This Week in Logistics News (October 7-11, 2013)

There’s lots going on today, so let’s go straight to the news.

The Bureau of Transportation Statistics’ (BTS) Freight Transportation Services Index (TSI) reached its second highest level in history in August, rising 0.4 percent in August from July, and increasing 3.4 percent from August 2012. Here’s some analysis from the press release:

The Freight TSI has increased in eight out of the last 10 months, growing from 108.4 to 114.8, an increase of 5.9 percent since October 2012. Most of the increase was in trucking and rail intermodal.

The 10-month growth is consistent with steady growth in Gross Domestic Product, industrial production and employment over the same time period. The growth in the economy has come particularly from housing, autos and energy, sectors that generate relatively large amounts of freight tonnage.

Meanwhile, the annualized turnover rate at large truckload fleets rose two percentage points to 99 percent in the second quarter of 2013, according to the latest edition of American Trucking Associations’ Trucking Activity Report. “Continued high turnover shows that the market for qualified, experienced drivers remains extremely tight,” ATA Chief Economist Bob Costello said. “The continued improvement in the freight economy, coupled with regulatory challenges from the changing hours-of-service rule and CSA will only serve to put a further squeeze on the market for drivers.”

A few months ago, I said that the real test regarding the impact of HOS and CSA will come in the fourth quarter. Here we are. The early signs are a bit concerning, but let’s look back in January and see how we did.

The U.S. government shutdown is having an impact on global trade. Although Customs is mostly staffed during the shutdown, many other agencies involved in global trade have reduced staffs and closed websites. Here are some excerpts from a Wall Street Journal article published this week:

More than 40 government agencies, including the EPA, the Department of Agriculture and the Department of Commerce, are involved in trade shipments, said [Marianne Rowden, president of the American Association of Exporters and Importers]. Fourteen agencies have “release and hold” authority that trumps clearance from U.S. Customs and Border Patrol, she said.

Last Thursday, a website run by a Commerce Department bureau suddenly shut down…The Bureau of Industry and Security site is used by sellers of high-tech goods that are subject to export controls, particularly those with encryption capabilities that could interfere with the government’s intelligence-gathering. Licenses often are required to export equipment used to make semiconductors, particularly advanced chips that can have military applications.

On the technology front, SAP announced the SAP® Customer Activity Repository application, “a new retail data repository powered by the SAP HANA® platform…intended to support retailers in becoming more customer-centric by bringing together customer, sales and inventory information from siloed applications.” Here are some additional details from the press release:

SAP Customer Activity Repository aims to empower retailers with consumer insights by consolidating customer interactions from stores, online and mobile channels with insight from social media feedback such as Twitter or Facebook posts [emphasis mine]. The information shall act as the basis for a “single source of truth” to help retailers optimize branding, marketing, promotions, pricing, merchandising, inventory management processes and more.

General availability of SAP Customer Activity Repository is planned for the first quarter of 2014.

There’s been a lot of buzz and hype lately about performing sentiment analysis on social media posts and integrating the output with enterprise data to get a more complete and real-time pulse on demand. I’m glad to see that SAP plans to leverage insight from social media posts in its application, but how well and valuable this information turns out to be in practice remains to be seen.

In other technology news, HighJump Software announced that its TrueCommerce EDI Solutions Group has partnered with AdvancePro Technologies (APT), a provider of inventory management software, which will “enable AdvancePro customers to process EDI purchase orders like any other orders, without the need to manually manage or rekey EDI documents. Even invoices and Advance Ship Notices (ASNs) can be exported from AdvancePro and sent to trading partners using TrueCommerce EDI.”

Connectivity — it isn’t sexy, but it’s vital to executing supply chain processes.

Natural gas is having a growing impact on logistics and supply chain management, which is why it’s one of the “mega trends” we will discuss at the CSCMP Annual Global Conference later this month. The news from UPS this week is yet another example. The company announced that it plans to invest about $50 million to build an additional nine liquefied natural gas (LNG) fueling stations, bringing the total number of stations to 13. According to the press release, “The enhanced LNG fueling infrastructure will support the operation of approximately 1,000 UPS LNG tractors that will displace more than 24 million gallons of diesel fuel annually.”

And finally, retailers in the UK are also viewing same-day delivery as a competitive differentiator. AO.com, which sells kitchen appliances, is now offering same-day delivery of refrigerators and cookers (customers are charged a £29.99 fee). Here’s an excerpt from the Financial Times article:

John Roberts, the chief executive and founder of [AO.com], said: “Research was coming back from customers saying they wanted same day service.”

The change was not simple. AO.com had to rejig its delivery infrastructure across the UK, but Mr Roberts is confident that the move would drive sales volume [emphasis mine]. “The customer can order in the morning and not have to take any time off work. The not having to take time off work is a good offset for £30.”

Mr. Roberts has a good reason to be confident. As Steve Banker wrote about earlier this year, “Amazon found that merely displaying an icon touting same-day availability increased conversions by 20 to 25 percent! Interestingly, of those Amazon shoppers who saw the icon and then made a purchase, most of them ended up not using same-day delivery, opting instead for next-day delivery.” In case you’re wondering, AO.com also offers next-day delivery for a lower fee of £9.99.

And with that, have a happy weekend!

Song of the Week: “Paddling Out” by Miike Snow (“There’s someone here who laughs too hard at everything”).

Note: HighJump Software is a Logistics Viewpoints sponsor.