This Week in Logistics News (February 10-14, 2014)

By Adrian Gonzalez

Well, it seems like even Cupid is at risk of being replaced by a robot. A florist in Michigan delivered flowers using a drone this week, and although the company planned to conduct more deliveries via drone today, the FAA promptly pulled the plug on it.

This is the second company in less than a month to post a YouTube video showing a drone delivery (see beer delivery by drone). Apparently, marketing geniuses everywhere are adding “drone delivery video” to their 2014 marketing plans. What’s next, a sandwich?

In other news…

Historically, the healthcare industry, which includes pharmaceutical and medical device companies, represented a small percentage of 3PL revenues, especially compared to automotive, consumer goods, high tech, and retail. But that started to change a few years ago. In addition to increased regulation, pharmaceutical companies face significant cost pressures today, as many of their “blockbuster drugs” come off patent and generic alternatives gain market share. Also, competition in the healthcare industry is much more global today, and distribution models are also changing, as in-pharmacy clinics and direct-to-patient shipments become more common.

The bottom line is that many healthcare companies have reached that fork in the road: do they invest internally to transform their supply chain and logistics operations or do they outsource? A growing number of healthcare companies are choosing the latter, which is why logistics service providers like UPS are investing to serve this industry. The company announced this week that it has acquired U.K.-based Polar Speed, a provider of temperature-sensitive pharmaceutical supply chain solutions in the U.K. Here are some details from the press release:

[Polar Speed] specializes in active temperature-controlled deliveries to hospitals, pharmacies, wholesalers and surgery centers as well as end patients. Polar Speed also offers unique capabilities within the growing homecare direct-to-consumer delivery market.

Polar Speed utilizes a fleet of 118 actively monitored temperature-controlled vehicles for transporting both 2-8 degrees celsius refrigerated and 15-25 degrees celsius products in accordance with U.K.’s Medicines and Healthcare products Regulatory Agency (MHRA) guidelines. The fleet is outfitted with sophisticated technology, including on-board temperature recorders and alarms to alert drivers of potential temperature excursions as well as a PolarTrack, an online portal linked to a satellite navigation system allowing customers to access real-time delivery status and temperature conditions of their products.

This acquisition adds three facilities with advanced warehousing management systems, full quality assurance services, and an experienced workforce to UPS’s existing global healthcare network, now totaling 45 healthcare facilities.

In other 3PL news, FedEx announced that it has expanded its SenseAware® service into 14 new countries across Europe, including Germany, Italy, France, and Spain. As described in the press release:

SenseAware combines an online application with a multi-sensor device to provide customers that ship high-value or environmentally-sensitive products with near real-time visibility, insight and collaboration across their supply chains. In addition to location monitoring, the service can also monitor temperature, light exposure, relative humidity, shock and barometric pressure. The SenseAware 2000 device supports a dry ice probe which monitors temperatures ranging from -80°C to +60°C (-112°F to +140°F) and a cryogenic probe which can monitor shipments from -195°C to +60°C (-319°F to +140°F).

Meanwhile, starting today, Saddle Creek Logistics Services will embark on “The Great American Green Ride,” the first cross-country trip with a for-hire, compressed natural gas (CNG) truck. The truck will travel from Lakeland, FL to San Diego, CA and back, and will make deliveries for two top CNG customers: Procter & Gamble and Lowe’s. Some more details from the press release:

“This trip gives us a great opportunity to showcase CNG’s ability to reduce our carbon footprint. In the course of this 5,800-mile round trip, the truck will reduce its carbon emissions by 7,656 pounds – more than a pound a mile,” said Mike DelBovo, Saddle Creek Transportation president.

The Freightliner Cascadia Evolution truck with advanced aerodynamics belongs to Saddle Creek’s fleet of more than 140 CNG tractors. Its 12-liter engine has enough power to handle the variety of terrain conditions on a cross-country trip. Capable of travelling up to 600 miles when fast fueled, the truck will stop for fuel at commercial CNG stations on its route across the country.

This is just another example of how close we’re getting to reaching the tipping point for natural gas long-haul trucks.

Back in December, Home Depot revealed that it was investing over $300 million on supply chain, technology and online improvements this year, including building new fulfillment centers and overhauling its warehouse technology systems to enable same-day shipping and delivery of orders. The company opened the first of three planned e-commerce fulfillment centers this week. “This is a significant investment in our ability to say ‘yes’ to customers with confidence,” says Mark Holifield, Home Depot’s senior vice president, supply chain (as quoted in the Internet Retailer article). “Yes, you have access to our entire inventory to fulfill your order. Yes, you can expect a speedy delivery. And yes, you can rely on information updates about your delivery.”

According to Cass Information Systems, truckload linehaul rates paid in January 2014 increased 2.9 percent compared to January 2013, the largest year-over-year increase since last February. Here are some excerpts from the report:

Recent spot market data, combined with increasing demand and a high number of trucking companies exiting the market, all seem to indicate that rates – both contracted and in the spot market – will continue to rise.

In his January analyst report, Donald Broughton stated: “We believe that persistent cost pressures, relatively tepid demand, soft pricing, increasing regulatory pressure, and a less robust used truck market have taken their toll on smaller carriers over the last two years.” As a result, the number of trucking companies that went out of business in 2013 exceeded that of the prior two years combined.

If you haven’t already, maybe you should send a box of chocolates to your carriers.

Finally, in more drone news, the Financial Times reports that “The United Arab Emirates is hoping to become the first government to deliver basic services via unmanned aerial vehicles…The Gulf state wants to harness global expertise and change domestic regulations to launch a fleet of low-flying drones to deliver documents, such as passports and ID cards, or to provide emergency services at the scene of accidents.”

Santa Claus and Tooth Fairy, watch your backs, because the drones are coming after you next!

And with that, have a happy weekend!

Song of the Week: “Yellow” by Coldplay (“For you I’d bleed myself dry…”)