This Week in Logistics News (January 21-25, 2019)

I’m on borrowed time this morning, so let’s go straight to this week’s supply chain and logistics news, starting with Amazon sharpening its logistics competitive weapon.

Amazon Sharpens Its Logistics Competitive Weapon

When I was driving once I saw this painted on a bridge,
I don’t want the world, I just want your half

I was reminded of those lyrics (from “Ana Ng” by They Might Be Giants) when I read the article in the Wall Street Journal this week that “Amazon.com…is trying to poach shippers from FedEx Corp. and United Parcel Service Inc. by targeting a common complaint: fuel surcharges and extra fees that drive up the cost of home deliveries.” Here are some more details from the article:

Amazon recently expanded its nascent home-delivery service, called Amazon Shipping, beyond test markets in London and Los Angeles. The online retailer is offering to pick up shipments from merchants’ warehouses and deliver them directly to shoppers. The end-to-end service is part of Amazon’s quest to handle more of the millions of items sold through its site.

To woo shippers, the retailer is promising to forgo many fees that the traditional carriers use to pad their revenue, such as [the residential surcharge, which are $3.80 and $3.95 at FedEx and UPS, respectively, and the fuel, peak season, and weekend surcharges], according to an email sent last week to shippers in the New York area and reviewed by The Wall Street Journal.

Simply put, Amazon doesn’t want to eat FedEx’s and UPS’s cake, it just wants to carve out the pieces with the most frosting.

Amazon is also ramping up its ocean shipping capabilities. According to USA Today:

Quietly and below the radar, Amazon has been ramping up its ocean shipping service, sending close to 4.7 million cartons of consumers goods from China to the United States over the past year, records show…As of the beginning of 2018, Amazon’s freight shipping arm has shipped over 5,300 shipping containers from China to the United States.

The containers, under the name Amazon Logistics or its wholly owned subsidiary Beijing Century Joyo Courier Service Co., are sent from ports in China to either the Port of Long Beach in California or the Port of Seattle in Washington state and from there to Amazon distribution centers. Amazon provides either simply the trans-Pacific portion of the trip or end-to-end service for companies that want it. That can include pick-up at the factory door in China,  shipment across the Pacific to a U.S. port, and trucking to Amazon fulfillment centers in the United States.

As I wrote back in August 2016 in Amazon: Disruptor or Distraction?, Amazon logistics strategy is a customer focused one: it’s not aiming to compete with entrenched players like UPS and FedEx; the company is investing in logistics not to deliver packages, but to keep raising the bar on delivering the best overall customer experience possible.

I’ll repeat what I said back in November 2016: For a long time, C-level executives viewed supply chain management, especially the logistics function, as a cost center. As a result, cutting and controlling costs became the top priority for supply chain executives. Today, however, cost management is a given — it’s what every supply chain executive is expected to do. Therefore, how do you differentiate and make a larger impact on the organization? You have to think and act beyond cost management and find ways to leverage supply chain and logistics as a competitive weapon — that is, look for ways to leverage supply chain management to drive top-line growth, increase market share, and enhance customer loyalty.

And with that, have a happy weekend!

Song of the Week: “Longshot” by Catfish and The Bottlemen

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