Professional program tracks: 2005 NDTA Forum--partnering for solutions.

MONDAY 12 SEPTEMBER 2005

* SESSION A: Securing Intermodal Freight Systems

Moderator:

Mr. Ray Brown, Sr. Associate, TotalSecurity.US

Panelists:

Mr. Michael Laden, Founder of Trade Innovations, Inc.

Mr. Mark Johnson, Dir. of Trans. Security, C&H Patriot Security

* SESSION B: Contingency Operations

Moderator:

BG Mark Scheid, USA, Chief of Army Transportation, Commanding General, Fort Eustis, and Commandant, US Army Transportation School

Panelists:

Mr. Mark Boyle, Pres., Boyle Transportation

Mr. Ray Donahue, VP Field Sales North America, DHL Danzas Air & Ocean

Mr. James Madden, VP Govt. Relations, P&O Nedlloyd

Mr. Doug Tilden, CEO/Pres., Marine Terminals Corporation

* SESSION C: The Role of the Freight Forwarder in Support of the Warfighter

Moderator:

Mr. Jeffery Tucker, CEO, Tucker Company, Inc.

Panelists:

Mr. Chris Alf, Pres. & CEO, National Air Cargo 

Mr. Richard Weidner, VP Sales, EGL Eagle Global Logistics

Mr. Dan Yoest, Pres., CrossRoad Carriers

Mr. Kent Stuart, Dir. of Sales, C.H. Robinson Worldwide

* SESSION D: Defense Travel System Report

Moderator:

Mr. G.R. Mobaraki, PhD, Dir. Govt. Sales, The Hertz Corporation

Panelists:

Mr. Andrea Carlock, Chief Travel Management Branch, PMO DTS 

Mr. Rich Fabbre, Project Mgr., DTS, Northrop Grumman 

Ms. Linda Colovos, Dir. Govt. Sales, Carlson Hotels Worldwide

Mr. Mike Washkevich, Vice Chair, Car Rental Subcommittee

Ms. Kelly Kuhn, Chair, NDTA Travel Agent Subcommittee

Mr. Rick Cirillo, Dir. Military and Govt. Sales, American Airlines 

* SESSION E: FY 06 Operational Forecast

Moderator:

MG Charles W. Fletcher, Jr., USA, Cmdr., SDDC 

Panelists:

BG Michael J. Lally, USA, Cmdr., Defense Distribution Center

Ms. Susan Howland, Pres., The Howland Group

Mr. James E. Caponiti, Assoc. Administrator for National Security DOT/MARAD

TUESDAY 13 SEPTEMBER 2005

SESSION A: Ask the Leaders

Moderator:

LTG Robert Dail, USA, Dep. Cmdr., USTRANSCOM 

Panelists:

Vice Admiral David L. Brewer, USN, Cmdr., Military Sealift Command 

Mr. Joseph M. Donald, Pres., Baggett Transportation Co.

Mr. Raymod P. Ebeling, Chairman and Pres., American Roll-On Roll-Off Carrier

Brig Gen David Reist, USMC, Chief of Staff, 1st Force Service Support Group

Lt Gen William Welser, USAF, Cmdr., 18th Air Force

* SESSION B: Industry Trends--What to Expect in 2006

Moderator:

Mr. Jeff Pundt, Pres., Landstar Carrier Group

Panelists:

Mr. David Lee, Dir. Economic Research, Air Transport Association

Mr. Eric Mensing, VP, Govt. Markets/Affairs, APL 

Mr. Rob Robinson, Dir., Govt. Distribution Services, Norfolk Southern Corp.

* SESSION C: Technology Advances in Supply Chain Management

Moderator:

Mr. Rob Fitzgerald, Exec. Dir., Defense Programs, Northrop Grumman IT

Panelists:

Dr. Leanne Viera, Sr. Partner, IBM Global Supply Chain Practice

Mr. Tom Knutilla, Dir., Information Technology, Ryder Corporation

Mr. William Corcoran, Dir., Integrated Defense Logistics, Maersk Line LTD 

* SESSION D: Young Leaders--Operation Iraqi Freedom

Moderator:

LTC Chris Croft, USA, Cmdr., Rear Detachment - 101st Sustainment Brigade

Panelists:

