My colleagues have written about the numerous applications of autonomous vehicles and their potential uses in the future. Chris discussed driverless trucks currently operating at the ore mines in Australia. In a prior posting, Steve wrote about Google’s plans to build and launch a small fleet of subcompact, driverless cars. He continued by supposing that maybe someday these cars would carry robots that could make door-to-door deliveries. Well now Domino’s Pizza has made autonomous deliveries a reality by launching its new driverless delivery motorcycles, the Domi-No-Driver.
Now on to the news!
- LLamasoft Acquires IBM’s LogicTools Supply Chain Applications Business Unit
- Property Investors Flock to Europe’s Warehouses
- Labor Dispute at West Coast Ports Contributes to Trade Deficit Shrinking to Five-Year Low
- (India’s) Government to Shake Up Trade Tariffs to Compete Globally
- Factories in U.S. Slogging Through Storm of Challenges
LLamasoft announced this week that it has acquired IBM’s LogicTools supply chain applications. In 2007 ILOG, an optimization software vendor well-known for its CPLEX engine, acquired LogicTools. LogicTools was known for its supply chain strategic planning, network design, and multi-echelon optimization software. A year later, IBM acquired ILOG, obtaining the LogicTools business as well. About ten years ago, there was a sure in point-solution providers offering multi-echelon inventory optimization and network design software. Eventually, most of these companies were acquired by vendors offering a broader suite of supply chain applications. ARC’s research into the supply chain planning market shows that these solutions continue to deliver value, but are more often seen as an integral component to a larger software footprint, rather than a stand-alone solution. I find it likely that the LogicTools business will be highly synergistic within LLamasoft, given the LLamasoft solution footprint and the profile of LLamasoft’s client base and service offering.
Warehouse properties continue to be all the rage in Europe. An article this week in WSJ discusses the flourishing European industrial real estate market, primarily warehousing driven by e-commerce and customer expectations for next-day delivery. Deutsche Asset & Wealth Management expects logistics properties to be the best performing real-estate sector in Europe over the next five years. This appears consistent with the growth potential I expect in the warehouse automation market, as numerous vendors are experiencing heightened bookings and revenues.
West Coast Ports – the topic that just won’t go away. The trade deficit for February was lowest level in five years. Initially I thought this was good news due to my concern about decreasing exports resulting from the strong US dollar. But exports only decreased 1.6 percent, while imports decreased 4.4 percent. So the reduction in imports was the primary driver of the trade deficit reduction. The import decline is being attributed to the West Coast port disruptions and lower fuel imports. The import trend is expected to reverse along with increased activity from the port resolution. Therefore, the trade deficit is likely to revert back toward the higher levels typical of the recent past.
India’s Government is planning to revise its tariff policies to compete with global norms and prepare for new regional trade agreements that are being proposed. In particular, India is looking at lowering tariffs on intermediate goods to increase its role in global supply chains (India’s trade policies were recently in the news due to its disagreement with the WTO guidelines on agricultural stockpiling policies). Interestingly, I was reading just the other day,that India’s infrastructure and provincial taxation policies rendered the deployment of large, central distribution centers impractical.
The ISM index declined in March to 51.5 (over 50 implied expansion), the lowest reading since May 2013. This represents the fifth straight month of growth deceleration (not actual decline in activity). Bradley Holcomb, chairman of the ISM Manufacturing Business Survey Committee also referred to the resolution of the West Coast ports as a potential catalyst to increased growth going forward. Transportation equipment was one of the leading industries reporting expansion in March.
Have a great weekend! This week’s video is of an automated Amazon fulfillment center in Brazil!