Logistics Viewpoints

A complete analysis of logistics trends, technologies, and services

This Week in Logistics News (February 10 – 16)

Supply Chain News | By •

logistics newsOn Wednesday of this week, millions of people celebrated Valentine’s Day. And how better to show your love than by spending lots of money. Much like basically every holiday, Americans dug into their wallets to spend, spend, and spend some more. According to the National Retail Federation’s annual survey on Valentine’s Day, as 55 percent of Americans celebrate the holiday, the average consumer spent $143.56 on Valentine’s Day this year, an increase from last year’s $136.57. Total spending was projected to exceed $19.6 billion, an increase of $1.4 billion over last year. The most common gifts for 2018 were candy (55%), greeting cards (45.9%), flowers (35.6%), and an evening out (35.2%). With more than a third of consumers buying flowers, that equates to $2 billion spent on flowers. UPS alone delivered 88 million flowers, which is about 8 million pounds. And now, on to this week’s logistics news.

Amazon is preparing to launch a new delivery service that it hopes will rival both UPS and FedEx. The program, called Shipping with Amazon (SWA), will debut in Los Angeles with its ‘third-party merchants’ and then be rolled out more broadly. The program entails Amazon picking up packages from businesses and shipping them to consumers. Amazon is planning to undercut UPS and FedEx on pricing, although the exact rate structure is not completely known. While Amazon has built out its delivery and fulfillment infrastructure over the last few years, many in the industry doubt that it will be able to scale its delivery service to truly compete with UPS or FedEx. However, if the past has shown us one thing about Amazon, it is to never underestimate what the company can do.

Amber Road quickly rejected an unsolicited buy-out offer made public by E2open the previous day. Amber Road’s board concluded that the proposed business combination would not be in the best interests of Amber Road’s shareholders. The Chairman of the Amber Road Board further stated that the Company’s existing strategic plan is the best means of maximizing value for stockholders and satisfaction for customers. Although the E2open proposal to acquire Amber Road appears to be off the table, mergers and acquisitions within the supply chain software market are sure to continue, as providers look to offer a more comprehensive solution to their customers, and deliver additional value to their shareholders. The offer, which valued publicly traded Amber Road’s stock at $10.50 per share, was for $300 million.

While the city of San Francisco wants to make home delivery much tougher for robotic delivery startups, the state of Arizona is moving in the opposite direction. State lawmakers on Wednesday took the first steps to legalizing the use of personal delivery devices. The house bill, which received unanimous approval from the House Committee on Transportation and Infrastructure, would allow the robots to operate on sidewalks and in crosswalks. The bill also would give the robots the same rights and duties as the pedestrians with whom they would share that right of way. That includes a mandate to follow traffic and pedestrian signals. The robots have been tested in a few cities to deliver items such as food, packages, and mail.

Tesla Costs Twice as Much as Diesel

Elon Musk thinks the highly anticipated Tesla Semi is going to sell like hotcakes. On the company’s earnings call this week, Musk told analysts he expects to sell 100,000 units or more annually by 2022. The trucks come with a price tag of $150,000 for 300-mile range version, $180,000 for the 500-mile range version, and $200,000 for the Founders Series. So far, Ruan Transportation Management Systems, UPS, PepsiCo, Anheuser Busch, J.B. Hunt, and Walmart have all pre-ordered trucks.

UPS has officially expanded its International Special Commodities (ISC) program. Customers may now ship biological substances and dangerous goods in pre-determined quantities, along with shipments requiring dry ice, to 50 additional international destinations. This brings the total destination availability to more than 100 locations. The main driver for expanding the program is the increased demand from biopharmaceutical manufacturers, diagnostics companies, laboratories, distributors, and care providers who need specialized commodities when safety, time, and controlled temperatures are essential.

UPS and the Teamsters Union have begun negotiations for a new contract this week. Last month, the Teamsters submitted an 83-page opening demand in its National Master contract that covers about 260,000 UPS employees. On its list of demands for the new contract are the creation of 10,000 new full-time jobs; elimination of late-night deliveries; greater job security; and raises from part of the expected $10 billion in profit UPS is expected to make this year, and in the foreseeable future. In a statement, UPS emphasized it is seeking “flexibility” to remain competitive in the rapidly changed e-commerce and small package landscape. It sounds like the two sides may be quite a bit apart as the negotiations begin, but they have a few months to get things ironed out.

