Defense Transportation Journal

The Official Publication of the National Defense Transportation Association

August 2013

www.ndtahq.com

Continuing Education, Continuing the Conversation Creating Wise, Strong, Inspired Leaders Closing the Gap on the US Airlines’ Pilot Shortage The Case for the Current HHG Program

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FEATURES Creating Wise, Strong, Inspired Leaders: August 2013 • Vol 69, No. 4

PUBLISHER

LTG Ken Wykle, USA (Ret.) EDITOR

Dr. Kent N. Gourdin

The Eisenhower School, National Defense University

Closing the Gap on the US Airlines’ Pilot Shortage A Public-Private Partnership Opportunity for Industry and National Security

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By Captain(N) Mary-Ellen Clark

MANAGING EDITOR

Sharon Lo | sharon@ndtahq.com CIRCULATION MANAGER

Leah Ashe | leah@ndtahq.com

The Case for the Current HHG Program 18

By Tim Helenthal

PUBLISHING OFFICE

NDTA 50 South Pickett Street, Suite 220 Alexandria, VA 22304-7296 703-751-5011 • F 703-823-8761 GRAPHIC DESIGN & PRODUCTION MANAGER

Debbie Bretches

ADVERTISING ACCOUNT MANAGER

Jim Lindsey

ADVERTISING & PRODUCTION Carden Jennings Publishing Co., Ltd. Custom Publishing Division 375 Greenbrier Drive, Suite 100 Charlottesville, VA 22901 434-817-2000, x261 • F 434-817-2020

DEPARTMENTS A-35 NEWS | Lori Leffler . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Defense Transportation Journal (ISSN 0011-7625) is published bimonthly by the National Defense Transportation Association (NDTA), a non-profit research and educational organization; 50 South Pickett Street, Suite 220, Alexandria, VA 22304-7296, 703-751-5011. Copyright by NDTA. Periodicals postage paid at Alexandria, Virginia, and at additional mailing offices.

SUBSCRIPTION RATES: One year (six issues) $35. Two years, $55. Three years, $70. To foreign post offices, $45.

Single copies, $6 plus postage. The DTJ is free to members. For details on membership, visit www.ndtahq.com.

POSTMASTER: Send address changes to: Defense Transportation Journal 50 South Pickett Street, Suite 220 Alexandria, VA 22304-7296

EDITORIAL | Dr. Kent N. Gourdin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 PRESIDENT’S CORNER | LTG Ken Wykle, USA (Ret.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 CHAPTER SPOTLIGHT | Sharon Lo. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 PROFESSIONAL DEVELOPMENT | Irvin Varkonyi. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 CHAIRMAN’S CIRCLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 HONOR ROLL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 BOOKSHELF IDEAS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 INDEX OF ADVERTISERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

A-35

NDTA Headquarters Staff LTG Kenneth Wykle, USA (Ret.) President COL Mark Victorson, USA (Ret.) VP Membership

Thanks from the Future

Patty Casidy VP Finance

Lori Leffler, CTC, A-35 Chair

Lee Matthews VP Marketing and Corporate Development Leah Ashe Manager, Database Sharon Lo Director of Public Relations Rebecca Jones Executive Assistant to the President Carl Wlotzko Coordinator, Banquet & Special Events For a listing of current Committee Chair-persons, Government Liaisons, and Chapter & Regional Presidents, please visit the Association website at www.ndtahq.com.

EDITORIAL OBJECTIVES The editorial objectives of the Defense Transportation Journal are to advance knowledge and science in defense logistics and transportation and the partnership between the commercial transportation industry and the government transporter. DTJ stimulates thought and effort in the areas of defense transportation, logistics, and distribution by providing readers with: • News and information about defense logistics and transportation issues • New theories or techniques • Information on research programs • Creative views and syntheses of new concepts • Articles in subject areas that have significant current impact on thought and practice in defense logistics and transportation • Reports on NDTA Chapters EDITORIAL POLICY The Defense Transportation Journal is designed as a forum for current research, opinion, and identification of trends in defense transportation and logistics. The opinions expressed are those of the authors and not necessarily of the Editors, the Editorial Review Board, or NDTA. EDITORIAL CONTENT For a Media Kit and Archives, visit www.ndtahq.com/education_dtj.htm Dr. Kent N. Gourdin, Editor, DTJ Director of the Global Logistics & Transportation Program, College of Charleston, Charleston, SC 843-953-5327 • F 843-953-5697 gourdink@email.cofc.edu Sharon Lo, Managing Editor, DTJ NDTA 50 South Pickett Street, Suite 220 Alexandria, VA 22304-7296 703-751-5011 • F 703-823-8761 sharon@ndtahq.com

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Global Government Strategic Manager, The Hertz Corporation

T

he A-35 Committee, NDTA Chapters and Headquarters support and encourage young members each year through scholarships and other awards. I wanted to take the time to give my personal thanks to each of you for spending your time, energy, and money to help these future leaders. So that you can best understand the impact you are making in the lives of these students, I wanted to share excerpts from a few of their notes received by NDTA Headquarters:

“I am writing to thank you for your generous scholarship. I was so happy and excited to learn that I was selected as the recipient of your scholarship. I am a Supply Chain Management major at the University of Maryland. I plan to pursue a career in Supply Chain upon graduating in May 2014 . . . By awarding your scholarship, you have lightened my family’s financial burden, and for this I am very grateful. Your generosity has inspired me to help others and give back to my community.”

“. . . I was recently awarded the “The National Defense Transportation Association Scholarship”. I would like to thank you and the committee for providing it to me, and I would also like to let you know how much this means to me.

I am from the Greater Los Angeles area, and decided to attend California Maritime Academy to pursue a bachelor of science in international business & logistics. I do plan to pursue a career in the transportation/logistics industry. In fact currently I am in the process of fulfilling an internship as a Logistics Intern. My plan is to graduate in Spring of 2014, and after graduation I will be ready to start my career in this industry. Thank you so much for supporting me in this process.

With this scholarship that is awarded to me, it is taking some of the financial burden off

AUGUST 2013

me which allows me to focus more on my school work. Your support means so much to me, and it will go a long way in assisting me in my educational and career goals. Once again I would like to thank you and the committee for this generous support.”

“. . . I am writing to thank you for selecting me as the recipient of the National Defense Transportation Award. I am proud to be selected as the recipient of your award and will confidently represent your association.

I strive to be able to recognize cadets, soldiers, and veterans one day, just as you have recognized me.”

“I am writing to thank you for being selected to receive a NDTA Scholarship. I am truly honored and grateful to be the recipient of this award. My mom speaks often of her career working for the military and her involvement with NDTA throughout her years, serving on the local chapter Board. She is a lifetime member, has attended many NDTA Transportation & Logistics Forums, and has spoken highly of the accomplishments of NDTA; she too is extremely honored by this award . . .

Once again, thank you for the vote of confidence and for the NDTA Scholarship. Being rewarded for my hard work and for doing what I love to do is truly amazing and I look forward to continuing my activities at the college level.”

As the Chair of the A-35 Committee, I am well aware of the impact recognition such as scholarships and awards make on NDTA’s young members’ lives.

While you may not always get to see this first-hand, I hope the notes above give you a sense of how all of us are making a difference in the lives of these future leaders! DTJ

Shipbreaking: The Dark Side of Global Commerce Dr. Kent N. Gourdin, Editor, DTJ Director, Global Logistics and Transportation Program College of Charleston

W

hen I see the annual sales figures proudly published each year by the world’s automobile manufacturers, I can’t help but wonder what happens to all of the old cars that die during the same period. When you factor in discarded airplanes, trucks, trailers, containers, locomotives and railcars, dealing with unwanted or unserviceable transport equipment becomes a serious problem.

This issue is an especially troubling one in the maritime industry where disposing of unwanted vessels can be very problematic.

Approximately 1,000 ships were scrapped worldwide in 2012; 70% of those were run up onto beaches in India, Bangladesh and Pakistan to be broken apart, largely by hand, utilizing gangs of workers in informal shipyards. The ongoing global shipping crisis has forced fleet owners to downsize as older ships become unprofitable, some after only 15 years. European ship owners also prefer to dump their defunct ships in South Asia, where there are few environmental and occupational safety regulations, but where steel is all the more valuable. The scrapping companies pay about $400 per ton for ships, which generated $6.3 billion in recycled material last year for ship owners, who often use those monies as a down payment on a new vessel. The highquality steel used to make the vessels is in great demand as a resource. In fact, recycling ships currently satisfies nine percent of India’s demand for steel.

Unfortunately, these yards operate at a terrible cost. The work of destroying this epic trash is left to the world’s most desperate laborers, who earn a handful of dollars a day, and benefit from only rudimentary safety precautions. It is a grueling and dangerous pursuit—by some assessments, the world’s deadliest job. In Pakistan, more than 20 shipyard workers died and more than 150 were injured in 2011. In Alang, India, 173 workers

have died in more than 170 shipyards since 2001, killed by falling steel parts or burned to death in explosions. Workers are sometimes barefoot as they climb over the ships, and toxic waste such as asbestos, petroleum products, paint and old batteries are often incinerated on the beach or dumped into the ocean. The upside, if there is such a thing, is that shipbreaking creates anywhere from 8,000 to 22,000 jobs (exact numbers are understandably hard to come by) that pay between 30-50 cents per hour, usually more than those workers can earn elsewhere.

