Thirty-six years ago today marks either one of the greatest marketing blunders or success stories of all-time, depending on how you look at it, of course. Concerned that it was losing market share to other soft drinks, and the fact that in some blind taste tests consumers preferred the sweeter taste of Pepsi, Coca-Cola changed its formula and released New Coke. The response from America was overwhelmingly negative, and the new formula was seen as a major failure. Within three months, the company reintroduced the original formula, renaming it Coca-Cola Classic. So, while the new formula was seen as a major bust, some see it as a stroke of marketing genius. The speculation here was the new formula was just a veiled attempt to drive interest in the original formula, which saw a huge uptick in sales once it was reintroduced and rebranded. While New Coke would linger for quite some time, it was discontinued in 2002, with a limited re-release in 2019. Coca-Cola Classic remains the number one soft drink in the US. And now on to this week’s logistics news.
- Amazon in the news:
- Retail import surge expected through the summer
- Shortage of ocean containers shows no sign of easing
- Save Mart kicks off pilot of shelf-scanning robots
- Walmart is pulling the plug on more robots
- CN offers $33.7 billion to one-up rival’s bid for Kansas City Southern railway
- TuSimple plans driverless truck tests in Arizona later this year
Amazon is already the world’s largest buyer of green energy, but through a series of deals, the company is moving to reduce its carbon footprint even more. Amazon will use the power from wind farms, solar parks, and batteries to run its global operations. The series of deals in the US, UK, Sweden, Spain, and Canada will add more than 1.5 gigawatts of capacity to Amazon’s network of green power supplies. In total, the company will source enough renewable energy in Europe to power the equivalent of more than two million homes a year. All of the projects are new developments that will take a couple years to start generating power. As of June 2020, Amazon sourced about 42 percent of its global energy needs from renewables.
While Amazon may have the largest market share for e-commerce, one area where it is lagging behind its competitors is in the assembly of its products at the customers house. Companies like Wayfair, Best Buy, and Home Depot have this service in place. While Amazon has not publicly announced the new service, reports are circulating that the company will experiment with a service that lets customers opt to have furniture or appliances assembled as soon they arrive at their homes. While Amazon will deliver large items to a particular room, that is where its current service ends. The new service will be tested in Virginia and two other markets, and requires drivers to unpack and assemble the items, remove the packaging and take the item back on the spot if the customer isn’t satisfied.
Over the last year-plus, retail imports have been surging at US ports from coast to coast, contributing to ever-increasing backlogs. According to the monthly Global Port Tracker report released today by the National Retail Federation and Hackett Associates, the unprecedented surge of imports at retail container ports that began last summer is expected to continue at least through the end of this summer as retailers work to meet increased consumer demand. In the report, NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said:
“We’ve never seen imports at this high a level for such an extended period of time. Records have been broken multiple times and near-record numbers are happening almost every month. Between federal stimulus checks and money saved by staying home for the better part of a year, consumers have money in their pockets and they’re spending it with retailers as fast as retailers can stock their shelves.”
As imports continue to rise, the cost of getting goods across the ocean is increasing. Supply chain disruptions such as the US – China trade war, increased demand during the pandemic, and most recently, the Suez Canal lockage, has caused an international shortage of shipping containers. As containers become scarcer, the price goes up. And unfortunately, the trend shows no sign of stopping. This has also affected the secondary container market. In years past, a used ocean container that was a few years old would cost about $1,000; now, with the ongoing shortage, that price has doubled. This is likely to be an ongoing problem as the pace of container shipping trade continues to increase.
Robots in retail stores are nothing new these days. But more and more retailers are exploring how they can use them. The Save Mart Companies plans to test Simbe Robotics’ Tally shelf-scanning robot at seven California stores to help reduce out-of-stocks and ensure products are where they should be in the aisle. Tally will roam the aisles at the Save Mart Companies’ stores to provide the retailer with an audit of store shelves, which includes checking products’ in-stock status and ensuring they’re in the correct location on the sales floor. The robot can scan up to 30,000 products daily, which can cut out-of-stocks as much as 30 percent and free up store associates to focus more on customer service, in turn improving the shopper experience, according to the company.
Not all companies are keeping their robots in stores, however. Walmart has already removed its aisle-roaming robots and is now starting to phase out its other in-store robots: automated pick-up towers. The towers are 16 foot-tall, self-service kiosks for online order retrieval. Customers place their orders online, pay for the item, and then enter the order number into the machine, which spits out the item. The retailers is phasing out the towers from more than 1,500 stores as its focus on curbside pick-up has increased since the Covid pandemic hit. About 300 machines are being removed from stores, and around 1,300 “hibernated” while Walmart focuses on other services.
A bidding war is heating up for Kansas City Southern’s north-south rail network through the North American industrial corridor, with Canadian National Inc. (CN) railway today saying that it had one-upped its rival Canadian Pacific Railway’s recent $29 billion takeover bid with a $33.7 billion offer. Both of the Canadian companies have described their vision in similar terms, with CN saying its move would connect ports in the US, Canada, and Mexico to facilitate trade across North America as the new USMCA trade agreement takes effect across the continent. Government regulators will get a vote in approving the deal. The acquisition would be subject to approval by KCS shareholders, the US Surface Transportation Board (STB), and Mexican regulators.
In a long-ranging interview, TuSimple has mapped out its self-driving trucking future. TuSimple, which raised more than $1 billion through an initial public offering, plans to use its new capital to expand its staffing and rev up the development of its self-driving trucks. The company plans to launch a self-driving pilot program in Q4 where it takes the driver completely out of the truck. As part of the program, Jim Mullen, TuSimple’s chief administrative officer, said the following:
“This will be the first time we’ve taken a safety driver out of the truck. It will be on highway and surface streets, hauling actual freight. It’s depot-to-depot, from Tucson to Casa Grande, which is 110 miles. We’ll navigate the surface roads that go onto the interstate. What we’re predominantly working on now is the edge cases: where you have other motorists that are not conforming with the rules of the road and how do you account for that and how do you make sure you can avoid bad events that aren’t even our fault.”
That’s all for this week. Enjoy the weekend and the song of the week, Bad Decisions by the Strokes.