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STB Implementing Rail Reform Law

Acting with all deliberate speed – with emphasis on deliberate, not speed – the Surface Transportation Board is moving to implement freight rail reform legislation passed by Congress late last year.

Starting April 8 the STB will begin considering major rail rate cases on a schedule that requires them to hand down a final decision no later than 485 days after the initial filing.

Previously, in what are termed “Stand-Alone Cost” or “SAC” cases, the board had no set deadline.

The board reported it is assessing whether other changes to SAC case handling could help it meet its new shorter deadline for making a final decision which was set by the STB Reauthorization Act.

The board also announced that it is holding a series of informal meetings throughout April with stakeholders and practitioners to examine procedures for expediting those cases, as well as the potential application of such procedures to STB rate case processing.

In regard to the April stakeholder meetings, STB Chairman Daniel R. Elliott said, “These meetings will be a valuable opportunity for STB staff and interested parties to talk openly and candidly about our procedures for handling rate cases, and to brainstorm ideas for improving our processes and expediting case resolution.”

In a separate action, the STB is seeking public comment on its proposal to revoke existing class exemptions from railroad-transportation regulations for certain bulk commodities.

The board said these commodities include crushed or broken stone or rip rap (loose stone used to maintain surface stability); hydraulic cement; coke produced from coal, primary iron or steel products, and iron or steel scrap, wastes or tailings.

U.S. Poised to Take Manufacturing Lead

Global business leaders recently surveyed expect the United States over the next five years will become the most competitive manufacturing nation in the world, with the current leader, China, slipping into second place.

The report was issued by Deloitte Touche Tohmatsu and the U.S. Council on Competitiveness.

“Made in the USA is making a big comeback,” said Council President Deborah Wince-Smith. “Contrary to the view that manufacturing is falling behind the times, the study points to a manufacturing future characterized by advanced technologies and growth through innovation.”

The CEOs surveyed asserted that advanced manufacturing technologies will be the key to unlock future competitiveness.

They cite such things as predictive analytics, the network connectivity of common objects known as the Internet of Things, smart products and smart factories they say help to define “Industry 4.0.” These innovations along with the development of advanced materials are viewed by executives as crucial to global manufacturing competitiveness.

“The U.S. is currently among the top nations unlocking advanced manufacturing technologies including smart, connected products and factories, predictive analytics, and advanced materials that are core to future competitiveness,” says Craig Giffi, vice chairman, Deloitte LLP in the U.S. and Deloitte U.S. Automotive Sector leader.

“The U.S. excels at creating connections and synergy between people, technology, capital, and organizations to form a cohesive ecosystem of innovation, generating tremendous value from investments in research and development.”

The Asia Pacific nations Malaysia, India, Thailand, Indonesia and Vietnam (known as MITI V, or the “Mighty 5”) will join the top 15 nations by 2020, the survey concludes. Respondents say they could become a “New China” due to their low-cost labor, agile manufacturing capabilities, favorable demographics, and market and economic growth.

Consumers Transform the Food Business

Expect the explosive growth of ecommerce in food retailing to continue its surge throughout this year.

That prediction found support from a study released this March conducted by the ecommerce market research firm of Brick Meets Click and SAP Hybris.

Their study finds the percentage of U.S. households that bought groceries online in the previous 30 days had nearly doubled from 11% in 2013 to 21% in 2015.

In addition, 41% of U.S. consumers said they have bought groceries online, reinforcing this view of ecommerce penetration in the grocery space.

The survey also reveals that one in five American consumers now actively use online grocery services, spending an average of 16% of their weekly grocery dollars via ecommerce.

“Retailers and suppliers need to appreciate that a significant portion of their customers – including some who are very important to their future – are already buying groceries online,” the researchers observe.

When consumers shop for groceries online they divide their shopping in three different ways that mirror several other grocery consumer trends.

Specific product shopping tops the list at 61%, focusing on getting specific products shoppers can’t find or buy easily in the stores they regularly shop.

Another 15% said they rely on ecommerce to eliminate the need for spending time shopping in a store. This shifts the purchase task to a more convenient time when the shopper can order via computer or mobile device, the researchers report.

And another 12% of the consumers surveyed said they rely on subscription-based shopping to help ensure there is always a supply of regularly used products on hand, which means the shopper doesn’t even need to think about repeat purchases.

Grocery consultant John Karolefski says he expects more grocers will join the 65 retailers partnering with Instacart. That company allows consumers to order groceries online and pairs them with a Personal Shopper who hand-picks items at customers’ favorite stores and delivers to the home (AA, 2-15-15, P. 5).

Also, mirroring the experience of non-grocery retailers, he anticipates more testing of curbside pick-up of groceries ordered online.

Karolefski also notes that supermarkets will look to connect digitally with smartphone-carrying shoppers. This is especially the case with Millennials, who he says account for most grocery purchases because they are starting families.

He cites the example of Marsh Supermarkets, which along with other grocers has equipped stores with Bluetooth-enabled devices that connect with nearby smartphones, sending out ads, coupons and product information to shoppers.

Karolefski also says more grocers will install Electronic Shelf Labels now being tested by Kroger that display prices, ads and nutritional information.

ConAgra Foods spokesperson Phil Lempert believes this might not be enough to save the big supermarket chains which are wilting in the face of new competition from giants like Amazon, Target and Walmart, as well as small specialty markets.

Traditional grocers have seen 15% of their market share erode over the past 10 years and he predicts they will give up an additional 2.9% by 2018.

He also told an industry meeting late last year that the ongoing Amazon revolution has transformed consumers by making them “brand-agnostic.”

“This is the trend you should be most worried about,” Lempert said. “I’m an Amazon shopper. They own that relationship with me; the brand doesn’t. Shoppers are becoming more brand-agnostic, retailer-agnostic.”

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