This Week in Logistics News (April 27 – May 1, 2015)

By Adrian Gonzalez

My wife and I visited my fourth grade son’s class this morning to see the work they’ve done the past few weeks. At the end of the work share session, the teacher tells the class, “Fourth graders, please stand up and put up your right hands up,” at which point I thought they were going to say the Pledge of Allegiance or something like it, but instead she says, “and give yourselves a nice pat on the shoulder for a job well done.”

And they did, and they deserved it. And if you did a good job at work this week, go ahead, stand up now, stretch your arms above your head, and on the way down, pat yourself nicely on the shoulder too. You deserve it.

Moving on to the supply chain and logistics news that caught my attention this week…

Mergers and acquisitions (M&A) activity in the 3PL industry remains hot, with another large deal announced this week: XPO Logistics is acquiring Norbert Dentressangle SA for €3.24 billion ($3.53 billion USD). The press release contains a lot of details, but here are some highlights:

Headquartered in Lyon, France, Norbert Dentressangle has 662 locations and approximately 42,350 employees…and had €5.1 billion ($5.5 billion USD) in pro-forma trailing 12-month revenue for the year-ended December 31, 2014.

Norbert Dentressangle offers services that strongly mirror XPO’s portfolio: contract logistics, including e-fulfillment; freight brokerage; an asset-light palletized network; freight management; dedicated and owned truckload; and global freight forwarding. XPO intends to use the acquired operations as a platform to grow its business in Europe.

Norbert Dentressangle serves customers in retail, food and beverage, manufacturing, chemicals, agriculture, e-commerce and high tech.

Norbert Dentressangle’s Red Online service leads the €5 billion outsourced e-fulfillment market in Europe, with €242 million revenue in 2014 and 31% organic growth. It serves both B2B and B2C customers in the United Kingdom, Spain and France. Norbert Dentressangle has leading capabilities in high-growth reverse logistics.

One of the words I keep hearing a lot from both shippers and 3PLs is scale — as in the ability for logistics service providers to meet the growing needs of shippers in terms of services offered and geographies served. Gaining scale is what’s driving a lot of M&A activity in the 3PL industry today, and this deal is a perfect example. As the press release states, “Complementary service offerings and geographies will enable widespread cross-selling to an established base of multinational companies.” Expect more M&A news in the weeks and months ahead, as I know there are several deals in the works.

For related commentary, see my post from last month, “Is the 3PL Industry Becoming Barbell-Shaped?”

In same-day delivery news, TechCrunch reports that “Uber is planning to launch a merchant delivery program that would allow online shoppers to get same-day delivery of goods through both UberRush couriers and Uber drivers…Sources say that Neiman Marcus, Louis Vuitton, Tiffany’s, Cohen’s Fashion Optical and Hugo Boss are all in talks with the Uber Merchant Delivery program, and one source in particular said that there are over 400 different merchants currently in talks (or already testing) with Uber for same-day delivery.”

Last June at the TMSA conference, I asked the 130+ transportation and logistics professionals in attendance, “Do you view Uber as a competitor?” Only one hand when up. If I asked that question today, I wonder what the response would be. As I wrote last year in “Lesson from a Little League Loss,” Uber is already disrupting the taxi industry; will it disrupt the logistics industry too? I don’t know, but if you’re a logistics service provider, it would be foolish and dangerous to take Uber (and others like them) for granted.

For related commentary, see “Uber, the Next Amazon?” and “How Big is the Same-Day Delivery Market?”

Earlier this week, I attended the JDA FOCUS 2015 conference, where I moderated a panel discussion with 3PL executives. I will share my takeaways from the session and the overall conference in a future post. While I was there, I had the chance to speak with Fabrizio Brasca, vice president of solution strategy for Intelligent Fulfillment at JDA Software, about the company’s transportation management system (TMS) and the new capabilities announced this week. Here are a couple highlights from the press release:

More granular level of item-awareness during load building. With this JDA-exclusive capability, shippers can apply granular, warehouse aware item definitions to improve load building, decrease costs, and maximize equipment and resource utilization — as well as increase visibility and exception management. Shippers can define item-level details including warehouse locations and constraints, profiles, groupings, packaging hierarchies and loading factors. As a result, loading efficiencies are improved at both shipping origin and all destinations. In addition, lower-level packaging is automatically rolled up into higher-level packaging for more efficient equipment utilization and shipment handling. Load planners can maximize capacity based on the number of stops, loading type and item type — leading to more profitable, more executable loads.

Dynamic shipment splitting that’s concurrent with routing. New functionality, exclusive to JDA, enables companies to strategically split shipments into two or more sub-shipments to improve load efficiency — and this splitting occurs concurrently with routing in a seamless, fluid process. All sub-shipments reference the original shipment for the purpose of tracking. Shipment splitting can be configured at the container level and controlled at the origin and destination locations. Splitting is applicable to both greater-than- truckload and less-than-truckload shipments. Load planners can control the number of times a shipment can be split, as well as the minimum split size, to honor both physical and business constraints.

Although it’s tempting to view TMS as a mature market segment, the reality is that there’s plenty of opportunity and demand for ongoing innovation. Simply put, in their ongoing quest to make smarter decisions faster, shippers are looking for new and enhanced TMS capabilities to help them better plan and execute their transportation operations, which are becoming more time-sensitive and complex.

Finally, the Wall Street Journal published a front-page story this week about the congestion plaguing major U.S. ports. It underscored many of the points I raised in February 2015 in “Ready for the Next Port Crisis?” After reading the article, it seems like the crisis is already here. As I wrote in my post, the next port crisis is in the works, and it’s being caused not by labor disputes, but by capacity and productivity constraints. And we don’t have the money, nor the luxury of time, to adequately address it. The question still remains: What can we do?

And with that, have a happy weekend!

Song of the Week: “My Type” by Saint Motel