The European Union (EU) is working to curtail this practice by crafting legislation that would ban EU-flagged ships from being recycled at shipyards lacking “fixed structures,” including the means to capture and properly dispose of hazardous materials. Such shipyards do exist in China and Turkey, for example,

EDITORIAL but they are more expensive to use and pay less for the scrap than do their South Asian counterparts. However, nothing is being done to prevent ship operators from reflagging their ships to non-European countries for the final voyage to the scrapheap, effectively nullifying the EU’s efforts altogether.

Clearly, the social costs associated with transportation can be very high, no more so than when they lead to the loss of human life or serious injury. For example, approximately 34,000 people were killed in car crashes in the United States in 2012 (32% as a result of drunk driving, but that’s a topic for another column); we as a nation could lower that number significantly by mandating the use of carpooling or public/ commercial alternatives, but we choose not to because we value our mobility. Similarly, the workers risking life and limb in these crude Asian shipyards are probably happy to have the work, the horrendous working conditions notwithstanding. Losing those jobs for any reason would not serve the laborers well. That said, the EU should be applauded for at least addressing the issue.

The time has come for the United States to do the same. DTJ

JOIN US for the...

NDTA-USTRANSCOM FALL MEETING 2013 NDTA and USTRANSCOM are co-sponsoring a

Fall Meeting at the Renaissance St. Louis Grand Hotel in St. Louis, Missouri, 15-17 October 2013.

The purpose of the meeting is to stimulate wider interest and inquiry into technical and professional issues involving Department of Defense (DOD) transportation requirements. The meeting will provide information, training, and strategic overview for personnel of the DOD and also will assist industry in anticipating and meeting future DOD needs.

The meeting is open to the public. Early registration is encouraged, as attendance is limited. For additional information pertaining to the meeting,

please visit http://www.ndtahq.com/FallMeeting.htm. www.ndtahq.com | 5

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PRESIDENT’S CORNER NDTA: Finding New Ways to Meet the Needs of Its Members LTG Ken Wykle, USA (Ret.) NDTA President

S

everal of my recent columns have discussed the changing Department of Defense (DOD) business environment. I have highlighted the need to focus on the National strategy, the shift to the Pacific, the budget projections, major areas expected to be cut, and areas for potential growth. I have discussed the need for NDTA’s members to be flexible and look for new opportunities. NDTA feels your pain because we too are experiencing challenges in this new environment; NDTA must also find ways to adjust and be flexible. Our major focus areas are to continue providing educational opportunities and facilitating the sharing of information between the military, government, and industry. Over the past year, NDTA has been seeking new ideas, opportunities, and changes to help meet its challenges.

The most prominent change you will notice is how NDTA conducts its national-level meetings. With the constraints on government travel, NDTA has decided to meet in locations that eliminate or minimize government expenses. The meetings will not have any “frills” (like golf tournaments), but they will provide more time to work the issues. Finally, the schedule and format of events will be designed to get attendees to participate more in the discussions. We are hopeful that these adjustments will make meetings even more valuable to those in attendance.

We are currently planning for two such meetings this fall. The first is a one-day meeting in Alexandria, VA focusing on passenger travel, personal property, disaster relief, and interagency requirements.

The Defense Travel Management Office (DTMO) and OSD Transportation Policy Office, as well as other government departments are located in the DC Metro Area.

The intent of this meeting is to provide an opportunity for government and industry

to share knowledge on changes occurring within these areas. The meeting will be held 19 September 2013 at the Hilton Alexandria Mark Center Hotel. The agenda will include speakers and a series of discussions involving government and industry to identify issues and potential solutions for current and future passenger travel, personal property movement, disaster relief, and interagency requirements, as well as information for small businesses or those who want to learn more about doing business with the government.

The second meeting is for about two days in the greater St. Louis Area. NDTA and USTRANSCOM are co-sponsoring this Fall Meeting. USTRANSCOM and two of its component commands are located near St. Louis. This location minimizes travel expenses for USTRANSCOM and its components. The purpose of the Fall Meeting is to stimulate wider interest and inquiry into technical and professional issues involving DOD transportation requirements. The Fall Meeting will provide information, training, and a strategic overview for DOD personnel, and will assist industry in anticipating and meeting future DOD needs.

The Fall Meeting will be held 15-17 October 2013 at the Renaissance Hotel, in St. Louis. It will consist of government, military, and industry representatives, including USTRANSCOM civilian and military leaders, DOD and other federal agency stake holders, interested members of the public, and a wide cross-section of transportation industry professionals. Advance registration is required. The program will begin on the afternoon of 15 October with functional committee meetings. The business meeting will start on the morning of 16 October and conclude about mid-day on 17 October. The agenda includes government and industry

NDTA Presents The Defense Travel & Government Transportation Meeting September 19, 2013

•

Alexandria, VA

The agenda includes sessions related to passenger travel, HHGs, and small businesses. PLUS, hear about disaster relief, DOD and interagency requirements.

Find the complete agenda, sponsorship information, and register online at: www.ndtahq.com/DTGTMeeting.htm

speakers, a working lunch on the 16th, and a series of functional area discussions involving government and industry.

These discussions will identify issues and potential solutions for current and future transportation and logistics challenges.

The Fall Meeting will conclude with an open discussion of issues identified during the functional sessions requiring followon work within already established Executive Working Groups (EWGs).

I look forward to seeing many of you this fall. More information pertaining to the two meetings is available on our website: www.ndtahq.com. Thank you for your commitment to NDTA, and all that you do individually and collectively every day in support of our economy and National security. DTJ

WELC ME

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corporate member upgrades CHAIRMAN’S CIRCLE PLUS+ • Innovative Logistics, LLC SUSTAINING PATRONS • C.L. Services, Inc.

www.ndtahq.com | 7

Creating Wise, Strong, Inspired Leaders The Eisenhower School National Defense University The only institution in America where military, government civilians, and industry come together to earn a joint, professional, graduate education; where students study challenging, bureaucratic, enterprise-level global issues and have the opportunity to perform research working directly with government customers on their toughest, most complex problems.

A PREMIER BUSINESS EDUCATION OPPORTUNITY

Sponsored by the Chairman of the Joint Chiefs of Staff, the Industry Fellows Program was developed in support of The Eisenhower School’s vision of “Government and Industry working closely together to ensure National Security.”

Congress approved the first civilian corporate executive to attend the Dwight D. Eisenhower School for National Security and Resource Strategy (formerly the Industrial College of the Armed Forces) in 1995. Since then, the School has received 8 |

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worldwide recognition as a premier senior business education program, and Congress has increased the number of available seats for industry to 20 per academic year. To date, over 100 Industry Fellows from more than 30 domestic and international companies have graduated from the program. The Industry Fellows Program has included personnel from traditional defense industrial base companies such as weapons manufacturers and federal systems integrators. However, recent enrollments include healthcare, transportation, energy, and consumer product goods

AUGUST 2013

companies, reflecting the changing demographics of government contracting and public/private partnerships. The typical Industry Fellow candidate is one who has already been identified with senior leadership potential, has 15-20 years of experience, and has demonstrated excellent business acumen. No specific government experience or familiarity with the military is required. While the Industry Fellows contribute significantly to the richness of The Eisenhower School’s programs, they also have many opportunities to share their experiences, and help to educate

www.ndtahq.com | 9

their peer groups about the private sector and their own companies. Feedback from past graduates and their sponsoring companies confirms all involved have found the educational experience a solid return on investments. Many Eisenhower School Industry Fellow graduates have risen to senior executive positions, building strong government/industry networks they maintain throughout their career.

THE BUSINESS BENEFITS OF A JOINT EDUCATION

NDU 2013 Graduation

Lincoln Hall

General Martin E. Dempsey

While officially part of a military education system, the Eisenhower School is truly a joint, interagency, ‘whole-of-government’ environment, with more than 30 government and civilian organizations represented across the faculty and student body. In this environment, the Industry Fellows are prepared for future engagement throughout all areas of the government, giving them first-hand exposure to some of the challenges and tough decisions facing government and business leaders today. Industry representation in the classroom offers the government students a greater divergence of thought and a wider spectrum of valuable insight and dialogue, promoting a stronger foundation for future partnership. This program builds a better relationship between government and the private sector—a relationship critical to our future national security needs.

A PROGRAM DESIGNED FOR OUR NATION’S FUTURE LEADERS

Eisenhower School Industry Fellows On Thursday, June 13, 2013, students of the National Defense University graduated in a ceremony in Lincoln Hall at the Fort Lesley J. McNair campus in Washington, DC. General Martin E. Dempsey, Chairman of the Joint Chiefs of Staff, delivered the commencement address. Students of the College of International Security Affairs, the Dwight D. Eisenhower School for National Security and Resource Strategy, the Information Resources Management College, and the National War College attended the ceremony.

