This Week in Logistics News (October 3 – 9)

As a child, my mother received an orange in her stocking at Christmas each year. It was quite the treat back in the day. Today many of us take for granted the ability to drive to our local market and pick up fruit from other parts of the country, and even other parts of the world. Much of this change in product availability is due to the vast improvements in global logistics capabilities and the men and women who make it happen.

Supply chain risk management is a topic my colleagues and I often discuss on Logistics Viewpoints. Typically we are referring to supply chain disruptions when we mention “risk.” On Wednesday, the US Coast Guard ended its search for the missing crew of the cargo ship El Faro that sank while sailing into Hurricane Joaquin. Let us remember the 33 crew members who perished on this journey and remind ourselves that supply chain risk can mean more than shipping disruption.

November 2014 Meeting of Trans-Pacific Partnership Countries (Source: Associated Press)

November 2014 Meeting of Trans-Pacific Partnership Countries (Source: Associated Press)

The Trans Pacific Partnership (TPP) has reached another milestone on its journey toward international trade accord status. The US and 11 other Pacific-Rim countries agreed on the deal that took almost six years to complete. The partnership includes the US, Canada, and Mexico from North America and a number of Asia-Pacific countries. As I mentioned in my July post on the TPP, the scope and structure of the agreement are available onThe Office of the US Trade Representative, but the details still remain elusive. The deal still needs to be approved by Congress and will surely be a point of contention as we move into the Presidential election cycle.

Source: Geoff Riley ,

Source: Geoff Riley ,

FedEx is reportedly increasing its fuel surcharge, effective November 2. This is the second fuel surcharge increase this year. UPS also reportedly increased its fuel surcharge earlier this year. Surcharge hikes are nothing out of the ordinary, but these come at a time of  substantial declines in fuel prices. FedEx says that its latest increase is in response to heavier packages and a rise in more costly residential deliveries. Ok, maybe. But thinking back to my economics class…

Doesn’t the kinked demand curve theory of oligopoly suggest that competitors won’t follow price hikes at a certain point (the demand kink) due to the ability to obtain greater volumes and total margin by retaining lower prices? Maybe the theory is wrong, FedEx and UPS aren’t in an oligopoly, or the price is below the kink. Ah! That’s my guess – the price insensitive (inelastic demand) nature of the busy holiday season. That seems to do a pretty good job of explaining surcharge hikes in the presence of decreasing prices.

XPO Logistics has received a number of offers for the Con-Way Truckload business unit. The XPO Logistics CEO stated that he has been approached by three interested buyers for the Truckload unit and that they would consider selling it for the right price. Truckload is one of Con-way’s three financial reporting business segments, along with Freight and Logistics (Menlo Logistics). Con-way’s annual report for 2014 shows that the Truckload segment of Con-way achieved $573 million in revenue for the year, accounting for about 10 percent of the company’s total revenues.

DSV Group, a Copenhagen Denmark based international logistics firm, signed a deal to acquire US-based UTi Worldwide, an asset-light logistics services provider. On a related note, UTi recently extended  into the last mile logistics services arena. The company launched its ByBox service in South Africa that includes the installation of more than 450 UTi ByBox shipment kiosks that online retailers and their customers can utilize as a convenient, secure drop off delivery and pick-up location for parcel deliveries.

RightHand Robotics is a robotics start-up right in my backyard…. well, not literally. But they are located in the metropolitan Boston area. RightHand recently raised $3.3 million in venture funding. The Harvard University spin-out is developing intelligent robotic order picking systems. They have developed a cool three fingered robotic gripper. They have posted videos on their website of the robot in action, including one clip from their winning entry into the DARPA Autonomous Robotic Manipulation Challenge. I have included links below to an Each Picking clip and a Kitting clip. Enjoy!

Have a great weekend!