Archive for Global Trade

AFCOn Sunday night, I dealt with a logistical nightmare. I was fortunate enough to have tickets to the Patriots – Colts AFC Championship game. As a lifelong Pats fan, it was a treat to witness the victory. As a man with a decent amount of common sense, it was a difficult night. First, the rain. I don’t think I’ve spent that much time in sustained downpours before in my life. Luckily I had on many layers and our tent for tailgating had portable heaters. They certainly helped me dry off after the game. Second, the traffic. With 30,000 (give or take) cars leaving the parking lots at the same time, it became a logistical nightmare. We decided to fire the grill back up and wait out the traffic. At one point, we watched a car move 10 feet in a half an hour. By the time we finally got on the road, traffic had let up a bit, but it was still slow going. In all, it took me about 3 ½ hours from the final whistle to get back home; and I live just north of Boston. From a logistical standpoint, I’ll be searching for alternatives for the next game.

Now that the Colts game is over, we’re on to the news.

According to the American Trucking Association (ATA), the amount of freight moved by truck increased 3.5 percent in 2014 over 2013. The seasonally adjusted For-Hire Truck Tonnage Index was unchanged in December, following a jump of 3.5 percent during the previous month. In December, the index equaled 136.8 (2000=100), which tied November as the all-time high. Compared with December 2013, the index increased 5.2 percent, which was the largest year-over-year gain in 2014. Additionally, the ATA announced a strong outlook for 2015. According to ATA Chief Economist Bob Costello, “Overall, 2014 was a good year for truck tonnage with significant gains throughout the year after falling 4.5 percent in January alone. Freight volumes look good going into 2015. Expect an acceleration in consumer spending and factory output to offset the weakness in hydraulic fracking this year.”

BezosAmazon has reported that its Sunday deliveries in the UK have quadrupled compared to the last year. The online retail giant points to the accelerated nature of online shopping. The launch of Sunday deliveries on Amazon products, which is available in most major cities in the UK, has been driven by the company’s Amazon Logistics business. This arm of the company provides the facilities for local and national delivery companies to deliver products on a Sunday. The service is free of charge for Amazon Prime members. In the UK, the Royal Mail is feeling the pressure from Amazon’s Sunday deliveries. However, in the US, Sunday deliveries in the US run through a partnership between Amazon and the Postal Service. It will be interesting to see if things change in the US based on the success of Amazon’s logistics business in the UK.

Of the 6.8 million square feet of warehouse space across Mumbai, Chennai, Bengaluru and Delhi-NCR, about 1.7 million (or 25%) are accounted for by online retailers. The e-tail space is growing significantly, with more money invested across a number of areas. For example, e-tailers raised more $2.2 billion in 2014 for the purpose of building warehouses. Additionally, about 3.5 million square feet of office space had either been leased or was in various stages of negotiation by e-commerce firms across the country, which is about 400 percent year-over-year growth. These stats point to the continued expansion of online commerce in a global economy.

The Postal Service has proposed raising postage rates this spring to adjust for inflation. Under the plan, prices across all classes of mail would increase by an average of 1.966 percent on April 26. The cost of a single-piece stamp would remain at 49 cents, but the rate for letters weighing more than 1 ounce would increase from 21 cents to 22 cents per additional ounce. The Postal Service has estimated that its plan would bring in an estimated $900 million per year for the agency, which still does not account for $5.5 billion it lost last year. These price increases should come as no surprise, considering that even with fuel prices dropping, both FedEx and UPS are raising rates as well.

FEDEX UPSAnd finally, on the lighter side of the news, UPS declined to deliver a package to rival FedEx. Sue Szuch, of Lima, OH, sent a package via UPS to her daughter, who happens to be a FedEx employee in Cincinnati. The package, however, was stuck in delivery limbo. A supervisor said that the driver reserves the right to refuse delivery to a competitor. After a few phone calls, the matter was cleared up and the package was delivered. UPS even refunded her shipping costs.

