This Week in Logistics News (June 19-23, 2017)

It’s the last day of school, so lot’s of excitement here at home. With little time to spare this morning, here’s the supply chain and logistics news that caught my attention this week:

Lots of buzz this week following Amazon’s announced acquisition of Whole Foods. In just a few days, I’ve seen countless articles addressing questions like: What will this deal mean for Walmart and other grocers? How will Amazon leverage Whole Foods’ stores and distribution network? Is this a strategic mistake for Amazon? Should the deal be blocked by regulators because it gives Amazon an unfair advantage?

Here are my high-level takeaways:

  • The battle has never been about Online vs. Brick-and-Mortar; it’s been about who can best leverage the two to unlock new efficiencies, business models, and services.
  • The competitive assets of Brick-and-Mortar are not just stores, but distribution and fulfillment centers too. I would also add Engines-and-Tires (i.e., transportation assets) to the equation. From that perspective, Amazon has been a brick-and-mortar company for a long time already.
  • “Consumer Convenience” will become a new supply chain metric (more on that idea in a future post).

By the way, what ever happened to HDS, the startup quietly launched in 2014 by Webvan’s founder Louis Border that promised to “offer competitive prices, fresher foods and unlimited selection, as well as free delivery?” (See my April 2014 post “Webvan 2.0: If At First You Don’t Succeed…”) Based on the website, it looks like the company is still in stealth mode and stuck in 2015 (the date of its last press release). Further proof that the grocery home delivery business remains a tough nut to crack.

If you’re a technology vendor hoping to work with Walmart and you’re using Amazon Web Services, your odds of winning the business have just gone down. According to the Wall Street Journal:

Wal-Mart Stores Inc. is telling some technology companies that if they want its business, they can’t run applications for the retailer on Amazon.com Inc.’s leading cloud-computing service, Amazon Web Services, several tech companies say.  

Wal-Mart, loath to give any business to Amazon, said it keeps most of its data on its own servers and uses services from emerging AWS competitors, such as Microsoft Corp.’s Azure.

“It shouldn’t be a big surprise that there are cases in which we’d prefer our most sensitive data isn’t sitting on a competitor’s platform,” [Wal-Mart spokesman Dan Toporek] said, adding that it’s a “small number.”

I’m guessing you’re out of luck too if Whole Foods is already one of your clients. I wonder what’s next. Will Walmart will start asking their tech vendors how many of their employees are Amazon Prime members?

Joking aside, when it comes to sensitive data and where it’s stored, I can understand Walmart’s concern. If you’re a tech vendor, is getting Walmart as a customer worth the time, cost, and effort to migrate to Azure or another competing cloud computing service? Post a comment and let me know.

Regarding the peak surcharge UPS announced this week, check out my post from yesterday: Free Shipping is Costing More (As Small Packages Flood Delivery Networks).

Finally, here’s a quote from an in-depth investigative report conducted by USA Today Network on how California port drivers are being “forced into debt, worked past exhaustion, and left with nothing”:

Prominent civil rights leader Julian Bond once called California port truckers the new black tenant farmers of the post-Civil War South. Sharecroppers from that era rented farmland to make their living and regularly fell into debt to their landlords. Widespread predatory practices made it nearly impossible for the farmers to climb out.

Through lease contracts, California’s port truckers face the same kinds of challenges in ways that experts say rarely happen in the U.S. today.

What are shippers saying about this?

The few [shippers] that issued statements said it was not their responsibility to police the shipping industry. Retailers don’t directly hire the truckers who move their goods at the pier. They generally hire large shipping or logistics firms that line up trucking companies through a maze of subcontractors.

“We’re not trying to wash our hands of this issue,” said John Taylor, a spokesman for LG Electronics, “but it’s frankly far afield” and “really very disconnected from LG Electronics.”

When asked about labor violations by trucking companies in Target’s supply chain, spokeswoman Erika Winkels wrote: “Target doesn’t have anything to share here.”

In short, this is another another example of “truck drivers being treated like trash with no rights” and shippers passing the buck of responsibility onto their suppliers. For related commentary, see Still Don’t Know How Many Slaves Are In Your Supply Chain?

And with that, have a happy weekend!

Song of the Week: “Magic” by The Cars

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