This Week in Logistics News (August 8 – 14)

logistics newsIt is back to school shopping season again, but things sure have changed. With the future uncertain, coronavirus could push back-to-school shopping to record levels as families make contingency plans for remote learning. The National Retail Federation (NRF) and Prosper Insights & Analytics released their annual survey on back-to-school spending, and consumers tentatively plan to spend record amounts on laptops and computer accessories in anticipation that at least some classes will take place online due to coronavirus-related closures. Total spending for K-12 and college combined is projected to reach $101.6 billion, exceeding last year’s $80.7 billion and topping the $100 billion mark for the first time. And now on to this week’s logistics news.

logistics newsAs the coronavirus pandemic continues, more and more retailers have gone out of business or filed for bankruptcy protection. This in turn has left many malls with closed stores and no new tenants to take them over. With demand for warehouse space increasing, especially in population centers, Amazon and Simon Property Group are taking a creative approach to the increased number of empty stores. The mall owner has been in talks with Amazon to take over empty stores across the country and turn them into distribution hubs. The talks have focused on converting stores formerly or currently occupied by J.C. Penney and Sears, as both have been closing stores across the country. The move would put Amazon in a unique position to be able fulfill orders quicker while potentially creating region-specific inventory models. Simon malls have 63 J.C. Penney and 11 Sears stores, according to its most recent public filing in May.

logistics newsAs the country continues to turn to grocery delivery, Walmart, the country’s largest grocery retailer, is partnering with Instacart to offer same-day delivery. This is not an overly surprising move for Walmart as it continues to try to keep up with Amazon in the online arena. Amazon offers grocery delivery using its own services Amazon Fresh and Prime Now to deliver groceries from Whole Foods stores and its warehouses. The Walmart – Instacart partnership is currently in a pilot phase in Los Angeles, San Francisco, San Diego, and Tulsa, OK. While it remains to be seen whether the program will be rolled out nationwide, as online grocery shopping continues to grow it is difficult to envision a scenario where Walmart does not expand the partnership to more markets.

logistics newsLast year, the US and Canada announced a deal to eliminate tariffs on steel and aluminium. Last week, President Trump reintroduced the tariffs and imposed a 10 percent tariff on some Canadian aluminium products. President Trump said US tariffs on Canada were necessary to defend the domestic aluminium industry because “producers to the north had broken their commitment to stop flooding the US market with a cheaper product.” Canada has answered with the announcement of a $2.7 billion tariff on US aluminium products. The new tariffs were announced after deputy prime minister Chrystia Freeland previously promised a “dollar-for-dollar” fight. The retaliatory tariffs by Canada will go into effect on 16 September.

Both UPS and FedEx had already announced delivery surcharges ahead of this year’s holiday season. And now, UPS has announced a new round of surcharges for companies that ship large amounts of packages during peak season. The root cause of the surcharge is that the amount of people shopping online continues to grow and an unprecedented surge in packages is likely coming. For a company that ships more than 25,000 packages per week, the surcharge will cost between $1 to $4 depending on whether it’s delivered via ground or air. UPS decides the fee depending on the company’s shipping volume in February of this year, prior to the pandemic hitting the US. Fees will be implemented from November 15, 2020, through January 16, 2021. The big question is how these shippers will handle the increased costs – pay it themselves or pass it on the consumer.

The partner of Coca-Cola’s largest US-based bottling company is expanding its use of blockchain to enhance efficiency across the beverage company’s supply chain. Coke One North America (CONA) will use The Baseline Protocol to enhance transparency and reduce friction in “cross-organization supply chain transactions.” The announcement notes that the 12-largest North American Coca-Cola bottlers began using a Hyperledger Fabric-based blockchain platform for internal supply chain management last year, driving increased “transparency and efficiency” in bottlers’ intricate supply chains. The new project will see CONA expand its use of digital ledger technology beyond its internal network to incorporate external suppliers, such as raw material vendors distributing cans and bottles.

DoorDash is launching a new digital convenience store channel in an effort to grow its market share in the on-demand delivery world. The new service, dubbed DashMart, is available on the company’s platform for customers in eight cities: Chicago; Minneapolis; Dallas; Salt Lake City; the greater Phoenix area; Redwood City, California; and Cincinnati and Columbus, Ohio. This marks the first time that DoorDash has expanded its infrastructure to include distribution centers. The digital convenience stores will offer household essentials, ready-made meals, and restaurant retail items. Each DashMart location will carry roughly 2,000 items and delivery will be available in about 30 minutes.

The Federal Motor Carrier Safety Administration (FMCSA) has once again extended and modified its coronavirus pandemic-related hours of service (HOS) exemptions. In June, the FMCSA made modifications to the exemption, removing “food, paper products and other groceries for emergency restocking of distribution centers or stores” as they were no longer needed for “emergency relief.” Fast forward two months, and “current conditions” have added those categories back to the list. The declaration, which was set to expire today, is now effective through September 14.

While it is probably just my mind playing tricks on me, it seems as though Halloween candy arrives in stores earlier and earlier every year. But this year, it is actually happening. With trick or treating in jeopardy this year due to the coronavirus pandemic, candy manufacturers are changing course and hedging their bets on what is usually their busiest time of the year. These manufacturers are trying to extend the season by getting candy displays in stores two-to-four weeks earlier than normal. But, with the future unknown, many companies, like Hershey, are using less Halloween-specific packaging this year and putting more focus on family-size bags of candy. It is crazy to think we are already seeing Halloween displays.

Want to learn more about inventory optimization and omni-channel fulfillment? On Wednesday, August 19, Steve Banker and I will join Scott Fenwick, Sr. Director, Product Management for Inventory at Manhattan Associates to explore the impact of omni-channel fulfillment on supply chain planning. Register now.

That’s all for this week. Enjoy the weekend and the song of the week, Bob Dylan’s Things Have Changed.

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