That’s all for this week. Enjoy the weekend and the song of the week, Won’t Get Fooled Again, by The Who.

big showHappy New Year. It’s hard to believe our little break is over and we are a week back into work. With so much to look back on, I prefer to look ahead. But just to next week. Clint Reiser and I will be off to the National Retail Federation’s (NRF) Big Show on Monday in New York. This will be my seventh straight year attending the show. And much like every other year, I am expecting a whirlwind. There are meetings to attend, new technologies to see, and hopefully, some sessions to witness. In the past, NRF’s Big Show has highlighted many cutting edge technologies that focus on the user experience – mobility, touchscreens, wearables, etc. I am hoping to see some interesting supply chain technologies that can truly usher in the omni-channel era. Clint and I will be reporting back on our trip, so look for some NRF notes soon.

And with that, let’s get to this week’s news.

Bengaluru-based Flipkart is evaluating how it can get products to its customer’s doors in just three hours. There are a few key components to figure out, including pricing and technology. In the era of “free shipping”, many consumers are actually willing to pay a premium to get their goods as soon as possible. Just look at the number of people willing to shell out $99 to Amazon annually for the promise of free two-day shipping. At the core is figuring out which products and which cities this is even a viable option for. With same day delivery already available in big cities, and offered by not just Flipkart, but Amazon India and Snapdeal already, this new time table could be a game changer. And it could certainly force their competitors to up their service levels as well.

Photo by Mike Koozmin - sf.Pier80For months we’ve been covering the port congestion issues plaguing Southern California. Well for one port, the congestion may finally be the boon it needs. The California car culture could soon boost cargo traffic in San Francisco. Pier 80 in the Port of San Francisco was once one of the busiest cargo hubs on the West Coast.  But a decade of dropping cargo traffic has left it operating at limited capacity. But now, with ports in Southern California at capacity, Port 80 in San Francisco is ready to rise again. It is in line to become the newest hub for the import and export of automobiles — including cars built at factories in Mexico as well as locally produced Tesla electric cars shipped to emerging markets in Asia.

LalamoveCrowd-sourced services have been growing by leaps and bounds across a number of industries. Uber is giving traditional taxi’s a run for their money. Airbnb is an alternative to traditional hotels. Deliv is another option for home delivery. Lalamove is now making a name for itself in the logistics business. The company, which began life in Hong Kong in December 2013, and has expanded to Bangkok, offers smartphone apps that allow customers to move items across a city using its network of drivers. Anyone with a valid license and car can sign up to be a driver. The company recently raised $10 million in funding. According to Executive Blake Larson, “the money will be used to strengthen its position in its existing markets: Hong Kong, Singapore, Bangkok, Taipei and — as of last week — Guangzhou and Shenzhen. The capital will also be used to ‘further penetrate’ China and enter more parts in Southeast Asia.”

UPS and FedEx rate increases are now in effect. At the same time, fuel prices are at nearly six year lows. So what gives? According to the large carriers, fuel prices are only one consideration when it comes to setting prices. Trucks are no longer idle; the shipping industry is booming. At the same time, there is a trucker shortage which means that there is more demand to fill the pallets that are actually going on trucks. With less truckers, capacity is down, making things even more complicated. And now, enter the age of e-commerce, and most notably, the Amazon effect. Online sales, with the promise of free shipping, have jammed trucks full of small items, wrapped in loads of bubble wrap and crammed into boxes. While these boxes take up room on a truck, the truck may be carrying around mostly air. So the days of charging simply by weight are over. We’ll closely monitor the impact of new shipping rates.

Nic CanalFor 100 years, the Panama Canal has been the only shipping route through the land mass of the Americas. The canal allows ships to navigate between Pacific and Atlantic oceans without having to sail all the way to the tip of South America, through the infamous Magellan Strait, making it one of the world’s most important economic arteries. Nicaragua has plans to enter history (after nearly 200 years of discussions). On December 22, work began on the Interoceanic Grand Canal of Nicaragua. The new canal will take five years to build over some 278 miles, at an expected cost of $50 billion. The project resulted from the Nicaraguan national assembly agreeing a 50-year concession with the Chinese company Hong Kong Nicaragua Development. The canal will allow the passage of the world’s largest ships, some of which will be too big for the Panama Canal even after its current expansion project has completed. Even though work has officially begun on the canal, there is plenty of speculation that the project will never be completed.