Mr Chet Huber (NDU’s first Industry Fellow) and Major General Gregg Martin

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AUGUST 2013

Major General Gregg F. Martin

The Eisenhower School offers an accredited, executive leadership development program paralleling top graduate schools nationwide. Students develop the skills needed to lead large, complex organizations in volatile and uncertain environments. A foundational element of the program is to gain an understanding and appreciation of resource management, as well as the importance of proper resourcing in any business or government strategy. Students earn a Master of Science degree in National Resource Strategy upon successful completion of this demanding ten-month program of study.

The curriculum provides a balance of traditional graduate lessons, case studies and exercises, and real-world discussions with experienced professionals and government leaders. Students enjoy special

guest speakers through the Distinguished Lecture Series, where they directly engage with some of our nation’s top leaders such as four-star General Officers, Chief Executive Officers, and members of the Judicial, Executive, and Congressional branches. They also learn much from each other, embracing open dialogue, critical thinking, and debate in the seminar room using the Socratic style of teaching. Eisenhower School students learn to be more strategic leaders, to include technical, conceptual, and interpersonal competencies as they relate to leading, changing, and transforming organizations in joint, interagency, and multinational environments. They learn how different business strategies affect the economy, and how to apply analytics to better understand business decisions and strategies. At a more macro level, they also learn to synthesize domestic and international economic policy into a national economic strategy and how to understand defense resourceallocation in today’s budget-constrained environment.

The Eisenhower School educational experience is balanced with a Regional

Security Study and an Industry Study.

The Regional Security Studies Program focuses on the history, politics, and demographics of select global regions of strategic importance to the United States. The inimitable Industry Studies Program provides a deep dive into the dynamics of a focused sector of the US economy. In their Industry Study course, students visit companies and government organizations, both domestic and international; discuss industry analytics and business strategies; and hear from a robust and diverse set of speakers who offer their own experiences and insights.

With this field experience, students are able to evaluate the capabilities and vulnerabilities of the US economy, industry, and infrastructure within emerging markets and at home.

HISTORY AND MISSION

The Eisenhower School has served the Nation for more than 88 years, providing military officers, civilian government officials, and industry professionals a worldclass, executive, graduate education. The School was established in 1924 in the

aftermath of America’s mobilization difficulties in World War I. Today, the mission remains; to prepare select domestic and international military officers and civilians for strategic leadership positions within their respective organizations.

THE APPLICATION PROCESS

Companies are invited to nominate one of their rising executives to attend The Eisenhower School. Admission is managed through a merit-based selection process.

Seats for the Class of 2014 are currently available. Application forms and additional information are available at http:// www.ndu.edu/es/programs/supplement/ industry-fellows/. Application packages of those selected are forwarded to the Under Secretary of Defense (Personnel & Readiness) for approval. Since this process takes several weeks, please start the application process by contacting Ms. Eileen Daniels, Communications and Outreach Director, at danielse@ndu.edu or 202-685-4338; or Dr. Leanne Viera, Partner at IBM and The Eisenhower School’s current Industry Chair and Visiting Professor, at leanne.viera@ndu.edu or 202-685-4306. DTJ

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A Public-Private Partnership Opportunity for Industry and National Security

By Captain(N) Mary-Ellen Clark, Royal Canadian Navy

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W

hile fewer US airline firms exist today than did a decade ago due to consolidations, the overall health of the industry appears to be strengthening. This is largely a result of efforts in cost containment and ancillary revenue streams.1 However, despite increased efficiencies and profitability, the two most significant cost drivers— fuel and labor2—continue to drive industry costs upward. A significant increase in the cost of crude oil would threaten any progress in profitability made since the 2008 recession and could threaten the industry’s survival.3 Moreover, hedging fuel costs can incur high risks and therefore, many airlines opt out; in fact, only 25 percent of US carriers adopt such a strategy.4 Consequently, firms have focused recently on reducing labor costs, because it is the controllable lever to increasing a firm’s profitability. But even with the introduction of the low-cost carrier (LCC) sector, both legacy carriers and the LCCs have increased labor productivity to the point that the unit labor cost differential between the two business models has closed from 3.6¢ to 2.5¢ (US) per available seat kilometer as of 2011.5 The ability of the legacy carriers to copy this business strategy “. . . has squeezed out about as much costs as it can to this point,”6 remarks one US financial industry expert. Simply put, airlines have become efficient to the point

1 Bogdan Daraban, “The Low Cost Carrier Revolution Continues: Evidence From The US Airline Industry,” Journal of Business and Economic Research, 10.1 (January 2012): 43.

2 Investopedia, “The Industry Handbook: The Airline Industry,” Investopedia.com, http://www. investopedia.com/features/ industryhandbook/airline. asp#axzz2NASRNpE6, March 10, 2013.

3 Interview with senior American Airlines Captain, working in American Airlines’ Airspace Modernization section, with the author, March 11, 2013. All interviews with this industry expert were conducted in confidentiality, and the name of the interviewee is withheld by mutual agreement.

that little remains in the ability to reduce labor costs. Regardless of the airlines’ attempts to streamline back-office procedures through technology or to increase profitability through revenues and cost centers, labor will continue to be one of the largest cost drivers in this industry.

Notwithstanding the fact that human capital costs place pressure on the profitability of airline firms, a pilot shortage looms on the horizon that will stress industry capacity and, more significantly, the ability to meet America’s national security requirements. Aging demographics, high entry barriers for prospective pilots, and a growing exit of pilots from US carriers place a strain on the US domestic airline industry, as well as on the Civilian

should implement a Public Private Partnership (PPP) arrangement with EmbryRiddle Aeronautical University (ERAU) that will serve both industry and national security requirements.

DEFINING THE PROBLEM – CONTRIBUTING FACTORS TO THE PILOT SHORTAGE

Currently, more than half of the pilots in the domestic industry are over the age of 50.8 Airlines employ 96,000 pilots and will need to hire 65,000 over the next eight years due to the impending mass exodus of those reaching the mandatory retirement age of 65 (this age limit was extended from age 60 in 2007 under the Bush administration.)9 The problem is further exacerbated by a low intake of pi-

Notwithstanding the fact that human capital costs place pressure on the profitability of airline firms, a pilot shortage looms on the horizon that will stress industry capacity and, more significantly, the ability to meet America’s national security requirements.

Reserve Air Fleet (CRAF) program. These constraints combine to make the creation of a revolutionary pilot recruiting strategy, in order to meet the projected exponential growth in demand for domestic air travel7 and to meet national security emergencies, more challenging. In order to narrow the gap on the imminent pilot shortage, the DOD (Department of Defense) and Department of Transportation (DOT)

4 Interview with US Airline industry analyst for US top 500 Financial Securities firm, with the author, March 13, 2013. All interviews with this industry expert were conducted in confidentiality, and the name of the interviewee is withheld by mutual agreement.

5 Steven Thompson, “Gap in Cost Between Budget Airlines and Legacy Carriers is Closing,” Airport-world.com, March 13, 2013, http://www.airport-world. com/home/general-news/ item/2433-gap-in-costbetween-budget-airlines-andlegacy-carriers-is-closing, March 14, 2013.

6 Interview with US Airline industry analyst for US top 500 Financial Securities firm, with the author, March 13, 2013.

lots in the past decade due to the economic recession, lower pay, and tighter regulations in the US.10 Additionally, until the 1990s, 90 percent of pilot intake into US commercial airlines originated from the military. However, this trend has been inversed in almost the same proportion due to an increase in the length of service for active duty commitments,11 which only further intensifies the problem.

Interviews with this industry expert were conducted in confidentiality, and the name of the interviewee is withheld by mutual agreement.

7 Air traffic growth for US carriers is anticipated to rise more than 90% over the next twenty years.

Federal Aviation Administration, FAA Aerospace Forecast Fiscal Years 2013-2033 – Forecast Highlights 2013-2033, (Washington, DC: Department of Transportation – Federal Aviation Administration, 2013), Section – ‘Message from the Administrator,’ http://www. faa.gov/about/office_org/ headquarters_offices/apl/ aviation_forecasts/aerospace_ forecasts/2013-2033/media/ Forecast_Highlights.pdf, March 15, 2013.

8 Emma O’Connor, “Airlines Face Worst Pilot Shortage in Decades,” Newsfeed.time.com, November 14, 2012, http:// newsfeed.time.com/2012/11/14/ airlines-face-worst-pilotshortage-since-the-1960s/, March 16, 2013.

9 Ibid.

10 Ibid.

11 Jan W. Duggar, Brian J Smith, and Jeffrey Harrison, “International Supply and Demand for US Trained Commercial Pilots,” in Journal of Aviation Management and Education 1, (July 2011): 2, http:// search.proquest.com.ezproxy6. ndu.edu/docview/1033195117?ac countid=12686, March 16, 2013.

