This Week in Logistics News (April 18-22, 2016)

By Adrian Gonzalez

“Dearly beloved, we are gathered here today to get through this thing called life.” — Prince

The world lost another gifted musician and performer yesterday. RIP Prince.

But let’s not let the elevator bring us down, let’s go crazy…after this week’s supply chain and logistics news.

As the folks on Sesame Street would say, the future of transporting goods and people is brought to you by the letter ‘D’ — as in droids, drones, and driverless.

An article in Bloomberg Technology highlights two startups, Starship Technologies and Dispatch, that are developing droids to deliver goods. Rather than take to the skies like drones, these robots, which look like large coolers on wheels, will share the sidewalks with you and me to make last-mile deliveries. Here are some details from the article:

Starship robots have already covered more than 1,900 miles in the U.K., Germany, Belgium, Estonia and the U.S., with more than 50,000 miles planned this year.

Because small robots are less expensive to build than trucks or drones, Starship anticipates being able to offer them to local shopkeepers on a leased basis – essentially “robot-delivery-as-a-service,” says Martinson, the chief operating officer. With a target delivery cost of £1 to £3 per delivery ($1.40 to $4.20), the robots will allow these businesses, which have often been shut out of e-commerce by high delivery costs, to begin selling online, he says. A business might break even on a robot if it did just 15 deliveries a day, he says.

Whether it’s a truck on the road, a guy on a bicycle, a drone in the sky, or a droid on the sidewalk, finding the right formula and environment for profitable last-mile delivery remains the biggest challenge for companies. All of these delivery options have their “sweet spot” in terms of population density, order frequency, and other important factors. This is not a zero-sum game — it’s an all-of-the-above future.

But I have to wonder: what will happen when a droid encounters a group of mischievous teenagers?

Moving on, in another example of how the business models of technology companies and third-party logistics providers are merging, eBay Enterprise and Innotrac have joined forces to become Radial, “the largest omnichannel commerce technology and operations provider.” Here are some details from the press release:

Radial brings together best-of-breed technologies and services in one market-leading platform to offer speed and efficiency to retailers’ omnichannel commerce requirements, including:

Global commerce platform as a service: Create seamless, unified brand experiences across digital and physical channels, devices and physical stores to make and keep customers happy. Radial covers it all – from order management and safe payment processing to sophisticated order routing and fulfillment to actionable analytics.

Tech-enabled fulfillment and operations: Manage orders and inventory across distribution centers and suppliers while protecting margins and delighting customers. Radial’s scalable fulfillment and freight services enable orders to be fulfilled faster and delivered where and when desired while optimizing costs.

The platform also includes payments, tax and fraud offerings and full customer care services.

Simply put, as I wrote more than two years ago, 3PLs need to ask themselves, “What business are we in?” If your answer is still “We’re in the transportation and warehousing business,” then your value proposition in the eyes of customers is becoming more limited and commoditized.

Finally, Werner Enterprises, Knight Transportation, and Swift Transportation all experienced double-digit declines in profits in Q1 2016 compared to the same period last year. As reported by Robbie Whelan in the Wall Street Journal:

Trucking companies say too many big rigs are plying the market, driving down the rates they can charge customers. Demand has also taken a hit from persistently high inventories at major retailers, which reduces the need for shippers to restock stores and warehouses. Rising driver wages are also squeezing profits, they said.

Couple that with declines in ATA’s Truck Tonnage Index and Cass Information Systems’ Truckload Linehaul Index, and the story remains the same: the transportation market remains soft, with capacity exceeding demand. Enjoy it while it lasts.

And with that, have a happy weekend!

Song of the Week: Prince performing “Purple Rain” during downpour at Super Bowl XLI Halftime Show.