It’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 to acquire Genco
- USA to normalize relations with Cuba
- Ikea opens e-commerce stores
- Procrastinators rejoice: Amazon extends Christmas shipping
- Port delays put holiday shipments at risk
FedEx 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.
Ikea 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.
While 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.
To 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.