This Week in Logistics News (May 26-30, 2014)

By Adrian Gonzalez

I’m back from my father-son weekend of baseball, and in case you’re wondering what baseball heaven looks like, here’s a glimpse (with my son belting a line drive to left field).

In this week’s news…

Descartes reported record Q1FY15 results this week, with revenues ($40.8 million) increasing 20 percent compared to Q1FY 2014. Services revenue and net income increased 26 percent and 32 percent, respectively, compared to the same period a year ago. “Our strategy of focusing on recurring revenues, organic growth and complementary acquisitions continues to deliver consistent, predictable financial results,” said Edward Ryan, Descartes’ CEO. “We remain optimistic about fiscal 2015 as we continue to see strong demand for our SaaS-based solutions [emphasis mine], which drive the largest collaborative logistics community in the world.”

SaaS + collaborative community: As I wrote about earlier this year, I believe many companies will ultimately find opportunities for supply chain innovation at the intersection of Software, B2B Connectivity, and Social Networking. It’s the direction Descartes and others are moving toward, and it’s part of the reason why the enterprise software industry is undergoing a lot of disruptive change right now.

In partnership news, IBM and SAP announced plans “for a global collaboration to provide tailored business applications and consulting services for the transportation and logistics industry.” Here are some details from the press release:

The new initiative is intended to combine SAP® software with IBM’s implementation and configuration services. The SAP Transportation Management, SAP Event Management and SAP Customer Relationship Management applications, as well as the SAP Billing and Revenue Innovation Management solutions are planned to be integrated to provide a 360-degree view of individual customers. Backed by deep industry knowledge and experience from IBM’s SAP Center of Competence, IBM’s best practice templates will allow the transportation industry solution from SAP to be tailored to meet each transportation company’s needs. This is intended to result in lower implementation costs and faster time to value.

The ability to deliver on that last sentence — lower implementation costs and faster time-to-value — will ultimately determine the success of this partnership. Generally speaking, the transportation and logistics industry is a low-margin business, and so transportation and logistics companies are very cost conscious and many of them lack sufficient IT resources. The traditional model of charging large upfront license fees for software plus large consulting and implementation fees will simply not work in this industry, at least not once you get past the very large players. Therefore, SAP and IBM will also have to innovate their pricing and deployment models to achieve broad success in this industry.

In trucking news, Con-way Truckload announced its purchase of 550 new tractors, 540 of which will be equipped with automatic transmissions and all with driver-preferred 6×4 axles, “in a replacement cycle that will maintain the company’s 2,700-tractor fleet as one of the youngest and most modern in the truckload industry.” What I found most interesting about the news is the reason why the company bought tractors with automatic transmissions:

“We’ve found that many younger drivers looking to enter the industry prefer the automatic transmissions because it removes the perception that operating a truck is outside of their ability,” said Gretchen Jackson, recruiting manager at Con-way Truckload. “Truck driving is an essential role within the economy and, given the current driver shortage, we want to provide career opportunities for those who have an interest but may think the job is unattainable.”

“Learning to shift a 10 or 13 speed transmission may make some new drivers nervous about starting a career in trucking,” said Stephanie Klang, professional driver for Con-way Truckload. “But with the auto shifts in the trucks today, new drivers can feel more comfortable, focus attention on their surroundings and maneuver their truck safety through traffic and congestion. While driving a truck still involves a lot of skill, the automatics make life on the road a little easier.”

Simply put, whatever actions trucking companies can take to remove barriers and attract more drivers to the profession, is a smart move.

Finally, Target is the latest entrant in the same-day delivery game. According to an article in Retailing Today, “Target will launch a $10 rush delivery pilot in June in the Minneapolis, Boston and Miami markets, offering guests the ability to order as late as 1:30 p.m. in the afternoon and receive a delivery of qualifying items between 6 p.m. and 9 p.m. the same day.” For related commentary, check out some of our recent episodes and posts on this topic: