This Week in Logistics News (June 17-21, 2013)

By Adrian Gonzalez

Summer is finally here, so let’s go right to the news…and then maybe the pool.

Europe is on the brain for both C.H. Robinson and MercuryGate, with the two companies announcing this week that they’re expanding their presence in the region. C.H. Robinson Europe is opening a new office in Istanbul, Turkey. According to the press release, “Demand for logistics services in the region is rapidly increasing and with over 40 universities in the area, presents access to a large and talented workforce. The Istanbul office will primarily offer international road freight services including both full and less-than-truckload transportation modes.”

Meanwhile, MercuryGate has partnered with e4Data Systems to establish MercuryGate EMEA, which will be based near Liverpool, UK, with representation in Ireland. Here’s an excerpt from the press release:

MercuryGate EMEA will focus on developing new business opportunity for the MercuryGate transportation products in this rapidly growing market…Each day, over 125,000 users, from over 50 countries in 15 different languages log into the MercuryGate TMS to manage their international transportation. MercuryGate EMEA offers new prospects regional access to MercuryGate sales and delivery resources.

But wait, I thought most of Europe was still in a recession, with record unemployment? Well, not all of Europe is created equal, with some countries doing much better economically than others. Also, and somewhat paradoxically, demand for transportation solutions often increases in tough economic times as companies look for ways to reduce costs. Transportation is a natural target because, despite its strategic value, most C-level executives still view it as a “cost center” and a “low hanging fruit” opportunity to add significant money to the bottom line.

In other technology news, JDA Software announced the release of its integrated product roadmap following the merger with RedPrairie. Here are some details from the press release:

The six critical solution areas that make up the product roadmap are based on JDA customers’ greatest challenges and where the company can offer the most value. These areas are retail planning, retail execution, commerce, warehouse, transportation and manufacturing/distribution.

One of the most significant milestones outlined in the product roadmap is the Q1 2014 delivery of the company’s first fully integrated planning and execution offering, combining JDA’s supply chain planning (SCP) solutions and transportation management system (TMS) with RedPrairie’s warehouse management system (WMS).

For as long as I’ve been in the market, vendors have been promising a fully integrated TMS-WMS solution, but the promise has always fallen short of expectations. The reality is that relatively few companies integrate these solutions in the way analysts like to envision because they still manage transportation and distribution as separate operations, with transportation often dictating what happens at the distribution center. The fact that JDA is prioritizing its TMS over RedPrairie’s in the product roadmap implies that the benefits of its TMS (more functionality, larger customer base) outweighed the benefits of RedPrairie’s existing TMS-WMS integration.

Oracle reported disappointing financial results for the second quarter in a row, with total revenues of $10.9 billion in Q4 FY 2013, unchanged from the previous year. New software licenses and cloud software subscriptions revenues were up 1 percent to $4.0 billion in the quarter. Oracle blamed the weaker-than-expected results on disappointing sales in Asia and Latin America. In contrast, Infor announced this week that it expects its fiscal 2013 Q4 software license fees and subscription revenues to grow about 9 percent at actual currency rates compared to its fiscal 2012 Q4, driven primarily via organic growth and product investment.

While I believe the market shift toward cloud and software-as-a-service solutions is putting competitive and pricing pressure on traditional software vendors, not all vendors are being impacted the same. Ultimately, success in the software industry comes down to having the right strategy, business model, and products for the times, and having the right people to execute it.

In a posting last month, I wondered if we had reached the tipping point for natural gas long-haul trucks. My conclusion was that we hadn’t reached the tipping point yet, but that we’re getting closer every day — as long as the price difference between natural gas and diesel stays large enough to cover the higher price for LNG-powered trucks and other ancillary costs. As reported in the Wall Street Journal this week, the International Energy Agency (IEA) is also bullish on the use of natural gas in transportation sector. Here is an excerpt from the article:

In its five-year gas outlook, the [IEA] said it expects natural gas use in road and maritime transportation to rise to 98 billion cubic meters by 2018, covering around 10% of incremental energy needs in the transport sector. According to the IEA, this shift will do more to reduce the medium-term growth in oil demand than both biofuels and electric cars combined.

“Gas is already a major fuel in power generation, but the next five years will also see it emerging as a significant transportation fuel, driven by abundant supplies as well as concerns about oil dependency and air pollution,” said Maria van der Hoeven, the IEA’s executive director.

Several hurdles still exist that could stymie the development of natural gas as a transport fuel, not least the need to develop infrastructure like fuelling stations, the IEA said. But in several countries, notably the U.S. and China, activity is already underway to develop the sector.

Finally, the Wall Street Journal also published an article this week discussing how Walmart plans to compete with Amazon on the e-commerce front, particularly on how it fulfills online orders. According to the article, “Wal-Mart is creating a vast new logistics system that includes building new warehouses for Web orders, but also uses workers in stores to pack and mail items to customers, because Wal-Mart has determined it is faster and cheaper to send some shipments from its more than 4,000 U.S. stores.” The article goes on to say that Walmart “is vowing to solve its online problem with a distribution network that shares inventory information between 4,000 stores and 158 warehouses and immediately sizes up the most efficient way to deliver a television or T-shirt to a customer nearby [emphasis mine].”

As we’ve highlighted before, other retailers like Macy’s are also starting to use their stores as fulfillment centers, and this is a big reason why supply chain and logistics software vendors are so enamored with omni-channel fulfillment these days.

Have a happy weekend!

Song of the Week: “Sea of Love” by The National (I can’t stop singing this song, or watching the video).