This Week in Logistics News (March 9 – 15)

logistics newsSt Patrick’s Day is this weekend, where everyone is a little bit Irish. And it wouldn’t be a holiday without Americans spending a lot of money. So just how much money will be spent this year? According to the National Retail Federation’s (NRF) annual survey on St Patrick’s Day, about 55 percent of Americans plan to celebrate. The average consumer plans to spend about $40, which equates to roughly $5.61 billion in total spending. The largest categories for spending include food, beverages, and apparel and accessories. When it comes to celebrating, wearing green is the number one choice for both men and women, followed by making a special dinner, attending a party at a bar or restaurant, and decorating the home. I’m sure we’ll have our annual corn beef and cabbage dinner at my house…and maybe a Guinness or two. And now on to this week’s news.

Amazon, in an effort to boost profitability, has abruptly stopped buying products from many of its suppliers. This move has sent wholesalers into a panic. Instead of buying from the wholesalers, Amazon is pushing these companies to sell directly to consumers through the Amazon marketplace. Amazon saves and makes money a few ways in this scenario. First, Amazon no longer carries the cost of purchasing, storing, and shipping the products. Second, Amazon can charge suppliers for these services and take a commission on every item sold. There is a lot less risk for Amazon to have the wholesalers sell through the marketplace than buy the items outright. This is part of Amazon’s overall push to reduce overhead where suppliers can use the company’s automated self-service system that requires no input from Amazon managers.

FedEx is running a pilot program to help staff its Memphis, TN hub. The pilot consists of busing employees from Cleveland, Mississippi to the Memphis hub, some two hours away. FedEx sees the program as mutually beneficial: FedEx fills positions the dwindling number of Memphis job-seekers aren’t jumping on, while Clevelanders get accessible employment opportunities the Delta is lacking in. Employees are bused roundtrip every weekday and put in about 25 hours weekly sorting packages, loading containers, and unloading oddly sized shipments. Permanent part-time employees at the hub make a minimum of $13 an hour, with benefits eligibility coming after 90 days of service.

According to a number of reports and interviews with supply chain executives, Brexit will prompt a UK logistics exodus. Reports indicate that shippers will increasingly move European distribution hubs from the UK to continental Europe as they develop new post-Brexit logistics strategies. Transport chaos is looming, especially if the UK pursues a no-deal Brexit. This would raise the cost of distribution and customs clearances unless the UK remains in the Customs Union. Many European companies are beginning to realign their supply chains, which will lessen the UK’s role in pan-EU distribution strategies.

Blockchain is continuing to show use cases when it comes to food traceability and safety. Bumble Bee Foods has been using blockchain technology to trace yellowfin tuna from the time it’s caught to the moment it hits store shelves. The company has been running the program for on its “fair trade”-certified frozen tuna brand, Natural Blue by Anova. The tuna is sourced from small-scale fishing operations based on east Indonesian islands and it is set to go on sale in the US in the coming weeks. In Bumble Bee’s deployment, consumers will be able to scan QR codes on bags of ahi tuna steaks and see information about each product, such as where it originated, which community caught it, the size of the catch, and how it came to be certified as fair trade.

Online grocer FreshDirect is rolling out same-day delivery in Manhattan, Brooklyn, and Westchester County. Customers that place an order by 10 am will be able to have their order delivered by that evening. To celebrate the expansion, the company is offering free delivery to new customers in the month of March and will also provide savings on new products and fresh food during the month. This move comes on the heels of the company’s expansion to deliver more groceries to more parts of Connecticut and the Washington DC metro area, with more expansion coming in the future. FreshDirect currently delivers directly to customers throughout seven states, including the New York City and Philadelphia metropolitan areas, and the District of Columbia.

The food delivery service market is continuing to grow. According to data released on Monday by third-party research firm Edison Trends, there is a new king in town. DoorDash is now the top on-demand food delivery service, surpassing long-time leader GrubHub in consumer spending market share. According to the results, DoorDash owns 27.6 percent of the market followed by GrubHub at 26.7 percent. Uber Eats, which has not grown for some 11 months, takes the third spot claiming 25.2 percent of the market. However, Uber Eats leads in total transactions, but smaller tickets mean lower spending market share.

Alibaba is continuing to invest in Chinese courier companies to bolster its delivery network. The company is preparing to purchase a 14 percent stake in STO Express, one of the largest courier service providers in the country. Alibaba is looking to invest $695 million in the company. This will mark Alibaba’s fourth investment in a major Chinese express courier company, joining YTO Express, ZTO Express, and Best Inc. These moves are all part of the company’s goal to offer 24-hour shipping anywhere in China, and 72-hour shipping anywhere in the world.

Quiet Logistics, a prominent e-commerce fulfillment provider, is being acquired by Related Companies and Greenfield Partners, two private equity investors with a portfolio of real estate holdings. Quiet Logistics is known for its innovative approach to e-commerce fulfillment, first as an early adopter of Kiva Systems, then as the first adopter and incubator to Locus Robotics. The acquisition by real estate investors is interesting because e-commerce fulfillment is one of the fastest (is the fastest?) growing sectors of the industrial real estate market, and this partnership is positioned to support retailers in their ongoing competition against behemoths such as Amazon and Walmart. The terms of the deal were not disclosed.

And finally, three companies have joined forces to o launch the industry’s first Trucking Freight Futures exchange, set to open March 29. The project, which has been three years in the making, will allow companies to begin trading freight futures contracts via Nodal Exchange, FreightWaves and DAT later this month. Initial contracts will be based on seven lanes between major freight markets, three regional baskets of lanes and a national average truckload spot rate, according to the companies.

That’s all for this week. Enjoy your St Patrick’s Day weekend, and the song of the week, Dirty Old Town by the Pogues.