This Week in Logistics News (January 22-26, 2018)

Drones, driverless vehicles, and global trade all made the headlines in this week’s supply chain and logistics news…

Teamsters to UPS: No to Drones and Driverless Trucks

Let’s see: you have Amazon, Deliv, Uber, and many others getting into the delivery space; you have major retailers like Target (which recently acquired Shipt) and Walmart (which acquired Parcel last year) taking more direct control of their last-mile delivery operations; and you have just about every car and truck manufacturer, along with several startups, working on commercializing driverless cars and trucks.

That’s the new reality when it comes to delivery.

So, if you’re UPS, how do you remain competitive in this rapidly changing landscape? You stick your head in the sand and ban the use of emerging technologies like drones and driverless trucks.

Well, that’s what the Teamsters want UPS to do, according to a report in the Wall Street Journal:

The Teamsters union wants to prohibit United Parcel Service Inc. from using drones and driverless vehicles to deliver packages. That was one of the labor union’s initial demands as it kicked off high-stakes contract talks with UPS this week.

The Teamsters document addresses a number of work rules and conditions. For instance, it calls for a ban on deliveries after 9 p.m., including during the peak delivery months of November and December when drivers can find themselves delivering packages late into the night. It seeks to prohibit UPS from using drones, driverless vehicles and other new technology to transport, deliver or pick up packages, innovations that would curb demand for labor.

Granted, this is the opening proposal by the Teamsters as they kick off negations with UPS for a new collective bargaining agreement (the current one expires in July), so it’s not surprising that it would contain banning drones and driverless trucks for negotiation purposes.

The reality, however, is that driverless UPS trucks making deliveries in our neighborhoods (with drones flying off their rooftops) is still a long way off. While the technology continues to advance, there are still many legal and regulatory hurdles to overcome. And a person would still be needed for the last few feet of delivery, to bring the packages to our doorstep or inside an office building.

In short, tomorrow’s UPS drivers might not drive, but they’ll have a new title and new roles and responsibilities.

The other reality is that UPS and its employees cannot afford to ignore what’s happening in the market, both with regards to technology and the competitive landscape (see article above about Alibaba’s Cainiao logistics unit working on driverless vehicle technology to improve its courier processes). Banning the use of emerging technologies is like facing an enemy that has switched from swords to guns, but insisting that your army continue to fight with swords. It’s suicidal in the end.

Global Trade: The Beginning of a Trade War?

Moving on to global trade news, the Trump administration imposed tariffs this week on solar panels and washing machines imported from Asia, which may trigger a trade war with China and South Korea (both countries have already suggested that they will take retaliatory action).

Meanwhile, negotiations between the U.S., Mexico, and Canada over the North American Free Trade Agreement (NAFTA) are reportedly at a standstill. Negotiators for the three countries are meeting in Montreal in the latest round of talks. According to Reuters: “One source close to the talks complained that ‘we have brought flexibility, we have brought ideas, but the problem is that the United States has not moved an inch’.” In short, the threat of the U.S. pulling out of NAFTA remains.

Finally, although the U.S. pulled out of the Trans-Pacific Partnership (TPP) last year, the remaining 11 countries reached an agreement this week. As reported by Bloomberg, “Canadian Prime Minister Justin Trudeau said Tuesday negotiations had concluded on what is now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. The deal was reached after two days of talks in Tokyo, and came just hours after Trump imposed tariffs on imported solar panels and washing machines.”

The bottom line, as I stated in my predictions for 2018, is that there are plenty of changes, risks, and uncertainties related to global trade that companies need to keep a close eye on in order to respond quickly and effectively to whatever happens in the months ahead.

And with that, have a happy weekend!

Song of the Week: “Sit Next to Me” by Foster The People