This Week in Logistics News (February 10 – 16)

logistics newsOn Wednesday of this week, millions of people celebrated Valentine’s Day. And how better to show your love than by spending lots of money. Much like basically every holiday, Americans dug into their wallets to spend, spend, and spend some more. According to the National Retail Federation’s annual survey on Valentine’s Day, as 55 percent of Americans celebrate the holiday, the average consumer spent $143.56 on Valentine’s Day this year, an increase from last year’s $136.57. Total spending was projected to exceed $19.6 billion, an increase of $1.4 billion over last year. The most common gifts for 2018 were candy (55%), greeting cards (45.9%), flowers (35.6%), and an evening out (35.2%). With more than a third of consumers buying flowers, that equates to $2 billion spent on flowers. UPS alone delivered 88 million flowers, which is about 8 million pounds. And now, on to this week’s logistics news.

Amazon is preparing to launch a new delivery service that it hopes will rival both UPS and FedEx. The program, called Shipping with Amazon (SWA), will debut in Los Angeles with its ‘third-party merchants’ and then be rolled out more broadly. The program entails Amazon picking up packages from businesses and shipping them to consumers. Amazon is planning to undercut UPS and FedEx on pricing, although the exact rate structure is not completely known. While Amazon has built out its delivery and fulfillment infrastructure over the last few years, many in the industry doubt that it will be able to scale its delivery service to truly compete with UPS or FedEx. However, if the past has shown us one thing about Amazon, it is to never underestimate what the company can do.

Amber Road quickly rejected an unsolicited buy-out offer made public by E2open the previous day. Amber Road’s board concluded that the proposed business combination would not be in the best interests of Amber Road’s shareholders. The Chairman of the Amber Road Board further stated that the Company’s existing strategic plan is the best means of maximizing value for stockholders and satisfaction for customers. Although the E2open proposal to acquire Amber Road appears to be off the table, mergers and acquisitions within the supply chain software market are sure to continue, as providers look to offer a more comprehensive solution to their customers, and deliver additional value to their shareholders. The offer, which valued publicly traded Amber Road’s stock at $10.50 per share, was for $300 million.

While the city of San Francisco wants to make home delivery much tougher for robotic delivery startups, the state of Arizona is moving in the opposite direction. State lawmakers on Wednesday took the first steps to legalizing the use of personal delivery devices. The house bill, which received unanimous approval from the House Committee on Transportation and Infrastructure, would allow the robots to operate on sidewalks and in crosswalks. The bill also would give the robots the same rights and duties as the pedestrians with whom they would share that right of way. That includes a mandate to follow traffic and pedestrian signals. The robots have been tested in a few cities to deliver items such as food, packages, and mail.

Tesla Costs Twice as Much as Diesel

Elon Musk thinks the highly anticipated Tesla Semi is going to sell like hotcakes. On the company’s earnings call this week, Musk told analysts he expects to sell 100,000 units or more annually by 2022. The trucks come with a price tag of $150,000 for 300-mile range version, $180,000 for the 500-mile range version, and $200,000 for the Founders Series. So far, Ruan Transportation Management Systems, UPS, PepsiCo, Anheuser Busch, J.B. Hunt, and Walmart have all pre-ordered trucks.

UPS has officially expanded its International Special Commodities (ISC) program. Customers may now ship biological substances and dangerous goods in pre-determined quantities, along with shipments requiring dry ice, to 50 additional international destinations. This brings the total destination availability to more than 100 locations. The main driver for expanding the program is the increased demand from biopharmaceutical manufacturers, diagnostics companies, laboratories, distributors, and care providers who need specialized commodities when safety, time, and controlled temperatures are essential.

UPS and the Teamsters Union have begun negotiations for a new contract this week. Last month, the Teamsters submitted an 83-page opening demand in its National Master contract that covers about 260,000 UPS employees. On its list of demands for the new contract are the creation of 10,000 new full-time jobs; elimination of late-night deliveries; greater job security; and raises from part of the expected $10 billion in profit UPS is expected to make this year, and in the foreseeable future. In a statement, UPS emphasized it is seeking “flexibility” to remain competitive in the rapidly changed e-commerce and small package landscape. It sounds like the two sides may be quite a bit apart as the negotiations begin, but they have a few months to get things ironed out.

And finally, EU antitrust regulators are set to fine Nippon Yusen KK (NYK) and several other Japanese shippers as well as Norwegian Wallenius Wilhelmsen Logistics ASA (WWL) in the coming weeks for rigging bids for shipping cars. The sanctions come on the heels of a six year investigation by the European Commission in September 2012 in coordination with Japanese and U.S. antitrust authorities. Competition regulators around the world have penalized a number of shippers in recent years for fixing prices and dividing the markets for shipping cars and other products on various routes.

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That’s all for this week. Enjoy the weekend and the song of the week, Dead Flowers by the Rolling Stones.

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