This Week in Logistics News (June 13-17, 2011)

As I previewed on Wednesday, the panel session I moderated in Washington, DC discussing CSCMP’s 22nd Annual State of Logistics Report was very informative. My plan was to share my key takeaways from the discussion today, but rather than squeeze it in with all the other news this week, I’ll write a separate, more detailed posting next week. In the meantime…

The convergence of routing and scheduling, mobile resource management, telematics, and fleet maintenance solutions is a trend we have been writing about for a couple of years. For example, see “Fleet Management and ‘Connected Vehicles’,” where my colleague Steve Banker wrote the following back in July 2009:

Telematics solutions are currently more focused on execution than planning, but their real time sensor data could create new forms of planning optimization, as well as close the chasm that often exists between planning and execution. As part of this study [on fleet management planning solutions], I’m interested in learning how “connected vehicles”-i.e., vehicles that are linked to navigation satellites, communication networks, and (in the near future) to other vehicles directly-could transform fleet maintenance, routing, and safety.

Descartes’ acquisition this week of Telargo, a software-as-a-service (SaaS) provider of MRM telematics solutions, further validates this trend. Here is an excerpt from the press release:

Telargo’s solutions gather information about vehicles, such as location, engine use and braking information, and the drivers of those vehicles, such as hours of driver service. This data can then be used for real-time decision making, dynamic estimated time of arrival notifications for delivery recipients, and sophisticated operational analysis. In the quickly evolving United States regulatory environment, Telargo’s telematics solutions also help fleet owners comply with new driver hours of service (HOS) and fuel tax reporting (IFTA) regulations.

In short, the definition of “fleet management solutions” is much broader today than it was just five years ago. Many people still equate “fleet management” with routing and scheduling software applications. While routing and scheduling is still important, it is only one piece of the puzzle. Fleet operators need to take a more end-to-end, integrated perspective of their requirements, and solution providers need to respond accordingly. Vendors have historically taken the partnership route to assembling a complete solution, an approach that has worked okay overall, but is arguably a more complex solution for end-users to implement and manage. Will this acquisition spur other vendors to make acquisitions of their own? Time will tell.

CH Robinson Worldwide (CHRW) continues to expand the global reach of its “Managed TMS” service. Last November, the company announced the opening of a control tower in India, and this week the company announced the opening of its China control tower.

Long-time readers of Logistics Viewpoints know that I am a big proponent of bundling software-as-a-service TMS with managed services (see, for example, “Buying Supply Chain Outcomes, Not Software”). This option is best suited for companies that have limited IT resources (or simply don’t view IT as a core competency) and want to outsource the day-to-day execution of their transportation operations to a third party, while still retaining strategic planning and procurement in-house. CH Robinson is not alone in providing this type of solution—CTSI, enVista, LeanLogistics, Transplace, and others also offer SaaS TMS plus managed services–but CHRW is arguably the most aggressive in expanding its TMS and managed services capabilities to other geographic regions.

One of my predictions for 2011 was that more shippers will consider SaaS TMS coupled with managed services this year. I don’t have any data yet on whether this is happening, but if I use the general uptick in logistics outsourcing as a proxy, I remain optimistic about my prediction.

When it comes to reading the tea leaves about the economy, all we seem to get is mixed signals. This week, for example, USA Today published an article titled “$4 gas a thing of the past, at least for now,” suggesting that “the slide in prices — linked to rising inventories and soft demand — could continue through summer, soothing fragile consumer sentiment and potentially boosting the sluggish economy.” But an article in today’s Wall Street Journal paints a different picture:

The recent run-up in prices has evoked troubling memories of July 2008, when crude reached $147 a barrel and helped to precipitate the global economic meltdown. IEA Executive Director Nobuo Tanaka said Thursday that the current situation “is starting to resemble 2008, and we know that 2008 was a very hard landing for the world economy.”

In Boston, we say that if you don’t like the weather, just wait a minute because it will change. I think the same applies to the economy these days. If you’re feeling good or bad about the economy, just wait a minute because it will change.

That’s all the time and space we have for today. Enjoy the weekend and Happy Father’s Day to all you dads out there.

(Note: Descartes, CH Robinson, LeanLogistics, and Transplace are ARC clients)