Major Jeff Babinski, USAF

LCDR Benjamin E. Jenkins, USN

Captain Adam Minnich, USAF

1LT Tunde Szivak, USA

* SESSION E: Emerging Areas of Interest for Industry

Moderator:

RDML Marc L Purcell, USN, Dir., Strategy, Plans, Policy, & Progs. (J5), USTRANSCOM

Panelists:

Mr. James D. Hall, Dir., Studies & Analysis--Office of the Under Sec. of Def. for Acquisition, Technology, & Logistics

Mr. Earl Boyanton, Asst. Dep. Under Sec. of Defense, Trans. Policy

Mr. Frederick Baillie, Exec. Dir., Distribution and Reutilization Policy, DLA 

Col Michael Hirka, Dir., Def. Trans. Coordination Initiative at USTRANSCOM

* SESSION F: Making Transportation Security Intel Actionable

Moderator:

Mr. Ted Rybeck, CEO, Benchmarking Partners

Panelists:

MG Butch Pair, USAR, Chief of Staff for USTRANSCOM

Mr. Edward Brown, Chief of Domestic Surface Div., SDDC

Mr. J.G. Somavilla, Chief of Security and Intel, SDDC

Mr. Richard Russell, Dir., DHS Information Sharing & Collaboration Office--Arms, Ammunition, and Explosives (AA&E) Carriers (Commercial), SDDC

* INDUSTRY LEADERS ROUNDTABLE

Moderator:

LTG Kenneth Wykle, USA (Ret.), Pres., NDTA

Industry Leaders:

Mr. Rick Boyle, Dir. US Flag Liner Services, Maersk Line, Ltd.

Mr. Jeffrey C. Crowe, Chairman of the Board, Landstar System, Inc.

MG Daniel G. Mongeon, USA, Dir. of Logistics Operations, DLA

Mr. Eric S. Stange, Managing Partner, Def. and Homeland Security & Pres., Accenture Security

Select Session Notes Only

CONTINGENCY OPERATIONS

More than ever before, Operation Iraqi Freedom is a joint team effort between the Warfighter and its commercial partners. The Military is working together with commercial partners to bypass predictable and traditional choke points, to deliver intact combat power at multiple entry points, to support uninterrupted deployment momentum, to provide for assured access, and to decrease unpredictability and dwell time.

Trucking companies determine the needs of the Warfighter, then establish ways of providing more efficient and competent support. When a truck is ordered, they calculate the best routing, identifying potential bottle-necks and developing contingency plans for any transportation disruptions. They have ramped up capacity and have built in flexibility to enable shortened delivery times and expedited deliveries. Furthermore, on-time performance and in-transit visibility have drastically improved. With a focus on joint cost reduction, customers save money and receive safe and secure service as well.

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Transportation congestion and a disconnect in the US infrastructure disrupt smooth material flow. This is most notable at LA-Long Beach Ports, which currently receive 1/3 of the nation's waterborne cargo amounting to 13.2 million TEUs. This amount will only increase, especially with the current 14.4 percent annual rate of growth of the trans-Pacific trade. In order to support the Warfighter, alternative, less-utilized ports have been considered. At LA-Long Beach, improvements are needed such expanding capacity and connecting these ports with other modes, specifically rail.

Liners sailing the Persian Gulf deliver sensitive materials for Operation Iraqi Freedom. These ships receive heightened security in what amounts to a separate supply chain, specifically in support of the military. This provides greater flexibility and security in delivering the necessary materials to the Warfighter. Other support includes air freight and express services from US origins to the Middle East; ocean freight specialized services from US origin ports to Iraq, which include break bulk and containerization; and overland truck transport, including convoy and trailer loads throughout the Middle East with emphasis in Iraq and Afghanistan. These support services provide for a variety of choices catering to timing sensitivity and security expectations.

Whatever the potential disruption, the Warfighter is assured that his industry partners can adjust and respond.

DEFENSE TRAVEL SYSTEM REPORT

The Defense Travel System (DTS) is a web-based, end-to-end system that automates travel authorizations, reservations, voucher payments and processing, and financial integrations. It is a front, middle, and back travel office for the DoD that replaces manual administration with an automated solution saving time and money. (DTS is projected to save $178 million in productivity costs and $56 million in real dollars each year when the system is fully deployed in 2007.)

