This Week in Logistics News (May 30 – June 5)

logistics newsUPS has dubbed January 2 as National Returns Day, where the company ships close to 2 million unwanted items back to retailers. While retailers plan for the holiday buying surge for months, they take equal care in preparing for the influx of returns when the holiday season ends. But as we know, 2020 is a different beast, as the coronavirus pandemic has caused a lot of shifts and pivots in the global economy. I read an article on Business Insider this week about how retailers are bracing themselves for a flood of returns when they reopen stores. As non-essential stores reopen, they will be faced with consumers who are returning quarantine purchases that did not work out. This brings about a few problems. First, unsold inventory backlogs are about to get bigger. And second, what do they do with clothing that has been worn and returned during a pandemic. It sounds like most retailers have developed new processes to safely quarantine those clothing items before they will be reintroduced to store shelves. The whole process sounds beyond headache inducing. And now on to this week’s logistics news.

logistics newsBlockchain has gained a lot of attention the last few years, with the majority of well-known use cases revolving around food safety. Amazon has filed a patent for a blockchain system to track goods as they move through the supply chain. According to the patent, Amazon is building a distributed ledger certification to ensure that goods sold on its site are authentic. This does not sound overly surprising given the effort Amazon has put in to removing counterfeit items from its marketplace. According to the document, the system aims to improve “trust through an enterprise services platform that allows parties to map their global supply chains.”

CVS is no stranger to emerging technology when it comes to home delivery. As part of its response to the coronavirus pandemic, the company partnered with UPS to make drone deliveries of prescriptions to a retirement community in Florida. And now the company is at it again. This time, CVS is partnering with autonomous driving technology startup Nuro for a pilot program in Houston to autonomously deliver prescriptions. The deliveries will be free to customers that order through the CVS website or mobile pharmacy app and are expected to be ready in as little as three hours. Nuro will be using Toyota Prius vehicles equipped with self-driving technology for the deliveries. While there will a person monitoring the vehicle in the driver’s seat, in the coming months it plans to use an unmanned delivery vehicle called R2. Customers will have to verify their identity to unlock the vehicle and retrieve their prescription.

Digital freight matching platforms have seen a lot of interest, especially as more TMS providers integrate the platforms into their solutions. There is now a new entry to the North American market as Alibaba Group Holdings has announced the launch of Alibaba.com Freight. The platform is designed to help small and medium businesses simplify the moving of freight by allowing them to compare, book, manage, and track ocean and air freight in real-time. Within the freight marketplace, shippers can decide how they want their shipment to be hauled, including mode of transport, costs, and the brand and size of the carriers. The freight matching platform is powered by logistics freight routing company Freightos. Alibaba also announced the release of a new payment terms solution and online trade shows platform.

As coronavirus has pushed more shoppers online, there has been an increase in demand for home delivery. And according to FedEx, the surge in residential deliveries has resulted in a surge in oversized and hard-to-handle packages. This surge has increased operating costs across the entire network. As a result, the company has announced it will start implementing temporary surcharges on a number of services starting June 8. US domestic residential packages will face a surcharge of $0.30 per package and oversize deliveries will now cost an extra $30 per package. The surcharges are targeted at large shippers who have seen volumes rise, and those companies will need to decide whether to pass the surcharges on to customers or eat the cost. Chief rival UPS had already implemented similar surcharges starting last week.

Nordstrom’s off-price outlet Nordstrom Rack mainly operated in a brick and mortar vacuum as the company was hesitant to invest in the e-commerce side of the business. It is a strategy that makes sense as inventory is incredibly volatile, and the competition follows the same path. However, when coronavirus ground brick and mortar retail to a halt in March, things clearly needed to change. Nordstrom Rack has an advantage that other off-price retailers do not: better inventory visibility due to buying most items from Nordstrom. So, the company shifted gears and enabled store fulfillment for its Nordstrom Rack line to carry more things online. The store fulfillment process drove immediate results, and 25 percent of online sales were fulfilled from a store.

The coronavirus pandemic has caused a number of other businesses to make pivots in their fulfillment strategy. Office supplier WB Mason had never offered home delivery before as their customers were office buildings in need of paper, coffee, and janitorial supplies. But when the pandemic hit and offices shut down, the company made a significant adjustment to its business. Initially, WB Mason let its clients order goods to be shipped to their employees’ homes. And within a week the company had set up a website to sell directly to consumers. As CEO Leo Meehan noted, the pandemic closed the majority of their business opportunities, but they followed the customer home. The company saw success by diversifying into the personal protective equipment business, as most companies were not delivering that. With the long-term remote workforce picture still murky, WB Mason will need to continue to adapt to the changing business landscape.

The coronavirus pandemic has caused a lot of product shortages in the US. The FDA has added a new drug to its list of drugs in shortage: Zoloft. The drug is one of the most widely prescribed antidepressants in the US, and is used to treat a range of conditions, including depression, obsessive-compulsive disorder, and posttraumatic-stress disorder. The pandemic has increased demand for mental health services as feelings of isolation and anxiety have risen. According to data gathered by Bloomberg Intelligence, Zoloft prescriptions climbed 12 percent year-over-year to 4.9 million in March, which is the most ever. While Zoloft prescriptions receded to 4.5 million in April, the shortage shows how fragile prescription drug supply chains can be in a time of crisis.

According to sources familiar with the situation regarding US-China relations, Chinese government officials told major state-run agricultural companies to pause purchases of some American farm goods including soybeans as Beijing evaluates the ongoing escalation of tensions with the US over Hong Kong. These sources are also reporting that Chinese buyers have canceled a large number of pork order from the US. This news adds to the speculation that the trade agreement that was struck in January is in jeopardy as the two countries are still at odds.

And finally, I wanted to post an update to a story that we ran last week. As you may remember, the APL England experienced a loss of propulsion amid heavy seas and lost forty containers overboard, as well as damaging seventy-four more. The master of the arrested APL England is to be prosecuted in Australia and the offenses relate to pollution and/or damage of the Australian marine environment as a result of poor cargo loading. The master appeared in court this week to face two charges: discharging of garbage into the sea; and not ensuring that the vessel was operated in a manner that did not cause pollution to the marine environment in the coastal sea of Australia. The offenses carry maximum fines of more than A$300,000 (US$202,000). The case was adjourned until 12 June.

That’s all for this week. Enjoy the weekend and the song of the week, Point of No Return by the Buzzcocks.

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