This Week in Logistics News (October 6-10, 2014)

Next week, I’ll be speaking at the Ryder Innovate Forum in Chicago and the Elemica reveal 2014 conference in Frankfurt. I look forward to learning and networking with all the attendees, and I’ll share my takeaways from those conferences in future posts. In the meantime, here’s the news that caught my attention this week:

The omnichannel retail chess pieces keep moving, and Amazon made a strategic move this week. According to the Wall Street Journal, the company plans to open its first brick-and-mortar store in midtown Manhattan. Here are some details from the article:

Amazon’s space at 7 West 34th St., across from the Empire State Building in Midtown [and on the same busy street as Macy’s flagship store], would function as a mini warehouse, with limited inventory for same-day delivery within New York, product returns and exchanges, and pickups of online orders. The Manhattan location is meant primarily to be a place for customers to pick up orders they’ve made online, but will also serve as a distribution center for couriers and likely one day will feature Amazon devices like Kindle e-readers, Fire smartphones and Fire TV set-top boxes, according to people familiar with the company’s thinking.


People familiar with the matter cautioned that Amazon’s plans could change, and that the store is an experiment and could be deemed unsuccessful. If it is successful, however, the New York location could presage a rollout to other U.S. cities, according to the people familiar with the company’s thinking.

As I’ve commented before, the line between stores and warehouses is beginning to blur, with more and more retailers enabling ship-from-store operations. It’s clear from the article that this Amazon brick-and-mortar location will function more as an inventory location — to enable customers to pick up orders placed online and for couriers to pick up items for same-day delivery — instead of a traditional store with aisles of goods for walk-in customers to browse and buy. I view this as a new type of supply chain node, designed primarily to facilitate same-day delivery operations and order pick-ups and returns for consumers. And if this first location is successful, I expect future ones to open in the same high-density areas where Amazon offers (or plans to offer) same-day delivery.

Simply put, brick-and-mortar retailers are leveraging their stores as an advantage to provide consumers with more flexible order fulfillment and return options, and this is Amazon’s way of fighting back.

Speaking of providing added convenience to consumers, “UPS has started allowing U.S. customers to collect packages from neighborhood stores or lockers to lower failed deliveries of online purchases and costs associated with them, ahead of the busy holiday shopping season,” according to Reuters. Here are some interesting excerpts from the article:

Repeat deliveries to buyers not available to receive their parcels adds to the costs in terms of handling, fuel and labor. “If we save one minute per driver, it results in a multi-million dollar savings,” UPS spokesman Steve Gaut told Reuters, estimating global annual savings of about $15 million.


UPS said…that nearly 300 outlets, including dry cleaners, convenience stores and pharmacies, in New York and Chicago would serve as access or pickup points. This includes nine unstaffed lockers in Chicago…UPS said its 4,400 U.S. store franchises would also serve as pickup points from January. The company has more than 12,000 access points in Europe.

It strikes me that so much of what’s happening today in supply chain management is about pampering consumers — and the more demanding, impatient, and time-starved we become, the more problems and challenges we create for supply chain professionals. But that’s what keeps the profession fun and interesting, and fuels the engine for ongoing innovation in technology and services.

(UPS also announced this week that it acquired i-parcel; for my thoughts on the acquisition, read my post from yesterday).

Finally, the Freight Transportation Services Index (TSI) rose 0.6 percent in August from July, reaching its highest level ever. August 2014 freight shipments were up 3.8 percent from August 2013. According to the press release, “The increase in freight in August was driven by continued gains in trucking and water…[and] took place despite a decline in industrial production, but accompanied growth in personal income and in inventories of manufactured goods.”

Life is good in freight transportation. But as the index continues to rise, so do concerns about truckload capacity, especially as we enter the holiday season. Buckle your seatbelts.

And with that, have a happy weekend!

Song of the Week: “Weekend” by Priory