I hate to admit when I’m wrong, or mistaken. But I will admit it. In December 2014 I wrote an intro to the Friday Logistics news round-up, discussing how a sign stating “This project is funded by the American Recovery and Reinvestment Act” was placed on the highway shoulder along my commute to work 6 years ago with no subsequent work ever visible. Well, more than six years later, I must admit, work is being done and substantial progress is being made. Granted, it’s over six years since that sign was placed on the highway, but progress is being made, nonetheless. It’s a productive investment, but it certainly was not a quick means of injecting productive activity into the economy. Now on to this logistics week’s news:
- ISM May Manufacturing Report on Business Shows Accelerated Growth
- Amazon brings Minions ads to delivery boxes, marking its first advertising deal on packaging
- Amazon Picking Challenge aimed at improving warehouse robotics
- Maersk Line seals $1.8bn order
- Warburg Pincus commits over $133M in e-commerce focused logistics startup Ecom Express
The Institute for Supply Management released its May Manufacturing Report on business, as well as the non-manufacturing report, this week. Manufacturing expanded at a faster rate than it did in April. New orders and employment were the hot spots in the report, both reflecting accelerated activity. Also, raw material prices showed a decline, often viewed as a positive for the overall economy, but a negative for the commodities industries. The transportation equipment industry was one of those showing growth for the month. Also, the ISM non-manufacturing report on business showed growth, but at a slower rate than April. Transportation and Warehousing was one of the industries reporting expansion during the month. Of course, the ports are still making their way into the news. One quote from the report stated, “…The port congestion is hampering deliveries and is keeping inventories at a lower level than desired on imports.”
Amazon was all over the news this week (for a change?). The company has begun shipping products in boxes designed with Minion caricatures – an advertisement for the upcoming Minion’s movie. This is Amazon’s first foray into the use of the boxes as advertisement space for non-Amazon promotions. This week Amazon also debuted free shipping on some small goods without the requirement for a minimum order. This option is not just limited to Amazon Prime customers. Amazon is just unrelenting in applying competitive pressure to the retail market. They really are taking fulfillment competition and pressures to the next level- driving investment in fulfillment technologies, warehouse construction, and overall commerce strategy.
The latest in warehouse automation comes from a contest sponsored by, you got it, Amazon. The Amazon Picking Challenge at this year’s ICRA conference in Seattle featured 31 teams competing for a prize going to the one with the robot best capable of stock picking. The RBO team from the Technical University of Berlin won the first prize and a team from MIT took the second prize. See the video at the bottom of the post to view the articulations of the winning robot.
Maersk is clearly not afraid to bet on future shipping demand. The company ordered 11 ships with the option for six more from Daewoo Shipbuilding & Marine Engineering in Korea. These ships are expected to be 400 meters long (yes, over four US football fields in length). That comes out to about $161 million per ship – a substantial capital investment in my view.
Sticking to the investment theme, Warburg Pincus private equity has committed to invest $133 million Ecom Express, a Delhi, India based e-commerce focused logistics provider. Ecom Express currently employs about 8,000 people across India, with a presence in 210 cities. A Warburg Pincus executive is quoted in the Techcircle India article as stating, “There is a significant need for logistics capacity in India to serve the requirements of the e-commerce industry, and businesses are seeking reliable service providers who can scale up with them.” This is another example of how the global growth in e-commerce is creating ongoing investment opportunities and competitive shifts in fulfillment, transportation, and order management processes.
Have a great weekend! This week’s video, the winning team, RBO from the Amazon Picking Challenge.