Jeff Barrie is CEO for DB Schenker U.S.A having recently returned to the U.S. after 8 years abroad. In a recent interview with Robert Bowman, Managing Editor for Supply Chain Brain, Barrie talked about his time away from the U.S., his return and the differences as well as similarities between the U.S. and European transportation markets. Here are excerpts from the interview.
To listen to the podcast in its entirety, click here.
Robert Bowman: How does transportation in the U.S. differ, if at all, from that in Germany and Europe as a whole?
Jeff Barrie: I think that there’s a lot of similarities, so I don’t want to say that they’re dramatically different. I think you’ve got size and scale topics that are different but you still have a lot of niche players in both markets so there are similarities that exist here as well. I would add in the ground transportation business, one of the larger differences I see is that there is still room for the forwarders in the brokerage model in Europe. And, obviously, that’s been much more shifting towards platform players and pure operators in the U.S. market. So, that would be one difference that I would point out that is noticeable upon returning to the U.S.
Robert Bowman: You have the obvious geographic differences of distance between destinations and origins. That’s always been the case, of course, between the U.S. and Europe. Europe is more compact. But still, does that in any way affect the manner of transportation services or the nature of service?
Jeff Barrie: I don’t see that as a big difference. The models we see today that use major hubs for air and ocean freight with distribution either via road or other intermodal means, is pretty common even in Europe which may be even more advanced in its usage. So, again, I’d say similarities for the geographic reach, and the times, and some of the challenges regarding those operations may differ slightly, but nothing to point out as dramatic.
Robert Bowman: Now, you pretty much spent your career in the world of highly time-sensitive delivery, going all the way back to your time with BAX Global and even before then. And yet, now we see an even more concerted effort to ensure quality in the so-called last mile sector. Do you think it’s more demanding now? Do you think it’s even tougher and more challenging than it was back when you were doing this years ago?
Jeff Barrie: I’m not sure that it’s more challenging but what I do see is the demands of the customer in the business has changed. I like to use the phrase ‘there is a convergence of expectations’ happening. The consumer’s personal online experience today is a very positive one – when they order a product online, they can sometimes get same day delivery. When they use an Uber, or any type of platform player that get a confirmation when the vehicle or the service is arriving, they get a receipt emailed to their phone sometimes before they step to the curb. They are experiencing all of these very positive and satisfying experiences in their private life. And that has converged with the expectations that customers now have in their business life. The bar is much higher now so yes, I’d say that those things have become quite challenging. I don’t think it’s a stretch to say the private sector experience is more advanced than in the B2B market, but the expectation level of the client is moving from what they have in their personal life to what they want for their business. And that’s an area where I think all of us can do a lot better on creating the transparency and increasing the visibility and experience for our customers in their business life. And as I said, this is really being driven by what they’re experiencing at home.
Of course, you then have congestion and other topics that come into play. So, you’ve got an increase in demand in E-commerce and that puts lots of stress on final mile delivery. Today, you’re dealing with urbanization. So, you’re looking at distribution centers being set up closer than in the past to some of the larger urban centers. And this is a result of everyone trying to re-create a customer’s private life experience with his or her business life to make this experience far more predictable than it was in the past. As an example, a customer may say, look, I’ll accept a 48-hour delivery instead of 24 hours, but I really expect that 48-hour delivery to work. So, I think this an area where I see some shifts in the demand on delivering with specificity and accuracy.
Robert Bowman: Well, what about the basic question of capacity these days – freight capacity in the market and also drivers. Of course, we have long talked about there being an endemic driver shortage as well as warehouse labor shortages. What’s happening in these two areas right now in the U.S.?
Jeff Barrie: It’s pretty well known that in the next five or six years there’s going to be a shortage of well over 150 thousand drivers in the U.S. For the contract logistics industry, it’s the same challenge. You have a high demand for blue collar labor with a low unemployment rate. That, in itself presents significant challenges for our industry. So how do we attract the talent we need and what mediums do we use to reach these people? How do we train them? How do we retain them and how do we develop them? Just as important, how do we make our industry attractive to them and how do we do it in work environment with a low unemployment rate, escalating salaries, and very high customer demand?
Robert Bowman: Just to bring this back around to where we started – you’ve come back to the U.S. re-entering the U.S. transportation market, a market that is very crowded and consolidating rapidly to just a few players. On top of this of course, we have Amazon making additional encroachments into providing its own delivery service, which is of great concern to many including some of the dominant package carriers. Do you look around the market and ask yourself the questions – Is their room for us? How do I make room for myself and DB Schenker in this crowded market? How much of a challenge is this?
Jeff Barrie: First off, DB Schenker has a very strong position in the U.S. market. We have over 8,500 employees. We have a robust business covering a variety of different business sectors. But at the same time, there’s still plenty of opportunity for us. We have strong brand recognition and strong brand position. We have many of our customers approaching us related to us expanding our capabilities so we can do even more business with them. There are also a few segments of the market we’ve identified as great long-term opportunities for the products and services we offer today. At the same time, there are even more short-term opportunities in adjacent markets where we do a portion of the business today but could be doing much more. We’re very excited about the future and I very happy to be back in the U.S. where it all started for me.