This Week in Logistics News (March 31 – April 6)

logistics newsIt’s Masters Weekend – one of the most glorious weekends of the year for golf fans. This year’s tournament marks the return of Tiger Woods, who will be competing in his first Masters since 2015, when he finished tied for 17th. While Tiger will clearly be a dominant storyline, one of the feel-good stories has to be Matt Parziale, who is an amateur golfer and firefighter from Brockton, MA. Parziale quialified for the Masters after winning last year’s US Mid-Amateur tournament. With his retired fire-chief father as his caddy, Parziale played a practice round on Wednesday with Tiger Woods and Fred Couples, two of golf’s biggest names. Not bad for the firefighter south of Boston. After shooting an opening round 81, Parziale has his work cut for him to make the cut and play this weekend. Let’s hope he can do it. And now on this week’s logistics news.

As China and the US head into a potential trade war based on newly imposed tariffs, the most obvious sectors of the US economy are not necessarily the ones that will be hit the hardest. While airplanes and parts are the leading American export to China, they are not the area of concern. Instead, China has imposed tariffs on wine imports from the US. China’s imports of American wine reached $82 million last year — not including bottles entering duty-free through Hong Kong — a sevenfold increase in the last decade. This increase in importation has turned Napa wine into easy prey. On Monday, China announced a 15 percent tariff, on top of existing tariffs taxes, to wines imported from the US. This could be just another step in the growing trade war between the US and China.

According to sources, Walmart is in talks to acquire medication delivery service PillPack for “under $1 billion.” Launched in 2013, PillPack has raised $118 million in funding from investors including Accel Partners, Atlas Venture, and CRV. PillPack is more than just a prescription fulfillment platform; the company helps patients manage their medications by sorting pills into packets for individual doses, automatically delivering refills to homes, and providing around-the-clock customer service to customers. These are among the major selling points for seniors and people with multiple conditions. While the deal is still in negotiations, it certainly resonates with Walmart’s move to expand its digital retailing footprint.

Speaking of Walmart, the company is in advanced talks with India’s largest e-commerce firm Flipkart to buy a majority stake. Reports have that stake as high as 55 percent, through a mix of primary and secondary share purchases in a deal that could value Flipkart at $21 billion. Amazon is looking to submit a rival bid to buy Flipkart, even though it seems likely Walmart will acquire the e-commerce firm. Since it launched here in June 2013, Amazon has invested more than $2 billion in India and has said it will invest $3 billion more. Still, the company lags behind Flipkart by a slender margin at the top of India’s $18 billion e-commerce market.

In recent weeks, President Trump has urged the USPS to charge Amazon more to deliver packages to consumers. This could prove to be a very costly blow to the online retail giant, as the company uses the federal agency for an estimated 40 percent of deliveries. While Amazon has been working on its own shipping arm, there is still a significant reliance on the USPS for deliveries. Amazon is now looking to turn Whole Foods into combination grocery store – warehouses. Since acquiring Whole Foods last year, Amazon has been putting lockers at stores so shoppers can pick up or return merchandise. Now the company is searching for bigger Whole Foods locations in cities that can serve as both grocery stores and urban distribution centers for delivering goods to online shoppers more quickly.

The crowd-sourced delivery model is a complicated beast – while adoption levels are low, money is pouring into the market. Just last week, I wrote that packaging and shipping start-up Shyp was officially shutting down operations. Well, time to add UberRUSH to the list of services that have shut down. Uber has told customers that it will shut down UberRUSH, its same-day delivery service. The service will remain in operation for three months before closing. UberRUSH was tested in New York city before a broader launch in October of 2015 expanded it to Chicago and San Francisco. It was part of a linked suite of services aimed at providing high-speed deliveries for merchants looking to compete with the likes of Amazon’s same-day shipping. The service was also designed to increase Uber’s per-driver revenue, potentially allowing the same driver to deliver packages and riders during the same trip. But those scenarios apparently didn’t work out. This is another black mark on Uber’s already rocky start to the new year.

Wages and benefits for truck drivers are rising in the US as tight freight-hauling capacity falls short of surging demand. The American Trucking Association, a trade group that represents fleet owners, said annual truck-driver salaries rose between 15 percent and 18 percent from 2013 to 2017, with growth varying based on the type of fleet and the nature of the routes. The ratio of freight loads to the number of trucks on the spot market rose more than 120 percent in February from a year ago as shippers scrambled to get goods to customers, according to online freight marketplace DAT Solutions LLC. Capacity on the spot market was down 8.5 percent in February from the same month a year ago, DAT reported.

And finally, the strong freight demand is having an impact on sales for heavy-duty trucks as well. Orders for trucks in the heaviest Class 8 weight segment reached 133,900 for the quarter, a 98.4 percent gain compared with the same period a year ago, according to industry research firm FTR Transportation Intelligence. Class 8 truck orders were the highest for any quarter FTR has tracked.

That’s all for this week’s logistics news. Enjoy the weekend, and the song of the week, courtesy of one of golf’s biggest hitters, John Daly’s Hit It Hard.

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