This Week in Logistics News (May 28 – June 3)

amazon logoI certainly write a lot about Amazon in the news round-up, from their testing of drone delivery to leasing jets to make cross-country shipments cheaper. And I have certainly mentioned how the company is building out its own private fleet of vehicles and expanding last mile delivery plans to reduce its reliance on UPS and FedEx. Well, this week, CEO Jeff Bezos insisted that delivery will not be the main driver at Amazon. Speaking at a tech conference, Bezos said that Amazon isn’t aiming to take over the last mile of delivery from the likes of FedEx, UPS, or the U.S. Postal Service, but rather to “supplement it heavily.” Supplementing these companies is necessary during peak demand times, such as the holidays. But the investment required to completely cut out FedEx or UPS is astronomically high, and would certainly be bad for business. So for now, we’ll just have to wait and see what the next big Amazon news is.

And now, on to the news.

fedex-logoLate last week, the deal was finalized for FedEx’s acquisition of TNT for $4.9 billion. Respectively, the companies were the third and fourth largest players in the European express delivery market. FedEx has announced that it will begin integration of TNT assets immediately. The acquisition pushed FedEx’s employee count to nearly 400,000 worldwide, with revenues close to $58 billion. This puts FedEx in a dead heat with UPS from a revenue standpoint, although it still employs roughly 40,000 less people. Assuming the integration of TNT assets goes smoothly, it will be interesting to see how much ground the company can make up in Europe.

0202walmartWalmart is testing the use of drones at its large warehouses. However, unlike many other companies, Walmart is not looking at drones for deliveries. Instead, at a demonstration earlier this week, the drones moved up and down an aisle packed nearly to the ceiling with boxes, taking 30 images per second. This enables Walmart to rapidly catalog its inventory. In fact, the drones can perform the task in about a day, compared to what now takes employees a month. The retail giant is testing the drones for the next six to nine months, and will possibly roll out a full scale program at that point.

The rise of e-commerce is leading to a warehouse boom. A big part of this is the desire for speedy delivery, which means that retailers need to have more warehouses in more locations. According to recent reports, over the past year, prime warehouse rents are up 9.9% across the U.S. and up by double-digit amounts in some large urban areas. The types of warehouses that are being built is changing as well. Today’s warehouses have taller ceilings to accommodate tall racks of shelves full of items to be picked and delivered to a customer, rather than just pallets to a store. With e-commerce continuing to grow, the warehouse boom should continue to grow as well for the foreseeable future.

grocery deliveryA Scandinavian courier company, PostNord AB, and supermarket chain, ICA AB, are testing a new service that could change grocery home delivery. Grocery home delivery is a big business right now. One of the key components, however, is that you generally must be home to receive the items. A new service in Stockholm, Sweden is changing that, as PostNord AB and ICA AB are partnering to deliver groceries not just to your house, but right into the refrigerator. The service hinges on a new add-on lock, which customers must install on their doors and which messengers can open with their smartphones. The service can eliminate failed delivery attempts, which can cause serious headaches for consumers and retailers alike. The service even promises that messengers will remove their shoes before going into the house.

Swedish home furnishings retailer IKEA opened a temporary, kitchen-focused store in a high traffic area in Toronto. The store features about 50 products, but does not have any shopping baskets to collect them. Instead, the store features RFID enabled wooden spoons, which the customer carries around with them. If the customer likes and wants an item, they simply tap the spoon to a sensor on the product. At check-out, the customer taps their spoon to another sensor built into the POS, and has the opportunity to confirm their order and pay via credit or debit card. At this point, the items are picked from a store room and delivered directly to the customer at the front of the store. Obviously this is the type of service that can work well in a small format store, with smaller items. However, depending on the success of the program, it could translate to larger format IKEA stores, especially if they offer home delivery.

nikeNIKE is working to build a more sustainable supply chain, and their logistics campus in Antwerp, Belgium, is a huge step in the right direction. The newly expanded campus includes five locally generated renewable energy sources, including six 150 meter high wind turbines and solar panels with a surface area equivalent to three soccer fields used to power the building. With an infrastructure of canals, 99% of incoming containers reach the campus by water, not road, saving 14,000 truck journeys a year. Additionally, more than 95% of waste generated on-site is recycled and transportation routes to and from the campus have been optimized to reduce CO2 emissions by 30%. This is a bold move by a global leader in athletic shoes, apparel, and equipment to truly transform their supply chain.

port-oaklandBeginning Monday, truckers will need an appointment to pick up imported containers at the Port of Oakland’s largest marine terminal. Oakland International Container Terminal will mandate appointments for most containerized import pickups to shorten truck waits and speed up delivery. There are a few exemptions for appointments including peel-offs, dray-offs, and pre-mounted loads. Import pickups represent the most time-consuming process at the terminal, as cranes are required to lift containers from rows stacked five high. Appointments to enter terminal gates are already available. Since 2014, varying degrees of appointment systems have been implemented ports at Los Angeles/Long Beach, New York/New Jersey and New Orleans.

And finally, air freight rates continued their recovery in April as cargo load factors remained steady, but tough market conditions are expected to prevail over the summer. The latest statistics from Drewry show that air freight rates climbed by three cents on the March level to $2.61 per kg. It is the second month in a row that prices have improved. However, prices continue to track below last year’s level when airlines were able to achieve $3.01 per kg. The increase comes as cargo load factors remained at March’s level of 43.5%. March is traditionally one of the stronger months of the year in terms of demand and therefore it is not unusual for there to be a dip in load factors. Looking ahead, Drewry painted a bleak picture for the summer months.

That’s all for this week. Enjoy the weekend, and the song of the week, Signed, Sealed, Delivered, I’m Yours, by Stevie Wonder.


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