This Week in Logistics News (April 2-6, 2018)

It’s 32 degrees this morning. Chance of snow and freezing rain later this afternoon. This can only mean one thing: Opening Day for my son’s baseball team is upon us.

His first two games of the season are tomorrow afternoon. I’ll dress for football weather, bring a hot mug of coffee, and cheer the team on — from the cold metal bleachers or the warmth of my car (if it starts to snow or rain).

That’s baseball in New England.

As I look for my gloves and earmuffs, here’s the supply chain and logistics news that caught my attention this week:

Tit for Tat Trade

“On Tuesday, [the United States Trade Representative] proposed 25 percent tariffs on more than 1,300 Chinese industrial and other products from flat-panel televisions to electronic components,” reported Reuters. “China shot back 11 hours later with a list of proposed duties on $50 billion of American imports, including soybeans, aircraft, cars, beef and chemicals.”

And last night, President Trump “directed U.S. trade officials to identify tariffs on $100 billion more Chinese imports, upping the ante in an already high-stakes trade confrontation between the world’s two largest economies.”

Negotiating tactics or the true beginning of a trade war? We’ll know in about 60 days when these proposed tariffs either go into effect or get tossed away if the U.S. and China reach some sort of trade agreement.

I’ll just repeat what I’ve been saying all along: Companies that have already modeled and simulated these risks and scenarios, months or even years ago as part of their ongoing supply chain design and risk management activities, will be able to respond faster and more intelligently to these changes than their competitors.

Ryder Acquires MXD Group: “Disruptions in the Market”

How important is e-commerce and omni-channel fulfillment becoming for logistics service providers? Very important, as Ryder showed this week by acquiring MXD Group (MXD), “an e-commerce fulfillment provider with a national network of facilities, including last mile capabilities,” for approximately $120 million. Here are some details from the press release:

Ryder has acquired 109 MXD e-commerce fulfillment facilities across the U.S. and Canada, including 21 MXD-operated cross dock hubs, 16 dedicated operations, and a network of 72 third-party agent facilities. The acquisition also includes proprietary order management and visibility technology, which features real-time tracking and a customer service portal for rapid response and resolution. This significantly expands Ryder’s omni-channel fulfillment capabilities in two key areas:

Ryder e-Commerce Fulfillment – With the additional 109 facilities, Ryder’s network now includes 121 e-commerce hubs covering more than 95% of the U.S. and Canada within a two-day delivery timeframe. The network can serve any industry, as it can handle big and bulky products as well as small and large parcels.

Ryder Last Mile – A last mile solution for retailers and shippers of big and bulky products will include home delivery and white glove installation with multiple tiers of service and a network of carriers throughout the U.S. and Canada.

“The acquisition of MXD is one of several strategic investments we are making to overcome the disruptions we are seeing in the market today [emphasis mine] and to position Ryder for future growth,” said Robert Sanchez, Ryder Chairman & CEO.

What disruptions is Mr. Sanchez referring to? The same ones that have prompted P&G to undertake “a multibillion-dollar effort to remake an antiquated and inefficient network of factories, warehouses and offices into a new model that gets goods to stores more quickly,” as the Wall Street Journal reported a few weeks ago. “Started in 2012, the project has become more critical amid the faster pace of retail in the e-commerce era and as big retailers such as Walmart Inc. increasingly demand that suppliers deliver shipments on time.”

Speaking of antiquated warehouses, and related to disruption, CNBC reports that “the average age of a U.S. warehouse is 34 years, according to a survey by real estate services firm CBRE. And that likely won’t cut it for a retail industry that’s moving increasingly toward e-commerce and fulfilling online orders for customers in the blink of an eye…Most warehouses built before about 2005 lack modern upgrades: Ceilings are low, flooring is uneven and space is tight…Nearly 1 billion square feet is more than 50 years old, built back when the term ‘e-commerce’ wasn’t on all retailers’ minds.”

In that light, you can view Ryder’s acquisition of MXD as a $120 million modernization investment.

Kuebix Enables Dynamic Rate Allowances

On the transportation management systems (TMS) front, Kuebix introduced SupplierMAX, “a comprehensive inbound program to increase the efficiency of inbound freight operations.” Components of this program include “publishing a routing guide to establish a set of preferred LTL carriers, along with a set of inbound rules for suppliers to follow,” as well as helping customers convert inbound shipments from vendor delivered (VDS) to customer pickup (CPU) where feasible.

However, the most interesting component of SupplierMAX is the enablement of dynamic rate allowances:

Kuebix will administer and integrate a dynamic rate and allowance program to reduce the cost of goods. Allowances can be structured using actual carrier rates and unloading costs, and these costs can be deducted from the invoice directly through the portal. This program ensures the lowest cost of freight for all parties and can be easily executed and maintained, resulting in far better visibility to a dynamic environment, the ability to increase inventory turns and an overall reduction to cost of goods.

The bottom line is that while outbound transportation always gets the lion’s share of attention from shippers, especially today with the challenges of meeting On Time In Full (OTIF) requirements in a capacity-constrained market, there are plenty of opportunities to reduce costs and improve productivity on the inbound side — and the most savvy shippers understand that taking an integrated approach to inbound and outbound offers the greatest benefits of all.

And with that, have a happy weekend!

Song of the Week: “On the Lips” by JD McPherson

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