Deutsche Post DHL announced a €400 million year over year reduction in profits in Q3 of 2015. In particular, EBIT from the Global Forwarding business went from €37 million in 2014 to -€337 million Euros in 2015. The negative earnings were largely the result of a €345 million write down related to a failed software system upgrade for its freight forwarding business. I believe the referenced software project is what DHL refers to as its New Forwarding Environment (NFE) that was previously reported to have been draining human resources at the organization. I thought it was especially relevant to bring up this case due to ARC Advisory Group’s focus on logistics technologies. I believe that it also reinforces the importance of supply chain software in today’s corporate environment. The applications can cost a lot to purchase and implement, but cost substantially more if not done correctly!
Now on to the rest of this week’s news:
- Cass Freight Index for October Shows Freight Slowdown
- September Freight Transportation Services Index (TSI) Shows Growth
- Ships Waiting Up to 11 Days at the Panama Canal
- 7-Eleven Looking to Lockers to Load Omni-Channel Strategy
- Simbe Robotics launches new retail robot
- Flexe Raises $4.4M to Fuel Growth of On-Demand Warehousing Business
Cass Freight Index for October shows year-over-year and month-to-month reductions in shipments and expenditures. An October reduction from September is a typical seasonal pattern. However, year-over-year shipments are down 5.3 percent and expenditures are down 8.7 percent. This October’s levels are lower than the readings from October 2012, 2013, and 2014. On a more positive note, see the TSI below.
The Freight Transportation Services Index (TSI) for September rose 0.2 percent from August, as reported by the Bureau of Transportation Statistics. The September index level is 30.3 percent above the 2009 low and only 0.1 percent below the November 2014 peak. These readings show a clear contrast to the Cass Index above. Although these two indexes measure different data sets, they logically should show correlation. I plan to analyze the relationship between the two indexes and publish a Logistics Viewpoints article discussing the relationship at a future date.
The Panama Canal is experiencing a bit of a backup. According to gCaptain.com, ships are waiting up to 11 days to enter the canal. The backlog is driven by a number of concurring factors including increased number of large vessel arrivals, maintenance work, and environmental factors. The good news is the forthcoming Panama canal expansion and the Nicaragua canal project should alleviate similar issues in the future and substantially increase shipping volume capacities.
7-Eleven is expanding its role in the e-commerce world, as it adds lockers to its locations where customers can pick up packages from FedEx and UPS. This is an extension of a program that it launched with Amazon.com a number of years ago and recently expanded with Wal-mart. The locker program has now been extended as an option for any retailer that ships via FedEx or UPS.
Simbe Robotics launched a (cute, pet-like) robot designed to track inventory in large retail stores. The robot, named Tally, autonomously navigates store aisles, avoiding customers and capturing current inventory levels as it roams the floor. The information is then fed to store workers for updates on product levels and movements. I find this to be a practical application of autonomous robots in the inventory management space. What comes to mind next is “can this technology be modified and applied to inventory audits in the warehouse?”
Have a great weekend. This week’s video is of Simbe, the inventory tracking robot mentioned above!