This Week in Logistics News (March 17-21, 2014)

By Adrian Gonzalez

Lots of news to discuss this week, so let’s go straight to it.

Spring officially started yesterday and none of us are missing winter, especially FedEx, which reported this week that “unusually severe winter storms throughout [its fiscal Q3] disrupted operations, decreasing shipping volume and increasing costs, and impacted year-over-year operating income by an estimated $125 million.” However, when it came to the problems the company and UPS experienced during Christmas, FedEx CEO Fred Smith placed a big part of the blame not on the weather, but on retailers. According to a Wall Street Journal article:

Retailers, he said, claimed that packages had been tendered to FedEx and rival UPS for delivery to their customers before they actually were. In addition, labels were often affixed incorrectly or items weren’t properly packaged and subject to damage…”No one wants to order something over the Internet, get it three days before Christmas and it is smashed or the label comes off it and the package goes into the ether,” Mr. Smith said.

Retailers’ shortcomings on their side of the delivery equation “is a big part of the e-commerce business that really didn’t get enough publicity last year because they were an integral part of the problem even more than the weather and the carrier performance,” the FedEx chief said.

Mr. Smith echoed what I said at the time: Retailers also have to accept responsibility for creating ever-more unrealistic expectations. The margin for error is almost zero when you let consumers order by 11 pm December 23rd and promise them next day delivery. And consumers aren’t without fault either. If you wait until the last few days before Christmas to buy a gift, you’re playing with fire if you have it shipped.

The point about retailers not affixing labels correctly and not packaging items properly underscore something else I wrote about last year: forget innovation, just execute better.

In other 3PL news, Coyote Logistics and Access America Transport (AAT) announced that they are merging (terms of the deal were not disclosed). Here are some details from the press release:

Founded in 2002, Chattanooga, Tennessee-based AAT handles multi-modal transportation including truckload, less-than-truckload, intermodal, flatbed, and specialized freight for shippers and carriers across the country. Upon closing of the transaction, the combined company will be one of the largest 3PL service providers in North America with run rate revenues of over $2 billion, 17 North American locations, approximately 40,000 contracted carriers and approximately 1,750 employees.

In the “build vs. buy” technology debate, Coyote is firmly in the build-your-own camp. And like other relatively young 3PLs (Coyote was launched in 2006), the company positions its technology as a competitive differentiator. On its website, Coyote claims, “We have complete control of our technology because we design and build it — we are transportation experts who also know science, engineering, and application development.”

As I commented recently in 3PLs, What Business Are You In?, 3PLs are not just in the business of providing customers with logistics services like transportation management and warehousing; they are also in the business of providing (among other things) software applications, trading partner connectivity, and data quality management services that provide customers with timely, accurate, and complete visibility to supply chain events, information, and intelligence.

Interestingly, just like I argued earlier this week that some shippers are looking bring outsourced operations back in house “to gain more control,” Coyote apparently justifies developing its own technology solutions in-house “to have complete control.” I guess we’re all just a bunch of control freaks.

Speaking of technology, Infor and LogFire announced enhancements to their respective supply chain execution solutions, which include warehouse management, transportation management, and inventory management capabilities. You can read the press releases for all the details, but here are some highlights for each:

Infor: “Infor SCE 10.3 is delivered with Infor Ming.le, bringing a consumer-grade user experience and business collaboration capabilities to the warehouse and logistics operations…Warehouse Director, the iPad application for managing mobile logistics, was enhanced to optimize the warehouse and monitor operations using more efficient color-coded picking and velocity heat maps…Updates to the Transportation Management module include new program interfaces and a new fixed & variable rating model that enable international and North American customers to combine fixed costs with a variable cost, as well as a zone-based rating model”…plus enhanced third-party logistics (3PL) billing and labor management capabilities.

LogFire: “Major platform enhancements and expanded capabilities…include enhanced integration and expanded support for additional Material Handling Equipment (MHE) and Warehouse Control Systems (WCS) to manage automated warehouses from LogFire in the cloud….Inclusion and leverage of Jitterbit, a powerful, flexible, and easy to use extension to [LogFire’s] data and application integration capabilities…Jitterbit’s graphical ‘no coding’ approach puts more power and control in the hands of the technical business analyst instead of developers, and accelerates and simplifies the configuration and management of integration…Expanded EDI X12 transactional capabilities…to speed trading partner definition, onboard mapping, and meet compliance requirements”…plus enhancements to its Warehouse Management (WMS), In-Store Inventory Management, and other apps.

At a high level, these announcements show how cloud, mobile, and social are influencing the R&D plans of supply chain software vendors, and how they’re also investing to enhance the user experience of their applications (for related commentary, see Will Supply Chain Software Vendors Start Competing on Design? and 5 Reasons Why Excel is Champ of Supply Chain Apps).

Shifting gears to trucking news, Volvo reported that truck shipments in February increased 28 percent overall compared to February 2013. Truck shipments rose 14 percent in Europe and 55 percent in North America. Are carriers buying these trucks to add capacity or to replace aging fleets? I haven’t had a chance to research this question, but my bet is on the latter. Either way, these trucks (and those of other truck manufacturers) are probably not well designed for female drivers, as details from a Ryder press release announcing its partnership with Women in Trucking reveals:

The findings [of studies conducted] highlight the fact that the average female driver is six inches shorter and 50 pounds lighter than her male counterpart. This physical discrepancy can create issues for female drivers operating trucks designed and built for men.

“Today’s trucks are not designed with women in mind,” said Dr. Kersten [one of the researchers]. “Given the driver shortage and the changing demographics that the trucking industry faces, it’s important for manufacturers to make trucks more female-friendly through moderate design changes for seats, pedals and gauges, for example. Not only will this make trucks easier and more comfortable for women to operate, but it will also better ensure greater safety for female drivers.”

Finally, twenty four years ago this week, Depeche Mode released Violator and almost caused a riot in Los Angeles when about 15,000 people showed up at a record store (remember those?) to meet the band and get their autographs. And so this week’s Song of the Week is one of my favorite songs from that album: “Policy of Truth”

Enjoy, and have a great weekend!