Amazon reported its Q4 2015 results yesterday, and although it reported record profits for the quarter ($482 million), the company’s shares tumbled in after-hours trading because overall results fell short of analyst expectations. Shipping costs are always an item of interest, and as the Wall Street Journal reported:
In the quarter, shipping costs jumped 37% to $4.17 billion. As a percentage of sales, shipping costs rose to 12.5% from 10.9% in the year-earlier period, suggesting the company relied more heavily on pricey third-party couriers to help dispatch goods during the holidays, Mr. Mahaney said.
“We’ve found we needed to serve our customers at peak; we needed more of our own logistics to supplement partners,” said [Amazon Chief Financial Officer Brian Olsavsky] in a call with analysts. “Those carriers are just no longer able to handle all of our capacity that we need at peak.”
Based on who shows up to deliver my Amazon packages these days, and those ordered by my neighbors, I would say Amazon’s reliance on UPS, FedEx, and USPS for every day deliveries — not just during the peak season — is continuously diminishing. More than half the time, when a delivery truck or van comes down my street, I usually see this (taken across the street from my house) instead of UPS or FedEx.
In other supply chain and logistics news…
- This is How Google’s Project Wing Drone Delivery Service Could Work (Fast Company)
- Trucking Companies Throttle Back Expansion Plans (WSJ – sub. req’d)
- C.H. Robinson Opens Second Air Freight Screening Facility
- Logistical Labs Announces Technology Partnership with project44
- HighJump Announces Hours of Service Integration with Rand McNally
- November 2015 North American Freight Numbers
Google was issued a patent this week related to drove delivery (“Automated Package Delivery to a Delivery Receptacle”). Here’s the abstract:
Improving automated package delivery to mobile delivery receptacles to allow accurate and reliable package deliveries comprises a delivery receptacle for an automated package delivery via an unmanned aerial delivery device. The delivery receptacle is notified of a pending delivery and travels to a receiving location. The delivery receptacle emits infrared (“IR”) beacons from one or more IR beacon transmitters. An aerial delivery device detects the IR beacon and uses the beacons to navigate to the delivery receptacle. The delivery receptacle receives IR beacon responses from the aerial delivery device and continually or periodically directs the IR beacons in the direction of the aerial delivery device. The aerial delivery device deposits the package in the delivery receptacle. After receiving the package, the delivery receptacle transports the package to a secure location, such as into a garage.
In short, rather than deliver a package directly to a consumer’s house or office, the drone would deliver the package to a mobile receptacle — call it “a smart box on wheels,” which based on the garage reference in the abstract, could conceivably be a Google driverless car.
In some ways, Google’s idea is similar to DHL’s approach, except instead of mobile receptacles, DHL drones will deliver to stationary parcel lockers such as its Packstation delivery lockers.
The bottom line is that direct-to-consumer drone delivery, which is Amazon’s vision and approach, is only one potential future outcome. I believe we’ll ultimately see drones being used in a variety of ways for package delivery and other logistics applications, and the “right” approach will depend on where the drones are being used and for what purpose (e.g., rural vs. city environment, developed vs. emerging countries, inside the warehouse or yard vs. public airspace).
Moving on to 3PL news, C.H. Robinson announced that it opened “a new state of the art certified cargo screening facility (CCSF) in Carson, CA.” The new facility is the second for the company, which opened its first CCSF on April 18, 2012, in Chicago, IL. According to the press release:
C.H. Robinson’s in-house screening facility includes approximately 20,000 square feet of warehouse space, state of the art screening machines, and a dedicated air freight team to screen air freight that moves through the facility. The facility is tied directly to Navisphere®, the company’s global technology platform, allowing customers to track their freight before, during, and after the CCSF. This adds a level of visibility that is often missing during the screening process.
“We’re excited about the new screening facility. Rather than relying on a third party to perform the required screenings on their schedule, now we can assure our customers that our trained experts are reviewing their shipments,” explained Tim Reiff, general manager, North America air freight. “The facility also features convenient airfreight doors that speed up the process. Once cargo is screened, it can be quickly transferred to or from the airlines.”
This is another example of a company taking direct control of a logistics process in order reduce lead times and cost, improve supply chain visibility, and enhance customer service. Ironically, in this case, it’s a 3PL eliminating the role of another third party — which is what some shippers, most notably Amazon, is doing to their own 3PLs by bringing logistics operations in-house. I guess this need for greater control is starting to bubble up in 3PLs too. For related commentary, see Keeping Control: What 3PLs Must Convince Their Customers.
On the technology front, Logistical Labs announced “an integration between its pricing platform LoadDex and project44, a platform that uses cloud-based APIs to instantly connect shippers and 3PLs to capacity. The integration allows LoadDex users to leverage project44’s large network of LTL carrier data for fast, accurate rates and instant booking.”
This news underscores one of my supply chain and logistics predictions for 2016: the increased use and importance of APIs and web services in facilitating B2B integration and processes. “Users can now access project44’s LTL network directly from within the LoadDex interface via API technology to instantly book capacity,” said Chris Ricciardi, Chief Product Officer of Logistical Labs. “Having all rates and all modes in a centralized location greatly streamlines the rating process for our customers—giving them one source for all of their mode optimization needs.”
Finally, in other transportation technology news, HighJump announced that its Prophesy Dispatch Software is now integrated with Rand McNally’s electronic logging devices. According to the press release:
Within the HighJump Transportation Management Solution, this integration will warn or prevent a dispatcher from assigning a driver to a load if they do not have enough available time to deliver the load on time. The system also displays the following information to dispatchers:
- Estimated Driving Time required to complete a load
- Hours of Service totals
- Last updated date and time
- Last status update
- Estimated driving time remaining
- Estimated On Duty time remaining
- Estimated Remaining Total On Duty time
- Estimated Time Remaining until Mandatory Break
And with that, it’s time to pick up my mom at the train station. We’re celebrating her birthday this weekend. Every day, every year, a blessing.
Have a happy weekend!
Song of the Week: “All of This and Nothing” by Dave Gahan & Soulsavers
Note: C.H. Robinson is a Talking Logistics sponsor.