Traffic congestion on the roads. Delayed shipments at the ports. Shrinking ocean freight capacity. Fluctuations in rail service. It's enough to make your skin crawl. But while the doomsayers continue to predict the collapse of the global supply chain due to logistics infrastructure snafus, the overall feeling within the supply chain is that logistics infrastructure—both in the U.S. and abroad—is sufficient to enable the movements required by today's global firms.

Not spectacular, but sufficient.

The result is that supply chain professionals today know they need to think more about how they manage their logistics networks and what kind of providers they partner with.

Here in the U.S., it's not so much the current state of the logistics infrastructure that concerns supply chain professionals, but the outlook based on the lack of investment. In a recent Purchasing survey, 46.5% of supply chain professionals polled said the U.S. infrastructure was "adequate" while 39.5% said it was less than adequate. Highway congestion (39.5%) and port delays (32.6%) were the biggest problems cited. While they're not the kinds of marks you'd want your kids to bring home from school, they are a clear indication that the typical supply chain professional does not feel panicked at the state of global logistics infrastructure.

Annoyed, perhaps, but not panicked.

"I don't see a perfect storm coming for logistics, but I see some constraint issues in the U.S., mostly at ports," says Gregory Bunn, director of supply chain management at Sur-Seal in Cincinnati and chair of the Institute of Supply Management's Logistics and Transportation Group. "Even at U.S. ports, we get things through. We just have to put more time and thought into the supply chains. I think the level of risk is about the same as it has been—but we're getting better at preparing for it."

Eric Starks, president of logistics consulting firm FTR Associates in Nashville, Ind., thinks highway congestion is the biggest long-term problem facing the U.S. logistics network. "The railroads seem to be investing in new infrastructure, but when it comes to the highways, there doesn't seem to be much long-term vision," he says. "It will likely require some kind of gridlock, unfortunately, to change the infrastructure."

Longer term, the bigger domestic concern to Starks is the cost structure of the U.S. logistics network. "For example if there's a push to privatize highways and increase tolls, there's a major unplanned cost issue to the logistic industry," he says. "That's a short-term fix instead of putting the money back into the infrastructure." Starks points out that shipper organizations like the National Industrial Transportation League do some lobbying to get the U.S. government to invest more in logistics infrastructure but "just getting the ear of the right people is difficult—transportation's just not on anyone's agenda."

Quentin Roach is the vice president of global customer strategy at Bausch & Lomb and a longtime supply chain executive. While Rochester, N.Y.-based Bausch & Lomb makes and sells products all over the world, it currently has seven manufacturing sites in the U.S. and relies heavily on trucking in the domestic market to get its materials in and out of those manufacturing sites. Roach also agrees with Starks that the problem with logistics in the U.S. today is less about physical infrastructure and more about cost.

"For us, the biggest issue seems to be the pass-through cost mentality that's prevalent in trucking today," Roach says. "And I don't expect it to get any better. A lot of our issues with trucking carriers are around cost control. The performance is not degrading—it's just not getting any better and it costs more."

Like Bunn, Roach's concerns with physical infrastructure in the U.S. center on port congestion. But have the port delays driven Bausch & Lomb to alter its global supply chains? "We've definitely talked about that—I can't give a specific example of a source decision we've changed as a result of port issues, but we have definitely had some lengthy discussions about the impact of ports on certain sourcing decisions. We had to put more thought into some decisions but we haven't really had to change anything yet. We have re-routed shipments on occasion and we are reviewing ports more closely today for capacity issues and labor issues."

"If the trends toward globalization and global sourcing continue, port congestion will be the biggest risk to the U.S. infrastructure," says Gary Kowalski, COO of logistics services provider Menlo Worldwide in San Mateo, Calif. "There's no magic bullet to the port congestion. You can't flip the light switch. It's tied into a couple complex issues—like the rail and highway congestion."

Bunn says Sur-Seal is avoiding the backed up Ports of Los Angeles/Long Beach when possible, and using more of the smaller ports in Mexico and Spokane, Wash. And he's certainly not alone. According to the 2006 annual report from the Pacific Maritime Association, the ports of Seattle and Tacoma have seen 13% growth in containers and 12% growth in overall traffic in 2005 and 2006. The same report points out that in one week in October 2006, the Ports of Los Angeles/Long Beach set a record for 200,000 crane lifts in a single week. The two ports saw a 12% increase in 2006 over 2005 volumes.