The pros of DTS include 1) the ability to interface with all global distribution systems that commercial travel offices use; 2) on easy-to-use travel authorization process; 3) the availability of electronic authorizations and vouchers; 4) connections to all major financial systems; and 5) military personnel systems and military lodging systems. Electronic archives will replace paper, single disbursement will become split disbursement, and annual CBA reconciliation will be automated with archived data and payment sent directly to the Bank of America.

DTS, designed and developed by Northrop Grumman, is now used at more than half of the DoD's 11,000 sites by over 680,000 people. Usage rate, at an increase of approximately 15 percent a month, makes proliferation an important factor in its success. The goal is to support six million trips per year with an average duration of three days. Implementation is broken down into phases named consecutively for Presidents. The current release is called Monroe, which focuses on expanding budget module functionality and foreign military sales expenditure authority support.

HOW IS DTS AFFECTING TRAVEL SUPPLIERS?

* The Airline Industry: The industry values DTS's efficiency when it comes to direct booking, but contends a balance of service [travel agents and on-line options for travelers] is better. Compliance issues are a concern; DTS is currently working on programs that have the ability to pull out reports. Display of the GSA contract winner online is another point for consideration.

* The Car Rental Program: DTS will force the federal car rental industry to reevaluate its packages and programs. Meeting services will become more efficient [consolidated bookings and long term rentals will be made in one phone call]. Pick-up location, if outside the airport, is a concern since means to differentiate alternative sites are not in place. This is necessary to correctly confirm bookings.

* The Hotel Industry: Hotel suppliers, likewise, have been forced to change in order to adapt to the benefits of DTS. Specific challenges include: 1) the affects of the evolving supply chain and 2) the disruption of long-time relationships established by travel agents.

Some members of Congress question the amount of money and time that has been spent to get the system up and running. To date, DTS has cost between $300 and $400 million. The justification? Panelists contend that the complexity of numerous interfaces and functions is the culprit.

FY 06 OPERATIONAL FORECAST

OVERALL

October will bring a high level of unit deployment to Iraq as a result of the upcoming elections. These elections will be critical in determining force levels and future supply needs. Since equipment is already in place in Iraq, there will be cost savings. For the DoD, there will be a return to normalcy with commercial partners, although it will be a "new form" of normalcy with increased utilization of ITBs and 3PLs at various nodes for increased capability. Army prepositioned stocks are being built up as units decrease. Hurricane Katrina, which destroyed one vehicle center, will affect resetting abilities.

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DEFENSE DISTRIBUTION

An active year lies ahead, with an estimated 4 billion dollars in investment. A major effort will be directed at bringing all contracting ability under the direction the Army Materiel Command (AMC). There will be major changes in containerization, requiring intelligence data sharing with our commercial partners. Ninety-two to ninety-three percent of containers used are pure containers, which translates into better efficiency. For example, transit time has been reduced from 35-40 to 12-15 days. A new warehouse has been opened in Kuwait, which will mean an 80 million dollar transport cost avoidance. Inventory management will be key. Guam will become prominent as a staging center for the Air Force and Navy.

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MARITIME ADMINISTRATION--DOT

Several initiatives will be ongoing:

* Ship Manager Services Contracts--Contracts have been awarded to nine companies for 54 ships.

* Virtual Office of Acquisition (VOA)--Procurement forecast for FY 06 will be posted on VOA during the first quarter of FY 06.

* Ready Reserve Fleet OIF/OEF--There have been 96 RRF activations.

* Iraq Operations--An increased operational tempo for the RRF has resulted in unscheduled maintenance requirements that will bring additional work to the US ship maintenance and repair industry in the range of $90-$120 million in FY06. There will be continued shipping requirements for the Redeployment and Sustainment efforts in Iraq, estimated at up to 5.5 million square feet of cargo for the remaining OIF 05-07.

* Iraq Reconstruction--Reconstruction efforts started under DoD, transitioned to USAID, and now are overseen by the State Department. This is a $10 billion program--ongoing for three more years--with three distinctly different logistics flows into Iraq.

