Top 10 logistics challenges for 2012 (and

beyond)
The economy may be on the mend, but the logistics/supply chain community will still face
challenges throughout the year. Here's what to watch for.
By Clifford F. Lynch
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What issues bear watching in 2012? Once again, I've put together a list of 10 developments that
supply chain executives should keep a close eye on over the next 12 months. They are as
follows:
1. The economy. First and foremost has to be the economy. Although the recession was declared
officially over in June 2009, it appears to me that at best we are in a very slow recovery. With
unemployment fluctuating between 8 and 10 percent, supply chain costs increasing, and
resources decreasing, managers will be challenged throughout 2012, and no doubt beyond.
2. The price of diesel. According to Department of Energy forecasts, diesel fuel will average
$3.73 per gallon in 2012. Although this is down slightly from 2011 levels, it is still 25 percent
higher than it was in 2010. We will see upward and downward fluctuations, but the end result
will be higher transportation costs.
3. Rising truck rates. High fuel costs and further regulation of engine emissions and carbon
footprints, as well as possible driver shortages, will result in higher truck rates. Some increases
have already been taken or announced. Look for more in 2012.
4. Capacity. Despite rising rates, the threat of capacity shortages remains. Many truckers sold off
equipment during the downturn, and continuing battles over driver hours-of-service regulations
and safety initiatives like CSA 2010 could exacerbate the problem.
5. Infrastructure. The infrastructure continues to deteriorate, and Congress is in seemingly
hopeless turmoil and conflict over jobs, spending, and other issues that are all tangled up with
infrastructure. I can't imagine this getting a lot better within the next year.
6. Ocean shipping. With the Panama Canal expansion proceeding on time and on budget, look
for continued expansion and retrofitting at Gulf and East Coast ports in order to accommodate
the new post-Panamax ships. Many industry observers believe we will also see port expansion in

the Caribbean, where large ships will be unloaded and their loads dispatched on smaller vessels
to various U.S. ports.
7. Security. Efforts to tighten security in the supply chain will continue, but the idea of
guaranteeing that every package and every container is safe boggles the mind. It will be
impossible to plug every leak, but the government and carriers will likely scramble to do so
every time one develops.
8. The green movement. We can expect to see continuing efforts by shippers, carriers, and service
providers to store, handle, and transport goods in environmentally responsible ways. These will
not always be the least expensive methods in terms of capital outlay, but they will pay off in the
long run.
9. Increased truck weight limits. Many shippers and carriers back an initiative that would
increase truck weight limits on certain roads to 97,000 pounds from 80,000 pounds for vehicles
equipped with six axles, rather than the usual five. Truck size would not be affected, but the extra
axle would enable the vehicle to handle the additional weight without any negative effects on
highway infrastructure, safety, fuel costs, or the environment. (In fact, there is strong evidence
that just the opposite would be true.) The Senate recently approved higher limits for Vermont and
Maine, where tests have been under way, but the hope is that each state will be given the option
to increase weight limits on its own portion of the interstate highway system.
10. The election. We can expect action on infrastructure, the new Keystone XL pipeline project,
and other important supply chain initiatives to be delayed until after the November election. In
spite of the need to move swiftly on some of these issues, Congress will almost certainly place
the election agenda ahead of that of the supply chain.