And finally, EU antitrust regulators are set to fine Nippon Yusen KK (NYK) and several other Japanese shippers as well as Norwegian Wallenius Wilhelmsen Logistics ASA (WWL) in the coming weeks for rigging bids for shipping cars. The sanctions come on the heels of a six year investigation by the European Commission in September 2012 in coordination with Japanese and U.S. antitrust authorities. Competition regulators around the world have penalized a number of shippers in recent years for fixing prices and dividing the markets for shipping cars and other products on various routes.

Want to benchmark your warehouse labor management performance? Take our new survey to find out how you compare with your peers.

That’s all for this week. Enjoy the weekend and the song of the week, Dead Flowers by the Rolling Stones.

This Week in Logistics News (February 3 – 9)

Supply Chain News | By •

logistics newsEarlier this week, SpaceX launched a rocket into outer space. Attached to the Falcon Heavy rocket, launched from Cape Canaveral, FL, was a 2008 Tesla Roadster, with a dummy at the wheel named “Starman.” The goal was to launch the car into space and into an orbit around the sun that would bring it close to Mars, Well, the mission was mostly successful, as the rocket took off and initially went into the planned orbit. However, upon a final reignition of the rockets, the Roadster left its initial orbit and was heading toward the asteroid belt. According to the revised data, it will take the Tesla about 18.8 months to complete one trip around the sun. This means that the Roadster will reach its farthest distance from Earth in about half that time, and the Tesla will cross the orbit of Mars twice per orbit around the sun. And now, on to this week’s logistics news.

As Bitcoin and Blockchain-related technology continues to grow, UPS is taking a big stand. The company, according to recently published documents, may be looking to accept Bitcoin at its item-exchange lockers. According to an application released by the U.S. Patent and Trademark Office (USPTO) on Thursday, UPS is exploring a system of locker banks that will accept digital currency. According to the patent, “The filing outlines a system of lockers where a party trading or selling an item can leave it in the locker for a buyer to pick up at their convenience. Some of these lockers may be configured to accept payments if the parties are renting the locker.”

Amazon is no stranger to innovative patent filings. However, its latest patent moves away from the futuristic vision of drone deliveries and moves towards the simplistic aspect of tracking warehouse workers. In theory, Amazon’s proposed technology would emit ultrasonic sound pulses and radio transmissions to track where an employee’s hands were in relation to inventory bins, and provide “haptic feedback” to steer the worker toward the correct bin. The aim, Amazon says in the patent, is to “streamline time consuming tasks, like responding to orders and packaging them for speedy delivery. With guidance from a wristband, workers could fill orders faster.”

A self-driving truck, operated by tech startup Embark, completed a test of a full cross-country journey. The truck is a modified Peterbilt tractor, outfitted with an array of sensors and guided by self-driving software. During its journey, the truck traveled 2,400 miles over five days along the length of Interstate 10, which span the southern United States. While there was a driver behind the wheel at all times, Embark’s onboard technology handled nearly all of the highway driving. Embark’s current system represents Level 2 automation, where the driver is required to actively monitor the vehicle’s progress as it drives itself on the highway.

DHL Global Forwarding expanded its offices along the US and Mexican border, investing in staff and operations in San Diego, CA, Nogales and Tucson, AZ, and El Paso, Laredo, and McAllen, TX. Industries along the border that should see an increase include pharmaceuticals, engineering, and biotechnology. The border area has manufacturing and a large US military presence. According to DHL, “these six stations are located in some of the most trade-driven metropolitan areas along the US-Mexico border.” The six stations alone employ 300+ staff. DHL Global Forwarding provides air freight, ocean freight, U.S.-Mexico customs brokerage, warehousing, vendor management inventory, bonded warehouse and domestic transportation services.

The Hershey Company is joining the fight to end deforestation in its supply chain. The commitment includes two fundamental components: no new deforestation for cocoa through a strict commitment not to source cocoa from anywhere in the world where new deforestation has occurred, effective immediately; and agroforestry to support shade-grown cocoa through tree planting programs. Hershey joins the likes of Nestlé, Mars, Mondelez, Cargill, and Olam, which have all signed an agreement in which they acknowledge that their cocoa supply chains and procurement practices have contributed to the destruction of forests. The agreement indicates that these companies will work together to develop a solution to the problem, which will be no easy task.

