This Week in Logistics News (May 9-13, 2016)

The Hyperloop and drones headlined this week’s supply chain and logistics news, so let’s go straight to it:

It might still be a longshot, but that’s not stopping engineers and investors from the pursuit of making the Hyperloop a reality. On Wednesday Hyperloop One (one of several companies, including Hyperloop Transportation Technologies, focused on bringing this idea to life) conducted a test of its propulsion system in North Las Vegas. The company also announced that it has raised $80 million in Series B financing from various investors, including France’s national rail company, SNCF, and GE Ventures.

I’ll just restate what I wrote back in August 2013:

Do we really need Hyperloop? Is this another example of us going after the “next new shiny thing” versus investing to improve what we currently have?

I firmly believe in the value and importance of innovation — in technology, medicine, transportation, business models, and other areas. In fact, that’s the reason why I became an engineer. But I also believe that the pursuit of innovation (specifically, the pursuit of something completely new) often causes us to overlook or under-prioritize the opportunities that exist to create significant value by better utilizing and optimizing the solutions we already have in place today. In trucking, for example, we see the opportunity every day: your private fleet comes back empty from an outbound delivery while a common carrier follows behind with inbound goods. Or a common carrier makes an inbound delivery and heads out empty, while another truck (perhaps from the same carrier) heads out in the same direction loaded with outbound goods.

What could the industry achieve if manufacturers and retailers actually “walked the talk” on collaboration? How much time and cost can we drive out of supply chains if there was less red tape, bureaucracy, and regulations?

Moving on to drones, both UPS and DHL made the news this week. First, as reported by Reuters, “UPS is backing a start-up using drones in Rwanda to transport life-saving blood supplies and vaccine.” According to the article:

UPS will provide a grant of $800,000 plus logistical support through the UPS Foundation to a partnership including Gavi, a group providing vaccines to poor countries, and robotics company Zipline International Inc for drone flights in Rwanda starting in August. The drones will deliver blood and vaccines to half the transfusion centers in the country of 11 million people, making deliveries 20 times faster than by land.

As I’ve said before (see A Kitty Hawk Moment in Drone Delivery?), drones are best suited for delivering goods in small, less-densely populated areas, and in places where there are no roads or they are flooded or impassable half the time, which is the case in many developing countries. The use of drones to deliver medicines to patients in remote areas, or using drones in humanitarian/disaster relief operations or in response to medical emergencies, is where we’ll see — and are seeing — the first truly beneficial applications of this transportation technology.

Meanwhile, DHL announced that it has successfully concluded a three-month test of its third Parcelcopter generation. According to the press release:

The trial run, part of a larger research and innovation project, was conducted between January and March 2016 in the Bavarian community of Reit im Winkl. It represents the first time worldwide that a parcel service provider has directly integrated a parcelcopter logistically into its delivery chain. Private customers in Reit im Winkl and up on the Winklmoosalm plateau were invited to test out the specially developed Packstations, dubbed the Parcelcopter Skyport. During the three month trial period, they could simply insert their shipments into the Skyport to initiate automated shipment and delivery per Parcelcopter. A total of 130 autonomous loading and offloading cycles were ultimately performed.

Each round trip from valley to plateau at roughly 1,200 meters above sea level covered eight kilometers of flight. The drone’s cargo was typically either sporting goods or urgently needed medicines and it arrived at the Alm station within just eight minutes of take-off. The same trip by car takes more than 30 minutes during winter.

And here’s a video from DHL showing the Parcelcopter in action:

What role will Hyperloop and drones play in the way we transport goods in the future? We’ll just have to wait and find out.

Finally, in more terrestrial news, Walmart is making adjustments to its subscription shipping program. As reported by Reuters, Walmart is “shortening the delivery time for an unlimited shipping program it is testing to two days from three as it taps a network of recently built warehouses for packaging online orders…The retailer also said it was lowering the annual fee for the shipping program by $1 to $49.” But here’s the part that caught my attention the most:

As part of a push to speed up deliveries, Wal-Mart will turn to regional carriers for an increasing number of its packages, according to a person familiar with the matter. That could cut into the share of parcels delivered by FedEx Corp, which handles the bulk of Wal-Mart’s packages.

It’s another sign that as package delivery times shrink from three days all the way down to same-day, so do the roles of UPS and FedEx.

And with that, have a happy weekend!

Song of the Week: “What You Do To My Soul” by Air Traffic Controller