This Week in Logistics News (September 2-5, 2014)

By Adrian Gonzalez

The first week of school, and already the first phone call: “Papi, I forgot my lunch at home; can you bring it to me?”

Yes, but first my thoughts on this week’s news…

When it comes to same-day / local delivery, Amazon is placing its bets on multiple models, including building out its own delivery fleet, experimenting with drones, and as reported in the Wall Street Journal this week, partnering with the United States Postal Service (USPS) to deliver groceries. Here are some details from the article:

Amazon.com Inc. and the U.S. Postal Service, already partners in Sunday deliveries, have launched a [two-month] trial to shuttle insulated containers of meat, dairy, produce and other groceries to San Francisco customers’ doorsteps.

The Postal Service said it is testing AmazonFresh deliveries “to determine if delivering groceries to residential and business addresses would be feasible from an operations standpoint and could be financially beneficial for the organization.”

A spokeswoman said the USPS is making the drop-offs between 3 a.m. and 7 a.m.; few of its trucks are in use at those hours. Because Amazon uses insulated tote bags for perishable groceries, the agency can make deliveries without the benefit of refrigerated trucks.

Considering the financial woes of the USPS, and the fact it visits every home, every day and has a large delivery fleet, this could be a win-win partnership — if Amazon and USPS can come up with a profitable financial model. At the end of the day, there won’t be a one-size-fits-all model for same-day local delivery — drones, private fleet, couriers, and other methods (see Uber) will be the “right” solution depending on order frequency and density, geographic region, and other factors, including how much consumers are willing to pay for the service.

At the Roadnet User Conference in July, I spoke about the convergence of technologies occurring in the fleet management space — namely routing and scheduling, telematics, mobile, and business intelligence and analytics. Acquisitions are a driving force in this convergence, with Omnitracs (which acquired Roadnet in late 2013) making another acquisition this week, XRS Corporation. According to the press release, “XRS has led the trucking industry’s migration to mobile devices for collecting and analyzing compliance and management data,” including compliance with the ELD mandate.

This acquisition underscores the important role mobile devices and applications are playing in the fleet management space. In many cases, demand for mobile solutions is what’s driving companies to invest in fleet management applications. Relatively few companies today are just looking to implement a routing and scheduling solution; most implementations today include a mobile component too. Mobile is the peanut butter to routing’s jelly.

A few years ago, as transportation management system (TMS) vendors started offering improved freight audit and payment capabilities, I predicted that many shippers would bring this outsourced process back in house. While some companies have gone that route, particularly those that ship mostly via truckload, demand for freight audit and payment services remains strong, especially for parcel and less-than-truckload (LTL) shipments.

enVista (a Talking Logistics sponsor) is one of the leaders in this market, with the company “experiencing another record growth year within our Transportation Solutions practice,” according to enVista President and CEO Jim Barnes. This growth has led enVista to expand its global freight audit and payment capabilities globally, with the opening this week of an office in Ellesmere Port, Cheshire, United Kingdom that will serve as its EMEA (Europe, Middle East and Africa) headquarters. According to the press release, “this expansion, coupled with enVista’s existing office in India, enables enVista to better respond to demand for carrier invoice audit and payment services globally and provides enVista’s client base with support at the local and regional levels within EMEA.”

Why is global demand for freight audit and payment growing? What factors go into the outsource vs. insource decision? What role is technology playing? Tune in to Talking Logistics on September 16th as I discuss those questions and more with Doug Kahl and Dominic McGough from enVista (stay tuned for link and other details).

Finally, news this week that Anheuser-Busch (in partnership with Ryder) is replacing its 66 diesel tractor fleet in Houston with Compressed Natural Gas (CNG) powered engines. Here are some details from the press release:

“The next generation CNG engine technology paired with support from state incentive programs contributed to our ability to take such a significant step in fully converting our Houston fleet,” said James Sembrot, Senior Director, Transportation, Anheuser-Busch. “Houston is a strategic choice due to the central location to our facilities and distribution radius, as well as its proximity to fueling stations.”

Through the advanced engine technology, the fleet is expected to reduce 2,000-tons of carbon dioxide (CO2) emissions per year when adjusting emissions reduction for consumption rates.

Anheuser-Busch is one of only a few large, heavy-haul shippers to complete a full fleet conversion to alternative fuel power vehicles. In June, the company added an environmental goal to reduce carbon emissions in its logistics operations from network planning, transportation, and warehousing by 15 percent by the end of 2017.

This is just another example of a growing trend: companies investing in alternative fuel vehicles (not just natural gas, but electric too) where it makes sense in their network to reduce fuel costs and CO2 emissions. For related commentary, watch my conversation with Jason Mathers, Senior Manager at the Environmental Defense Fund, on 5 Principles for Greener Freight.

And with that, have a great weekend!

Song of the Week: “Johnny Come Home” by Fine Young Cannibals