This Week in Logistics News (December 2-6, 2013)

By Adrian Gonzalez

There are huge piles of leaves in my backyard that I need to bag before Tuesday, the last day the city will pick them up, so let’s go straight to the news because I have a date with a rake this afternoon.

Last Sunday on the television program 60 Minutes, Amazon unveiled a new delivery system the company’s R&D team has been developing called Amazon Prime Air; the goal of the system is to get packages into customers’ hands in 30 minutes or less using unmanned aerial vehicles (aka “drones”). In the days that followed, reports came out that UPS and Google are also experimenting with drones.

My initial reaction was to think back to the posting I wrote back in February (Drones – The Birth of a New Transportation Mode), where I highlighted Matternet and its mission to create “the next paradigm for transportation” using a network of drones, ground stations, and an operating system. “We’re witnessing the birth of a new transportation mode, one that will take many years to develop and mature (but will probably happen sooner than we think),” is what I wrote back then, and Amazon’s demonstration this week– despite all the technical, regulatory, and legal issues associated with it — is another step, however small and trivial, toward the future of transportation.

Back to the present, GrandJunction, which provides a software-as-a-service (SaaS) platform for the local delivery industry, announced yesterday that it has managed more than 60 million deliveries to date, and is currently managing a local delivery every two seconds. GrandJunction is a new company, but the technology and people behind it have more than a decade experience in the local delivery industry. Rob Howard, GrandJunction’s CEO and founder, also founded Ensenda Inc. in 2000, a third-party logistics provider specializing in local delivery. GrandJunction’s technology was built and proven at Ensenda, and since quietly spinning off more than a year ago, GrandJunction has (according to the press release) “closed deals with a wide range of companies, including FORTUNE 500s, large technology companies rolling out local delivery programs using local carriers for the first time, and smaller businesses looking to offer scheduled delivery.”

Considering all of the buzz generated this year by Amazon, Google, eBay and others with their same-day delivery efforts — and all the press omni-channel fulfillment is getting — GrandJunction is coming out at the right time. In many ways, local delivery remains a “white space” in the TMS market. Local delivery is a very fragmented segment of the transportation market, with thousands of local carriers (couriers) that don’t have the technology to effectively manage their operations and provide customers with the information they need. Like other network-centric business processes, bringing all of the local delivery stakeholders (shippers, couriers, and drivers) onto a common cloud-based platform is the right strategy. How shippers will ultimately integrate local delivery with the rest of their transportation operations, and integrate their transportation solutions, remains to be seen.

Another software vendor benefiting from “last mile” logistics is Descartes, which announced record revenues for its Q3FY14 quarter ($38.8 million, up 19 percent from Q3FY13). In the financial analyst call, the company mentioned that omni-channel fulfillment and home deliveries are contributing to its growth, with retailers like Sears Holdings and Restoration Hardware adopting its home delivery solution.

Shifting from land to sea, what’s going on in ocean transportation? There was another development this week, with reports that Germany’s Hapag-Lloyd and Chile’s CSAV are in merger talks. Like I mentioned in my posting last month, ocean carriers are hurting financially (twenty-three out of the top thirty carriers were unprofitable last year), so ocean carriers will continue to explore new ways to save money or become more productive. The bottom line: if you’re an ocean shipper, you need to keep a close eye on what’s going on.

Finally, Steve Banker came across a very informative video series on NPR tracing the end-to-end supply chain of a t-shirt. Most of my friends and family do not know what “supply chain management” or “logistics” mean. These types of videos help educate the general public on what we do for a living, and sheds light on the role supply chain management plays in our daily lives, and why it’s a promising career choice for students and young professionals.

And with that, have a happy weekend!

Song of the Week: “That Was Yesterday” by Foreigner