This Week in Logistics News (October 20 – 26)

logistics newsLast week I mentioned that the Panama Canal expansion has resulted in record breaking tonnage moving through the waterway. The expansion was surely an engineering feat, using the latest technology to improve the global supply chain. However, engineering feats such as building a massive canal did not always have access to this level of technology. Today marks the 193rd anniversary of the opening of the Erie Canal. While the Panama Canal expansion took roughly nine years to complete, the Erie Canal was completed in just two years. While teams of oxen plowed the ground, the majority of the work was done by Irish diggers relying on primitive tools. They were paid $10 a month, and barrels of whisky were placed along the canal route as encouragement. The 425-mile canal connected the Great Lakes with the Atlantic Ocean, helping to drive the economy in New York City. Upon its completion, transportation costs had been cut by about 95 percent. The canal faced competition from railroads in the late 19th century but endured as a major mode of transportation. Today, the Erie Canal is used mostly by pleasure boaters, but it is still capable of accommodating heavy barges. And now, on to this week’s logistics news.

Walmart is betting big on Science, Technology, Engineering, and Mathematics (STEM) focused jobs within a high-tech distribution center as the battle for grocery business heats up. The retail behemoth is set to break ground on a new distribution center in Shafter, CA that will deploy Wiltron technology for automating the storage and retrieval of grocery items. According to Walmart, the new distribution center, which will open in 2020 and support 200 stores, will be able to move 40 percent more product than a regular distribution center, with “more efficiency, greater throughput, and more consistency.” The idea is to make more warehouse jobs STEM-focused to make order filling less physically demanding and more efficient. As the company moves towards a more automated fulfillment center, engineering and mathematics will play a bigger role.

In February, Walmart’s Sam’s Club division partnered with Instacart for same-day grocery delivery at select locations across the country. This week, the two companies have announced an expansion of that partnership. The expansion enables Sam’s Club deliveries in 1,000 more zip codes from 100+ new stores. By the end of the month, customers will be able to order from nearly 350 Sam’s Club stores. Additionally, as the partnership expands, customers can now shop at Sam’s Club stores without a membership; however, members will receive lower, member-only pricing. Delivery can be offered in as little as an hour, and can also include non-grocery items, which opens up more cross-selling opportunities for Walmart.

Drone deliveries are becoming more of a reality, as more test cases have proved successful. Uber Technologies is embracing the opportunity, and envisions that in as little as three years, it will have a fleet of drones ready to deliver food across the country. In a recent job posting, the company is seeking “an operations executive who can help make delivery drones functional as soon as next year and commercially operational in multiple markets by 2021.” In May the company announced that it would begin testing the use of drones for food deliveries in San Diego, but it is unclear how plans for those tests have progressed. There are obviously some regulatory hurdles that will need to be overcome, not to mention the actual technology behind delivery drones.

At the company’s 2018 Global Smart Supply Chain Summit in Beijing, JD.com unveiled plans to launch an “Urban Smart Logistics Institute.” Just what is the Urban Smart Logistics Institute? Well, it will be stocked with business and academic figures from Nankai University, the Institute of Comprehensive Transportation at the National Development and Reform Commission, Beijing Jiaotong University, Beijing Wuzi University, Shanghai Maritime University, Sinotrans & CSC, and Shanghai Municipal Engineering Design Institute. These members will be responsible for developing plans for urban logistics hubs, top-level design for urban logistics systems, and big data and cloud computing platforms for logistics. The top item on their list will be the development of an underground fulfillment network which will use existing tracks and pipe corridors. The end goal would be an underground delivery network to ease road congestion and reduce the cost of last mile deliveries.

Last week, I mentioned that the USPS wants to raise the fees it charges Amazon and other shippers by 9 to 12 percent. The USPS proposal calls for a 9.3 percent increase for packages weighing over one pound and a 12.3 percent increase on lighter packages for its parcel select service, as well as a 3.9 percent increase on priority mail express, a 5.9 percent increase on priority mail, and a 10 percent increase on first-class stamps. According to Credit Suisse, the increased fees could cost Amazon more than $1 billion in 2019. This is based on a potential shipping expense range of $400 million to $1.1 billion, assuming that 40 to 50 percent of US packages are shipped via the Postal Service. If approved, the USPS’ proposed price changes would take effect on January 29, 2019.

The Port of Rotterdam, Samsung SDS, and ABN AMRO, have announced the launch of a container logistics pilot project based on blockchain technology. For these companies, the end goal is to achieve a complete digital integration of physical, administrative, and financial streams within the distribution chain. According to a statement, there is “still a lot of space in the logistics sector to implement digitization, which can be leveraged to achieve greater transparency and efficiency.” The pilot, which begins in January 2019, involves the multi-modal transport of a container from a factory in Asia to a location in the Netherlands.

I have written about the long-term effects on supply chains and the environment due to food waste. Technology startup Flashfood has designed an app that aims to help eliminate food waste. The company is partnering with Target and Loblaw in the Twin Cities area to highlight foods that are close to their “best used by” or expiration dates and offering them at a discounted rate to consumers. The deep discounts are seen as a positive for both supermarkets and customers. For customers, especially lower income families, the deep discounts can help to fill the void between paychecks. For grocery stores, they are creating a revenue stream from items that would otherwise be thrown away. The startup makes money by taking a cut of each sale.

That’s all for this week and enjoy the weekend. While the easy answer for the song of the week would have been Thomas Allen’s Low Bridge (Erie Canal Song), I went with my favorite song about one of the Great Lakes, Gordon Lightfoot’s Wreck of the Edmund Fitzgerald.

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