This Week in Logistics News (June 22-26, 2015)

Lel_Triathlon52: the temperature of the ocean my wife swam in earlier this week in preparation for this Sunday’s Cohasset Triathlon. She’s been swimming, biking, and running for months, raising almost $8,000 along the way in support of JDRF (our oldest daughter has Type 1 Diabetes). The kids and I can’t wait to watch her conquer the course on Sunday, and we hope that her efforts and those of many others will ultimately help us turn Type 1 Diabetes into Type None.

Now, on to the supply chain and logistics news that caught my attention this week:

According to Reuters, “Wal-Mart Stores will begin charging fees to almost all vendors for stocking their items in new stores and for warehousing inventory, raising pressure on suppliers as the world’s largest retailer battles higher costs from wage hikes.” Here are some other excerpts from the article:

The new agreements mean a larger number of vendors will likely start paying fees, passing some of the retailer’s costs onto suppliers, analysts said. It was unclear how much money Wal-Mart would receive as a result of the changes.

For instance, Wal-Mart is seeking to charge a food supplier 10 percent of the value of inventory shipped to new stores and to new warehouses, both one-time charges, and 1 percent to hold inventory in existing warehouses, according to a copy of amended terms seen by Reuters.

Does Walmart still expect to get “Everyday Low Prices” from its suppliers even though it is shifting costs to them? You betcha. Wal-Mart spokeswoman Deisha Barnett said, “The changes we have outlined will help us ensure that we are operating at everyday low costs that yield everyday low prices.” But we’ve seen this movie many times before: bad things happen in the long term (quality issues, supplier bankruptcies, etc) when you increase the cost of doing business for your suppliers but still demand price decreases from them. In short, Walmart is following in the same worn footsteps of its competitors in the retail industry instead of being a true trailblazer. For related commentary, see The High Cost of Poor Supplier Relationships and Nothing Easy About Supplier Relationship Management.

As the same-day delivery space continues to heat up, so will M&A activity. This week, for example, Deliv announced that it has acquired WeDeliver, a Chicago-based delivery service that powers same-day delivery for over 100 local merchants in the Chicago area, “from omnichannel retailers like Trunk Club and Barneys New York to grocery stores like Plum Market as well as the popular Glazed and Infused Doughnuts.” The race is on to reach scale and critical mass in the same-day delivery market, which means we’ll see more deals like this in the months ahead.

On the technology front, JDA Software announced new capabilities in its JDA® Store Operations solution. The press release highlights several of the enhancements, including new mobile capabilities:

One of the most exciting enhancements to JDA Store Operations is improved mobile access for busy managers who frequently leave the office. JDA’s mobility solution provides immediate insights into store-level and district-wide priorities, including common dashboards for accessing information that spans all the components of JDA Store Operations. For example, performance alerts triggered in the back office can result in the assignment of tasks within JDA Task, so front-line managers can make informed, fact-based decisions from any network or any device, speeding customer satisfaction and service levels.

Ryder also announced new transportation management capabilities, which I commented on earlier this week.

Finally, here’s a quick summary of some of the transportation and trade statistics released this week:

ATA Truck Tonnage Index: “[The index] increased 1.1% in May…Compared with May 2014, the seasonally-adjusted index increased just 1.8%, which was well below the 2.7% gain in April and the smallest year-over-year gain since February 2013 (-4.3%). Year-to-date through May, compared with the same period last year, tonnage was up 3.7%.”

April 2015 North American Freight: “U.S.-NAFTA freight totaled $93.3 billion in April 2015 as all modes but air carried less U.S.-NAFTA freight than in April 2014…Year-over-year, the value of U.S.-NAFTA freight flows by all modes decreased by 6.8 percent. Large decreases in the value of NAFTA trade by pipeline and vessel in April were due to the reduced unit price of mineral fuel shipments.”

World Trade: “According to preliminary estimates…by the WTO and UNCTAD, world trade as measured by the average of exports and imports grew 0.7 per cent in the first three months of 2015, based on seasonally adjusted data. World exports increased by 0.4 per cent in the first quarter of this year, down from the 2.1 per cent growth registered in the previous quarter. Imports grew by 0.9 per cent in the same period, down from 1.5 per cent in the previous quarter.

And with that, have a happy weekend!

Song of the Week: “Lifted Up (1985)” by Passion Pit

Note: JDA Software is a Talking Logistics sponsor.