This Week in Logistics News (June 3 – 9)

The rise of e-commerce is making its mark on brick and mortar retailing. We’ve seen plenty of big name retailers changing their brick and mortar strategy, including closing or downsizing their stores, carrying less on-hand physical inventory, and using stores as an e-commerce fulfillment channel. We’ve also seen the impact on malls across the country; namely, less people are visiting malls these days. The result is empty storefronts, which can result in the death of a mall. But what should be done with the shuttered malls? I saw an article this week about CallisonRTKL, a global architecture firm that had an idea on how to salvage the shopping centers – turn them into drone ports. The idea is to turn old malls into delivery warehouses that are ideal for drone take-off and delivery. The delivery warehouse would have items shipped in by truck and stored in an underground warehouse. The drones would be loaded up with items via robots, and launched from high altitude to save energy, and prolong flight times between recharging.  While CallisonRTKL doesn’t have specific plans or funding to develop the port, it is certainly some forward thinking.

And now, on to the news.

In an effort to cut the high prices associated with last-mile deliveries, Walmart is taking a new and innovative approach. The company is asking employees to deliver packages on their way home from work. Walmart offered up some pretty sound logic when explaining the decision. They already have trucks delivering goods to stores for in-store pick-up. The same trucks could be used to bring orders to stores for home delivery. The program is a way for employees to make extra money, as they will be paid for deliveries or offered overtime to fit deliveries into their schedule. Walmart began testing the program at three stores last month but has not indicated when or if the program will be rolled out in large-scale. Either way, it is another interesting take on crowd-sourcing home deliveries.

While Waymo, Alphabet’s autonomous car company, has been in the news a lot lately over its court battle with Uber and Otto, the company is making actual news of its own now too. The company has confirmed that it is currently testing self-driving trucks. Well, to be fair, it’s one truck. The company was manually driving the semi on a public road for data collection purposes. According to a Waymo spokesperson, “self-driving technology can transport people and things much more safely than we do today and reduce the thousands of trucking-related deaths each year. We’re taking our eight years of experience in building self-driving hardware and software and conducting a technical exploration into how our technology can integrate into a truck.”

Online grocery delivery service Shipt has announced $40 million in new funding. As noted earlier in this post, the crowd-sourced delivery model is picking up steam; the grocery industry in particular is seeing success. Shipt currently operates in 47 metro areas, servicing over 20 million homes. The new round of funding is geared towards expanding the company’s reach beyond major cities. The big difference between Shipt and its primary competitor InstaCart is a subscription model – customers must become members to place an order on Shipt, paying $99 per year for free delivery on orders over $35. Shipt CEO Bill Smith sees suburban families located outside of city centers as the key to their future success.

Customized sneakers are no longer just for the rich and famous. Boston-based footwear company New Balance has partnered with Formlabs to make an exciting announcement on the future of customizable footwear – 3D printed custom shoes. The two companies made the announcement at the MIT Media Lab’s Digital Factory manufacturing conference. New Balance has 3D printed shoes before, but they were reserved for professional runners and sports teams. Now, New Balance will be able to sell custom shoes to all customers. The 3D printing process cuts down on the amount of time customers have to wait for custom products, and can streamline the supply chain. It also will save New Balance money in the form of procurement costs and supply chain efficiencies. It remains to be seen just how big the market for custom shoes will be.

Amazon is taking aim at Walmart again, especially given Walmart’s focus on e-commerce acquisitions to take market share away from Amazon. How? Well, Amazon is now offering a discount on its Prime membership for people who receive government assistance. This is a smart targeting effort to attract customers who would more likely be customers of Walmart than Prime members. Amazon says customers who get benefits such as through the Supplemental Nutrition Assistance Program, or food stamps, can pay $5.99 per month for membership, which would include free shipping and unlimited streaming of movies and TV shows with Prime Video. The regular annual membership is $99 per year, or about $8.25 per month.

The driver shortage in the trucking industry is clearly not applicable to the US only. Japan is facing a huge shortage of qualified drivers, and as a result, one of the major players is shaking things up to attract new drivers. Sagawa Express has rolled out four-day workweeks that bring five days’ worth of pay for drivers. Under the plan, parcel delivery drivers in Tokyo will work 10 hours a day four days a week at a starting salary of 180,000 yen to 260,000 yen ($1,630 to $2,355) a month — about the same as for five days of work. While take-home pay is expected to be lower, based on fewer overtime hours, drivers are enabled to work a second job outside of normal working hours. This seems like a good proposition for drivers in Japan, and one has to wonder whether American companies would look at a similar model.

And finally, there could be a huge disruption for air freight shipped to the Middle East as several countries have cut ties with Qatar. Saudi Arabia, the United Arab Emirates, Bahrain, Egypt, Yemen, and Libya have all announced a break-off in ties with Qatar over its continued support of Muslim Brotherhood and its relationship with Iran. Qatar Airways will especially feel the effect, based on its inability to fly to any of these countries or potentially use their air space. This will result in longer flight times and higher fuel bills. This is certainly an interesting story to watch.

That’s all for this week. Enjoy the weekend and the song of the week, Fly Like an Eagle by the Steve Miller Band.

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