According to a recent government report, truck drivers lose an estimated $1,281 to $1,534 a year and put themselves at higher risk for crashes because of unexpected wait times on loading docks. When normalized across the industry, it brings the total income loss close to $1.3 billion because of detention. Detention time is generally defined as the minutes or hours truckers wait beyond what they anticipate needing to load or unload freight. An industry rule of thumb often included in shipper contracts is anything over a two-hour wait is considered detention time. Industrywide, driver detention time also reduces for-hire motor carriers’ yearly net income by $250.6 million to $302.9 million, according to the report.

And finally, the Port Authority of New York and New Jersey (PANYNJ) has moved into the second phase of environmental review for the Cross Harbor Freight Movement Program. PANYNJ entered a $23.7 million agreement with Cross Harbor Partners for a Tier II Environmental Impact Statement that will evaluate two preferred options to move freight across New York Harbor. It is expected to take up to three years to complete. The two options to be examined are the construction of a cross harbor freight tunnel and the expansion of PANYNJ’s existing railcar float operation. Considering that the PANYNJ is expected to reach record container volumes this year, the time is right for expansion.

That’s all for this week. Enjoy the weekend, the Olympics, and the song of the week, David Bowie’s Starman.

This Week in Logistics News (January 27 – February 2)

Supply Chain News | By •

logistics newsThe time has finally come for Super Bowl weekend. All the pieces are in place – the teams, the media, the fans, the halftime entertainment, the security, and all the other logistics that need to be in place for the Super Bowl to actually happen. While I am clearly hoping for a Patriots victory, and for the dynasty to continue, I realize that I have become completely spoiled. This is the first year that my 7-year old has been into the Patriots enough to watch full games, including his first playoff game in the AFC Championship. When the Pats were losing in the fourth quarter, he was burying his head in the couch, so afraid that they would lose. He constantly asked me if I thought they would win. “Of course I do” was my response. And I really did. That’s what happens when they keep winning. So hopefully he will see his first Super Bowl victory for the Pats in its entirety. But if not, there’s always next year. And the year after. And now on to this week’s logistics news.

Amazon is expanding a delivery service trial that could put a squeeze on both UPS and FedEx. The program is called “FBA Onsite” and seeks to speed up delivery timeframes for groceries, cleaning products, and other items sold by merchants without an influx of additional inventory at Amazon’s warehouses and distribution centers. The program enables Amazon to oversee the pickup of packages from third party merchants that sell items on Amazon.com, and deliver these items to customers. Amazon controls the delivery of these items, so while it can still use UPS and FedEx, it ultimately has the final say in how items are delivered. Amazon is currently recruiting more merchants to join the program.

Since Target announced its acquisition of Shipt, a same-day, crowd-sourced delivery platform, in December, the company has been planning a roll-out of same-day delivery services. Earlier this week, Target announced that the service will be available in its first markets starting this month, including in Birmingham, AL and South Florida. The service will then be rolled out to other markets, with Target planning to offer the service at nearly half of its stores by the end of March, and almost all stores by the December. A Shipt membership regularly costs $99 or a $14 per month on orders more than $35. Deliveries of less than $35 have a fee of $7 per order and Shipt prices vary slightly from in-store prices.

Zara has unveiled a new click and collect pop-up store in east London while its flagship store is being refurbished. The store is a temporary location, and will remain open until May, when the flagship store re-opens. This is a trial run to show customers the type of experience they will have when the flagship store re-opens. Aside from click and collect, the store will feature mobile handhelds that store associates can use to place online orders for customers, and allow customers to decide a timeframe for fulfillment. The new flagship store will feature an entire section dedicated to online orders.