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Likewise, the lack of compensation for entry-level pilots coupled with more stringent pilot certification requirements (ATPL) under the Federal Aviation Administration (FAA) that come into effect in 2014, will be detrimental to the industry.12 The preponderance of candidates must bear costs to obtain a private pilot’s license unless trained in the US

requirement as of 2014 will increase the cost for training and certification to approximately $142,500, making it unaffordable for most individuals looking to become commercial pilots.17 Additionally, pilots face unenviable entry-level salaries and grueling schedules when hired through the major airlines (MAs) vis-à-vis the regional carriers

The ramifications of the pilot shortfall will be increasing pressure on airlines to raise customer fares, reduce the number of flights, and cancel routes to small and medium-sized communities.21 This pilot shortage cannot be reduced unless a radical shift occurs to change the underlying premise that pilot candidates must bear the financial burden to reach the FAA certification requirement, when the airlines, DOD and DOT have a vested stake in rectifying this impending shortage. armed forces or Coast Guard.13 Current training and certification costs can range between $7,000 and $9,000 (USD) for the student, which provides on average 25 hours of flight training.14 The 225-hour delta to reach the current 250-hour certification costs approximately $23,000 for a prospective candidate.15 And that does not include a growing number of candidates who pursue an associate’s degree in aviation in order to make their files more competitive when seeking employment with an airline.16 More critical is the fact that the FAA’s 1,500-hour certification

12 Under the FAA, effective 2014, co-pilots (first officers) must hold an Airline Transport Pilot (ATPL) certificate, which will require 1,500 hours of flight time, well beyond the current 250hour flight time requirement.

Federal Aviation Administration, “Press Release – FAA Proposes to Raise Airline Pilot Qualification Standards,” https://www.faa.gov/news/ press_releases/news_story. cfm?newsId=13373, February 27, 2012.

13 Aircraft Owners and Pilots Association, ‘Alien Flight Student Training Program.’

Further information can be found on the Aircraft Owners and Pilots Association website at: http://www.aopa.org/tsa_rule/ alienft.html, March 16, 2013.

14 ING Aviation, “Commercial Pilot Pricing,” http://www.

14 |

(RCs).18 The MAs use RCs as a feeder into their airlines for pilots, but transfer into the MAs is based on seniority and attrition.19 While the exodus of pilots in the next few years may open up this feeder route, it will leave RCs and thus, the MAs who own them, in a crisis due to an insufficient supply of pilots to meet demand, due to rising training costs associated with the FAA’s new certification. Facing soaring costs, loan repayments, a grueling work schedule, and paltry salaries make the career less than enticing for prospective pilots.

Candidates may opt, therefore, to join the

touch-n-goes.com/commercial/ commercialpilotpricing.html, March 16, 2013.

Aircraft Owners and Pilots Association, “How much does it cost to learn to fly and get a pilot certificate?” http://www. aopa.org/letsgoflying/faqs. html#question6, March 16, 2013.

15 Calculations are based on a low range of $95/hour USD to rent a Cessna 150.

ING Aviation, “Commercial Pilot Pricing,” http://www. touch-n-goes.com/commercial/ commericalpilotpricing.html, March 16, 2013.

16 Interview with senior arbitrator with Allied Pilots Association, with the author, March 14, 2013.

See also the United States Department of Labor website, “Occupation Outlook Handbook – Airline and Commercial Pilots – How to become a Pilot:

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military due to its excellent pay, training, and flight hours; however, with significant DOD budget reductions expected over the next decade, recruiting vacancies will most likely be constrained by the fiscal realities facing the DOD. Moreover, the fact that the US military is retaining pilots for longer periods of up to eight to ten years,20 narrows the potential to fill this gap.

The ramifications of the pilot shortfall will be increasing pressure on airlines to raise customer fares, reduce the number of flights, and cancel routes to small and medium-sized communities.21 This pilot shortage cannot be reduced unless a radical shift occurs to change the underlying premise that pilot candidates must bear the financial burden to reach the FAA certification requirement, when the airlines, DOD and DOT have a vested stake in rectifying this impending shortage.

The impact of a pilot deficit in industry on national security should not be underestimated. The shortage will adversely affect the CRAF program. In 2011, 32 carriers and 898 aircraft were enrolled in the CRAF—based on a voluntary commitment under the DOT program.22 Designed as a partnership to augment DOD in times of a national defense related crisis (whether domestic or international),23 the pilot shortfall will most likely cause MAs to opt out of re-competing for CRAF contracts because

Education and Training,” bls. gov, http://www.bls.gov/ooh/ transportation-and-materialmoving/airline-and-commercialpilots.htm#tab-4, March 15, 2013.

17 Calculations are based on a low range of $95/hour USD to rent a Cessna 150.

ING Aviation, “Commercial Pilot Pricing,” http://www. touch-n-goes.com/commercial/ commercialpilotpricing.html, March 16, 2013.

18 The average entry-level salary for pilots is between $20,000 and $30,000, along with demanding work schedules that more senior pilots employed with the MAs do not face.

Interview with senior arbitrator with Allied Pilots Association, with the author, March 14, 2013.

19 Ibid.

20 Jan W. Duggar, Brian J Smith, and Jeffrey Harrison, “International Supply and Demand for US Trained Commercial Pilots,” in Journal of Aviation Management and Education 1, (July 2011): 7, http:// search.proquest.com.ezproxy6. ndu.edu/docview/1033195117?ac countid=12686, March 16, 2013.

21 Centre for Aviation, “2012 Marks Beginning of Next Chapter in US Airline Industry,” Centreforaviation.com, http:// centreforaviation.com/ analysis/2012-marks-beginningof-next-chapter-in-us-airlineindustry-65485, March 15, 2013.

22 United States Air Force Air Mobility Command, “Civil Reserve Air Fleet,” amc. af.mil, http://www.amc.af.mil// library/factsheets/factsheet. asp?id=234, March 15, 2013.

they will have an insufficient pilot pool to draw from in support of the program.

Compounding this widening gap has been the downturn in the US economy.

Some airlines are just now able to negotiate more favorable contracts for pilots as a result of the consolidations of several airlines.24 For US pilots who are caught in the stovepipe of career advancement as they attempt to transfer from RCs to the MAs, many are seeking employment overseas where salaries and benefits are far more attractive. Asia’s demand for pilots is 180,000 (70,000 alone for China) over the next 18 years.25 This has created a recruitment campaign to attract US pilots: Asian airline carriers offer first-officers upwards of a 70 percent increase over what pilots are currently making in the US,26 making it an attractive market, considering the comparable pilot certification standards between the two continents.27 A PUBLIC-PRIVATE PARTNERSHIP SOLUTION

Based on criteria of affordability, risk spread, the ability to close the pilot shortage gap, and the ability to sustain the CRAF requirements, a public-private partnership (PPP) with suitable educational institutions, such as Embry-Riddle Aeronautical University, would offer the US government and industry a viable recruiting strategy to meet pilot demand for domestic airlines

23 Department of Transportation, “Civil Reserve Airfleet Allocations,” Dot.gov, www.dot. gov/mission/administrations/ intelligence-securityemergency-response/civilreserve-airfleet-allocations, March 15, 2013.

24 “Pilots at American Airlines approve new contract, could speed consideration of US Airways merger,” Toleblade. com, December 8, 2012, https://www.toledoblade. com/Economy/2012/12/08/ Pilots-at-American-Airlinesapprove-new-contract-couldspeed-consideration-of-U-SAirways-merger.html, March 17, 2013.

25 The articles cited below use the average annual salary for US pilots of $118,000, but it should be noted that this salary is not entry level. First-officers typically

and the CRAF. The PPP bidding process for the CRAF would require a transparent competition in order for carriers to compete. Carriers awarded CRAF contracts under this proposal would be obligated to enter into a PPP, agreeing to fund prospective students’ tuition, and to hire graduates. The PPP governance structure would include the DOD, DOT and the airlines awarded the CRAF contract. DOT would retain oversight of the CRAF program.

The DOD would contribute solely to PPP contract oversight, thereby reducing financial risk to the department. While educational institutions would bear significant

make between $20,000 and $30,000 annually. Asian airlines are offering a starting salary of $200,000 USD, hence the attractiveness for pilots with less seniority to look to Asia is strong.

Furthermore, the extension of the mandatory retirement age to 65 in the US has only created a backlog for seasoned pilots waiting to become captains, who have become frustrated since the policy implementation.

Consequently, although pilots are not leaving the US airline industry in droves at this point, the pilot shortage gap continues to widen.

Gregory Polek, “US Pilots, Seeking Better Pay, Look to Far East,” AINonline.com, March 5, 2012, http://www.ainonline.com/ aviation-news/ain-air-transportperspective/2012-02-28/uspilots-seeking-better-pay-lookfar-east, March 16, 2013.

capital investment and overhead costs to support such an initiative, a PPP presents a long-term strategic investment opportunity to closing the gap on the pilot shortage and building future capacity to support the domestic airlines.