And finally, the amount of freight moved between the U.S. and its North American Free Trade Agreement partners of Canada and Mexico increased in October compared to the same time a year ago. This increase made it the highest level on record. Truck freight led the way, with a 7.2% increase, followed by air at 4.9%. Trucks account for 60% of US-NAFTA freight, while rail is the second largest mode at 15%. Vessel, even with a 7.6% decline in shipments, is still the third largest mode at 7.7%

That’s all for this week. Enjoy the weekend and the song of the week, Sweet Child O’ Mine, by Guns N’ Roses.

Just how critical is a company’s ability to properly collect and correctly analyze information in an ever-expanding global logistics market?

Given the myriad of unique regulations and countless other considerations involved in moving goods from Country A to Country B, the depth and quality of your information makes the difference between profitability and the kind of failure that can ruin a company. The efficient processing of data and the execution of strategy based on the knowledge gained now stand along with personnel and equipment as the cornerstones of a successful logistics operation.

The exponential growth within the international logistics market in recent years has been, in part, a product of logistics providers and 3PLs in the U.S. seeking to expand as their domestic market growth began to stagnate. Meanwhile, the ever-broadening international trade market has become so complex that shippers from the U.S. and abroad are discovering it’s much more efficient and effective to partner with experts in the international logistics field.

There is no question we are in a period of great opportunity for domestic brokers and 3PLs to consider entering the international market. The U.S. is recognized around the world as the leader in logistics efficiency and productivity. However, any U.S. logistics operation seeking to play on the international stage must clearly understand four key considerations:

  • Effective strategies within U.S. domestic logistics operations will not necessarily transfer to the international market.
  • Economic and political situations are in a continuous state of change within countries around the world.
  • Regulations governing transportation and international trade are constantly evolving.
  • Information is the common denominator within the U.S. and international markets.

The Power of Information
The No. 1 challenge today for logistics professionals, 3PLs and brokers throughout the world is maintaining the ability to stay informed on the key issues. Properly managing information allows logistics pros to anticipate what’s next and how it will impact their customers and their respective operations.

Today’s most successful international (and domestic) transportation strategies are rooted in the insightful analysis of information. There are a number of requirements that logistics professionals must meet in gathering and processing information, including:

  • Establishing reliable sources of relevant information.
  • Utilizing systems with the ability to automate the sizable amounts of data that must be collected.
  • Working with professionals who can offer a comprehensive perspective and develop effective strategies based on the information collected.

At the end of the information trail, logistics providers are still focused on effectively serving customers’ needs and ensuring success for the overall operation. A few select transportation optimizers in today’s market can build highly sophisticated solutions to very complex problems. Yet, when it comes to optimization, there is an inescapable reality to consider:

Without the proper information related to regulations and laws of the countries where you are operating, you will not be solving a transportation problem for your customer. Instead, you will be creating an international trade problem for you and your customer.

The Value of ‘Actionable Intelligence’
The process of harnessing information and channeling it in the right direction to obtain the best result is very difficult to master. First of all, collection of the information is hard, and the analysis of what you collect is challenging. Most importantly, the proper and effective utilization of that information can be very difficult. The spectrum of information challenges can be very broad, as demonstrated by a few select examples:

  • The state of politics in the country or countries you are serving.
  • Fluctuations in the value of currency and any impacts it could have on buying power.
  • Labor or other issues related to ports of entry.

In a logistics setting, information reaches its greatest value when the various sources of data can be translated into actionable intelligence.

The Route Ahead & Entering the International Stage
With the expansion of markets across the globe, traditional domestic logistics customers are increasingly seeking to test how their products will fair internationally. This global marketing trend has created increased demand for expertise in international trade. Providers seeking to make a successful debut on the global logistics stage should do the following:

  • Target a market and don’t try to be all things to all people.
  • Focus on the unique challenges of that market and find the right solutions.
  • Invest in people and technology.
  • Stay in your target market and become proficient with your service before expanding into new markets.
  • Keep your eyes wide open and never lose the ability to adapt.

Of course, the fastest route toward gaining measurable international trade expertise is by converting information into a competitive advantage.

 

Doug Surrett is the Vice President, Global Logistics for MercuryGate where he oversees the company’s expansion plans outside the US market.  Prior to joining MercuryGate, he worked at UPS in Operations, IT and Customer Automation. He has also owned his own consulting practice focused on TMS, Global Trade and WMS software systems.