Silicon Valley start-up Nuro, which launched about 18 months ago, has been very secretive in its business plans up until now. The company has debuted its self-driving delivery van, and has grand plans to disrupt the delivery market. While it is certainly not the first start-up (or experienced manufacturer) to launch an autonomous van, this one is a little different. The van weighs approximately 1500 pounds, most of which is in the battery pack that powers its electric motor. While it is roughly the same length and height of a traditional SUV, it is only 3.5 feet wide. It is slower moving, which combined with its narrow design, allows for additional safety features such as avoiding pedestrians without leaving its lane. The company’s goal is to have its vehicles on the road sometime later this year.

Interest in delivery robots continues to heat up, with vertical transportation giant thyssenkrupp unveiling a self-driving delivery robot for field technicians. The new robot, co-developed with software maker TeleRetail, is designed to bring spare parts and materials to field technicians working on elevators and escalators in dense urban areas. Typically, if a technician needs a spare part, they need to drive back to the warehouse to get it or have it delivered by a colleague. Using thyssenkrupp’s new robots, technicians can have the parts delivered faster, as they do not have to deal with traffic congestion. The robots are 33 inches wide, can travel on sidewalks, and can carry payloads weighing up to 77 pounds.

As more companies seek out alternative-fuel freight trucks, Nikola Motor Company has unveiled plans for a new $1 billion manufacturing hub for its hydrogen-fueled semi-trucks. The facility will be located in the Phoenix area, and according to Nikola, will be the one of the largest stand-alone manufacturing facilities for next-generation semis at 500 acres. This news comes on the heels of announcements from Tesla, Navistar, and Volkswagen to begin production on alternative-fuel trucks as well. Nikola said that it plans to begin construction in 2019, with the first trucks rolling off assembly lines sometime in 2021. So far, the company has received 8,000 advanced orders for its new trucks.

Speaking of alternative energy sources, Budweiser has switched all of its US brewing to renewable electricity and is adding a clean energy logo to its labels. This is all part of Anheuser-Busch InBev’s global effort to use green power. The symbol will say “100percent renewable electricity” and will be added to all bottles and cans. AB-InBev, which is the world’s largest brewer, is one of more than 100 multi-national companies to have committed to using renewable energy as part of the Paris accord. The company hopes that other than combatting pollution and climate change, the use of renewable energy will ring a lift to Budweiser’s sales, which has seen a dip recently.

Want to learn more about how a TMS can help you improve customer service? Join ARC Advisory Group’s Steve Banker, Sephora’s Jose Flores, and MercuryGate’s Hope Federer to learn more.

Want to benchmark your warehouse labor management performance? Take our new survey to find out how you compare with your peers.

That’s all for this week’s logistics news. Enjoy the weekend and the Super Bowl. Cue the kick-off and enjoy the song of the week, AC/DC’s Hell’s Bells.

This Week in Logistics News (August 19 – 25)

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Source: Sky and Telescope

As authors of the Logistics Viewpoints blog, we take pride in delivering insights that you can’t obtain in other sources. As an example, did you know there was a total eclipse of the sun across the US this week? I say this sarcastically because every news outlet covered the event extensively.  But I also say this seriously because I found it to be a completely underwhelming event in Massachusetts. Ok, I understand that Massachusetts is far outside of the “path of totality”, but I wouldn’t have even noticed a difference in the light outside, had I not been looking for the eclipse’s effect. But it looks like this Nebraska family had a great experience.

And now, on to the news.

Zipline will be working with the Tanzania government to launch what they are calling the world’s largest drone delivery service for emergency medical supplies. In the first quarter of 2018, Tanzania’s government will begin using drones to make up to 2,000 deliveries per day to more than 1,000 health facilities, Zipline said in a statement Thursday. Zipline has been operating a similar service in Rwanda, and Vayu has completed drone flights deliveries of blood samples and other medical items in Madagascar.

Flytrex is launching an on-demand drone delivery service with AHA in Reykjavik Iceland. Its drones were recently approved by the Icelandic Transport Authority to pick up restaurant orders in Reykjavik and fly them to a drop-off point in a nearby suburb. The city’s structure on a bay makes the drone delivery an effective alternative to road delivery due to the drone’s ability to cross the bay, rather than driving an auto around the perimeter. The program will begin with one drone flying 20 orders per day and then scale up to hundreds of deliveries a day to customers’ yards.

