This Week in Logistics News (July 8 -14)

A few weeks ago, I wrote about Amazon’s acquisition of Whole Foods, and how it plays into its bigger rivalry with Walmart. New details have emerged about the acquisition, namely that Amazon beat out six other suitors to land Whole Foods. Whole Foods was initially approached by four private equity firms and two unnamed companies about an acquisition. The two unnamed companies were only identified as “Company X” and “Company Y,” with reports indicating that “Company X” is Albertson’s. Amazon entered the picture and offered $41 a share, which Whole Foods countered with $45 a share. Amazon indicated that it may go in another direction, but countered back with $42 a share, which it felt was a fair market value. The rest, as they say, is history, and Whole Foods agreed to move forward with negotiations at $42 a share. The deal is expected to close in the second half of 2017.

And now, on to the news.

For the third month in a row, parcel delivery companies have increased hiring. According to the US Bureau of Labor Statistics, parcel carriers and delivery companies added 4,200 jobs last month. This brings the total number of delivery jobs to 666,500 nationwide, which is the highest since December 2016. This comes as trucking and railroad companies cut a combined 2,200 jobs last month. E-commerce is the prime driver for the addition of delivery drivers as more focus is placed on last mile delivery efforts. As e-commerce sales continue to grow, the hiring trend will continue to rise.

President Trump’s threats to penalize automakers who import vehicles from Mexico seems to have fallen on deaf ears. According to data from the Mexican Automobile Industry Association, the flow of vehicles into the US has picked up over the last six months. Mexico exported 1.16 million vehicles to the U.S. in the first half of 2017, an increase of 15.6 percent compared with the same time frame in 2016. Additionally, the percentage of overall Mexican automobile imports that ended up in the US has increased nearly a full percentage point compared to the same time frame last year.

July 11 marked the annual Amazon Prime Day, where the online retail giant offers deals to Prime members on thousands of items. This year marked Amazon’s single largest sales day, surpassing last year’s Prime Day. In fact, this year’s Prime Day sales were higher than 2016’s Black Friday and Cyber Monday combined. Amazon also added more Prime members in one day than ever before. While this is all well and good, the big news around Prime Day from a supply chain standpoint is the use of Prime Air. Prime Day marked the first major use of Prime Air, which includes approximately 40 Prime-branded Boeing 767-300s operated by Amazon’s cargo partners Atlas Air and ATSG. Prime Air is the company’s response to skyrocketing shipping costs, as the cargo planes will provide supplemental support to Prime Day orders. This is another major move by Amazon as it tries to take more control of moving products around the country while relying less on UPS and FedEx.

Getting inventory on-time is crucial for retailers when it comes to balancing supply and demand. Walmart in particular has always been known for squeezing its suppliers in the event of late deliveries. Well, now the retailer is turning things up a notch. Walmart has introduced a new program called “On-Time, In-Full” which will penalize its suppliers for early and late deliveries. On top of early and late deliveries, the company will also fine suppliers that do not pack merchandise properly. The program aims to add an additional $1 billion in revenue by improving product availability in its stores. The new rules begin in August, and according to Walmart, require suppliers to “deliver what we ordered 100 percent in full, on the must-arrive-by date 75 percent of the time.” Items that are late or missing during a one-month period will incur a fine of 3 percent of their value.

Target has begun testing curbside pick-up at a number of stores around the Minneapolis area. This move is in response to a number of competitors offering the same service. For now, the service is limited to Target employees, but the plan is to roll it out to the public soon. Once it rolls out, customers will be able to place an order through Target’s website or app, and when the order is ready, they can park in a dedicated space reserved for curbside pick-up. At this point, a store employee will bring the order out to the car. The goal is to make buy online, pick-up in-store purchases more convenient for customers.

Meijer is continuing to roll out its grocery delivery service, as service launched to nearly 2.5 million households throughout the Chicago suburbs and Rockford, Il earlier this week. This is part of the company’s expansion across six states to keep up with other grocery stores offering delivery service. The service is fueled by Shipt, which combines personalized shopping with fresh groceries. Customers can place an order through the Shipt app, select their items, and have them delivered in an hour. Shipt memberships are available for an annual fee of $99, and members have access to free delivery on all orders over $35. For orders under $35, there’s a $7 delivery fee.

Robots in factories and warehouses are becoming more prevalent, and in most cases, are seen as the future of warehousing and the supply chain. However, cybersecurity experts are warning that many robots in factories and warehouses have outdated software and weak authentication systems, which makes them more likely to be hacked. A research report from the cybersecurity company Trend Micro and Politecnico di Milano, the largest technical university in Italy, says that robots going rogue is a distinct possibility. The most likely kinds of attack include: altering its control system so it moves unexpectedly; tampering with its calibration; manipulating its production logic; manipulating its status information; and manipulating it directly so the operator loses control. Such attacks could harm the company, the product, and the workers.

And finally, retail imports are on the rise. According to the monthly Global Port Tracker report released by the National Retail Federation (NRF) and Hackett Associates, July and August should be two of the busiest months of the year for imports as retailers stock up on back-to-school and holiday season items. Ports covered by Global Port Tracker handled 1.72 million Twenty-Foot Equivalent Units (TEU) in May, the latest month for which after-the-fact numbers are available. That was up 7.3 percent from April and up 6.2 percent from May 2016. June was estimated at 1.66 million TEU, up 5.3 percent from the same time last year. July is forecast at 1.71 million TEU, up 5.1 percent from last year; August at 1.75 million TEU, up 2.2 percent

That’s all for this week. Enjoy the weekend and the song of the week, Steve Miller Band’s Take the Money and Run.

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