This Week in Logistics News (June 2-6, 2014)

I’m giving a keynote presentation next week at the TMSA Annual Conference. The title of my presentation is What Business Are You In? The Case for Taking a Broader Perspective, which is partly based on a blog post I wrote earlier this year. I’m also speaking at the Chief Supply Chain Officer Forum and moderating a panel session with Reuben Slone (SVP Supply Chain, Walgreens), Gautam Grover (VP Operational Strategy, US Foods), and Steven LaVoie (CEO, ArrowStream).

I look forward to learning and networking with all the attendees next week, and if you’re attending either or both of these events, stop by and say hello! I’ll share my takeaways in a future post.

And now, here’s the news that caught my attention this week:

Compliance is what most people associate with a global trade management (GTM) solution, but it is only one component of a best-in-class GTM solution (see The 3 Cs of Global Trade Management). The other two critical components, which many companies overlook, are content and connectivity. When it comes to GTM, Descartes has primarily focused on compliance and connectivity, but this week the company acquired Customs Info LLC, a leading provider of trade data content, for up-front consideration of US $41.5 million plus potential performance-based consideration. Here are some details from the press release:

Customs Info provides comprehensive trade data and related research tools to more than 800 multi-national shippers…This trade data populates GTM systems, including SAP GTS and Oracle GTM, and includes trade tariffs, duties, regulations, trade agreements, rules of origin and other trade-related content. Customs Info also provides one of the leading on-line global trade research tools used by thousands of trade professionals, as well as a SaaS-delivered classification solution to help trade professionals and multi-national shippers quickly build and easily maintain complex classification databases for their operations around the world. Customs Info also provides duty and tax content to some of the world’s largest e-commerce sites.

This is the first content-based business that Descartes has acquired, so there will be a learning curve for the company as it integrates the Customs Info solution and service with the rest of its GTM portfolio. But this is not a big departure from Descartes’ network-based business model, and it’s the combination of trade content with Descartes’ large network of connected trading partners, that has the potential to usher in a new era for global trade management solutions.

Speaking of network-based solutions, E2open announced the acquisition of SERUS Corporation, “a market leader in extended supply chain management (SCM) for high tech companies.” Here are some details from the press release:

SERUS orchestrates the data and decision-making from engineering to operations and finance for companies in near real-time when disruptive changes occur that will impact output, inventory, costs and ultimately customer satisfaction. Dealing with issues such as demand spikes, propagation of engineering changes, or supplier interruptions, SERUS monitors all supply chain progress on a granular level, allowing partners to review detailed root cause analysis and make recommendations for solutions to problems that arise…SERUS customers include:  AMD, Cypress, Flextronics, IDT, Juniper, Nvidia, Oracle and Qualcomm/Atheros.

I am not familiar with SERUS’ solutions, but I view this as another example of how the combination of B2B networks with software-as-a-service applications opens the door to new opportunities for supply chain innovation.

The Hours of Service soap opera continues. Sen. Susan Collins (R-Maine) offered an amendment this week, which the Senate Appropriations Committee voted 21-9 to adopt, that would suspend the Federal Motor Carrier Safety Administration’s hours-of-service restart rule while the agency conducts a one-year study to examine the rule. The American Trucking Associations (ATA) was quick to applaud the vote:

“Since these rules were proposed in 2010, ATA has maintained that they were unsupported by science and since they were implemented in 2013 the industry and economy have experienced substantial negative effects as a result,” said ATA President and CEO Bill Graves. “Today, thanks to Senator Collins’ leadership, we are a step closer to reversing these damaging, unjustified regulations.”

Or maybe we’re just another step closer to more debate and legal action. For related commentary, see my post from last November, Hours of Service: The Obamacare of the Trucking Industry.

Finally, Google is adding a new delivery option for its Google Shopping Express service: next-day delivery. According to an article in Internet Retailer:

The new overnight shipping option is available now in cities in the East Bay area of San Francisco, including Berkeley, Fremont and Oakland. Over the next few months, the service will expand to cities as far south as Fresno and as far north as the California-Oregon border. Customers need to order by 7 p.m. to receive the shipment the next day.

Target, Toys ‘R’ Us, Walgreens, American Eagle Outfitters, Costco, Office Depot, and REI are among the retailers participating.

Like Amazon, Google uses its own delivery trucks in urban areas, but it plans to partner with third-party carriers to deliver orders in more rural areas. As I discussed in yesterday’s Talking Logistics episode, doing local delivery profitably is an ongoing challenge for companies, and getting the economics right is imperative. The following excerpt from a related Wall Street Journal article sums it up nicely:

[Amazon and Google] appear to be coming to similar conclusions: When delivering orders in densely populated areas, it makes sense to have your own fleet. When deliveries are headed to less populated areas, it is better to rely on existing carriers.

Which means a one-size-fits-all delivery fee won’t work because the delivery costs will vary significantly not only between urban and rural locations, but also between high-demand delivery time windows and low-demand ones. The main challenge with local delivery is the same today as it was when Webvan crashed and burned more than a decade ago: getting enough delivery density to minimize transportation costs. For related commentary, see Webvan 2.0: If at First You Don’t Succeed.

And with that, have a happy weekend!

Song of the Week: “Riptide” by Vance Joy

Note: Descartes is a Talking Logistics sponsor.