This Week in Logistics News (September 14 – 20)

logistics newsLast week, I wrote about the robot uprising that is going on in the store, where retailers are using robots for a variety of tasks, including stock checks, damage control, and customer service. So, what happens when a robot cannot fulfill its responsibilities and makes too many mistakes. Well, it turns out that after getting reassigned, it gets fired just like its human counterpart would. That’s exactly what happened in Scotland this week when a robot named Fabio, that was designed to answer customers questions, failed to answer the call. The robot was programmed with directions to hundreds of items in the store. And while it initially won over the customer base, it soon became apparent that it was failing. Within a few days it was noticed that the robot was struggling to understand shoppers’ requests because of background noise. As a result, Fabio was relegated to a lonely aisle where its only task was to offer free samples from the store. Given that its success rate of giving samples to customers was about one-fifth of its human counterparts, it is no surprise that Fabio was retired for the time being. I guess it is back to the drawing board. And now on to this week’s logistics news.

Is Uber Freight a Going Concern?California has passed a landmark labor bill meant to fix the gig economy. Last week, California legislators passed legislation designed to help hundreds of thousands of independent contractors become employees to earn a minimum wage, overtime pay, and other benefits. And now, California Governor Gavin Newsom has signed the state’s Assembly Bill 5 into law. The new law intends to re-classify gig economy workers as full-time employees based on a test that determines whether they qualify as contractors or not. Under the bill, workers are likely to be employees if the company directs their tasks and the work is part of the company’s main business. Uber, Lyft, and many food delivery companies are not happy with the new law. These companies argue that their business model hinges on drivers remaining independent contractors. This is likely due to the fact that if they were classified as employees, costs would rise significantly, and the total valuation of these companies would suffer. It does seem funny to argue that a delivery worker is not part of the company’s main business. Either way, this ruling could have a serious trickle-down effect across the country when it comes to crowdsourced last mile deliveries.

While the trade war drags on and trade deals continue to be negotiated, the US and Japan have apparently struck a deal which will cut tariffs and increase imports and exports for both countries. The US has agreed to increase its low-tariff quota for Japanese beef in bilateral trade negotiations. While the exact details are unknown, Japan will be able to export more beef to the US at a duty rate well below the 26.4 percent levied on quota-exceeding exports. The US levies an import duty of 4.4 cents per kilogram on the first 200 tons of Japanese beef each year. Japan will abolish import tariffs on US wine in seven years after a bilateral trade deal takes effect; Japan currently imposes a duty of 15 percent per liter on US wine.

The autonomous trucking race is on, and investments are continuing to soar. Waymo, which is a Google-affiliated self-driving car company, announced that it is expanding its capabilities. Earlier this week, the company announced that it is expanding to Class 8 trucks and last-mile delivery vehicles in the coming years. Waymo piloted its driverless truck technology for the first time earlier this year with Class 8 trucks running freight to and from a Google data center in Atlanta. Like other tests, the trucks had licensed drivers in the cab take control if needed. And while autonomous cars have been the core of what Waymo has focused on, given the initial test, and the interest in autonomous trucks, it is not a surprising move.

Amazon has been not so quietly building out its logistics network, with an emphasis on Prime Air to move packages between DC’s and transportation hubs around the country. The company has been building out its Prime Air fleet of cargo planes over the last few years, as well as building an air hub at the Cincinnati/Northern Kentucky International Airport. The company is set for a second phase of air hubs as it plans to open one in October at Fort Worth Alliance Airport in Texas. This will be the first “built-to-spec” airport project for Amazon Air. Capabilities include sortation as well as the infrastructure to handle multiple flights daily. The new hub will include daily flights and allow Amazon to further serve its customer base in the Dallas-Fort Worth Metroplex. Amazon expects this facility to create 300 new full-time jobs over time as operations reach full capacity.

As Amazon looks to speed up its Prime deliveries, it is also looking to expand its Amazon Locker services. According to people familiar with the project, Amazon is looking to at least double its Locker capacity over the next year. Currently, Amazon has less than 10,000 lockers located around the US. With the increase in its Prime Air network, as well as other investments, it is not surprising to see the company focus on more control over the last mile of deliveries. The Amazon lockers are a code-specific entry point at a store or university, where customers can retrieve items at their leisure securely. Retailers hope that by installing Amazon lockers, foot traffic could be improved as well.

Walmart has announced that it is expanding its “unlimited” grocery delivery service nationwide in the near future. The service costs users $98 annually, or $12.95 per month (rather than a $9.99 per order fee), and will expand to 1,400 stores this fall. The service had an initial test run in four markets: Houston, Miami, Salt Lake City, and Tampa. As part of the nationwide rollout, Walmart said the service will be available in 200 metro areas where it already has regular grocery delivery, reaching more than 50 percent of the US population, by the end of the year. As part of the expansion, Walmart will include some general merchandise items in the program on top of the fresh produce, meat, and bakery items it already includes. Walmart said it has more than 45,000 personal shoppers helping it pack grocery orders for customers every day, and that these personal shoppers must complete three weeks of training before they can begin that work.

Drone Delivery Canada (DDC) and its marketing arm, Air Canada Cargo, have announced the first commercial customer for the drone company, with operations set to commence next month. The business case has been made for the practical use of drones, and DDC’s first client is looking to use the service for delivery parts, tools, and repair equipment for Vision Profile Extrusions, a technology-driven group of companies focusing on the building products industry. According to the contract, DDC’s ‘Sparrow’ drones will operate between the manufacturer’s sites, remotely monitored by the drone operator’s commercial operations center. The drones can carry loads of up to 10 pounds, and Vision Profile will pay a monthly fee for each drone route. After so much drone rhetoric, it is amazing to see these practical use cases taking off.

And finally, FedEx has announced that customers will see higher rates starting in 2020. The hikes will be in the Express, Ground, and Freight divisions. However, FedEx has said that for the third year in a row it will not apply additional residential surcharges during the holiday season, except for shipments that are oversized, unauthorized, or that require additional handling. FedEx Express shipping rates will increase by an average of 4.9 percent for US domestic, US export, and US import services. FedEx Ground and FedEx Home Delivery shipping rates will increase by an average of 4.9 percent. FedEx Freight shipping rates will increase by an average of 5.9 percent for shipments within the US (including Alaska, Hawaii, Puerto Rico, and the US Virgin Islands) and between the contiguous US and Canada. FedEx Freight shipping rates also will increase for shipments within Canada, within Mexico, and between the contiguous US and Mexico.

That’s all for this week. Enjoy the weekend, and the song of the week, in remembrance of the late, great, Ric Ocasek, You Might Think by the Cars.

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