Reports of service failures across the CSX rail network have intensified over the summer, more recently gaining additional press and triggering a letter to be sent by the Rail Customer Coalition to committee members of the US Congress. The rail gridlock is reportedly causing coal stockpiles to increase in Ohio and West Virginia and shortages of oils and sweeteners used by food producers such as McDonalds and Kellogg Company.  A letter to Congress by the Rail Customer Coalition states “there are chronic service failures occurring across the CSX network which are impacting the entire North American rail network… This has put rail dependent business operations throughout the U.S. at risk of shutting down, caused severe bottlenecks in the delivery of key goods and services, and has put the health of our nation’s economy in jeopardy.”

Walmart and Google are teaming up to provide Walmart goods to customers of Google Express. These two companies are taking aim at the convenience and low-cost (free) delivery offered by the Amazon Prime service. Google plans to offer free delivery of items purchased on Google Express, so long as purchase minimums are met. Earlier this year Walmart began offering free two-day shipping on more than two million items. Walmart is also repurposing many of its stores to serve as e-commerce fulfillment centers for buy online, pick-up in store. Walmart is clearly looking to leverage its physical presence to optimize the omni-channel paradigm to compete with Amazon’s e-commerce strength.

Amazon’s pending acquisition of Whole Foods recently received the green light from regulators, and the acquisition is expected to close on Monday. Amazon plans to immediately make many of Whole Foods items more affordable. From a logistics perspective, Whole Foods brands will be made available through Amazon.com and the Prime Now same-day delivery service.  Also, Amazon lockers are planned to be installed in select Whole Foods stores, allowing Amazon.com items to be shipped to Whole Foods locations and allowing Amazon.com returns to be processed from Whole Foods locations.

Great Wall Motor Company, as you may have guessed is a China-based automotive company. Great Wall recently told Automotive News that it is interested in purchasing the Jeep brand from Fiat Chrysler. I recently wrote an LV post about American-made cars and the fact that an American auto brand does not necessarily equate with an American made car due to international supply chains. Although the Great Wall interest in Jeep is currently only hearsay, it could very well be the next major step in the internationalization of automotive brands and supply chains.

That’s all for this week. Enjoy the weekend and the song of the week, Eclipse by Pink Floyd.

This Week in Logistics News (August 27 – September 2)

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IrishpngWho first proposed the Labor Day holiday in the US? It is unclear who first proposed the holiday, but it does appear to be an Irish-American contribution to the country. According to DOL.gov, it was either Matthew Maguire, a machinist from NJ, or Peter McGwire, general secretary of the Brotherhood of Carpenters. By the way, the DOL webpage shows a cartoon of the two men duking it out. Are they implying that Irish Americans have a tendency to throw punches? Where are the PC police when you need them?

 

chrobinsonC.H. Robinson continues to expand its global logistics services footprint, as it announced it has entered an agreement to acquire APC Logistics, a $250 million (revenue) freight forwarding and customs brokerage services provider in Australia and New Zealand. C.H. Robinson is one of the world’s largest 3PL service providers, and ARC’s research has shown the company to be well-regarded within the industry. Although C.H. Robinson appears to be gaining market share, the industry overall is experiencing some headwinds from slowing global trade.

freightosFreightos, an online freight marketplace provider, announced the acquisition of WebCargoNet, an air cargo rate management provider.  ARC recently published a research study titled Transportation Execution Marketplaces and Systems that analyzes the market in which Freightos operates. Steve Banker, the study’s author, estimates that this is one of the fastest growing logistics software markets, and that over $170 million in VC money has been invested in these firms over the last couple years. Of course, Freightos was among the recipients of VC funds, and has deployed some of that capital toward its acquisition of WebCargoNet. The fast-paced dynamics of this market lead me to believe there will be many more acquisitions on the horizon.

HanjinOn a more somber note, Hanjin Shipping, one of the world’s largest container lines, filed for bankruptcy protection on Wednesday. The new is causing turmoil at global ports, as Reuters and others note that international ports are denying access to its vessels. The same article notes that the vessel Hanjin Rome was seized in Singapore by a creditor. This doesn’t sound like an orderly bankruptcy to me, but that’s just me.

