This week I began assisting my colleague Chris Cunnane with ARC Advisory Group’s first market outlook study on the technologies that support omni-channel commerce. The study evaluates the key technologies that support omni-channel operations, namely distributed order management (DOM), WMS, TMS, inventory planning and optimization, and demand management. The beauty of this study is that it will provide a “lay of the land” for the vendors and technologies that support key business processes in retail, consumer goods, electronics and wholesale and distribution. I am interested in seeing what market insights this process will reveal.
Now on to the news:
- FedEx, TNT say no EU antitrust objections to $5 billion merger
- Maersk Cuts Profit Outlook on Weaker Global Container Market
- China’s huge Singles Day shopping festival to test logistics network
- E-Commerce and New Delivery Paradigms Shape Future of Global Logistics
- ‘Amazon Transportation & Logistics’ could earn the e-commerce giant $5bn a year
Full steam ahead! FedEx announced that its proposed acquisition of TNT Express will pass the scrutiny of EU antitrust regulators. The combined entity will represent Europe’s second largest delivery service, behind only DHL. Clearly, the acquisition will cement FedEx’s position as a global parcel and post delivery provider.
Maersk, being the container ship behemoth that it is, serves as an indicator for overall global trade activity. Maersk announced a cut in its profit forecast, stating the the container shipping market has deteriorated beyond its expectations. In August, I noted World Trade Monitor’s estimate of a reduction in global trade activity, and highlighted signs of weakness coming out of China. So, there have been more timely indicators of slowing global trade. However, the new from Maersk provides additional color. Speaking of China, it’s worth noting that China’s central bank cut interest rates today, for the sixth time in the last 12 months, in an effort to stimulate its economy.
Speaking of speaking of China, the country’s Singles’ Day, November 11, brought 278 million online orders to Alibaba. The large influx of parcel deliveries is expected to test the country’s logistics capacity. Alibaba has recruited thousands of Chinese brick and mortar stores to participate in fulfillment of orders. Of course, Alibaba will leverage its logistics arm, Cainiao, to coordinate logistics activities during the spike. Yes, Alibaba has a logistics arm, which begs the question, “Does it make sense for Amazon to develop its own logistics business?”
Colliers International released a research report titled “First Mile to Last Mile” that examines the primary factors affecting and shaping trends in global warehousing, logistics and trade. Their analysis confirms some trends that we have mentioned previously on LogisticsViewpoints, such as the proliferation of distribution centers in close proximity to population centers to support timely delivery of e-commerce orders. These also mention the long term trend of increased container shipping and a recent shift away from the traditional container ports such as LA/Long Beach. However, they also mention an increase in new and innovative “First Mile” warehousing space for “mega distribution centers.” ARC research on the global warehouse automation & control market shows that these vendors have received increased orders to develop the automation of facilities of this kind in all major global geographies.
Amazon Transportation & Logistics could be a $5 billion a year business for Amazon, according to financial firm RW Baird. The premise is that Amazon has already invested heavily in fulfillment centers and supporting technology, and manages these capabilities as a core competence. And the next logical step is to offer utilize these capabilities as a separate source of revenues, essentially operating as a 3PL. I personally think that it is an interesting concept. But I also think that Amazon is likely lacking slack resources in many areas that would be necessary to take on a meaningful amount of contract logistics. Clearly that has been the case with Kiva robots. It will be interesting to see if Amazon takes the step into 3PL services.
That’s all for this week. Have a great weekend!