Tempers were flaring as well. Notably, executives at electric utilities America 's heartland were hopping mad at rail-cargo operators after a series of derailments in Wyoming 's coal-rich Powder River Basin , combined with track-maintenance problems, triggered delays all down the line. Soon, power-plant stockpiles had dropped to dangerous levels. Some nonregulated power producers, many of which had embraced just-in-time (JIT) inventory concepts, had to ship in coal from Central America or buy natural gas on spot markets - costly alternatives.  "They took chances with their safety stock," recalls Rick Navarre, CFO at coal company Peabody Energy, which operates three huge mines in the Powder River Basin : "I think they've changed their view now."

A lot of supply-chain managers have changed their view about safety stock. JIT manufacturing may be standard operating procedure among U.S. businesses, but the approach requires finely tuned, well-synchronized supply chains. And while  managers have long worried about transportation snafus in  less-developed countries, they're growing increasingly  concerned about bottlenecks closer to home - on American  highways, in rail yards, and at deepwater ports, the so-called  “last mile" of the supply chain.*

Road Worriers
These days, just getting a load on the road is an accomplishment. A wave of mergers and acquisitions in the trucking industry - including YRC Worldwide's $1.5 billion purchase of USF Corp. last year - has left customers with only a handful of national carriers to consider. "Over the past three years, demand has clearly outstripped supply," notes Tim Coats, vice president, supply-chain logistics, strategy and grain, at General Mills. "Many companies have been caught short."

Now carriers have the advantage, a situation that is not likely to change anytime soon. The volume of domestic truck freight will likely top 15 million tons in about three years (a nearly 50 percent increase from 1998), says the Department of Transportation (DoT). If that happens, competition to secure cargo containers could become downright fierce, particularly during the peak holiday shipping season from August to October. "It's definitely become a seller's market," says Tom Giovingo, executive vice president at third-party logistics provider Fidelitone.

Slow Boat from China
Complaints were leveled at last year's congressional transportation bill, which authorized $286 billion in infrastructure spending through 2010. "When you take inflation into account, [the appropriation] in the new transportation bill is not that much money," says Ali Maher, chair of the civil and environmental engineering department at Rutgers University. "It will barely pay for maintaining and upgrading existing systems."

One place to start, though, might be the intermodal arteries near major ports. Stifling traffic jams around those routes - called choke points - often prevent goods from even leaving docked vessels.

The problem was overscored in 2004, when ship traffic got backed up at the Port of Long Beach, which handles 37 percent of the cargo coming from Asia. The delays, fueled mostly by a shortage of dockworkers, eventually pushed deliveries back by a week or more during the critical holiday shipping season. To help alleviate the traffic, major carriers imposed a congestion surcharge of $200 per 20-foot container.

Singed by the experience, some supply-chain managers have looked to hedge their bets. Giovingo reports that some Fidelitone clients now bring goods through several different West Coast ports, including Oakland, Seattle, and Long Beach.

Straight to the Source 
In the complaint department, there is no middle man - at least when it comes to delayed shipments.

In a bid to ditch noncore competencies, many companies sold off their truck fleets years ago. Instead, to guarantee overland shipping, many rely on trucking companies such as JB Hunt and YRC, or third-party logistics providers. But the use of outside shippers does not insulate the original manufacturer from liability. When there's a missed shipment, for example, retailers such as Wal-Mart and Home Depot don't generally go to cargo carriers to gripe - they go straight to the source. "Service providers have some risk," notes one supply-chain analyst. "But ultimately, companies have the risk of getting products to stores in time.”*

*Excerpts from the September, 2006 article.