As mentioned, one viable PPP would be Embry-Riddle Aeronautical University, which offers a worldwide and worldclass aviation training program, including two domestic undergraduate aviation programs—a civilian aviation degree program and the Reserve Officers’ Training Corps28 program—at several of its campuses.29 Pilots receive training to meet

Jasmine Wang and Simone Baribeau, “China Lures US Pilots Tired of 14-Year Wait for Airline Captain’s Seat,” Bloomberg.com, February 27, 2012, http://www.bloomberg. com/news/2012-02-27/chinalures-u-s-pilots-tired-of-14year-wait-for-captain-s-seat. html, March 17, 2013.

Interview with senior arbitrator with Allied Pilots Association, with the author, March 14, 2013. Name has been withheld at the request of the interviewee.

26 Gregory Polek, “US Pilots, Seeking Better Pay, Look to Far East,” AINonline.com, March 5, 2012.

Jasmine Wang and Simone Baribeau, “China Lures US Pilots Tired of 14-Year Wait for Airline Captain’s Seat,” Bloomberg. com, February 27, 2012.

27 Ibid.

28 The ROTC program would not constitute part of the proposed PPP as these graduates form part of the selection process for future US armed forces’ senior leadership positions, for which the DOD and Embry-Riddle strictly manage the number of billets in the program.

Interview with LieutenantColonel Kenneth Smith, US Air Force, with the author, March 30, 2013.

29 “Embry-Riddle Aeronautical University Bachelor Degrees,” Erau.edu, last updated 2013, http://www.erau.edu/degrees/ bachelor-degrees.html, March 31, 2013.

www.ndtahq.com | 15

FAA requirements, including the ATPL certification. Moreover, the curriculum places a heavy emphasis on leadership so that by the time the students graduate, “they know how to be captains.”30 Undoubtedly, the PPP requires congressional approval and due diligence to ensure that fair and equitable competition could be assured for airlines who choose to compete for CRAF contracts.

This would not be difficult given that the program’s stringent criteria eliminates from competition airlines that by nature of their capacity fail to meet the CRAF program mandate.31

between Embry-Riddle, DOT, DOD and the carriers is recommended to address the imminent pilot shortage facing the US airline industry and to meet national security needs based on the CRAF program mandate. A PPP would be an incremental cost increase to the Department of Defense, yet it would provide greater flexibility and risk spread for all stakeholders, and would build resilience for the US airline industry, as well as for national security. Finally, the proposed PPP would secure a stable recruiting source for civilian pilots and would contribute to the domestic airline industry’s solvency. DTJ

CONCLUSION

Labor costs continue to plague the US airlines’ profitability, and the challenge to inspire new pilots to join the aviation industry when they are required to bear an ever heavier financial burden for their training will only widen the impending pilot shortage. A fresh recruiting strategy that embraces a PPP between government and the private sector would pave the way to address the tsmt - 7x4.5.pdf 11:19:47A PMPPP pilot shortage facing 9/26/2007 the Nation.

Captain(N) Mary-Ellen Clark graduated from The Dwight D. Eisenhower School for National Security and Resource Strategy in June 2013 with a M.Sc. in National Resource Strategy. She serves in the Royal Canadian Navy. Upon graduation, she was appointed Comptroller for the Canadian Forces’ long-term acquisition program under the Assistant Deputy Minister (Materiel), Department of National Defence.

30 “Bachelor of Aeronautical Science—Daytona Beach Campus of Embry-Riddle University,” last updated 2013, Daytonabeach.erau.edu, http://daytonabeach.erau.edu/degrees/ undergraduate/aeronautical-science/index. html, March 31, 2013.

31 In addition to strict requirements, Civil Reserve Air Fleet carriers must “meet minimum participation levels (15 percent of Civil Reserve Air Fleet capable fleet offered to government for cargo operations or 30 percent of fleet for passenger operations),” for which few LCCs have sufficient capacity to meet these standards. Since many of the LCCs own a limited number of aircraft, they fail to meet these criteria with the exception of Allegiant who is the sole LCC in the Civil Reserve Air Fleet program as of January 2013.

Department of Transportation, “Civil Reserve Airfleet Allocations by Month – January 2013,” Dot.gov, www.dot.gov/ mission/administrations/intelligence-securityemergency-response/civil-reserve- airfleetallocations, March 15, 2013.

“How to become a Civil Reserve Air Fleet carrier,” Amc.af.mil, last modified November 29, 2011, http://www.amc.af.mil/library/factsheets/ factsheet.asp?id=3508, March 30, 2013.

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National Defense Transportation Association (NDTA) is a nonpolitical and non-profit educational Association composed of government, military, and industry professionals dedicated to fostering a strong and efficient global transportation and logistics system in support of national security. Membership in NDTA affords opportunities to serve and educate the community in your area of expertise as well as other special benefits.

CORPORATE MEMBERSHIP

Corporate membership in NDTA provides increased exposure and networking opportunities for those companies wanting to do business with the US government or military. Membership should be a key part of any business plan where the defense and government transportation, travel, and logistics system is the target market.

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www.ndtahq.com | 17

The Case for the Current HHG Program

By Tim Helenthal President & COO, National Van Lines

The last issue of the DTJ included an article “The Case for Containers,” that built a case for modifying the current Household Goods (HHG) program to allow Portable Moving Storage Container (PMSC) companies an opportunity to bid on a specially selected segment of the domestic HHG market. In response, this article will show how PMSC companies are already able to compete, fully and completely, without any special structure designed for the PMSC, and without any additional programming costs to the government. Furthermore, it will document why the current program is a success and fosters market competition based on quality service.

THE BASICS OF THE CURRENT PROGRAM

To begin, it is important for readers to understand the basics of the HHG program.

The current HHG program is the result of several pilot programs and years of development that culminated in the Defense Personal Property Program (DP3), which is supported by the Defense Personal Property System (DPS). Since the majority of shipments started moving in DP3 in 2010, the program has achieved significant increases in customer satis18 |

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faction and an overall reduction in cost.

This is supported by the published average Customer Satisfaction Scores. SDDC officials have also stated in public forums that they have saved money under this program, but have not elaborated on the specific amounts. One estimate published by the Army Times suggested it was a 20 to 30% reduction.

Here is the basic way the current program works: Participating Transportation Service Providers (TSPs) are required to

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file rates from an origin area (usually a state, but larger states like AK, CA, FL, and TX are divided into two or more areas), to one of 13 destination regions.

Destination regions include one-to-nine states. In the domestic market, there are two codes of service that a TSP may file rates in. The Defense Transportation Regulation (DTR) defines these as: • Domestic Motor Van – Movement of household goods whereby the carrier

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provides packing, pickup, and loading in a motor van from origin residence in the continental United States (CONUS) to destination residence in CONUS (termed Code D by DOD).

• Domestic Container – Movement of household goods whereby the carrier provides packing, pickup, and loading in containers from origin residence in CONUS to destination residence in CONUS (termed Code 2 by DOD).

savings along in order to maximize its best value score and therefore increase its market share. The competitive elements of the DP3 that balance quality and cost are designed to provide the best outcome. So, PMSC companies already have a way to compete, or are already competing, in the current program environment.

The bottom line is that the current DOD HHG program allows for the use

“gold standard” is pad-wrapped van service. When properly done it is the best way to move household goods.

Nothing beats the quality, care, and protection afforded by a professional driver using cloth pads and pulling a trailer with an air-ride suspension. It quite simply has no equal. The superior nature of this “white-glove” treatment extends beyond merely protecting the household

Shipment distribution is based on a Best Value Score (BVS) model. The BVS is calculated 70% on quality, as measured by Customer Satisfaction Survey Scores, and 30% on the rate filed by the TSP. Therefore, TSPs that provide the best combination of quality and rate are awarded the most shipments.

USE OF PMSC IN THE CURRENT PROGRAM

In the old Personal Property Program, the Domestic Container or Code 2 Program was limited to the use of the DODapproved type-2 lift vans. These wooden boxes, referred to in the June DTJ article, are what used to be mandated for use by SDDC. While these containers do have some limitations, their greatest strength is that anyone with a forklift or pallet jack can handle them without any specialized equipment.

However, since the beginning of DP3, TSPs have not been required by SDDC to use the type-2 wooden lift vans. Instead, TSPs may use any commercially available PMSC. Chapter 401 of the DTR further states that “The PPSO is authorized to use code 2 service when cost effective or when the PPSO determines it is necessary to meet the member’s requirement.”

(PPSO—the Personal Property Shipping Office—is the one responsible for booking a shipment with a TSP.) In fact, in a memo dated February 7, 2011, SDDC explicitly approved the use of PMSC and stated that they considered them the same as vans from a transportation standpoint.

It is a fact that the HHG moving industry has seen a reduction in its driver population since the beginning of the recession in 2008. As a result, many TSPs have adopted some form of PMSC program to supplement capacity. Again, these types of containers are already being utilized and, if there are savings from using them, it follows that the business would pass that 20 |

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Nothing beats the quality, care, and protection afforded by a professional driver using cloth pads and pulling a trailer with an air-ride suspension. It quite simply has no equal. The superior nature of this “white-glove” treatment extends beyond merely protecting the household goods being shipped, to the personal service provided by the driver at the origin and destination.

of PMSC and currently enjoys the benefit of them, without having to create a new code of service or make costly infrastructure or programming changes to DPS. THE CASE FOR MOTOR VAN SERVICE

Household items are simply not designed to be moved after they arrive at a consumer’s home from the manufacturer.