 

2014-2015-calendar-heroIt’s hard to believe another year is coming to an end. There have been many highs and many lows this year, and an awful lot of newsworthy items to keep you abreast of. We wrote about numerous mergers and acquisitions, new technologies and innovations, customer success stories, drones, overnight delivery, port congestion, drones, 3PL’s, robots, shale oil, drones, omni-channel, warehouse management, transportation management, and, of course, drones (did I mention drones?). As much fun as I’ve had writing some of these stories, I’ve also enjoyed reading the articles of my colleagues and customers. I truly feel that this has been a year of learning. And for that, I am thankful.

With the holiday season upon us, there are vacations to be had, family and friends to be enjoyed, and hopefully, some well deserved rest. For these reasons, this will be the final Logistics Viewpoints column of the year. We are going to spend the next two weeks re-energizing ourselves to make sure we continue to bring you the most insightful supply chain and logistics news and stories. Happy holidays from all of us here at Logistics Viewpoints.

And with that, on to this week’s news.

FedEx GencoFedEx has agreed to buy third party logistics provider Genco for an undisclosed sale price. According to FedEx, the impetus behind the deal is to expand their retail and e-commerce markets. The biggest (and most obvious) opportunity area for FedEx in the deal is the robust reverse logistics capabilities of Genco; the company processes more than 600 million returns annually from the world’s leading retailers and consumers good companies. A secondary opportunity is the addition of millions of square feet of managed warehouse space, which is not dedicated to reverse logistics. This aspect helps to broaden FedEx’s reach, and will certainly be an advantage during the 2015 holiday season.

What started out as discussions about a prisoner swap has escalated between the United States and Cuba. Thankfully, it has escalated in a positive way. On Wednesday, President Obama announced plans to normalize the relationship between the two countries, re-establishing diplomatic relations for the first time in over 50 years. Cuban president Raúl Castro tempered expectations, saying, “This in no way means that the heart of the matter has been solved.” The “heart of the matter” being the trade embargo. But a historic shift in overall relations between the two countries can be a step in the right direction toward an eventual larger commercial relationship.

ikeaIkea is opening a string of stores across Canada. However, unlike its normal store set-up, with dozens of showrooms and seemingly miles of warehouse space to walk through, the new stores will be approximately 1/10th the size of a normal store. The Swedish company plans to open these stores as e-commerce pick-up location. Unlike the normal stores, Ikea workers would retrieve items for customers who ordered online. This is quite the difference for those Ikea fans who are used to walking the warehouse looking for the tag to retrieve their merchandise. And with the influx of customers who have grown tired of a standard store experience, Ikea is making what looks like the right move at the right time.

Amazon primeWhile my Christmas shopping is done, there are scores of people who are waiting until the absolute last minute to order gifts. And this year, the last minute is even later. Amazon has extended its free shipping deadline for Christmas Eve delivery. Customers who order online by 11:59 pm EST today, will have their items delivered by Christmas Eve. For those customers who are Prime members, the deadline for free two day shipping is December 22. While many procrastinators will rejoice at this news, let’s not forget about last year’s late-delivery debacle. A huge influx of online orders could backlog Amazon and delivery partners, leading to another disastrous season. Hopefully Amazon has learned its lesson and will be ready for the shopping onslaught.

portsTo make things more difficult for retailers, holiday shipments are said to be at risk due to the West Coast port labor disagreement. Protracted labor talks at the busiest U.S. container ports are leading to delayed deliveries to some retailers. The backlog has already caused FedEx to shift resources and limit shipments from some customers to avoid a last-minute pre-Christmas surge, the company said. The National Retail Federation (NRF) estimates that a strike or lock-out could cost the US economy more than $2 billion a day. The current dispute affects 29 ports including Los Angeles and Long Beach. Many retailers are reporting up to a week’s lag time getting merchandise on the shelves. With so many companies at the make or break part of their year, the port slowdown could be disastrous. It also means there could be a lot of gift cards under the tree.

That’s all for this week and for the year. We hope everyone has a happy and prosperous new year and we look forward to bringing you more logistics news in January. Enjoy the weekend and the song of the week Pharrell’s Happy.

