Associates, said that anything the DOT can do to support better supply chain visibility among shippers, ports, and logistics providers is a plus.

“Maybe the combined effort can develop predictive models to identify and plan for potential supply chain disruptions and bottlenecks,” he said. “It looks like they have recruited a nice cadre of companies to start.”

And Eric Oak, research director for global trade intelligence firm Panjiva, said that generally, there is not available data to evaluate these types of efforts. “But this additional focus on supply chain data and visibility continues the efforts by the Administration to try and organize stakeholders to tackle supply chain congestion,” he said. “Efficiencies can likely be found in sharing data and aligning activities, so hopefully the participants can streamline their operations and clear goods faster.”

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