This Week in Logistics News (December 4-8, 2017)

We’re supposed to get our first plowable snow of the season tomorrow, which means I need to head outside and rake and bag the remaining leaves on my lawn.

Rake today, shovel tomorrow. My exercise plans for the weekend are set.

So, without further delay, here’s the supply chain and logistics news that caught my attention this week:

For many in logistics, e-commerce is like a big tidal wave that you see coming again and again, but no matter what you do to prepare, you still get slammed.

Just ask UPS and Walmart. As reported by the Wall Street Journal:

United Parcel Service Inc. is struggling to handle the surge in shipments from online shoppers, resulting in delivery delays early in the critical holiday season and prompting the carrier to a push drivers to work extra hours.

The delays show that delivery networks such as UPS, which are critical components of the e-commerce boom, are still struggling to cope with the busiest shopping periods despite heavy investment to build out and automate their operations and capacity.

Apparently, the new surcharges UPS implemented to help smooth out shipping volume this holiday season haven’t worked too well.

Walmart is in the same boat. The company said on Wednesday “that soaring online purchases have caused delays in its distribution network,” according to Reuters. The article goes on to say, “The backlog reflects the degree to which Wal-Mart, United Parcel Service and other companies struggled to handle peak ecommerce volumes despite months of preparation and major investments to expand and upgrade distribution facilities.”

The challenge, of course, is finding the right balance — that is, figuring out how to meet peak demand volumes without building out a network that goes under-utilized the remaining 11 months of the year. Maybe they’ll do better in 2018.

If you move containers through the East Coast or Gulf Coast ports, here’s something to put on your radar screen: The Wall Street Journal reported yesterday that “labor negotiations between employers and unionized dockworkers at East Coast and Gulf Coast ports got off to a rocky start this week after union leaders walked out of contract-extension talks.”

What caused the walk out? You guessed it: port automation.

Here’s an excerpt from the article: “The main point of disagreement was about how ports define automation, according to the International Longshoremen’s Association. Earlier this year the union’s president, Harold Daggett, said the issue of job losses due to technology would be central during negotiations to extend the current contract, which expires in September 2018. He has pledged to prevent container terminals from automating to the same degree as many European ports.”

It’s just a spark now, but be prepared in case this turns into a full-blown fire in the weeks and months ahead, resulting in work slowdowns or even a strike.

(For related commentary, see Ready For the Next Port Crisis?)

Finally, in technology news, Descartes announced that “as part of its Software Development Cooperation Agreement (SCDA) with SAP, it has successfully integrated air and ocean transportation freight messaging and customs declaration filing with SAP® Transportation Management (SAP TM).” Here’s a quote from the press release by Franz Hero, senior vice president, Supply Chain & Logistics Development at SAP:

“Transportation management is a multi-party process, and our work with Descartes helps customers running SAP TM to more efficiently and effectively execute cargo bookings, send waybill information, track shipments and file customs documents with carriers, logistics service providers and regulatory agencies. We decided to collaborate with Descartes because of their expertise in multi-modal transportation messaging and customs filing. This integration gives our customers access to the breadth of air and ocean logistics services providers, carriers and regulatory agencies that exist on the Descartes GLN.”

I’ll just repeat what I said more than two years ago when Descartes and SAP first announced their partnership (see Software is Not Enough: SAP and Descartes Partner on TMS Connectivity):

This partnership is a win for both companies and customers. For Descartes, it opens the door to a large customer base with a growing TMS presence; it’s an opportunity to increase the number of shippers and logistics service providers on its Global Logistics Network, and increase the volume of transactions flowing through it. For SAP, it strengthens its competitive position against software-as-a-service TMS providers, at least from a network connectivity standpoint. And for SAP customers, this partnership provides them with an alternative to building and maintaining their own connectivity network, which as I discussed above, is a costly, time-consuming, and ongoing effort — and something that most manufacturers and retailers are not good at.

And with that, have a happy weekend!

Song of the Week: “Two High” by Moon Taxi