The announcement of Infor’s agreement to acquire GT Nexus for $675 million is this week’s biggest logistics technology news. It is the latest consolidation in the enterprise application software market, following the trend of traditional software vendors acquiring SaaS solution providers. GT Nexus provides a cloud-based network connecting a community of trading partners, allowing for the dynamic transfer of information and visibility into global trade events. Infor has been transitioning its offerings to the cloud over the last year and a half. In early 2014, Infor announced the Infor CloudSuite, a partnership between Infor and Amazon Web Services, offering industry application suites on the cloud. GT Nexus will operate as a separate business unit within the larger Infor organization. Infor is presenting the acquisition as highly complementary, and I agree, as there is very little overlap between the two companies’ solution sets. Offering out-of-the-box integrations between Infor’s current supply chain footprint and the GT Nexus platform will offer total cost of ownership benefits. However, it remains to be seen to what degree and in what ways this acquisition can provide synergies in the form of increased revenues for Infor.
Now on to the rest of this week’s news:
- Huge Blasts at Tianjin, China Port Warehouse
- Cass Freight Index and Cass/INTTRA Ocean Freight Index for July
- FTR’s Trucking Conditions Index Rises to Highest Level of 2015
- New e-Commerce Fulfillment Centers in the News
A Tianjin, China warehouse, owned by a company called Ruihai Logistics that specializes in handling dangerous goods, exploded late Wednesday evening. The blasts killed at least 50 people, injured 700, and destroyed scores of new cars and shipping containers. Needless to say, the blasts were horrific. We are including this story in Logistics Viewpoints due to the logistics relevance of the site and location. We wish the best for those injured and effected in other ways by this tragic event.
The Cass Freight Index for July showed a slight reduction in shipments and a substantial reduction in expenditures. However, July is typically a slow month and the year-over-year reductions are comparing against 2014 which was the best year the freight sector has experienced since the recession. These factors imply that the negative comparisons are likely transitory. In contrast, the Cass/INTTRA Ocean Freight Index for July reported reductions in imports and increases in exports. Container imports increased 21 percent month-to-month, while exports showed a 29 percent decrease year-over-year. The recent surge in the price of the US dollar accounts for much of the import/export disparity, as US goods are now more expensive overseas and international goods are cheaper in the US. Also, much of the global economy is experiencing a slowdown, while the US is importing goods for the “back to school” season and the overall economic trajectory remains stable.
FTR’s Trucking Conditions Index (TCI) for June rose to the highest level of 2015. Freight growth has slowed but rates continue to grow, labor costs are increasing, and lower fuel prices are maintaining profit margins.
e-Commerce fulfillment centers continue to come on line to support the ongoing robust growth of e-commerce. Research conducted by my colleague Chris Cunnane and I show that practitioners expect online sales to increase 40 percent over the next five years, while brick and mortal sales are expected to remain flat. Recent warehouse investments in the news include Amazon’s planned distribution center in Joliet, IL that will be the company’s first warehouse in the state and provide access to the Chicago metropolitan area. Amazon is also opening a new fulfillment center is south Dallas, reportedly to fulfill small items such as books, etc. Finally, the other 800 pound gorilla of US retail, Wal-mart, is commemorating the opening of its new 1.2 million square foot e-commerce fulfillment center in Plainfield Indiana.
That’s all for this week. Have a great weekend. This week’s video shows a landing and take-off of an Airbus Beluga super transporter. I’m pretty sure it is a sea mammal of some kind. Maybe a dolphin.