US Ports are experiencing less than stellar growth in imports , less than expected for this time of year, according to Hackett Associates data quoted by the Wall Street Journal. Interestingly, they attribute the lackluster imports as a result of changing retail inventory practices driven by the shift from brick and mortar to e-commerce sales. ARC’s research has shown unequivocally that ecommerce is growing quickly and that it is having widespread effects on supply chains. However, I consider there to be an additional factor in the causal chain. I believe that ecommerce companies, like Amazon, are able to offer a wide range of SKUs that surpasses what many brick and mortar retailers have available on the shelves at stores. This has pressured stores to offer a greater number of SKUs to better compete with ecommerce providers. In response to the proliferation of SKUs and the lackluster growth of brick and mortal sales, retailers are reducing the quantity of inventory on hand, per SKU, to minimize inventory carrying cost and reduce the volume of likely after season markdowns.

Apple, Inc., as most of you are probably aware, was hit with am €11 billion back tax by the European Commission, resulting from an arrangement the company obtained from Ireland. I spent some time reviewing the topic and came to the conclusion that the company’s supply chain is not central to the issue. Rather, in my humble opinion, the accounting topic of transfer pricing and agreements between EU sovereign nations and the EU as a whole are the areas where we will see future discussions as this drama continues to unfold.

Have a great labor-free Labor Day weekend!

This Week in Logistics News (August 20 – 26)

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Now for today’s trivia question, brought to you by Lack of Supply Chain Integrity, Inc.

Q: What exactly is Egyptian cotton anyway?
A: Thanks to the lack of integrity within the sheet and bedding supply chain, I now know how Egyptian cotton differs from regular cotton. According to Wikipedia, Gossypium barbadense is known as extra-long staple cotton, sea island cotton, Pima cotton, and Egyptian cotton. It is sought after for its extra-long, silky fibers.This species of cotton only accounts for 8 percent of world production, whereas “upland cotton” accounts for 90 percent.

And now, on to the news.

cottonWelspun India was accused of selling fake Egyptian cotton sheets by its customer Target. Target stated that it is cutting ties with Welspun. Other large retailers such as Walmart and and Bed Bath and Beyond are also looking into the integrity of cotton products from Welspun. Welspun stock price is down about 33 percent this week. Steve Banker wrote a good post on supply chain integrity, focused primarily on counterfeiting, but clearly product quality is paramount as well.

logilityLogility, one of the last remaining publicly-traded (as part of American Software) supply chain planning software companies, announced that it has acquired AdapChain. AdapChain is a privately-held provider of integration software and tools that expedite the integration of supply chain software with ERP solutions. I view this as a sensible acquisition for Logility, as best of breed providers must compete against incumbent ERP providers for new supply chain software sales. ERP vendors promote their ability to offer the benefits of one integrated system across all major functions of an organization. Best of breed vendors must overcome the extra integration efforts required by touting their superior features and functionality. Decreasing integration costs a  nd efforts enhances the best of breed value proposition.

PrintJDA Software announced that it will receive a $570 million equity infusion from Blackstone and New Mountain Capital (its current owner). This came after a week of speculation that Honeywell was going to acquire JDA. This sounded unconventional to me, but plausible due to Honeywell’s recently announced acquisition of Intelligrated, a well-established warehouse automation company. The specific terms of the Blackstone and New Mountain Capital equity deal were not mentioned, but the equity infusion allows JDA to payoff debt, free up cash that would have gone toward interest payments, and remove uncertainty surrounding debt rollover terms and requirements. Overall, it allows JDA to take a longer-term focus without the short-term concern of profit margins required to service debt payments.

starshipSwiss Post announced a new partnership with UK-based start-up Starship Technologies. I find robotics incredibly interesting. They’re being adopted in the warehouse, but now it looks like they’re showing potential for parcel delivery as well.  Swiss Post will begin trials in three cities starting next month. Initially, the robots will carry dummy parcels. The functionality will be tested and the impact assessed, and there is potential for Swiss Post to go live next year.

Domino’s Pizza is trialing pizza delivery by drone in New Zealand in the next step of making every man a couch potato. I say, “what’s next, beer delivery by drone?” Wait, that’s already been done.

That’s all folks. Have a great weekend! And enjoy this week’s educational video, The History of Cotton

https://www.youtube.com/watch?v=N7ZJL34OY5w

 

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