This Week in Logistics News (February 11-15, 2019)

Well, after many weeks of binge watching, my wife and I finished all six seasons of Downton Abbey last night. I must admit, I’m a little sad today — like saying goodbye to dear friends after an extended stay together. But we have the movie to look forward to.

What should we watch next? I’m sure you have some suggestions for me.

In the meantime, here’s the supply chain and logistics news that caught my attention this week:

NEMF Files for Bankruptcy, XPO Warns on 2019: Is the Party in Transportation and Logistics Ending?

This week a sobering reminder from New England Motor Freight (NEMF) that all parties ultimately come to an end. The company, the 18th largest less-than-truckload (LTL) carrier in the U.S., filed for bankruptcy on Monday. As reported by Transport Topics:

The decision to cease operations came after absorbing two years of significant losses, according to Vincent Colistra, senior managing director at Phoenix Management Services and chief restructuring officer for the trucking company.

“We have worked hard to explore options for New England Motor Freight,” Colistra explained in a statement posted on the company’s website on Feb. 11, “but the macroeconomic factors confronting this industry are significant.

“Following two years of losses, and with continuing and unsustainable rises in overhead as well as a severe shortage of drivers, we have concluded that the company has no choice but to proceed with an orderly wind down of operations.”

Peg Brickley and Jennifer Smith at the Wall Street Journal add that NEMF “ran into trouble at the end of 2018, when it lost some major customers [emphasis mine]” and that the company “burned through cash and logged an estimated operating loss of $20.9 million in 2018, according to court filings […] Employee costs for NEMF’s workforce — more than half of which is represented by the International Association of Machinists and Aerospace Workers — is also ‘substantially above industry norms,’ according to court papers.”

While 2018 was a banner year for most transportation and logistics companies, this year might prove to be a little less festive. Retail sales declined 1.2 percent in December, the largest drop since September 2009, according to the U.S. Census Bureau. If the downward trend continues in the months ahead, we’ll likely see a downturn in transportation activity too.

Another risk: losing major customers. As highlighted above, the loss of some major customers contributed to NEMF’s financial problems. XPO Logistics mentioned a similar problem when it downgraded its outlook for 2019. As reported by CNBC:

XPO Logistics Inc, one of the largest global freight transportation and warehousing companies, on Thursday reported quarterly profit that missed targets and warned that a reduction of business from its biggest customer would hit 2019 growth.

XPO said in its annual report filed on Thursday that the reduction of business from its largest customer shaved revenue by $46 million in the fourth quarter.

That customer further curtailed business with XPO in early 2019 – a move that could decrease revenue by roughly $600 million this year, or about two-thirds of the revenue the customer generated 2018, XPO said in the regulatory filing.

XPO didn’t say who the customer is, but many are speculating that it is Amazon. This follows last week’s news that Walmart is bringing some warehousing operations, which it had outsourced to Schneider Logistics for the past 13 years, back in-house. See my recent commentary about it: Logistics Outsourcing: Is It Still a One-Way Street?

Is the party in transportation and logistics ending? Probably not abruptly, but the festive mood is perhaps dampening a bit, as a few guests leave the party feeling a little ill. But you tell me. Post a comment and share your perspective.

BluJay Solutions and what3words: Will Locations Start to Replace Addresses?

I didn’t get a chance to write my supply chain and logistics predictions for 2019, which I had tentatively titled “Certainly, Maybe,” but one of my predictions is that locations will start to replace addresses in transportation and logistics, with more granular systems like what3words and Locpin leading the way.

This was one of the topics I discussed with Doug Surrett, Chief Product Strategist at BluJay Solutions, a few weeks ago on Talking Logistics. Well, this week, BluJay (a Talking Logistics sponsor) announced that it has integrated what3words into its MobileSTAR application. Here are some excerpts from the press release:

The integration enables BluJay customers to specify delivery and pick-up locations with what3words’ unique three-word address rather than traditional addressing or GPS coordinates. Benefits include increased accuracy, efficiency, and improved customer experience.

“The world is moving to more geolocation-based addressing, which not only solves a number of limitations inherent with traditional street-level addressing, but also opens new opportunities and applications for more exact, practical pick-up and drop-off points,” said Doug Surrett, Chief Product Strategist at BluJay Solutions. “At the same time, logistics is shifting away from DC-to-retail models, toward more home delivery, and with that comes an incredible level of flexibility that customers are demanding. With the what3words integration, BluJay enables customers to use precise universal addresses that enable efficient delivery anywhere.”

In the not too distant future, as same-day (same-hour) deliveries become more common and they are executed by robots and drones, the question will not be “What’s your address?” but “What’s your location?” — maybe you’re sunbathing in the middle of a beach or sitting in the stands at a Little League baseball game — and this shift will have an impact on how transportation management systems plan and execute shipments. Stay tuned.

And with that, have a happy weekend!

Song of the Week: “Ready to Let Go” by Cage the Elephant