This Week in Logistics News (April 8 – 14)

I saw over the weekend that Norway is planning on building the world’s first ship tunnel to bypass part of the ocean. The tunnel will be a 5,610-feet passageway dug through a piece of rocky peninsula that will allow vessels to avoid a treacherous part of sea. The tunnel will be 118 feet wide, 162 feet tall, and will accommodate cruise and freight ships weighing up to 16,000 tons. The tunnel, if it remains on schedule, could be open as soon as 2023. Apparently, the wave and wind patterns of the Stadhavet Sea are treacherous enough that carving out 106 million cubic feet of rock weighing 8 million tons is a better option. I can’t wait to see the finished product.

And now, on to the news:

Walmart is expanding its grocery pick-up service in Canada. After successful trials in Toronto, Ottawa, and Edmonton, the retail giant is expanding grocery pick-up to Calgary. The service costs $3, and allows customers to place orders on Walmart.ca for pick-up. The orders can be placed 21 days in advance, and a minimum order of $50 is required. On top of the in-store grocery pick-up, Walmart has been testing grocery delivery in parts of Toronto.

Walmart is also offering incentives to get customers into the store. Starting next week, the company will offer discounts on 10,000 online-only items if the customer picks them up at the store. The aim is to roll the program out to over 1 million products by summer. The discounts will vary by products, but the biggest discounts will be for heavy items which are more expensive to ship. Walmart’s strategy can have two distinct benefits. First, by having customers pick up items in the store, it eliminates expensive shipping costs for last mile deliveries. Second, it gets customers in the store, where cross-sell and up-sell opportunities abound.

Drones are certainly a hot topic for home delivery, and JD.com is banking on drones as part of their future plans. Just last November, the company launched drone delivery service with a trial in rural China. Now, JD.com said it will build 150 operation sites for unmanned aerial vehicle delivery in the southwestern province of Sichuan. According to JD.com CEO Richard Liu, the sites should be open within 3 years, and he expects drone deliveries to reduce freight costs by 70 percent. The program will reportedly deliver Sichuan’s products to shoppers nationwide within 24 hours.

German logistics group Deutsche Post DHL Group is planning to increase production of electric vans to take on the automotive industry. The company developed the StreetScooter van for internal use to reduce emissions while increasing delivery capacity. Initially, traditional automobile manufacturers were not interested in building the electric vans, so the company went it alone. Deutsche Post currently has about 2,500 StreetScooter vans in its fleet and plans to at least double that this year. The company expects there will be high demand for the delivery vans from municipal authorities and large fleets throughout Germany.

Back in January, the first freight train from China to the UK completed its journey. Now, the first rail freight service to China from the UK has departed. The journey will take 17 days to cover the 7,500 miles, and will become a regular service. The 30-container car train is stocked with British goods including soft drinks, vitamins, and baby products. After going through the Channel Tunnel, the train will pass through France, Belgium, Germany, Poland, Belarus, Russia, and Kazakhstan before arriving on April 27 in Zhejiang. The operators say it is cheaper to send goods by train than by air and faster than by sea.

And finally, Swift Transportation Co. is merging with Knight Transportation Inc. in a stock swap that would combine two of the biggest operators in the U.S. trucking sector. Combined, the companies are worth more than $5 billion. As part of the deal, announced Monday, each Swift share would be converted into 0.72 share of the new entity through a reverse stock split. Knight shares would be exchanged one-for-one. Swift shareholders would own 54% of the new company, with Knight holders owning the rest. The new group is to be named Knight-Swift Transportation Holdings Inc. and each company’s brands and operations would remain distinct. Even though Swift is significantly larger than Knight, Knight’s executives will take over key leadership positions of the merged business.

That’s all for this week. Enjoy the weekend, and the song of the week, The Ocean by Led Zeppelin.