Manufacturers have the luxury of putting together specific packaging solutions for their products that minimize the cube and cost, while maximizing the safety of shipping their products. Once unpackaged, assembled, and in someone’s home these items are not intended to be moved again. That is why proper preparation of the item for transit is necessary and the

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goods being shipped, to the personal service provided by the driver at the origin and destination.

With the combined efforts of industry and the military, we are steadily reducing the number of shipments that require storage at destination. The “door-todoor” nature of the service provided by a professional driver offers personal service that makes the customer feel that they have indeed received the best service possible. Additionally, a driver provides a direct line of communication for the customer resulting in a greater chance for a direct delivery and enhanced customer service.

This professional service should be provided to members in all traffic chan-

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www.ndtahq.com | 21

nels, whether their move involves high and/or low volume routes. The availability of shipments moving in the high volume channels makes it possible for TSPs to maintain a fleet of professional drivers who have the flexibility to provide the same outstanding customer service to customers moving to and from locations outside of the principally travelled routes. Since DOD requires consider-

members are able to move to their home of record at separation.

PMSC companies could bid on limited regions or utilize the blackout functions available in DPS to limit the scope of their operation to those channels where they feel they have a service network or a competitive advantage. Again, this is currently available to approved TSPs and creating a separate code of service would

Additionally, pad-wrapped van service provides a tremendous amount of flexibility.

There is flexibility in the ability to handle various sizes of shipments, extra pickups, extra deliveries, and diversions. When you think about it, a tractor trailer really is a type of Portable Moving Storage Container. able service in locations outside of just the major metropolitan areas, it stands to benefit greatly from the additional regions these professional household goods drivers can service.

Additionally, pad-wrapped van service provides a tremendous amount of flexibility. There is flexibility in the ability to handle various sizes of shipments, extra pickups, extra deliveries, and diversions.

When you think about it, a tractor trailer really is a type of Portable Moving Storage Container.

ENTRY OF A PSMC COMPANY INTO THE CURRENT PROGRAM

Technically, PMSC’s entry into the program is not blocked. As outlined earlier, by virtue of the way the program is set up, PMSC companies already can and do participate in many ways in the current program. A PMSC company seeking entry into the program could also consider purchasing an existing TSP or entering into a partnership with one. Incidentally, SDDC just announced that DOD will have an “open season” this fall to allow qualified new participants into the program.

One of the proposals in the June DTJ article was to carve out some specific channels in major metro areas for PMSC companies to bid on. In the current program, SDDC decided to have TSPs bid on rates to destination regions, with the intent of getting TSPs to provide service to every location within the regions.

DOD shipments move outside of normal routing areas at a higher frequency than commercial shipments, because military 22 |

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not be necessary for a PMSC company to compete in this way. The proposed PMSC program segregates shipments out of the current program that are traditionally easier to serve, allowing those participants to minimize their participation to only the best point-to-point lanes. This would leave existing TSPs with rolling stock to service only the more difficult and less profitable areas. If a program like this would be adopted, it would only be a level playing field if the Code 1 and Code 2 markets could both file rates in the same way.

Due to the unique nature of DOD customers, there is a higher frequency for the need of SIT (storage-in-transit) at destination. Local moving companies rely on that storage to provide the infrastructure necessary to provide packing and other labor to support the DOD program. By removing a significant amount of SIT from the program, local agents would not be able to support the lift necessary to get the customers moved out of their homes during the peak moving season.

The proposed PMSC model also contained a comparison of costs. There are many differences that need consideration before an “apples to apples” comparison can be made between a shipment moving in the DOD program with its specific requirements and the primarily ‘do-it yourself ’ model with which the comparison is made. The two most significant are: 1. Full Replacement Value (FRV) Coverage – The DOD requires an increased level of claims liability that must be

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reflected in DOD rates. PMSC companies do not have claims exposure, because they have experience primarily with the do-it-yourself model, where the customer has no one to make a claim against.

2. Shipment Size – Domestic interstate DOD shipments average about 6,500 lbs., not 10,000 lbs. Using the 10,000 lb. figure overestimates the average cost of storage on a “normal” move, therefore the storage savings are overstated.

It is important to remember that DOD is the customer in this relationship. TSPs currently in the program strive to provide HHG services as the customer has requested them, and DOD requirements have driven the services offered. A request to DOD to carve out a special niche for a limited set of industry players is asking the customer to serve industry rather than the reverse. Further, it is asking DOD to benefit one part of industry at the expense of another part of industry. New industry players who can provide the requested services with superior quality or cost savings should be able to do so in the current program, without requiring special accommodations.

Based on the reasons above, I believe the competitive framework of the current program allows companies to modify the underlying way they move personal property customers, if economical and if it preserves the stability of the required local agent infrastructure. It also appropriately promotes the use of high-quality service as a performance metric. The program, as structured, can deliver the benefits of PMSC providers or any future provider. PMSCs have a place in the current program and provide the DOD with value today, without the need to segregate specific shipments into another code of service. DTJ Special thanks to Keith Tounget, The Pasha Group; CJ Dabo, Interstate Van Lines; Peggy Wilken, Stevens Van Lines; Michael Gonzales, Denali Group; Tony McCarty, Affiliated Van Lines; Jeanette Homan, Valley Movers; Kevin Myers, Wheaton Van Lines; Barbara Johnson, Crystal International; and Rae Hickinbotham, Unigroup for their contributions to this article.

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Meeting yours is everything else. www.ndtahq.com | 23

CHAPTER SPOTLIGHT The San Joaquin Valley Chapter Sharon Lo Director of Public Relations, NDTA

W

hen I decided to highlight this chapter, the first thing I did was to google “San Joaquin” to get a little background about the area in which the chapter is located. One of the first things I read was about the city with the same name—the city of San Joaquin, California is the smallest city in Fresno County and goes by the slogan the “Everything is Possible” City. While the San Joaquin Valley Chapter is not one of NDTA’s smallest chapters, the slogan is still a great fit.

From an outstanding scholarship program to winning NDTA awards, this chapter certainly shows us what is possible!

The San Joaquin Chapter has an extensive scholarship program, and is a strong supporter of transportation and logistics continuing education. On average the chapter gives out an impressive $20,000 each year in scholarships. For 2013, the chapter provided scholarships to eleven students! The chapter uses profits from events throughout the year, as well as donations from generous individuals and carriers to fund the scholarships. Scholarship recipients are then invited to join the chapter each June at its annual banquet. The banquet includes scholarships and other awards presentations, chapter officer installations, and NDTA President LTG Ken Wykle, USA (Ret.) as its guest speaker.

While the banquet is an exciting night for all, the chapter hosts a variety of worthwhile events over the year. The chapter holds meetings on the third Tuesday of the month (except July and August), each with a different theme such as “Air Night” or “Emergency Preparedness Night.” Each of these meetings includes a guest speaker and/or events related to the transportation and logistics issues being emphasized. The chapter is noted for its strong participation in local and national transportation and logistics activities, and support of emergency planning locally and statewide. The chapter’s calendar also 24 |

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includes several annual social events, including two golf tournaments, a holiday party, and a crab feast. In addition, chapter members are invited to a party each year hosted by Green Valley Transportation. Half of the proceeds from this party are donated to NDTA, with the other half donated to hospice.

With a strong scholarship program and excellent events, it is no wonder this chapter has received its share of NDTA awards.

In 2010, the chapter even won International Chapter of the Year! The chapter has also won several recruiting accolades over the years. In addition to the chapter’s awards, several of its members have won awards such as the NDTA Individual Distinguished Service Award. Most recently,

chapter member Yolanda Rios was named top recruiter of the year for all of NDTA. In addition to being a steller recruiter, Ms. Rios is a current chapter board member. Led for several years by President Terri Dalton, the San Joaquin Board is comprised of a strong group of government employees and representatives from the commercial industry. This group’s mission is to work together towards a common goal— supporting the war-fighter and awarding scholarships to further the education of future leaders. The 2013-2014 San Joaquin Chapter Board of Directors are: • President – Terri Dalton (DLA) • 1st Vice President – Keith Huppert (Pilot Freight Services) • 2nd Vice President – Yolanda Rios (DLA) • Secretary – Sumer Martin (DLA) • Treasurer – Penny Heupel (DLA Retired) • Scholarship Co-Chairs – Lora Moore (Retired) and Mary Grove (Green Valley Transportation) continued on page 28

Industry Support Makes a Difference at the Norfolk-Tidewater Golf Tournament

By Ann Tardy, President, Norfolk/Tidewater Chapter The Norfolk Tidewater Chapter’s Annual Golf Tournament was a great success! The Captain’s Choice format worked well as teams scrambled to 15 of the 18 holes at Sewell’s Point Golf in Norfolk. Our sponsors were extremely generous this year: LANDSTAR was a Platinum sponsor and sponsored two holes. As a tribute to our enlisted service members, Seko Logistics and Ryder each sponsored Active Duty Military teams. Philadelphia Truck Lines was a Silver sponsor. Candlewood Suites VB and Crowne Plaza both sponsored holes. The Expediting Co was the Hole-in-One Sponsor and Don Lowers had fun showing off the prize (photo on left). There was no shortage of raffle prizes with over 50 items donated. Lucky winners took home hotel stays donated by Crowne Plaza, Candlewood Suites, Country Inn & Suites, Hilton Garden Inn, and Comfort Suites. Creative Office Environments donated an executive office chair and Maersk Line, Limited donated a Callaway golf bag. When the final raffle ticket was drawn, a happy participant came forward to accept his two round trip tickets to anywhere in the US, which had been donated by Southwest Airlines. Next year’s tournament has already been scheduled for the same date—May 31!

