This Week in Logistics News (December 3-7, 2012)

Adrian’s stand up desk

I’ve been reading a lot lately about how sitting for too long isn’t healthy, and how many business professionals are now using stand up desks at work. So I decided to work standing up this week, and because stand up desks are expensive, I employed my Cuban ingenuity and built my own using an ironing board and five of my Encyclopedia Britannica books. I am happy to report that my lower back feels much better. My legs and knees, however, are not so happy.

In other news…

As I’ve highlighted in previous postings, the main driving forces for mergers and acquisitions in the 3PL industry are to expand globally, introduce new services, target new industries, and penetrate the small and midsize business (SMB) market. Transplace is a perfect case study when you look at the acquisitions the company has made since early 2011, including this week’s acquisition of Torus Freight Systems, a Canadian-based logistics services company focused on Canadian cross-border and intra-Canada freight. Here is how Transplace CEO Tom Sanderson summed it up in the press release:

“Acquiring Torus, a leading Canadian 3PL, continues our expansion through strategic acquisition. In 2011, Transplace acquired SCO Logistics to broaden our vertical experience in chemicals and joined forces with Celtic International bringing us door-to-door intermodal expertise. Geographic expansion was our goal, and that’s exactly what we have accomplished with this acquisition.”

Retailers and other companies are breathing a huge sigh of relief now that the strike by clerical workers at the Los Angeles and Long Beach ports is over. But when you stand back and think about it from a supply chain risk management perspective, being in a situation where just 800 clerks can shut down the main entry point for about 40 percent of US imports and cost the region about $1 billion per day is not good.

The buzz around same-day delivery continues. A few weeks ago, I wrote about how Google is testing a same-day delivery service in San Francisco. Well, it seems like the company is broadening its strategy in this area with the news that it has acquired BufferBox, which provides lockers for customers to receive packages from online e-commerce retailers (very similar to Amazon Locker). Check out this video to see how it works.

Meanwhile, the Wall Street Journal published an interesting article on same-day delivery, which included some interesting details about eBay’s activities in this area:

In each town, eBay plans to have dozens of couriers like Ms. Widtfeldt, who use their cars, bicycles or even the subway to shuttle goods around town.

 

“There’s a lot of inventory that’s close to customers, in stores and warehouses, but the link through delivery hasn’t really been cracked yet,” said eBay’s marketplace President Devin Wenig. “This is an experiment to determine if we can cement eBay into local markets by handling all aspects of commerce.”

 

There are high upfront costs to running a troop of couriers, for instance. EBay is paying couriers about $12.50 per hour, plus 55 cents per mile driven, and furnishes drivers with a parking card for when a lot is convenient. EBay plans to invest more into the service, including new uniforms and advertising on buses and, possibly, on couriers’ cars.

Like I’ve said before, the true winners in same-day delivery will be the retailers and service providers who can actually make money at it, rather than just leveraging it as a loss leader. Optimization and mobile technologies will certainly play a big role in achieving this goal.

If you are a 3PL or transportation company and you’re not involved in cross-border shipping with Mexico, then you are missing out on a growing business. A Reuters article published this week provides a nice overview. Here are some excerpts:

As the U.S. economy creaks along, the growing business with Mexico is a cause for cheer: Both Kansas City Southern and Union Pacific are reporting much bigger increases in cross-border shipments than in overall volume.

 

Two areas that are “just exploding” are transporting automobiles into the United States and intermodal shipping – moving goods in containers that are shifted from truck to train or train to ship – said William Galligan, vice president of investor relations at Kansas City Southern.

 

Total cross-border freight by train and truck has surged nearly 35 percent in the past five years, according to U.S. government data.

Finally, Apple’s CEO Tim Cook said that it will move the production of some Mac computers from China to the United States next year. “This doesn’t mean that Apple will do it ourselves,” he said, “but we’ll be working with people and we’ll be investing our money [more than $100 million].” It will be interesting to see where Apple decides to build its manufacturing facility (and why), and which products it will build there (and why). In terms of manufacturing jobs, my bet is that relatively few will be created because, more than likely, robots will be doing most of the work (see the New York Times article “Skilled Work, Without the Worker” published in August).

Now I need to sit down. Have a great weekend!

Song of the Week: “Stand” by R.E.M.

(Note: Transplace is a Logistics Viewpoints sponsor)

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