This Week in Logistics News (September 26-30, 2016)

Another Friday where I have limited time, so let’s go straight to this week’s supply chain and logistics news that caught my attention:

Uber made headlines last month when it acquired Otto, a startup launched by a group of former senior Google employees that aims to convert existing trucks into driverless ones. But with driverless trucks being more of a longer-term possibility, this week’s announcement by Uber could have a more immediate impact on the trucking industry. According to Reuters:

Uber Technologies Inc. is plotting its entry into the long-haul trucking business, aiming to establish itself as a freight hauler and a technology partner for the industry.

Otto plans to expand its fleet of trucks from six to about 15 and is forging partnerships with independent truckers, Otto co-founder Lior Ron told Reuters in an interview. Starting next year, Otto-branded trucks and others equipped with Otto technology will begin hauling freight bound for warehouses and stores, he said.

One indication of Otto’s ambitions is its recent hiring of Bill Driegert, a logistics veteran who helped found Coyote, a leading freight broker, and served as its chief innovation officer…Uber and Otto are working to build a freight network to connect shippers and carriers, much like Uber matches passengers and drivers.

“In Uber, you press a button and an Uber shows up after three minutes,” Ron said. “In freight … the golden standard is that it takes (the broker) five hours of phone calls to find your truck. That’s how efficient the industry is today.”

Uber is not the first company trying to disrupt the trucking and freight brokerage business (see Transfix, Convoy and Cargo Chief), but it certainly has the most funding and brand recognition, and with Bill Driegert on board, a proven executive who understands the industry. Of course, none of that guarantees success, but this move further underscores how the logistics industry overall is becoming more technology driven, and how established players need to respond accordingly to stay ahead of these emerging competitors.

Moving from trucking to ocean transportation, San Francisco startup Flexport Inc. raised $65 million in venture capital to expand its U.S. and global operations. Including this round, the company has raised $94 million to date. As reported in the Wall Street Journal:

Ryan Petersen, the startup’s founder and chief executive, said he plans to use some of the new money to develop a way of efficiently rerouting shipments while they are in transit, which he described as a nut that the logistics industry has yet to crack.

“A traditional freight forwarder looks at a container as a big blob of stuff that only moves in one direction,” Mr. Petersen said. “We think of it as a collection of parcels that happens to be traveling together for some period of time.”

Flexport wants to track products that are in transit as well as to handle sorting, relabeling and reshipping of goods when they are sold while they’re being shipped. To do so, the company needs to build warehouses and cross-docking facilities near seaports and airports, he said.

Again, lots of investors and money being poured into all segments of the transportation and logistics service provider industry. I believe it speaks to the large inefficiencies that still exist in the industry. But as many have learned from past efforts to transform it, you also have to overcome a lot of inertia to succeed.

Finally, underscoring my prediction that blockchain technology would make its debut in supply chain management this year, “Marine Transport International Ltd., a U.K.-based freight fowarder, has started using blockchain to create real-time digital ledgers of shipping data for use by port officials, cargo owners and others along global supply chains,” according to an article in the Wall Street Journal. More from the article:

MTI, which says it made its first public blockchain transaction on Sept. 1, is among only a handful of companies outside of the financial sector to deploy blockchain within its core operations…The move, it says, seeks to replace cumbersome and costly legacy systems, such as logs, spreadsheets, data intermediaries and private databases, which cause delays and prevent carriers from making timely changes to services.

Jody Cleworth, the company’s chief executive officer, calls blockchain a “natural fit” for shipping, which involves compiling and transmitting complex data sets between “so many participants, suppliers and regulatory organizations.”

Just another step forward in exploring the potential of this new technology in supply chain applications. For related commentary, see Toyota and USPS See Opportunities for Blockchain Technology in Supply Chain Management.

And with that, have a happy weekend!

Song of the Week: “Waste a Moment” by Kings of Leon