This Week in Logistics News (June 15-19, 2015)

By Adrian Gonzalez

It’s the last Friday of school and my kids are showing off their work this morning, so as I fill my coffee mug and get ready for the walk to school, let’s go straight to the supply chain and logistics news that caught my attention this week:

The buzz and hype around same-day, local delivery continues, and not surprising, Amazon and Uber are in the thick of it. As reported in the Wall Street Journal this week:

[Amazon] is developing a mobile application that would, in some cases, pay ordinary people, rather than carriers such as United Parcel Service Inc., to drop off packages en route to other destinations, according to people familiar with the matter.

As envisioned, Amazon would enlist brick-and-mortar retailers in urban areas to store the packages, likely renting space from them or paying a per-package fee, the people said. Amazon’s timing for the service, known internally as “On My Way,” couldn’t be learned, and it is possible the company won’t move ahead, the people said.

The crowdsource delivery model is not new. Back in March 2013, Walmart was reportedly experimenting with the idea of having store shoppers deliver packages to online customers who lived on their route back home (see my comments at the time). And of course, Uber’s $40 billion valuation is based partly (perhaps largely) on the bet that the company will “upend the delivery business much as it has for taxis,” as the Wall Street Journal put it. But as the article goes on to say:

For more than a year, the San Francisco company has been trying to build what its chief executive once called “an urban logistics fabric” that enables drivers who shuttle passengers with the tap of a smartphone to pick up food, grocery items and packages along the way. In a sign of Uber’s potential, it has more than 200,000 active drivers, roughly double the size of the delivery workforce at United Parcel Service Inc.

So far, though, an Uber same-day delivery program launched a year ago with plans to sign up dozens of retailers has announced partnerships with just six. And one of those, e-commerce company Gilt Groupe Inc., says its arrangement fell short of expectations, partly because Uber was unable to insure high-priced items sold through Gilt’s online store, according to a Gilt spokeswoman.

As I’ve said before, when it comes to same-day, local delivery, there’s a lot of experimenting going on. Why? Because the traditional delivery players and models are either not optimized for it, too expensive, or both. My bet is that most of these ventures and ideas will fail for a wide variety of reasons (technological, financial, legal, trust and acceptance by market, etc.), but I also believe that someone will ultimately “crack the nut” and transform the industry.

Moving on to technology news, Cloud Logistics announced new enhancements to its transportation management system (TMS), including:

Advanced third party logistics (3PL) capabilities to support complex hierarchical relationships and shipping rules.
Appointment setting for both pick-up and delivery in the carrier portal.
The addition of a brand new client portal for Cloud Logistics’ customers to be able to submit requests, access system documentation and other streamlined interactions.
A sophisticated new Carrier Key Performance Indicator (KPI) report to facilitate improved carrier relationship management for shippers.
New features for the Cloud Logistics TMS mobile application to capture information such as miles traveled and fuel consumption as well as integration with the mobile device’s gyroscope to prevent data entry while driving.

These new capabilities certainly expand the value of Cloud Logistics’ TMS solution, but it’s in combination with the cloud/software-as-a-service delivery model that makes it noteworthy. As David Landau, Executive Vice President of Cloud Logistics, stated in the press release, “Our customers love the fact that four times a year, they come to work one morning with an entire set of new features available to them at no cost.”

Finally, the Boston Consulting Group (BCG) and C.H. Robinson announced findings from a joint research project they conducted that looked at how “the Panama Canal’s expansion will likely change the way cargo moves, by both water and land, into and within the United States.” Here are some excerpts from the press release:

The $5 billion expansion will permanently alter the competitive balance between ports on the East and West coasts. With global container flows rising, West Coast ports will still handle more traffic than they do today, but they will experience lower growth rates and their market share will likely fall.

Goods shipped from East Asia through West Coast ports are currently transported by rail and truck as far east as the Ohio River Valley. The canal’s expansion will permit big, efficient “post-Panamax” container ships—which have two to three times the capacity of current vessels—to reach the East Coast. Those ports will then become more cost competitive because it is cheaper to move cargo by water than over land. West Coast ports, however, will remain the destination of choice for shippers who need to use the fastest routes possible.

Download the report — Wide Open: How the Panama Canal Is Redrawing the Logistics Map — for all the details.

And with that, have a happy weekend!

Song of the Week: “The Way I Want You” by Turbo Fruits