Taming the beast

| December 12, 2008

There are 865 motor carriers contracted for domestic transport with the Pentagon, says the U.S. Transportation Command. Among those dealing in relatively large volumes of military freight are Mercer Transportation and Landstar System.

All approved carriers are listed at https://eta.sddc. army.mil. Click “Freight/Cargo,” then “DOD Approved Carrier List.”

In November, the U.S. Government Accountability Office denied a protest brought by approximately 90 motor carriers, brokers and other parties concerned about a move to consolidate the process for procuring military freight.

That program – the Defense Transportation Coordination Initiative – seeks to contract with a single third-party logistics provider to manage the Department of Defense transportation network. The U.S. Transportation Command will award the contract this year.

Critics say the plan would create a barrier for those looking to do business directly with the Pentagon, but the chief bidders say the ultimate effect would be more hauling opportunity.

Clark Hall of Landstar, which with Mercer and other companies have bid for the contract in a coalition led by UPS Supply Chain, says the change represents an opportunity for both leased and independent owner-operators because the prime transport network manager likely will take on more companies. “It could potentially be even better for small business,” Hall says.

Among the loudest critics is the Transportation Intermediaries Association, an association of freight brokers. “This program creates a virtual monopoly for the mega-contractor awarded the business,” says Earl Eisenhart, the group’s director of government affairs, “and stunts fair market competition because it prevents small business transportation providers from competing directly for Department of Defense business.”

Two other bidders, coalitions led by Ryder System and IBM Global Services, stress their active pursuit of small business involvement. This includes the “incumbents,” as Ryder’s Tim Podvin calls independents who’ve been an integral part of the Pentagon supply chain for years.

“We always look at incumbents, but at the same time, generally, in our solution we’re introducing new providers as well to drive the overall value to our customer,” Podvin says.

IBM’s Walter Kozak says owner-operators should closely watch this process and let the winning bidder know their interest immediately “to ensure they are in fact given every opportunity to play.”

Niche haulers and regional operators stand to benefit from their expertise in certain lanes, Kozak says. Dedicated runs, consolidated truckloads and combined government/commercial freight all are expected to increase along the Pentagon supply chain.

As for rates, look for competition to increase even further, as the initiative is intended to cut long-term costs.

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