Black-Friday-ShoppersAccording to the National Retail Federation (NRF), Black Friday fizzled compared to last year, as sales tumbled 11%. An estimated 6 million+ shoppers that were expected to hit the stores on Black Friday never showed up. There are a few reasons why sales tumbled. First, more consumers appear to not be in a rush to hit stores and deal with massive crowds. With Cyber Monday right around the corner, many consumers are more comfortable with waiting a few days and shopping from the comforts of their homes (I certainly received an amazing number of promotional emails throughout the day on Monday). Secondly, retailer were targeted by protesters who called on consumers to boycott Black Friday. The plan was to make a statement about recent police violence. The third reason is that consumers simply were not moved enough by the discounts retailers were offering. The big draw for Black Friday is the massive discounts. Consumers apparently did not find the discounts enticing enough to venture out to the malls. Whatever the reason, NRF is still confident that this will be a busy holiday season. According to NRF Chief Executive Officer Matthew Shay (via a conference call), “the holiday season and the weekend are a marathon, not a sprint. This is going to continue to be a very competitive season.”

And with that, on to this week’s news.

C.H Robinson, a logistics service provider, announced that it has reached a deal to acquire Freightquote.com for $365 million in cash. Freightquote is a privately-held freight broker providing services throughout North America. The acquisition plays well for C.H. Robinson’s freight services. C.H. Robinson is focused on mid-size and large customers, where Freightquote has a focus on the SMB. This will allow C.H. Robinson to expand its target market. The acquisition also aids the company’s advances in the e-commerce market. According to John Wiehoff, C.H. Robinson chairman and chief executive officer:

“E-commerce is going to be a bigger part of future supply chain services and Freightquote brings us a leading solution in our industry. Along with their track record of success, Freightquote has an established brand, a talented management team, excellent people, and a performance-based company culture.”

Speaking of acquisitions, Trucking Unlimited has acquired TruckDrivingJobs.com for $800,000. This acquisition is partly aimed at helping to relieve the ongoing shortage of truck driver in the United States. Trucking Unlimited was established in 2012 as a specialty job site for recruiting truck drivers to available vacancies in every state. By acquiring a niche site focused on more specialized and higher paying opportunities, the new Trucking Unlimited can reach a larger pool of applicants, as it is significantly more targeted than general job boards. It also helps to reach the newer demographic of truck drivers which are more tech and web savvy.

death ringCyber criminals have been attacking retailers and banking establishments, stealing credit card numbers, account information, and pin numbers. Now there is a new area of attack: the smartphone supply chain. A new mobile Trojan dubbed “DeathRing” is being pre-loaded on to smartphones somewhere in the supply chain, warn researchers at mobile security firm Lookout. DeathRing is a Trojan believed to be of Chinese origin that masquerades as a ringtone app, but can download SMS and browser content from its command and control server to the victim’s phone. DeathRing could use SMS content to phish a victim’s personal information, for example, using fake text messages requesting the data. Lookout researchers say the malicious app is impossible to remove because it is pre-installed in the system directory. Researchers said this signals a potential shift in cyber-criminal strategy towards distributing mobile malware through the supply chain.

The US West Coast port congestion has caused lots of headaches for shippers and retailers alike. And we have certainly followed the coverage here quite a bit. With fears of a complete shutdown looming, and accusations of a work slowdowns, the congestion has continued to get worse. Just how much worse? Recently it drove Asian shippers to abandon ocean shipping and resort to air freight. This ensured that shippers would have their goods on store shelves for the holiday season. The only problem: it was the worst possible time to ship via air freight. Air freight rates rose 17% during the month of October. Just another reason the shipping world as a whole would like to see a deal reached in the West Coast ports.

Pizza-DeliveryAmazon has quietly entered the food delivery game. While this may not sound like something new, we’re not talking about Amazon Fresh and grocery delivery. Instead, Amazon has launched a takeout and delivery feature to rival GrubHub. The still-unnamed service rolled out in Seattle with around 20 restaurants for delivery and around 110 for takeout orders that you pick up yourself. As with other Amazon services, the takeout and delivery service lets you charge everything to your existing Amazon account.

That’s all for this week. Enjoy the weekend and the song of the week (in honor of my son’s newfound obsession with the song), Get Lucky by Daft Punk.