AUGUST 2013

The Supply Chain Management School at the Department of Veterans Affairs Acquisition Academy Irvin Varkonyi, President, Supply Chain Operations Preparedness Education (SCOPE) ivarkonyi@scopedu.com

T

he professional development of the logistics and prosthetics workforce in the Department of Veterans Affairs (DVA) has accelerated to meet the dramatic increase of medical services required by veterans who live longer, and who face health and recovery issues from the past decade of conflict in Iraq and Afghanistan. Since establishing the Veteran’s Affairs Acquisition Academy (VAAA) in 2008 in Frederick, MD, the DVA has delivered a broad array of services in the professional development of its acquisition, contracting, program management, facilities, and supply chain workforce. The increase in professional development opportunities has also been in reaction to several reports by the Government Accountability Office (GAO) and the DVA Inspector General on poor management of inventory at the DVA. States a GAO report in May 2011, “The Department of Veterans Affairs (VA) operates one of the largest integrated health care delivery systems in the US, providing care to over 5.5 million veterans annually.

Organized into 21 Veterans Integrated Service Networks (VISN), VA’s health care system includes 153 VA medical centers (VAMC) nationwide that offer a variety of outpatient, residential, and inpatient services.”1 This is relevant because the size of the DVA challenged its ability to manage inventory of medical supplies. GAO noted gaps in requirements for DVA tracking of expendable medical supplies and insufficient device-specific training on correctly processing such expendable supplies.

“The mission of the Supply Chain Management School (SCMS) is to provide best-in-class education, training, professional development, and certification of the VA supply chain workforce. VAAA’s competency-based curriculum will address general and technical skills, VA-specific functional areas, and core activities of our VA logistics professionals,” states Clifton Blount, Vice Chancellor, VAAA, SCMS. How does the DVA plan to enhance the capabilities of its logistics workforce of over

10,000? It has reorganized its professional supply chain levels into four positions: • Apprentice Level 1 – workforce provides logistics support and capabilities at facility, organizational, and entity level • Journeyman Level 2 – workforce expands upon apprentice level to regional administration and central office levels • Master Level 3 - workforce provides operational and strategic, supervisory, and planning support • Senior Level 4 – leaders provide strategic leadership, vision, guidance, and integration of departmental operations There are several supply chain management general competencies noted by the VAAA including leadership, communications, program/project management, problem-solving and decision-making, and contracting and procurement. There are some 16 supply chain management technical competencies, such as property and equipment management, information technology, forecasting, planning, sourcing, and inventory management.

While the organization has seen modification over the recent past, the critical path has been in providing training. Due to earlier policies and budget constraints, insufficient training was provided by DVA in critical areas, including its enterprise resource planning systems and best practices in inventory management. Three areas of professional development in the current curriculum focus on the following: 1. A custom-designed curriculum for logistics in healthcare, with foundational graduate-level knowledge of operations and logistics. DVA has engaged the Naval Post Graduate School to offer this course.

2. A five-day executive education program, called MedLog21, is being developed for high-potential logistics professionals who will bring DVA professionals together with other agencies

of the Federal Government, including the Department of Defense, as well as the medical services industry.

3. A three-day Principles of Inventory Management class to educate the logistics workforce on the basics of effective inventory management. “Upon completion of this course, the students will be able to accomplish the following: define inventory and explain the financial impact of the VA’s operating performance; identify and calculate carrying and ordering costs and, explain the effects and benefits of lot sizing; determine the best cost-effective levels of safety-stock, know the effects of random variation on forecasts and how it relates to safety stock; and be able to apply continuous process improvement to reduce inventory and eliminate waste,” states the DVA. This course was awarded to the DC Metro APICS chapter.2 Are the challenges to effectively manage inventory and logistics at DVA similar or different than the health care industry?

Though this is a difficult question to answer, developments in the industry point to similarities between the DVA and commercial health care industry. In November 2008, the Center for Innovation in Healthcare Logistics in the Department of Industrial Engineering at the University of Arkansas surveyed nearly 1,400 healthcare supply chain professionals from all major sectors of the supply chain.

Respondents were asked to provide their perceptions of cost and quality efficiencies and improvement opportunities within their organizations. The major topics covered were: • The healthcare supply chain • Data standardization • Efficient healthcare consumer response update • Cost and quality3 continued on page 28

www.ndtahq.com | 25

Nâ&#x20AC;&#x2122;S CIR RMA CL AI E H C

AAR CORP. + PLUS Agility Defense & Government Services + PLUS American Shipping & Logistics Group + PLUS APL Limited + PLUS Atlas Air Worldwide Holdings + PLUS Avis Budget Group + PLUS Bennett Motor Express, LLC + PLUS Bristol Associates + PLUS CEVA Logistics + PLUS Choice Hotels International + PLUS Coyote Logistics + PLUS Echo Global Logistics, Inc. + PLUS FedEx + PLUS Final Mile Logistics + PLUS Hapag-Lloyd USA, LLC + PLUS Innovative Logistics, LLC + PLUS InterContinental Hotels Group Americas + PLUS Landstar System, Inc. + PLUS Liberty Global Logistics-Liberty Maritime + PLUS Maersk Line Limited + PLUS National Air Cargo + PLUS Omni Air International + PLUS Panther Expedited Services, Inc. + PLUS Ports America + PLUS Rock-It Cargo USA, LLC + PLUS Science Applications International Corp. (SAIC) + PLUS Supreme Group USA, LLC + PLUS TOTE, Inc. + PLUS Universal Truckload Services, Inc. + PLUS UPS + PLUS

A Team Logistics LLC Aeroscraft American Roll-On Roll-Off Carrier Best Western International BNSF Railway Cubic Global Tracking Solutions, Inc. DB Schenker

26 |

DHL Global Forwarding Evergreen International Airlines, Inc. Global Aviation Holdings Inc. Hertz Corporation Horizon Lines, LLC International Shipholding Corporation KGL Holding Lockheed Martin

Matson Navigation Company Inc. Norfolk Southern Corporation R & R Trucking Raith-CTS Logistics SkyBitz, Inc. The Pasha Group Union Pacific Railroad

These corporations are a distinctive group of NDTA Members who, through their generous support of the Association, have dedicated themselves to supporting an expansion of NDTA programs to benefit our members and defense transportation preparedness.

Defense Transportation Journal

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AUGUST 2013

HONOR ROLL

OF

SUSTAINING MEMBERS AND REGIONAL PATRONS

ALL OF THESE FIRMS SUPPORT THE PURPOSES AND OBJECTIVES OF NDTA

SUSTAINING MEMBERS 1-800-PACK-RAT AAT Carriers ABF Freight System, Inc. Accenture ACTCO-Afghanistan Logistics Advantage Rent A Car Air Transport International, LLC Airlines for America AIT Worldwide Logistics, Inc. Alaska Airlines/Alaska Air Cargo Al-Hamd International Container Terminal American Maritime Officers Amyx Apex Logistics Group Arven Services, LLC Associated Global System Atlas International Baggett Transportation Company Blue Water Shipping US, Inc. Booz Allen Hamilton Engineering Services, LLC Boyle Transportation, Inc. C.L. Services, Inc. C2 Freight Resources, Inc. Cardinal Transport, Inc. Carlile Transportation Systems Carlson Rezidor Hotel Group CGI Chalich Trucking, Inc. Chamber of Shipping of America Citigroup Coyne Airways Crowley Maritime Corp.

REGIONAL PATRONS Acme Truck Line, Inc. AFC Worldwide Express dba R+L Global Logistics Agile Defense, Inc. Alaska Marine Lines Alaska West Express All-Lift Systems, Inc. Allswell Supply Company American Moving & Storage Association American Trucking Associations Association of American Railroads ATS Specialized, Inc. Benchmarking Partners, Inc. Blkbird, Inc. Boeing Company C5T Corporation CakeBoxx Technologies Cargo Experts Corp.

