This Week in Logistics News (April 29 – May 3, 2013)

By Adrian Gonzalez

It’s the beginning of May and the Red Sox have the best record in baseball. I know it’s a long season, but after a disappointing two years, I can’t help but feel good about this team. If they remain competitive the rest of the season, I think the team will prove something that is also true in the workplace: a few rotten apples can spoil the bunch, so it’s sometimes necessary to remove them from the team, no matter how talented they are, if you want to reach your true potential.

In other news…

Descartes opened up its wallet and made another acquisition, this time KSD Software Norway AS, a Scandinavia-based provider of electronic customs filing solutions for the European Union. Descartes paid approximately $33 million for KSD, which currently generates about $10 million in annual recurring revenues. Here is an excerpt from the press release:

KSD brings more than 1,300 customers to Descartes’ Global Logistic Network, with the majority of these companies based in Scandinavia. KSD provides its customers with customs declaration, security filing, transportation management and freight forwarding technology solutions.

I’m a big proponent of network-based solutions, especially for global trade management processes. As I wrote a few years ago in “Beyond Software: The Role of Content and Connectivity in Global Trade Management,” connectivity is perhaps the most underrated aspect of global trade management, but its importance cannot be overstated. Simply put, global trade processes do not occur in a vacuum. A cross-border shipment typically involves the exchange of information with about 25 external parties, including customs agencies, freight forwarders, brokers, banks, regulatory agencies, transportation providers, and suppliers. Establishing and maintaining connectivity with a dynamic set of trading partners, as well as keeping up with customs modernization efforts around the world, is a challenging task that few companies would call a core competency — which is why I believe network-based solution providers are a good option for many companies.

In 3PL news, Con-way reported net income of $14.0 million for Q1 2013, compared to $25.6 million for the same period last year. Net revenue for Menlo Worldwide Logistics increased 0.9 percent in the quarter, while Con-way Freight reported a 0.4 percent decline in revenue and Con-way Truckload reported flat growth compared to Q1 2012. Here are some comments from Douglas W. Stotlar, Con-way’s president and CEO:

“On a consolidated basis, our first quarter 2013 results were below our expectations and therefore were disappointing. However, the first quarter also provided further validation that our efforts to expand margins are gaining traction and moving in the right direction.”

“Adverse weather and fewer working days affected load count and efficiency [at Con-way Truckload]. The rate environment remains stable and we look for Con-way Truckload to benefit from low driver turnover and consistent operational execution.”

In technology news, CargoSphere introduced Floodgate Quote Refresh, “a freight rate quoting enhancement that allows logistics service providers (LSP) to quickly and efficiently refresh quotes with timely and accurate freight rate updates.” According to the press release:

Day in and day out, freight forwarders and NVOCCs (non-vessel operating common carriers) prepare origin/destination freight rate quotes for their customers. They are burdened with the task of tracking and managing complex, non-stop freight rate changes and carrier amendments for an enormous range of global trade lanes. Quotes must reflect accurate, up-to-date pricing including scheduled rate hikes, surcharges and fees. Managing this rate complexity with manual processes is simply too time-consuming and inefficient. Floodgate Quote Refresh eases this burdensome task by automating the update process. Customers open the floodgates on their quotes and let the new rates rush right in for a faster, more efficient operation.

According to the Bureau of Transportation Statistics, “the value of goods moving between the U.S. and its NAFTA partners by all modes of transportation decreased by 1.0 percent from February 2012 …Goods moving by truck, pipeline, and air each declined, while rail and vessel transportation both increased from the same month last year…From February 2012 to February 2013, the value of freight carried by truck fell by 2.5 percent while the value of freight carried by rail increased 0.8 percent.

I haven’t looked at the data closely, but is this another sign that shippers are moving more freight from trucks to rail?

In other freight news, freight volumes declined in April according to the Cass Freight Index Report. Here is an excerpt:

North American shipment volume and overall freight expenditures both slumped in April, following strong showings in March. The drops are not unexpected given the slowing state of the economy overall. It follows the pattern we have become accustomed to in the last several years − a strong surge raising expectations followed by an erosion of the gains. This month’s declines are significant because once again both the number of shipments and dollars spent have fallen below same month 2012 levels, and the number of shipments is even lower than the April 2011 level [emphasis mine]. This is indicative of the slow growth experienced since 2010 that has created a very narrow bounding range for each measure, with a small difference between the lows and the highs.

As I’ve said before, there are so many mixed signals out there, I have no idea what’s going on with the economy — which is why, to use a bunch of buzzwords, companies need to have timely and accurate visibility to demand and supply signals to enable agile and responsive supply chains.

Finally, sometimes it takes a disaster to drive companies to collaborate better. According to an article in the Wall Street Journal, “Wal-Mart Stores Inc., Gap Inc., and Hennes & Mauritz AB met with about 30 Western retailers, labor groups and nongovernmental organizations to work on a plan to prevent industrial disasters like last week’s deadly building collapse in Bangladesh.The discussions included creating a clearinghouse of factory-inspection results, so companies can see where other retailers stopped production over safety concerns, participants said. The group plans to publish the results of the talks in May.”

Time’s up. Have a happy weekend!

Song of the Week: “Fake Plastic Trees” by Radiohead