This Week in Logistics News (September 24 – 30)

I’ve written about it many times before, but one of the things I enjoy most about my job is learning new things, whether that is from a conference presentation, client briefing, or end user interview. Learning new things is not something that is confined to my job though, as I love to learn new things about many topics. Yesterday, my son came home from first grade and said, “do you know how apples are formed?” I knew they grew on trees, but wasn’t sure about the intricacies of their formation. He proceeded to tell me that “apple flowers bloom on an apple tree and a bee cross pollinates them.” He then went on to explain that cross pollination is when pollen is delivered from one flower to another. “When the flower dies, the apple begins to grow behind the stem. When the apple is big and ripe, we can go apple picking.” I love these little gems of information that trickle down through the school to me.

And now, on to the news.

• UPS tests drone deliveries to islands
• Whole Foods invests in Instacart
• Amazon raises stakes as retailers battle for customers online
• Uber pushes forward with food delivery
• Sainsbury’s offers one-hour delivery service
• Dutch bike company takes interesting approach to reduce damaged packages
• Carriers spent more on driver wages, less on fuel in 2015

UPS announced a partnership with Massachusetts-based drone maker CyPhy Works. While UPS has a massive fleet of jets, trucks, vans, and motorcycles, there have always been logistical issues when it comes to delivering packages to small islands, especially those without a runway or ferry. The two companies ran a test this week to deliver urgently needed medicine from Beverly, Mass. to Children’s Island, which is about three miles off the Atlantic coast. There are no roads or bridges that reach Children’s Island, so the flying drone is an attractive option for a just-in-time delivery. This marks UPS’ first foray into drone deliveries, but it could certainly be an option for the company moving forward, especially as interest in drones continues to heat up.

Whole Foods and Instacart have been partners in delivering groceries since 2014, with their program expanding to more than 25 markets ion 2015. Instacart authorized the sale of new equity earlier this year, letting Whole Foods buy shares in the startup in conjunction with an expanded partnership. Analysis by private stock market operator Equidate, based on a regulatory filing, pegged the total equity authorization at about $36 million. This is a big move as more and more consumers are looking at delivery options for grocery shopping. The partnership allows customers to order food and other products directly from the Whole Foods website and have them delivered to their house.

Amazon is expanding its Prime delivery options in Canada ahead of the holiday season. The company is launching free same-day delivery for its Prime members in Toronto and Vancouver starting this week. Amazon is offering free same-day deliveries on orders over $25 of one million items in Toronto and 700,000 in Vancouver, ranging from everyday household goods such as coffee makers, snacks, drinks and shampoo to toys, electronics and luggage. This move is in line with Amazon’s overall push to increase its Prime membership, as well as the overall trend of retailers offering same day delivery in Canada. Although, since most retailers do not offer free same-day delivery, this move should intensify competition.

Uber is making an aggressive move to become a major player in food delivery. According to job listings on Uber and other recruiting websites, UberEats is advertising 150 roles ranging from general managers to sales staff and delivery couriers. This comes on the heels on news that indicates Uber plans to enter at least 22 new countries globally in the near future. The company already operates in six countries, and in the coming weeks and months, Uber is planning to launch food delivery in Amsterdam, Dubai, Johannesburg, selected areas of Tokyo, Brussels, Stockholm, Hong Kong, Taipei, Jakarta, and Bangkok. With so much competition, it will be interesting to see if Uber can take a piece of the market.

Sainsbury’s is fighting back against Amazon in the one-hour grocery business in London. The supermarket has developed an app called Chop Chop, through which shoppers can order up to 20 items to be delivered from a local store within an hour. Sainsbury’s has been testing the service in South London, with groceries delivered using bicycles. It is now being extended across south-west and central London areas including Chelsea, Westminster, Fulham, Battersea, Southwark, Wandsworth and Wimbledon. This marks the company’s second time around using bicycles to deliver orders, however, the first time was 130 years ago.

Damaged shipping boxes, and more importantly the contents inside, are nothing new to retailers that sell online. In fact, the cost associated with this problem are often built into the cost of the product and shipping fees. Dutch bicycle manufacturer VanMoof is no stranger to the problem. The issue for this particular manufacturer, however, is the fact that the street bikes that it manufactures are at the high-end of the market, and some are loaded with delicate electronics like anti-theft trackers and electric motors. Plus, the company had set a goal to sell 90% of its bikes online by the end of the decade. The solution? VanMoof began printing a graphic of a flatscreen TV on the side of the box. As shippers thought they were shipping flatscreens, shipping damage dropped by 70-80%. That is certainly an innovative approach to solving the problem.

And finally, motor carriers in 2015 spent more than a dime less per mile on fuel in 2015 than in 2014, according to a report released Monday by the American Transportation Research Institute (ATRI). The decline in average carrier costs stems almost exclusively from cheaper per-mile fuel costs – 40.3 cents as mile in 2015, compared to 58.3 cents per mile in 2014. For the first time since ATRI first published its annual Operational Costs report, driver wages were the carriers’ most expensive per-mile line item. Driver wages put upward pressure on carriers’ per-mile costs, climbing to 49.9 cents a mile in 2015 from 46.2 cents a mile in 2014 and outpacing driver wages as the most costly per-mile expense incurred by carriers. Driver benefits costs also rose, moving to 13.1 cents a mile, a 2-cent increase.

That’s all for this week. Enjoy the weekend, and the song of the week, Johnny Appleseed by Joe Strummer & the Mescaleros.