Because material handling essentially started in manufacturing and logistics, here we look at a wide range of notable developments, from transportation and logistics to forklifts, cranes and pallets.

Due in no small part to the industrialization of China and other booming Asian economies, logistics has evolved into a much longer — and more complex — supply chain, with longer lead times and increased risk of sourcing product from overseas. Inevitably, inventory levels in the country of consumption have risen to offset the extended lead times and increased risk. Productivity, reliability, maintainability and flexibility all are critical in defining the continued role of materials handling and logistics systems in changing supply chain processes.

The 2007 Material Handling and Logistics Summit, held in June, identified the leading priorities of material handling and logistics professionals. Among the top priorities for the industry:

• Building a vision and roadmap for next-generation supply chains and material handling and logistics strategies that support them;
• Developing the future workforce for distribution, warehousing and manufacturing;
• Expanding industry and academia collaboration, especially in research and technology transfer; and
• Creating better interoperability between material handling and supply chain hardware/software.

Source: Material Handling Industry of America (MHIA)

The following is a brief roundup of developments in transporting, warehousing and handling materials in manufacturing.

Transportation and Logistics
Transportation and carrying costs are setting the pace for the way businesses approach supply chain priorities, and businesses are carrying more inventory throughout their supply chains to mitigate longer transit times and rising transportation costs.

Fueled primarily by rising energy costs, interest rates and inventory levels (carrying costs), nationwide logistics costs in the United States increased to $1.3 trillion last year, a 63 percent rise over the course of the last decade, the Council of Supply Chain Management Professionals (CSCMP) 18th Annual State of Logistics Report showed during the summer. Spurred by ever-rising fuel expense, transportation costs remained the largest component of overall logistics cost, increasing by 9.4 percent in 2006.

Last year, U.S. business logistics costs accounted for 9.9 percent of gross domestic product, versus 9.4 percent in the prior year, the report found. On the other hand, the cost of warehousing increased dramatically last year, jumping more than 12 percent to $101 billion in 2006. Total business inventories rose 6.2 percent.

“With inventory carrying costs increasing at a double-digit clip … it has become clear that businesses are no longer as confident as they have been executing lean inventory strategies,” Inbound Logistics now notes. “Many shippers prefer to keep more product in the supply chain to accommodate shifting demand.”

Continued demand for exports fueled an 8 percent increase in volumes at U.S. ports last year. In 2007, the biggest cost pressures appear to be with ocean and surface parcel transportation.

Traffic at the nation’s major container ports dropped below last year’s levels for the second month in a row in September, and “is expected to continue either flat or below last year’s levels for the remainder of the peak shipping season,” according to the monthly Port Tracker report released last week by the National Retail Federation and Global Insight. Surveyed ports handled 1.46 million Twenty-foot Equivalent Units (TEU) of container traffic in September, the most recent month for which actual numbers are available. “That’s down about 6,000 containers, or 0.4 percent, from August, and 1.9 percent from September 2006,” according to a joint statement.

Railroads handled a record 9.4 million containers, while airfreight ton-miles from Asia rose 4.6 percent. Airfreight revenue rose 7.6 percent in 2006, but that was nowhere near the 17-percent increase seen in 2005. Actual tonnage carried by truckers was down by 1.6 percent, the first decline by the industry in many years. The driver-shortage crisis continued to harry the industry.

(For more on this, see Shipping: What to Look For in 2007 and Beyond.)

For much more on how to better deal with today’s logistics, see The New Logistics Playbook at Logistics Management.

Transportation Technology
Every year, U.S. companies spend more than $600 billion on transportation. Not included in that amount is another $1 billion, more or less, that companies are spending on transportation management systems (TMS), according to IndustryWeek.

A TMS is a software program that automates a company’s shipping process, from carrier selection to routing and scheduling. The following are transportation management technology priorities, according to Aberdeen Group (via IndustryWeek):

• Advanced shipment visibility (66 percent);
• Carrier collaboration (53 percent);
• International transportation management (36 percent);
• Inbound freight management (34 percent);
• Online transportation information for the enterprise (30 percent); and
• Freight audit and payment automation (23 percent).

Can, or should, all material handing and logistics activities be automated? Not according to MHIA. Yet “market pressures — everyone needing to cut every unnecessary cost dollar out of performance while still adapting to specific operating changes — point to further automation developments to satisfy manufacturing-distribution demand.”

Material Handling Equipment
Material handling equipment manufacturing represents more than $20 billion, or approximately 30 percent to 35 percent, of MHIA’s estimate for the material handling consumption of nearly $125 billion in the U.S.

Equipment includes conveyors and conveying equipment; overhead traveling cranes, hoists and monorail systems; and industrial trucks, tractors, trailers and stacker machinery.

Forklifts and Cranes
The global forklift truck market is worth approximately $8.9 billion in annual manufacturing volume for new products, according to spend management solutions provider Ariba‘s quarterly SupplyWatch (Q3). Demand for forklifts is dominated by Asia, North America and Europe. The main cost components of manufacturing forklifts are labor (assembly) and material (raw material and subcomponents).

When it comes to truck crane control systems, wireless has become more commonplace — nearly standard. “Pretty much everybody is going standard with some kind of wireless now,” reports Equipment Today. “It is not just for the high-end customer anymore.”

The market for forklift trucks grew 15 percent in 2006, with many of the largest suppliers experiencing double-digit growth.

Pallets
More than 450 million new pallets are produced in the U.S. each year, and close to 1.9 billion are in use on a daily basis, according to MHIA.

While pallet users today face myriad material and design choices for pallets, the pallet material of choice continues to be solid wood. Such pallets comprise 90 percent to 95 percent of the U.S. market, at least. MHIA expects that “this is not likely to change in the future.”

As for the remaining pallet materials:

• Plastic pallets (HDPE, PP and PVC) are estimated to make up 2 percent to 4 percent of new pallet production in the U.S., or 15 million new plastic pallets per year;

• Wood composites, such as plywood, OSB, particleboard and laminated veneer lumber, represent 2 percent to 4 percent of the pallet market;

• Paper pallets represent less than 1 percent of the market and include corrugated, honeycomb, solid fiberboard and molded pulp;

• Metal pallets — carbon steel, stainless steel and aluminum — make up less than 1 percent of the market.

For much more on this, see Pallets: Where Form Meets Function at MHIA.

For in-depth conveyor information and tips on how to improve your conveyor system, see Cisco-Eagle.

Earlier: Shipping: What to Look For in 2007 and Beyond

Resources

Material Handling and Logistics Industry Sets Future Priorities at Inaugural Summit
Material Handling Industry of America, July 19, 2007

18th Annual State of Logistics Report: Taking Inventory of the Supply Chain
by Amy Roach Partridge
Inbound Logistics, July 2007

Port Tracker
National Retail Federation, September 2007

Retail Container Traffic Continues Below Last Year’s Levels
National Retail Federation and Global Insight, Nov. 6, 2007

The New Logistics Playbook
by Mary Holcomb and Karl Manrodt
Logistics Management, Sept. 1, 2007

How to Make Better Transportation Decisions
by David Blanchard
IndustryWeek, June 1, 2007

Beyond Past Laurels
by George Schultz
Material Handling Industry of America, July 13, 2006

MHIA Material Handling Equipment Manufacturing History and Forecast
Material Handling Industry of America

Supply Watch Library
Ariba, Q3 2007

Select Truck Cranes to Lift Capabilities
by Curt Bennink
Equipment Today, Oct. 30, 2007

Pallets: Where Form Meets Function
by Peter Hamner
Material Handling Industry of America, 2007

Conveyor Articles and Resources
Cisco-Eagle