This Week in Logistics News (July 15-19, 2013)

By Adrian Gonzalez

I passed on spending $1100 to fix my car A/C, so I’ve been driving around with the windows down this summer. When you have Cuban blood, 99 degrees is nothing to complain about (although I reserve the right to change my mind).

In this week’s news, new products and services and a couple of acquisitions top the list.

Con-way Freight announced this week that it has enhanced its Mexico service offering with the introduction of real-time, door-to-door online tracking, a 24-hour Customer Resource Center and new web tools for tendering and managing shipments moving to and from Mexico. As I’ve commented in previous postings, if you are a 3PL or transportation company and you’re not involved in cross-border shipping with Mexico, then you are missing out on a growing business opportunity (see Reuters article from December 2012). Based on the comment below from the press release, Con-way is making these enhancements in response to increased customer demand for Mexico services:

A recent survey of Con-way’s customers showed that with increased NAFTA traffic, and more manufacturing being shifted from Asia to Mexico, the provision of fast, efficient and simplified services, coupled with enhanced door-to-door visibility to shipments, is increasingly a requirement for today’s fast-response demand cycles.

On the technology front, LLamasoft announced the release of Data Services, “a new offering that provides reference and benchmark data to LLamasoft customers and others in the supply chain design community…[this data] enables significant reduction in model building time and validates model outputs against realistic standards.” Here are some additional details from the press release:

Data Services data sets will include mode-specific transportation costs and transit times, facilities cost estimates, demographics, risk metrics, duties and taxes, sustainability metrics and others. Users can access Data Services initially through an Excel macro interface with future direct connections planned to LLamasoft supply chain modeling software such as Supply Chain Guru and Transportation Guru, or through a Web-based interface. Source data is a combination of reference and benchmark data from third parties as well as econometric models and formulas.

Meanwhile, Oracle announced the general availability of two new Oracle In-Memory Applications for Oracle Value Chain Planning: Oracle In-Memory Consumption-Driven Planning and Oracle In-Memory Performance-Driven Planning. According to the press release:

Oracle In-Memory Consumption-Driven Planning helps organizations understand and respond on a daily basis to true end-customer demand thus helping to reduce bullwhip effect and to improve on-shelf availability and inventory turns.

Oracle In-Memory Performance-Driven Planning helps organizations analyze and plan massive amounts of supply chain data and get better, more timely business insights to simulate multiple real-time scenarios in order to improve decision making and reduce risk.

The merging of supply chain software and trading partner connectivity continues, with HighJump Software announcing this week that it has acquired Evenex, a provider of business-to-business integration solutions. Evenex has “over 3,000 customers exchanging more than 375,000,000 documents every year and is the leading and preferred business-to-business integration provider in Denmark.”

Last-mile logistics is a niche segment of the 3PL market that is starting to heat up, as evidenced by XPO Logistics’ announced acquisition of Atlanta-based 3PD — “the largest non-asset, third party provider of heavy goods, last-mile logistics in North America” — for about $365 million. Here are some additional details from the press release:

3PD reported year-over-year growth in adjusted EBITDA1 of 20 percent and 36 percent for the full year 2012 and the first five months of 2013, respectively; and trailing 12 months revenue of $319 million through May 31, 2013.

3PD provides blue chip retailers with customized solutions tailored to their supply chain needs, and serves small and mid-sized shippers by matching them to carriers on a transactional basis. The business has differentiated itself through its ability to assure a superb customer experience using proprietary technology and industry-leading process management.

And finally, UPS raised a red flag by lowering its full-year EPS expectations. “Overcapacity in the global air freight market, increasing customer preference for lower-yielding shipping solutions, and a slowing U.S. industrial economy drove revenue and operating profit below expectations [in Q2 2013],” said the company in the press release. “In addition, UPS experienced some slowing in package volume growth as a result of labor negotiations.”

Will the growing trend of retailers fulfilling online orders from stores negatively impact UPS and FedEx in the future? A Reuters article published this week raises this question, and it includes the following quote from Joel Anderson, president of walmart.com:

“We are at least two zones closer [to the customer] by utilizing the stores,” Anderson said. “The closer we can inject the order into our network, the more this saves the customer time and reduces what it will cost us to get it to the customer.”

I wonder if Mr. Anderson is factoring in the difference in labor costs between stores and distribution centers in his calculation, as well as the cost of transporting the goods to the stores in the first place.

And with that, have a happy weekend!

Song of the Week: “Safe and Sound” by Capital Cities.