This Week in Logistics News (December 10-14, 2018)

By Adrian Gonzalez

Why can’t I be you?

The Cure was inducted into the Rock and Roll Hall of Fame yesterday, along with Def Leppard, Janet Jackson, Stevie Nicks, Radiohead, Roxy Music, and The Zombies.

The Cure is certainly worthy of induction, but as a rabid Depeche Mode fan, I can’t believe they (and Def Leppard!) got in before Depeche Mode did.

Monday you can fall apart
Tuesday, Wednesday break my heart
Thursday doesn’t even start
It’s Friday I’m in love

Yes, it’s Friday and my daughter is home from college, so what’s not to love about today?

As I listen to The Cure, here’s the supply chain and logistics news that caught my attention this week:

Brexit: The Drama (and Uncertainty) Continues

It’s been two and a half years since Britain voted to leave the European Union, but with the exit date of March 29, 2019 getting closer, there’s still no agreement on how exactly to leave. As summarized by NBC News:

If [British politicians] can’t come up with a plan, the default scenario is that the U.K. will crash out of the E.U. without a deal — something experts say would have disastrous consequences for the British public.

Economic misery, gridlocked ports, shortages of medicine and food, disrupted flights and a potential rekindling of violence in Northern Ireland are all very real threats.

Theresa May survived a no confidence vote this week, but is there any confidence a compromise agreement will be reached in the weeks ahead?

Confidence or not, the government isn’t taking any chances. As reported by Bloomberg, “Theresa May’s government has told supermarkets to keep as much stock as possible in warehouses around the country in case the U.K. crashes out of the European Union without a Brexit deal, officials said.” Here are some additional details from the article:

The request is being made by ministers because in the worst-case scenario, a no-deal Brexit would cut the capacity of the country’s main EU trading route from the French port of Calais to Dover in southeast England to just 13 percent of the current level due to additional border checks.

Retail giants including Tesco Plc, J Sainsbury Plc, Walmart Inc.’s Asda and Wm Morrison Supermarkets Plc — the country’s four biggest grocery chains — are now asking their main suppliers to ramp up their stock over concerns that half their shelves will be empty if there is a hard or no-deal Brexit, according to Joe Clarke, national officer for food, drink and tobacco at the Unite union.

The article goes on to describe various supply chain headaches that will arise if no deal is reached, including a shortage of medicines and produce (due, in part, to a lack of temperature-controlled warehouses that prevents stockpiling).

Simply put, between Brexit and the ongoing U.S.-China trade dispute, there will be plenty of risks and uncertainty heading into 2019 on the global trade front. As the old saying goes, hope for the best, prepare for the worst.

Delivery (With or Without Cream?)

It was bound to happen sooner or later: you can now get your Starbucks coffee delivered to you. The company announced yesterday that it is partnering with Uber Eats to make the deliveries. As Fox Business reports:

While the company already has a delivery program in China, the companies expect this new deal to bring the service to about a quarter of its U.S.-based stores by the end of second quarter.

The only problem is — not all drinks are mobile. Starbucks CEO Kevin Johnson said during the company’s investor day that cappuccinos, for example, have a lot of foam, so they’re good for traveling, but others are not. In China, the company had to create spill-proof lids, new delivery containers and packaging in order to keep beverages hot and cold items cold.

In related news, as reported by Reuters, Deliv announced yesterday that “it is partnering with twenty new U.S. retailers including Nike and Bed Bath & Beyond as demand for same-day delivery surges.” Here are more details from the article:

Demand for same-day delivery has spiked during the holiday season as more shoppers wait until the last minute to purchase gifts. Retailers also hope to use the service to push their online grocery offerings and as a convenience to time-strapped consumers.

“We are approaching 50 percent of the U.S. population,” [Deliv Chief Executive Officer Daphne Carmeli] said, referring to the people who can receive same-day delivery. She said 55 to 60 urban markets around the country can support an efficient same-day delivery service and the company is already in 35 of them.

And if that wasn’t enough delivery news for one week, Instacart announced yesterday that it will stop delivering groceries for Whole Foods next year. This was somewhat expected once Amazon acquired Whole Foods, since Amazon has already invested significantly in its own delivery operations. According to Reuters:

Instacart Chief Executive Officer Apoorva Mehta said on Thursday that about 350 of its 1,415 part-time delivery employees at 76 Whole Foods locations would be laid off once the divorce begins in February 2019.

Whole Foods started testing in-house delivery at a Cincinnati store in February. Whole Foods “pickers” prepare the orders and hand them off to Amazon Flex drivers for delivery…At the same time, Amazon pushed the pedal on delivery speeds – adding one- and two-hour grocery delivery options that compete with Instacart and other third-party providers.

As I’ve said all year, there’s a lot of experimentation taking place with delivery at the moment, with retailers testing different options. Some will follow Amazon’s lead and develop their own same-day delivery capabilities, others will partner with the likes of Deliv to make deliveries, and still others might take a hybrid approach. Ultimately, it will boil down to which strategy is the most profitable — or if that’s too much to ask for, then which strategy loses the least amount of money.

And with that, have a happy weekend!

Song of the Week: “Pictures of You” by The Cure