This Week in Logistics News (June 3-7, 2013)

Welcome to June. We’re quickly approaching the midpoint of the year, which means it’s time to start planning for 2014 — at least that’s what I heard at my sister’s surprise birthday party last weekend, where some of her co-workers in finance were talking about getting started with 2014 budgets. Just like political campaigns, the budget planning process never ends.

In this week’s news…

It seems like 5.9 percent is the magic number in the transportation industry these days, especially in the LTL sector. On May 28th, ABF increased its general rates and charges for its freight division by “about 5.9 percent, although the effect on specific lanes and shipments will vary.” This week UPS Freight announced “a general rate increase of 5.9 percent for non-contractual shipments in the United States, Canada and Mexico. The rate adjustment will take effect on June 10, 2013, and applies to minimum charge, less-than-truckload (LTL) and truckload (TL) rates, and accessorial charges.”

In related news, according to the Cass Freight Index Report for May 2013:

Freight payments in May were virtually unchanged from April, coming in 2.6 percent below last year’s level for the same period. Rates have still remained quite flat as they have most of 2013. Truck capacity and demand are well balanced, so truck rates are putting downward pressure on intermodal rates. If the economy picks up, or in July when new Hours of Service rules go into effect, reducing truck productivity and capacity, the trucking sector will increase rates to match demand. This will remove some of the pricing pressure and intermodal rates will go up as well.

The bottom line, as I see it, is that the transportation market is near equilibrium for shippers and carriers at the moment. The big monkey wrench will be the new HOS rules that will take effect next month, which both shippers and carriers are fretting about. If the predictions about reduced capacity and productivity come true, the second half of this year — and especially the fourth quarter — will be a lot more stressful and chaotic.

On the technology front, 3Gtms announced a partnership with Tompkins International “to deliver TMS solutions that meet the expanding needs of mid-market companies today.” According to Mitch Weseley, CEO of 3Gtms, “We wanted to partner with Tompkins because of their quality supply chain expertise particularly across retail and consumer packaged goods. Companies in both of these industries can derive huge benefits from integrating a new generation TMS into a well-run supply chain practice.”

Meanwhile, Kewill announced that its Clippership solution will now be sold exclusively through Value Added Resellers (VARs). According to Jay Waldron, Kewill Senior Vice President, Americas Sales, “The best way for Kewill to make Clippership available to the broadest possible customer base is to work collaboratively with our VAR partners to leverage their expertise and value added services with Clippership, to deliver significant value to a much broader market than we could ever service on our own”.

It seems to me that partnerships are back in vogue in the software market, especially as vendors seek cost-effective ways to penetrate the small and midsize business (SMB) market. As I noted recently, NetSuite is a popular vendor to partner with these days. OzLINK, for example, has an existing partnership with NetSuite and the company released this week a set of NetSuite SuiteApp extensions for its OzLINK solutions to further integrate eCommerce orders and optimize warehouse processes. Here are some details from the press release:

Real-time integration between NetSuite and ChannelAdvisor – Orders created from marketplaces such as eBay and Amazon flow into ChannelAdvisor and are then integrated into NetSuite by OzLINK. OzLINK synchronizes item attributes and order updates in NetSuite, pushing back out to ChannelAdvisor with real-time fulfillment status and tracking information.

New functionality added to OzLINK Mobile – Customers can seamlessly manage work orders on mobile bar code scanners, managing inventory, assemblies, and kits.

Expanded capabilities and new features for OzLINK Shipping – Customers can lower transportation costs by implementing automated batch address validation, reducing mis-shipments and avoiding carrier address correction fees. They can also save additional costs by implementing automated carrier selection based on time-in-transit, giving them the ability to make optimized shipping decisions.

Amazon is reportedly planning to expand its online grocery business, AmazonFresh, into 20 new urban areas in 2014, including some outside the United States. You can read the Reuters article linked above for all the details. The challenge with grocery delivery is the same today as it was when Webvan crashed and burned more than a decade ago: getting enough delivery density to minimize transportation costs, which makes a big difference in a low-margin business like grocery. As the article highlights, Amazon’s ability to deliver higher-margin items like electronics with grocery orders is one way to improve the economics of the model. Another is to use technology to offer consumers incentives (e.g., a lower delivery fee) to choose a specific delivery date and time that will result in the most cost-efficient route for the company based on other deliveries it has to make that day. Several of Descartes’ customers, for example, are using its Reservations application to enable this type of capability.

Finally, IBM, SAP, and all acquired cloud-based companies this week. As an article in the Financial Times put it, “The latest deals could, say analysts, be the start of another ‘land grab’ as enterprise IT providers position themselves to take advantage of the expected move by the business mainstream to the cloud and internet-based service models.” In my opinion, the “expected move” has been happening for years, especially in certain market segments, like CRM and TMS. What we’re seeing today is an acceleration of the trend, with traditional software vendors unable to ignore this shift any more and playing catch up.

Have a happy weekend!

Song of the Week: “Hum” by The Sheila Divine

Note: Descartes is a Logistics Viewpoints sponsors.