* Maritime Security Program/Voluntary Intermodal Sealift Agreement (MSP/VISA)--Sixty ships have been reauthorized. The program begins October 1, 2005 and will include 10 newly reflagged ships, 14 Ro/Ro ships, and vessels belonging to companies that hold current MSP operating agreements.

* Commercial Ports--Fifteen strategic commercial ports are identified for Department of Defense deployments.

* Committee for the Marine Transportation System (CMTS)--Committee established to address challenges: network of waterways, ports and intermodal connectors used to move people and goods.

* Short Sea Shipping (SSS)--SSS will help mitigate congestion in key transport corridors. This initiative could facilitate new technologies important to the future of transportation logistics systems.

ASK THE LEADERS

"Ask the Leaders" followed a different format from other sessions by offering extended Q&A time.

Raymond Ebeling, representing commercial maritime interests, outlined key issues facing the transportation industry: Money--Some industries are struggling financially. Furthermore, earnings are not attractive enough to warrant investment; Infrastructure--Seaport congestion is a major concern; Security--Improvements have been made, yet more are needed; Technology--A major factor and a major cost, one that "we haven't been able to get right yet": Environment--Higher quality fuel is needed to reduce pollution, which would create even more financial problems; DoD Transformation--"Change is inevitable."

Vice Admiral David Brewer, representing military sealift, stated simply "I need more US-Flag ships--period." Vice Admiral Brewer had access to only six US-Flag ships for OIF operations.

Lt. Gen. William Welser, representing military air transportation, noted that partnership with commercial carriers has brought benefits and that success was based on the combined efforts of all modes, industry, and the DoD. Welser pointed out that, while he may be on the stage, the people in the audience are the real leaders.

Mr. Joseph Donald, representing the commercial trucking industry, stressed that trucking companies face volatile fuel prices and driver shortage. Together, this poses a serious threat to the industry. Partnering with the DoD and other companies will help.

Brig. Gen. David Reist represented the "point of the spear," or the end result. While the other panelists offered similar perspectives, Reist offered a unique view--the soldier's view at point of contact. He noted that everyone was working towards the goal of putting something in the hand of the warrior. He has seen everything from a tactical level and is extremely grateful to the industry.

Vice Admiral Brewer, your thoughts on the future of the non-combatant navy? Do you see it developing?

* (Vice Admiral Brewer): Transformation is continuous. We are taking over as many as possible of the Navy's non-coms. The sweet spot to hit is seabasing. For example, there are 40 ships waiting off the coast to be cleared into the harbor where they can dock. Seabasing eliminates that entire wait time. We need to get more ships into seabasing. For example, a ship dedicated solely to warehousing. At the same time, we need to keep increasing the number of merchant mariner-manned ships.

How would the DoD deal with an entire carrier "going under?"

* (Lt. Gen. Welser): This is a really tough question to answer; maybe it would be a situation that we would deal with as it arose. There is no question, however, that it would be a major crisis.

* (Mr. Ebeling): From a shipping side, it has already happened, and there was no government response. Maybe that was a lesson for the future.

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How do we balance adequately serving the DoD without losing commercial business? When DoD requirements relax (for example, after a war), we still have to maintain our business base.

* (Mr. Ebeling): The defense business represents a very small but important portion of our business. The DoD mostly exports, while the commercial side mostly imports.

Comment on the commercial fleet not being large enough to serve ever-expanding government needs.

* (Mr. Ebeling): One solution is to recapitalize reserve fleets. This is not a good solution--these ships are old and come with a half crew. On the other hand, a MSP ship at about $2.6 million a year is cheaper, newer, and comes with a full crew. The obvious solution is more MSP ships.

* (Vice Admiral Brewer): I also default on MSP ships. I'm always in support of "OPM--other people's money!"

Comment on the new Defense Transportation Coordination Initiative (DTCI).

* (Mr. Donald): Any type of change is scary to the trucking industry. I'm concerned with creating a middleman between trucking and customers. I'm also concerned that trucking won't be able to have direct conversation with those customers. This could lead to higher costs. At the same time, I acknowledge that a similar event has happened in the past, so I go into this new initiative open-minded.

How much regulation can you put on a small industry like the truckers before they are driven out of the marketplace?