Cargotec USA, Inc. Cavalier Logistics Center for the Commercial Deployment of Transportation Technologies (CCDoTT)

CRST Logistics, Inc. CSX Transportation CWT SatoTravel DAMCO Delta Air Lines DHL Express Dollar Thrifty Automotive Group Door to Door Storage Inc Dynamics Research Corporation Enterprise Database Corporation Express-1, Inc. Fikes Truck Line Fluor General Dynamics/American Overseas Marine GeoDecisions GID - Get It Done, LLC Greatwide Truckload Management Hilton Worldwide Hub Group, Inc. IBM Intermarine, LLC Intermodal Association of North America (IANA) International Longshoremen’s Association (ILA), AFL-CIO International Organization of Masters, Mates & Pilots Interstate International J. B. Hunt Transport, Inc. Kansas City Southern Keystone Shipping Co. Knight Transportation Krown1 Fzc KU Transportation Research Institute

Kuehne + Nagel, Inc. Labelmaster LMI Lockheed Martin Aeronautics M2 Transport Mack Defense Marine Engineers’ Beneficial Association Martin Logistics Incorporated Mayflower Transit McCollister’s Transportation Systems, Inc. Medallion Transport & Logistics, LLC Menlo Worldwide Logistics Mercer Transportation Company Military Officers Association of America MV Transportation, Inc. National Air Carrier Association National Van Lines, Inc. North Carolina State Ports Authority Ocean Shipholdings, Inc. Ocean Star International, Inc. Omega World Travel Omnitracs, Inc., a Qualcomm company One Network Enterprises, Inc. ORBIS Corporation Overdrive Logistics, Inc. Panalpina Pilot Freight Services PODS Port of Beaumont Port of San Diego Posidon Pratt & Whitney Preferred Systems Solutions, Inc. Prestera Trucking, Inc. Priority Solutions International

Priority Worldwide Services Radiant Logistics Partners LLC Ramar Transportation, Inc. Roadrunner Transportation Systems Sammons Trucking SBA Global Logistics Services Seafarers International Union of N.A. AGLIWD (SIU NA) Sealed Air Corporation Sealift, Inc. SEKO Southwest Airlines Co. SRA International, Inc. Teradata Corporation Textainer Equipment Management (U.S.) Limited The Exchange The Parking Spot TQL Transportation Institute Transportation Intermediaries Assn. (TIA) Transportation Management Services Tri-State Motor Transit Co. (TSMT) Truva International Transportation and Logistics TTX Company Tucker Company Worldwide, Inc. United Airlines United Van Lines, Inc. UTi Aerospace and Defense Group Wagler Integrated Logistics, LLC Winston & Strawn LLP Women In Trucking Association, Inc.

Ceres Terminals Incorporated Chapman Freeborn Airchartering Chassis King, Inc. Colorado Technical University CR Transport & Logistics DALKO Resources, Inc. EADS North America Enterprise Holdings Erudite Company Estes Forwarding Worldwide, LLC Europcar Car & Truck Rental FlightWorks FMN Logistics Fox Rent A Car Green Valley Transportation Corp.

Guard Transport, Inc. Hanjin Intermodal America, Inc. IdenTrust, Inc. JAS Forwarding K & S Trucking, LLC Kalitta Charters, LLC LMJ International Logistics, LLC Load Delivered Logistics, LLC Marriott International

McLane Advanced Technologies MCR Federal, LLC Mi-Jack Products Military Sealift Command (MSC) Miramar Transportation Morten Beyer & Agnew MOTIONOLOGY, INC. M-Pak Incorporated Naniq Global Logistics LLC National Motor Freight Traffic Association, Inc. NCI Information Systems, Inc. NFI NovaVision, Inc. Oakwood Worldwide Overwatch, Inc. (a division of Avalon Risk Management) Owner-Operator Independent Drivers Association Pak Shaheen Freighters (Pvt) Ltd. Patriot Contract Services, LLC Payless Car Rental System, Inc. Philadelphia Regional Port Authority PITT OHIO Port of Port Arthur

Portus Reckart Logistics, Inc. Royal Trucking Company Ryan’s Express Transportation Sea Box, Inc. Seabridge, Inc. Seatac Marine Services Secured Land Transport Semper Veritas Maritime Security Solutions SkyLink Air and Logistics Support (USA), Inc. SR International Logistics, Inc. Stratos Jet Charters, Inc. TechGuard Security Tennessee Steel Haulers The Cartwright Companies Trailer Transit, Inc. Trans Global Logistics Europe GmbH TRI-STATE Expedited Service, Inc. Triton Systems, Inc. U.S. Bank Utley, Inc. Virginian Suites Arlington YRC Freight www.ndtahq.com | 27

Kent Gourdin

The Geography of Transport Systems The Geography of Transport Systems, 3d edition, by Jean-Paul Rodrigue, (Taylor & Francis, 2013), ISBN-13: 9780415822541, 432 pages, in hardback and Nook book for $64.95.

M

obility is fundamental to economic and social activities such as commuting, manufacturing, or supplying energy. Each movement has an origin, a potential set of intermediate locations, a destination, and a nature which is linked with geographical attributes. Transport systems composed of infrastructures, modes and terminals are so embedded in the socio-economic life of individuals, institutions, and corporations that they are often invisible to the consumer. This is paradoxical, as the perceived invisibility of transportation is derived from its efficiency. Understanding how mobility is linked with geography is the main purpose of this book.

The third edition of The Geography of Transport Systems has been revised and updated to provide an overview of the spatial aspects of transportation. This text

continued from page 24

• Motor Reps – Nancy Houghton (Green Valley Transportation), Bill Brady (Cargo Logistics Inc.), Tim Baird (USF Reddaway) • Air Reps – Denise Palladino (FedEx), Stephen Ortega (FedEx), Amrit Singh (Pilot Freight Services) • Government Reps – Marlene Jetton (DLA), Henry Martin (DLA), Randy Buckley (DLA) • Amanda Meyer- A35 Representative In addition to its diverse board, the chapter boasts membership that includes all modes of commercial carriers, gov-

provides greater discussion of security, energy, green logistics, as well as new and updated case studies, a revised content structure, and new figures. Each chapter covers a specific conceptual dimension including networks, modes, terminals, freight transportation, urban transportation, and environmental impacts. A final chapter contains core methodologies linked with transport geography such as accessibility, spatial interactions, graph theory, and Geographic Information Systems for transportation (GIS-T).

When I was teaching at the University of North Carolina-Charlotte, there were transportation programs in the Colleges of Engineering (civil engineering), Business (marketing), and Arts and Sciences (geography), yet none of us ever talked with each other. This book provides an interesting, and very readable, discussion of the intimate relationship between transport and geography, a tie that most of us never think about. I actually found it a fascinating read, even though I know virtually nothing about geography per se. DTJ ernment and Internet based suppliers, plus military and civil service presence from Defense Distribution Depot San Joaquin, GSA, AAFES and other associated defense related facilities in the area.

Members include local government representatives, Commander/DDJC, CEO’s, CFO’s, Company Presidents and Senior Account Representatives.

While not the largest or smallest chapter in NDTA, I would not hesitate to call the San Joaquin Valley Chapter one of the strongest. If you are ever in this area of California, I encourage you to stop in to a chapter event. See for yourself why “Everything is Possible” in San Joaquin! DTJ

continued from page 25

Among its findings, the study determined that the healthcare supply chain is in its infancy, with nearly half of the respondents indicating that their organizations’ supply chains are at a low-level of maturity. “Healthcare supply chain managers should focus on fundamental improvements in order to increase the maturity of their supply chain.”4 “Supply chain in healthcare is talent rich, but it remains talent disconnected.

We have to learn how to communicate best practice and failed efforts enough so that the impact of supply chain on organizations continues to improve to a higher national standard. To accomplish this, healthcare supply chain professionals all must learn to a higher and broader standard of knowledge that extends far beyond what we knew five years ago.”5 In this author’s perspective, the DVA has similar shortcomings to the commercial supply chain and is not much different in many areas. It has unique challenges based on the burdens it must bear from Federal Acquisition Regulations (FAR) requirements in acquisitions, while delivering health care under a high stress, resource constrained environment. The DVA’s commitment to offer professional development to its workforce represents a significant commitment to move this process forward, similar to the commercial sector’s commitment to improve the efficiency of its health delivery system. DTJ

1 GAO Report, May 2011.

2 With full disclosure, the author is one of the instructors engaged by DC Metro APICS to provide instruction.

3 The State of Healthcare Logistics, Cost and Improvement Opportunities, University of Arkansas, November 2008, Drs. Heather Nachtmann and Edward Pohl.

4 The State of Healthcare Logistics, Cost and Improvement Opportunities, University of Arkansas, November 2008, Drs. Heather Nachtmann and Edward Pohl.

5 Howard G. Mann, Senior Director, Corporate Materials Management, Saint Luke’s Health System.

DTJ INDEX OF ADVERTISERS APL................................................ 19 ARC.................................................. 9 Budget.......................................... 11

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Defense Transportation Journal

Bennett International Group....... 2 Boyle Transportation.................... 6 FedEx.............................................C4

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AUGUST 2013

Landstar........................................C3 Maersk Line, Limited.................... 1 Port of San Diego........................ 21

SAIC..............................................C2 TOTE.............................................. 23 Tri-State Motor Transit Co......... 16

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