"Y2K glitches driving trucking biz - As inventories soar, so do trucking firms"

http://www.amcity.com/twincities/stories/1999/07/26/story6.html?h=y2k

-- Linkmeister (link@librarian.edu), July 27, 1999

Answers

[Fair Use: For Educational/Research Purposes Only]

July 26, 1999

Y2K glitch is driving trucking biz

As inventories soar, so do trucking firms

Adam Weintraub Staff Reporter

Survivalists aren't the only ones stockpiling supplies to prepare for the depredations of the Year 2000 problem on the world's computer systems.

There are also increasing signs that manufacturers and retailers are building up stores of raw materials and finished goods from their suppliers in anticipation of supply disruptions that will accompany the turning over of the century's odometer.

The situation presents both an opportunity and a danger for freight haulers. The opportunity is in increased demand as New Year's Eve draws nearer. The dangers are multiple, from a potential slackening of demand in early 2000 to a host of possible glitches in their own increasingly computerized systems, and even the chance that customers who don't have enough warehouse space to hold the extra supplies will try to convert truck trailers into temporary storage.

"From talking to our customers and other carriers ... it's pretty clear that shippers are concerned that there's going to be disruption of materials," said Robert Meyers, president of Transport Corp. of America Inc., of Eagan. The concerns are especially strong about supplies or goods coming from developing nations, where computer- related problems are expected to hit hardest.

Those concerns are being expressed in plans that could quickly deplete available equipment in the United States. "We've had several examples where ... shippers have said `here's our plan, and here's your part in it,' " Meyers said. "And we've had to tell them `it's not going to be possible for us to give you five times your normal number of trailers.' "

The dilemma is compounded by the shift to "just-in-time" supply chain management, where inventories and the space to hold them are kept small and on-time delivery is vital.

"Where are they going to put it all?" Meyers asked. "We anticipate that at least some folks will try to use our trailers as warehouse space," either by arrangement with the company or by slowing the turnaround process to empty a trailer and put it back in service. "The detention charge [late fee] for our trailers is likely to go up dramatically soon."

The amount of increased demand is "sort of a black hole of conjecture," said Thom Albrecht, vice president of transportation research at ABN AMRO Inc.'s North American headquarters in Chicago.

"Xerox is on record as saying they're going to carry 30 extra days of inventory," but General Electric's airbrake division has said it won't increase inventory at all, Albrecht said. A survey of U.S. companies by the Cap Gemini Group, he said, found that 38 percent planned to stockpile inventory in anticipation of Y2K issues.

U.S. Commerce Department figures show average inventory levels for retail and manufacturing firms at from 39 to 41 days for every 30 days of sales, Albrecht said. "I look at that ratio going to 50 [days] or so."

Both Meyers and Albrecht said the Y2K issue could accelerate consolidation in the industry. Some large shippers, such as Sears and Home Depot, have negotiated new shipping agreements or solicited new bids that effectively shifted business to larger carriers to ensure Y2K compliance, Albrecht said.

Meyers serves on the board of a company thatTransport Corp. has had three employees working since the beginning of the year to identify problems and two more performing fixes, Meyers said. At least one problem turned up in a phone system that the vendor had assured them was Y2K-ready. "My background is in information technology, so I'm a lot less trusting than some other executives."

The time Meyers and his team have devoted to the problem represents "a significant investment, but I think there's an opportunity for a return on that investment ... I think there's an opportunity to gain market share."

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-- Linkmeister (link@librarian.edu), July 27, 1999.

"Both Meyers and Albrecht said the Y2K issue could accelerate consolidation in the industry." ..."there's an opportunity to gain market share."

Yep.

Thanks Linkmeister.

Diane

-- Diane J. Squire (sacredspaces@yahoo.com), July 27, 1999.

Here's a companion artic le from Electronic Buyers' News.

The more I hear about both businesses and people hoarding/stockpiling/preparing, the less doomist my outlook.

-- Lisa (lisa@work.now), July 27, 1999.

I wonder how much of this stockpiling -- both personal and business -- is keeping the economy pumped up, right now.

Inventory buildup will be liquidated, one way or the other, after 2000-01-01. That means AT LEAST a recesssion.

-- A (A@AisA.com), July 27, 1999.

Lisa:

Good point, but business stockpiling will still not be a great asset if PLC/controls systems have the same level of failure that I've been seeing reported in process industries (15% to 25%).

Or *if* we get the 2-4 weeks of electric grid failure that seems to be the number so many second hand sources are heard quoting more and more.......

-- Jon Williamson (jwilliamson003@sprintmail.com), July 27, 1999.

That would be quite a LOT, A.

I have been telling people for two years now that the uncertainty alone would cause higher inventories and guarantee AT LEAST lower growth in Q1 2000. If there are big problems, this buildup will serve people pretty well. Either way, corporate profits will be down and the market will tank.

-- nothere nothere (notherethere@hotmail.com), July 27, 1999.

That's great that they are stockpiling it up, now if they can just sell it and deliver it before the rollover..................

-- sue (deco100@aol.com), July 27, 1999.

Yes, the market will be down and there will be a recession (most likely scenario) but I sincerely hope that with goods getting through to people at least the masses won't die by the hundreds of thousands. I guess it's not the economy, stupid. It's the human beings.

-- Mara Wayne (MaraWayne@aol.com), July 27, 1999.

It is a good thing that they are stocking up, with the heat waves all over the US. crops are dying.. Doubt there will be much left for farmers to sell this year, what will be available next year from the USA farmers.. OOO.. if crops are dying hardly anything. If we have the major problems predicted, and countries we buy produce from have not done anything to prepare for y2k we are in big trouble.. That leaves a weak, volunable USA to feed it's people.. Could we have a famine???? Think about it..

-- Cassandra (american_storm@usa.net), July 27, 1999.