Tuesday, January 15 marked the tenth anniversary of the dramatic landing of US Airways Flight 1549. I happen to be in New York for NRF on that day, so not surprisingly I saw a lot of media coverage. Shortly after takeoff, the Airbus A320 hit a flock of geese and lost all engine power. The plane was approximately 3,000 feet in the air and Captain Chesley Sullenberger (Sully) radioed in that they had lost all engine power and would be returning to LaGuardia. When radio control gave Sully the runway to land on, he radioed in that the plane would not make it back to the airport. The plane was also unable to reach Teterboro Airport in New Jersey and soared less than 900 feet above the George Washington Bridge. Captain Sully made an unpowered ditching and successfully landed the plane in the middle of the North River section of the Hudson tidal estuary. Amazingly, even though there were a few serious injuries, nobody was killed in the emergency landing. The dramatic event even resulted in the Clint Eastwood directed film Sully, starring Tom Hanks. And now on to this week’s logistics news.
- Brexit in the news:
- Microsoft, Walgreens align to develop health-care delivery model
- Stop & Shop is planning to roll out small ‘driverless grocery stores’ in the Boston area
- Dutch retailer taps Deliveroo for half-hour deliveries in Amsterdam
- FedEx tiptoes into $9 billion online market for bulky deliveries
- First US crude cargoes head to China since trade breakthrough
Prime Minister Theresa May’s Brexit agreement was decisively defeated in a vote, and now political leaders are calling for a second vote as the deadline looms. And as the deadline looms, Brexit plans are impacting the overall global supply chain. With so much unknown right now, Honda has decided to suspend production at its British plant for six days in April after the UK leaves the European Union on March 29. The main reason is to give Honda a little bit of time to assess how to prepare for any logistics and border issues that arise following Brexit. According to a Honda spokesperson, “these contingency provisions have been put in place to best mitigate the risk of disruption to production operations at the Swindon factory. This is to facilitate production recovery activity following any delays at borders on parts.”
Also bracing for the chaos that could ensue following Brexit, Novo Nordisk A/S, the world’s biggest maker of insulin, has reserved space on airplanes and plans to boost stockpiles. This is to ensure that there will not be a shortage of the life-saving drug for diabetes patients in the UK. The normal stockpile for insulin is approximately seven weeks; the Danish drug maker is looking to boost those stockpiles to as much as eighteen weeks by the end of March. Novo is now pushing the UK government to open up other entry points to relieve pressure on the key port of Dover, England, and look at prioritizing medical supplies over other imports. This is just the latest instance of a company looking to stockpile as much inventory as possible; the big difference here is that this effort is literally a matter of life and death. With the recent Brexit vote, it is becoming more likely that the UK leaves the EU without a trade deal.
As Amazon continues to push into new business lines, the competition is pushing back. In response to its move into the healthcare industry, Microsoft is entering into a multi-year partnership with Walgreens. The two companies announced the plan to develop new health care delivery models, technology and retail opportunities. A big part of this plan is to combine Azure, Microsoft’s cloud and AI platform, with Walgreens’ customer reach. This means connecting the physical stores and their health information services through Microsoft’s services. Microsoft and Walgreens are also looking into the possibility of building “joint innovation centers” across the country. The partnership should help to streamline order fulfillment and potentially home delivery service.
Stop & Shop, the Quincy, MA grocery chain, has announced plans to launch “driverless grocery stores” in the Boston area. And no, the company is not talking about driverless delivery vehicles. Stop & Shop is partnering with San Francisco start-up Robomart to develop the stores. Robomart operates a fleet of electric, remotely piloted vehicles that carry around a selection of grocery items. This way, customers can actually pick out their own items from the store, rather than simply having them delivered. Given its limited size, 11 feet by 5 feet, the Robomart vehicles obviously do not offer the same assortment as a full-scale grocery store. But Stop & Shop has said that the initial assortment will include fruits, vegetables, convenience items like bread and milk, and meal kits. The vehicles, which will be re-stocked periodically as they roam, are expected to launch this spring.
As the grocery delivery market continues to heat up, so too does the market for meal kits and hot foods. Well, Dutch grocer Albert Heijn is partnering with Deliveroo to deliver hot meals in Amsterdam’s city center. The service, which is called Allerhande Kookt, allows customers to order hot meals from the retailer’s online database. The meals will be cooked by a team of chefs and delivered within thirty minutes. The pilot program will make use of electric bikes to collect products from one of two Albert Heijin to go stores in the city. The initial trial will last for two months before being evaluated and potentially expanded.
The online market for bulky items is growing, and FedEx has decided it wants to take a piece of the $9 billion market. Traditionally, bulky items such as washing machines and furniture were left to more traditional trucking companies as the items did not fit into sorting operations. But FedEx is piloting a program that will use the company’s freight business, which is an LTL operation that focuses on more industrial shipments. Under the program, FedEx will deliver bulky items into a customer’s home and assemble it for them. According to a FedEx spokesperson, “FedEx Freight is in the beginning stages of piloting a new service, FedEx Freight Direct, that will move larger, bulkier items to customers’ homes and businesses, and even offer light assembly for an additional fee. Demand for these types of delivery services has grown in recent years and we expect that trend to continue.”
Three cargoes of US crude are heading to China from the Gulf Coast, marking the first departures since late September and a 90-day pause in the trade war. According to vessel tracking data, the ships should arrive at Chinese ports sometime between late January and early March. China is the world’s biggest crude importer and became a top buyer of US crude after a 40-year ban on shipments was lifted in late 2015. China imported 325,000 barrels per day of US crude in the first nine months of 2018 alone. However, the trade war resulted in Chinese buyers avoiding US crude. All told, the three vessels are carrying about six million barrels of crude.
That’s all for this week. Enjoy the weekend and the song of the week, Tom Petty’s Learning to Fly.