This Week in Logistics News (January 17 – 23)

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.