This Week in Logistics News (February 23-27, 2015)

What can you do with 102 inches of snow? You can bottle it and sell it, like one entrepreneur is doing. Or you can build an 8’3” Red Sox snowman like my kids did last weekend, which might still be there by the time our Little League season starts in April.


Moving on to this week’s supply chain and logistics news…

Free shipping remains a competitive weapon for retailers, especially in their battle against Amazon, and Target put some ammo in it this week by reducing the free shipping minimum from $50 to $25 for online orders (Amazon’s minimum is $35 for non-Prime members). What caught my attention, however, were the other data points that Target revealed recently:

  • Record sales on on Thanksgiving and Cyber Monday, up 40 percent from 2013
  • Mobile traffic made up 60 percent of traffic November through December
  • store-pickup orders hit a new record high on Thanksgiving Day, and more than 80% of orders for in-store pickup are ready in one hour

All of these statistics, which correlate with the results of other retailers, point to the ongoing transformation taking place in the retail industry, which is being driven by e-commerce, mobile purchasing, home delivery, and click-and-collect. These trends, in turn, are putting tremendous pressure on supply chains to not only meet the more stringent expectations of consumers, but to do so profitably.

Last March in 3PLs, What Business Are You In?, I argued that third-party logistics providers need to take a broader perspective of their business and value proposition. Yes, 3PLs provide customers with multiple logistics services like transportation management and warehousing, but they are also in the business of providing (among other things) risk management capabilities to help customers minimize or eliminate supply chain risks, and more importantly, to help them recover from supply chain disruptions faster and with less impact.

Among 3PLs, DHL is arguably one of the leaders in providing risk management capabilities and insights to clients. The company announced this week enhanced new capabilities to its risk management solution Resilience360. Here are some details from the press release:

Resilience360…is an end-to-end supply chain risk management platform that alerts customers about global incidents and risks to their global supply chain in almost real time – enabling customers to maintain an advantage over their competitors by immediately responding to incidents and pre-empting or minimizing business interruption.

The new enhancements will now allow customers to visualize the route of their supply chain by integrating Resilience360 with their Transport Management System. Customers can then scan the latest position and status of all their shipments worldwide. This will make it easier for customers to correlate shipments with disruptive incidents and identify potentially affected areas that require corrective actions. A new country-specific risk page will also provide customers with an overview of supply chain relevant risk scores and incident trends. A global incident report will be compiled into a weekly supply chain risk intelligence bulletin, “360º INSIGHTS”, which is available free of charge to subscribers.

On the transportation statistics front, here are some highlights reported this week:

  • ATA Truck Tonnage Index: The advanced seasonally adjusted For-Hire Truck Tonnage Index increased 1.2% in January…Compared with January 2014, the SA index increased 6.6%, which was the largest year-over-year gain in over a year.
  • Cass Truckload Linehaul Index: rose 7.9% year over year. With demand improving and capacity remaining extraordinarily tight, contract rate increases should continue to filter into our index at higher levels. Commenting on this index, investment firm Avondale Partners said, “We see TL pricing increasing between 4% and 9% in 2015, depending on how much rate increase each carrier was successful in obtaining in 2014 and when those rate increases were achieved.”
  • December 2014 North American Freight Numbers: U.S.-NAFTA freight totaled $95.8 billion in December 2014 as four out of five transportation modes – truck, rail, air, and pipeline – carried more U.S.-NAFTA freight than in December 2013… Year-over-year, the value of U.S.-NAFTA freight flows by all modes increased by 5.4 percent, with December marking the 11th consecutive month of year-over-year increases.

Finally, as reported in the Wall Street Journal, IBM announced yesterday that “it will shift $4 billion in 2015 spending to what it calls the ‘strategic imperatives’ of cloud, analytics, mobile, social and security technologies.” By 2018, the company expects those segments to generate $40 billion in combined annual revenue — or more than 40% of the company’s expected total revenue — compared to the $25 billion in revenue (27% of total revenue) they generated last year.

Cloud. Analytics. Mobile. Social. Security. That basically sums up the future of technology in the coming years.

And with that, have a happy weekend!

Song of the Week: “Like the Weather” by 10,000 Maniacs