* (Mr. Donald): Increased regulation, coupled with the fact that 80 percent of drivers are 45 years and older means that the trucking industry. may be out of business in ten or twenty years. It's tough to get new drivers, so efficiency is the key. I don't think increased pay is the door to increased efficiency--maybe an enhanced quality of life is?

How confident are you that the military has good information? Are you confident of inventory visibility?

* (Brig. Gen. Reist): "Confident, but never comfortable." A lot of our IT is patchwork. Once it gets put together, we will see some economies that will surprise us.

In regards to international security, how do you work together as an industry to achieve intermodal security?

* (Mr. Donald): Teams are cleared, trucks are checked, and then it's a direct line to their destination. It's never 100 percent secure, but shipments are difficult to tamper with.

* (Vice Admiral Brewer): Security depends on people--biometric checks. It's tough when we have foreign crews on foreign ships. I've even seen people thrown off ships for security reasons.

* (Lt. Gen. Bill Welser): Everything on an airplane is checked multiple times. I'm very comfortable with what goes on an airplane.

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How much of a benefit would a dual use port be on the West Coast, aiding short sea shipping?

* (Vice Admiral Brewer): It's a great concept, and is successful--if you get it to work end-to-end. Taking trucks off the road is a good alternative to spending more on highways.

YOUNG LEADERS IN OPERATION IRAQI FREEDOM

Major Jeff Babinski, USAF, deployed to Iraq in February, arriving right after elections when spirits were high among the people. Major Babinski focused on training, a demanding area since missions differed dramatically from one day to the next and the training evolved accordingly. The staff was minimal, yet it was responsible for coordinating all bus transport, working through the Iraqis personnel. A high level of coordination was required for each move; none were simple.

Communications were a major problem. The unit had four different types of cell phones, three different email systems, and Internet service with only a 10 percent connection rate. Interaction with Iraqi units was also a factor, since briefing groups of Iraqis was part of Major Babinski's mission. In spite of the language barrier, it was easy to differentiate between good and bad leadership. One group, known as the "Rough Riders," was a hodgepodge of army and marine infantry, but one of the most cohesive groups Major Babinski had ever encountered.

Major Babinski believes America will succeed in Iraq, since bonds between US troops and Iraqi soldiers were formed.

Captain Adam Minnich, USAF, was deployed from February to mid-June. His mission was to establish an embassy in a wartime environment. Normally the United States contracts the logistics involved in such an effort out to local firms, but that was not possible due to on-the-ground conditions. Captain Minnich was forced to learn Army acronyms while performing as an operation officer with Army units. His duties included moving cargo in and out of the country and dealing with helicopter crews and ambassadors.

Captain Minnich helped sustain the embassy with rotary wing assets and ground transportation by providing trained drivers and maintaining the fleet. These logistics tasks were accomplished by pulling all assets together into one synchronized effort. Road security was another matter. A 56-man team was brought in to direct traffic and establish some sense of order. This was a challenge since "rules of the road" are essentially non-existent. The team had to create a dedicated unit, including interpreters, who were responsible for familiarizing the team with Iraqi laws and customs.

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Captain Minnich was also involved in Star Missions, a project involving customers needing support in delivering supplies and services. Soldiers helped to find vehicles, armored trucks, or whatever else was needed to complete a mission. One mission included assistance in locating sites of mass graves. Ground transportation was made in Rhinos or armored buses. The State Department bought four Rhinos, and the military provided labor and maintenance assets. What was challenging in transportation was that there was no set schedule due to the high security and volatile nature of the environment. Other missions included security set up for high level officers, which was rewarding, because Captain Minnich got the opportunity to work with black hawk helicopters.

Communication for Captain Minnich was a major challenge as well. There was not reliable communication with ground troops. Another challenge was the efficient use of vehicles and other equipment, which were not being utilized to full capacity.

EMERGING AREAS OF INTEREST FOR INDUSTRY

CONTINUING AREAS OF INTEREST:

* OIF and OEF Mission Support

* Routine COCOM and Service Requirements

* Unexpected Humanitarian Missions

EMERGING AREAS OF INTEREST:

* Joint Intermodal Working Group (JIWG) is exploring the need for development of packaging and containerization solutions to improve end-to-end distribution support. Industry would be called upon for "off-the-shelf" products.