"But it's not so much about one port though," Bunn says. "I think we logisticians are looking at the entire supply chain today—all the modes and ports and not just how to manage around one problematic port."

The general opinion of the global logistics network seems a bit less clear than that of the U.S. market. It's clear that some new regions are investing heavily in logistics infrastructure in an effort to support the manufacturing and importing/exporting growth taking place. "Regions like China, India and Romania are now low-cost country sourcing options primarily thanks to their investment in logistics capabilities," says a buyer responding to Purchasing's survey.

But the rapid expansion of manufacturing and sourcing activity in Asia is making it difficult for the logistics infrastructure to keep up with the mind-boggling pace of import and export demand in the region. And the impact is being felt in other markets.

"There's a tremendous strain on the ports in Asia and the same thing is happening in Europe," says Roach. "In Europe there are issues with certain ports expanding due to environmental concerns. So the expansion that's required for European ports to receive the shipments from China may be seriously hampered. We've had to re-route some of our products or talk with carriers about certain ports in Europe."

When asked which regions most exemplify the mismatch in manufacturing and logistics capacity, Roach points to China and Eastern Europe, where the manufacturing capacity has outpaced the logistics capacity. But he's not panicky because Bausch & Lomb's internal logistics team works with outside consultants as well as logistics service providers to evaluate the logistics infrastructure in different regions before finalizing any supply decisions.

That analysis is key to global sourcing efforts and while most supply chain professionals agree that considering the logistics infrastructure of a region plays a role in global sourcing efforts, in an anonymous survey conducted by Purchasing, only 28% of supply chain professionals polled said they actually perform that analysis. Kowalski points out that the way purchasing professionals are rated may dictate their emphasis on total cost. For example, if buyers are given bonuses for price reductions on parts or materials, they are more likely to ignore logistics issues and costs and simply find the lowest-price part available.

And clearly logistics infrastructure investment and capability can vary within individual countries or even regions. "China is an example of such a region," Bunn says. "In the coastal cities you have a much more developed logistics infrastructure which drives more manufacturing and vice versa. But in inland China there is a lot of manufacturing going on, and the logistics infrastructure isn't in place. So you tend to choose suppliers closer to the ports."

Starks, on the other hand, points to China as an example of a country that is investing a lot in its logistics infrastructure. "I don't think there's a lot of concern about whether there's enough investme nt," he says.

Today's longer, more complex supply chains coupled with infrastructure constraints at home and abroad are having a clear impact on the shipper-logistics provider relationship. Shippers today are relying more on their logistics providers for information—be it data or more consultative advice—than ever before.

Bausch & Lomb is a prime example. Roach (left) says the current state of the logistics market has led his company to share more data with its logistics providers. But it goes beyond track and trace information. "With our largest logistics partnerships, we definitely share forecast data," he says. "As soon as we know about changes we try to get that data to our logistics partners so they can make adjustments. We have to do more to pull the providers in closer with us."

Bunn agrees that supply chain organizations are much "more integrated with our logistics providers today. A decade ago you hired a 3PL and they got stuff to you. Today, we are working on shared databases with our 3PLs to be able to access the status of our shipments online directly. You're seeing more user-friendly and customer-based databases come from these providers."

The flip side of that, says Starks, is that more logistics providers and carriers have now become logistics service providers offering more "solutions" and analysis than simply transport options. "It used to be that you gave the freight to trucker A and waited to hear if it got there. But today, logistics providers will advise the shipper on how to best move the freight given the list of expected constraints and maybe they only move some of it but not all of it for the shipper."

As a result, shippers are less worried about rate, Starks points out, and more interested in working with logistics partners. "Most shippers are looking for reliability in a logistics partner in today's complicated market. It's not so easy to jump from one 3PL to another now."

Kowalski says Menlo's customers are requesting a more analytical level of service. "For example, one customer recently asked us to run a complete impact analysis if they moved their manufacturing from one country to another," he says, adding that it is the kind of request that may not have been made of a logistics firm in the past. "You have to have the right tools and level of expertise to do that kind of analysis and it's that kind of thing that's driving more outsourcing decisions."

The more complicated supply chains also lead shippers toward more global logistics providers that can provide expertise in a variety of markets and modes. "We want to be the expert on how we handle our manufacturing and deal with our suppliers," says Roach. "But we don't want to become the experts on every logistics lane or mode. So we want to partner with the right provider and that tends to be the larger global providers. Only in certain markets do we need local providers to bring local expertise."