August is usually a quiet month for supply chain and logistics news, but not this year, especially the past couple of weeks. I’m still catching up from all I missed while I was away on vacation, but I’ve highlighted some of the key news items below, with Tropical Storm Harvey topping the list.
- Freight Companies Scramble to Reroute Goods in Wake of Harvey (WSJ – sub. req’d)
- Port Houston Container Terminals to Resume Operations Friday (WSJ – sub. req’d)
- UPS, FedEx resume operations in some parts of storm-battered Texas (Reuters)
- Descartes Acquires MacroPoint
- C.H. Robinson acquires Milgram & Company
- Körber acquires HighJump
- BluJay Solutions Raises up to $500 Million New Financing to Drive Accelerated Growth
- Transplace Selects New Equity Partner TPG Capital
- Convey Closes $8.25 Million in Series B Funding
- LevaData to Transform Strategic Sourcing for Global Procurement and Supply Chain Leaders
- Same-day delivery startup Deliv expands to 1,400 cities, rivalling Amazon’s Prime Now (TechCrunch)
- Manhattan Transportation Management Enhancements Enable the Acquisition and Supervision of Additional Shipment Capacity
- Infor Expands the Power of the GT Nexus Commerce Network
- Strong Software Bookings Growth Highlights First Half 2017 Results for JDA
- Iceland Gets On-Demand Drone Deliveries (BloombergTechnology)
- UK government announces funding for truck platooning trials (Automotive Logistics)
- Cummins unveils electric tractor concept (CCJ)
- TSA reviewing cargo screening, concerned about terror vulnerabilities (CNN)
The rains and winds of Tropical Storm Harvey are over, but the impact of the storm on the residents of Houston and the surrounding areas will continue for some time. The same is true for supply chains. Although the Port of Houston is reopening today and package carriers are resuming operations to some affected areas, it will take some time (weeks and months) for transportation and distribution networks to return to normal. In the near term, the shutdown of refineries will lead to higher gasoline prices and you can expect trucking capacity to tighten and rates to go up too.
What are the lessons learned here? The same as with other natural disasters and disruptions. As I wrote following the earthquake and tsunami that devastated Japan in March 2011, the reality is that there is relatively little companies can do right now to minimize the impact of these disruptions. Either you have been preparing for this type of disruption all along, taking the lessons learned from past disasters and building a resilient enterprise, or you have taken your chances and haven’t prepared effectively, believing that lightning won’t strike twice. The least impacted companies will be those that have been (among other things)…
- Sourcing critical parts from multiple suppliers, manufactured in multiple factories, located in multiple geographic regions;
- Using widely-available, standard components instead of proprietary, custom-built parts;
- Keeping excess manufacturing capacity in their factories;
- Designing and equipping their factories to build a wide portfolio of products;
- Implementing redundant IT systems and data centers;
- Using multiple modes of transportation, and working with multiple logistics partners.
At the end of the day, however, there is only so much you can do; Mother Nature usually gets the upper hand. The bright spot is seeing people from across the country come together to help their fellow citizens get through this hardship and to rebuild, with many in the supply chain and logistics community joining the effort (see American Logistics Aid Network).
(For related commentary, see Japan and Ecuador Earthquakes: Supply Chain Lessons from Past Disasters).
Moving on to M&A news, Descartes acquired MacroPoint while I was away on vacation. Here are some details from the press release:
US-based MacroPoint runs a connected network of over 2 million trucking assets and drivers. MacroPoint connects to trucks through integrations to on-board electronic logging devices (ELDs), transportation management systems, GPS-enabled smart phone applications and location-based mobile phone triangulation. MacroPoint uses this data to help transportation brokers, logistics service providers and shippers track the locations of deliveries in trucks. MacroPoint can also use this content to provide transportation brokers and shippers with predictive freight capacity to help identify early opportunities for additional freight moves.
Descartes acquired MacroPoint on a tax-efficient basis for approximately $US 107 million satisfied with approximately $US 87 million in cash and $US 20 million in shares….At the time of acquisition, MacroPoint had annualized revenues of approximately $US 12.5 million.
The real-time freight visibility space has been heating up in recent years, with MacroPoint leading the way, along with FourKites and 10-4 Systems. It seems like every week, each of these vendors announces a new integration partnership with a transportation management system (TMS) vendor. Why? Because shippers want this visibility, and more importantly, they want to do something with it — that is, they want to identify and implement better ways to plan and execute their transportation and logistics operations, which is what ultimately delivers value.
This acquisition raises the question: will real-time freight visibility solutions survive as standalone offerings or will they become features of broader solutions, particularly supply chain operating networks? Now that Descartes has pulled the trigger on this deal, it wouldn’t surprise me if other network-based solution providers like BluJay Solutions (which just raised up to $500 million in new financing to drive growth, particularly via acquisitions) or GT Nexus set their sights on acquiring FourKites, 10-4 Systems, or other players in this space.
Finally, in the 3PL realm, C.H. Robinson announced yesterday that it acquired Milgram & Company Ltd., “a world-class provider of freight forwarding, customs brokerage and surface transportation in Canada.” Here are some details from the press release:
Milgram is a leading provider of customs brokerage and freight forwarding, in addition to providing surface transportation and warehousing services, to 3,500 active customers. Headquartered in Montreal, Quebec, Milgram employs approximately 330 employees and has six offices in Canada and one office in the United States. Milgram is a gold standard winner of Canada’s Best Managed Companies®. For the fiscal year ending May 31, 2017, Milgram had approximately $155.3 million CAD (approximately $124 million USD) in gross revenues.
C.H. Robinson purchased Milgram & Company Ltd. for approximately $62 million CAD (approximately $50 million USD) in cash.
Most people equate C.H. Robinson with truck brokerage, which is its largest business segment by revenue, but Global Forwarding is its growth engine. In Q2 2017, Global Forwarding net revenues increased 24.5 percent to $121.0 million compared to $97.2 million in the second quarter of 2016. In comparison, North American Surface Transportation (NAST) truckload net revenues decreased 14.1 percent to $250.0 million in the second quarter of 2017 compared to $291.1 million in the second quarter of 2016, while truckload volumes increased approximately eight percent.
Yes, despite all of the protectionist talk out there, the fact is that global trade will continue to grow.
And with that, have a happy weekend!
Song of the Week: “Life’s What You Make It” by Talk Talk