* RFID Active-Passive Intermodal Demonstration (RAPID), project development study in cooperation with the University of Alaska and Chenega Technology Services.

* Joint Sea or Air Port pening, including the establishment of immediate distribution nodes, C2, and onward movement of forces and material from offload.

* Joint Regional Inventory Material Management, which is DLA's global stock positioning strategy. This strategy includes defense transportation coordination initiative objectives, a defense business systems management committee, and distribution process owner initiatives.

* Performance Based Logistics, a term applied when buying a product based on the original contractual level of performance. The contractor is paid only for the operational readiness rate, and is responsible for the individual supply chain. The firm is paid only for the final product. Impact on DoD is that it will be dealing with the end product rather than parts.

* The Defense Transportation Coordination Initiative (DTCI), with over 600 sites responsible for transporting or shipping materials. Even though DTCI methods for coordinating dedicated lanes and rates require some attention, the system can improve efficiency with predictability and forecasting that will lead to greater cost savings.

MAKING TRANSPORTATION SECURITY INTEL ACTIONABLE

MAKING TRANSPORTATION SECURITY INTEL ACTIONABLE

The Roundtable focused on resolving a high-priority vulnerability issue: SDDC commercial carriers of Arms, Ammunition, and Explosives (AA&E) who already have their security clearance, but currently carry only company-issued identification. The discussion centered on the pragmatic and voluntary application of the Department of Homeland Security's (DHS) Transportation Worker Identification Credential (TWIC) by SDDC's commercial AA&E carriers as a way to fill the gap for an authenticated, common credential.

The context for the discussion was an overall Joint CONOPS for Transportation Security by the global public and private sector. The Roundtable goal was to achieve executive alignment on the AA&E TWIC Initiative as precursor to a business case, information sharing agreement, and mobilization as the next step of the Joint CONOPS.

Since the session, a working group has begun addressing these business cases and test pilots on the way to full mobilization. Participants represent SDDC, TRANSCOM, DHS, and the AA&E commercial carriers.

INDUSTRY TRENDS--WHAT TO EXPECT IN 2006

AIR TRANSPORT

The industry contributes over $800 billion to the economy, employs 10 million workers, and has an eight percent economic impact on the GDP. Yet, airlines are struggling. Oil prices are over fifty percent higher than they were last year--an increase of over one-hundred percent since 2003. Air traffic has rebounded, but at much lower fares and with higher taxes. The customer complaint rate remains under 0.001 percent, and passengers are pleased with current fare options and on-time arrivals. Rising fuel costs, taxes, and security dictate future concerns.

RAIL TRANSPORT

Trends indicate increased use of rail transportation. With more carloads, revenue ton-miles, locomotives and trains traveling per day, rail has steadily become more convenient. Railroads are also more efficient because of better utilization of assets, improved customer satisfaction and secured networks. Rail will be even more vital as transportation demands increase.

SHIPPING

Typically, a US-flag fleet has proved unprofitable. The situation is changing due to recalculation of the tonnage tax, which has decreased by an average of 88 percent; and the new preference cargo program for US-flag carriers. Current trends in the global container business have seen at an average of nine percent increase in business/year over the past 20 years with a projected eight percent per annum growth over the next five years. Intra-Asia trade is currently the largest and fastest growing market. Current challenges include: high prices for oil and steel, high charter rates, and infrastructure congestion. High profile mergers are a significant trend.

MOTOR CARRIER

The industry continues to grow with demand, however the market is highly competitive. Consequently, many carriers have either consolidated or filed for bankruptcy. Driver shortage is the major obstacle--almost 50 percent of drivers are between 45 and 64 years; the latter are near retirement. High fuel prices add additional cost; regulatory changes and security measures cause delays. Trucks will continue to increase their share of the nation's freight pool and will continue to work closely with rail to improve service and mitigate acute driver shortages.

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Log on to the Members Section of the NDTA website for access to PowerPoint presentations and session notes from 2005 Forum moderators and panel participants. www.ndtahq.com

NDTA thanks Tiffany Clark, Jake Kiser, Anya Kroupnik, Robert Reigle (Smith School of Business, University of Maryland), Lisa Davis (OAG Worldwide, Inc.), and Scott Gourley (Military Logistics International) for taking session notes at the Forum in San Diego.