This Week in Logistics News (May 27-31, 2019)

Why do I still have a landline telephone?

I work from home most days and our landline phone rings throughout the day. I never pick it up. They’re all junk calls from solicitors and scammers. Or it’s CVS calling to let us know a prescription is ready for pick up.

Do you still have a landline telephone? A VCR? A cassette player?

As the phone rings again, here’s the supply chain and logistics news that caught my attention this week:

Trump Announces (via Twitter) Tariffs on Mexico

Did you include “What if the U.S. launches a trade war with Mexico?” in your scenario planning?

There’s never a dull moment in supply chain management, especially if you’re involved in global trade. If navigating the tariffs on China imports hasn’t been challenging enough, you now have another headache to deal with: President Trump announced yesterday via Twitter that starting June 10 the United States will impose a 5% tariff on all goods coming from Mexico. Here are some details from Reuters:

The announcement rattled investors who feared that worsening trade friction could hurt the global economy. The Mexican peso, U.S. stock index futures and Asian stock markets tumbled on the news, including the shares of Japanese automakers who ship cars from Mexico to the United States.

Higher tariffs will start at 5% on June 10 and increase monthly up to 25% on Oct. 1, unless Mexico takes immediate action [to curb the flow of migrants], [Trump] said.

“If the illegal migration crisis is alleviated through effective actions taken by Mexico, to be determined in our sole discretion and judgment, the tariffs will be removed,” Trump said

White House acting chief of staff Mick Mulvaney, asked in a conference call with reporters which products from Mexico could be affected by the tariffs, said: “All of them.”

What impact will this have on approving the USMCA (“New Nafta”) deal? Will companies absorb the added costs or pass them on to consumers? How long will the tariffs last? Will they really apply to all products or will the government grant exemptions?

It’s a busy Friday for everyone in global trade.

The main problem is that it is almost impossible to plan effectively for blindsides like these. You can’t reconfigure supply chains overnight — and even if you tried, it can all change again tomorrow with a single tweet. It’s the uncertainty that’s the killer.

For related commentary, check out my conversation with Ben Bidwell, Director of U.S. Customs at C.H. Robinson from last October (“Navigating Tariff Changes And The Global Trade Environment”).

Side note: It seems like Twitter is the communication medium of choice for politicians these days. President Trump announced the tariffs via Twitter, Mexican President Andres Manuel Lopez Obrador “responded in a letter he posted on Twitter” and Doug Ducey, the governor of Arizona, “said on Twitter” that he spoke to the White House (as reported by Reuters).

Blockchain in Ocean Shipping: Mediterranean Shipping Co (MSC) and CMA CGM Join TradeLens

It took some time, but Maersk and IBM have finally convinced two other large ocean carriers to join TradeLens, the blockchain platform they launched last year. Here are some details from Reuters:

With MSC and French-based CMA CGM, the second- and fourth-largest container shipping companies, joining the platform, nearly half of all cargo being shipped by sea — which accounts for 90% of traded goods worldwide — will be tracked using it.

More than 100 companies, ports or authorities, such as Procter & Gamble and U.S. Customs and Border Protection, have signed up for the platform led by Copenhagen-based Maersk, the world’s largest container shipping company.

Why is this important news? Because by having more of the leaders in ocean shipping working together, it will be easier (although not easy) to create a blockchain standard for the industry.

As I wrote last year in “Blockchain Will Solve, Save, Cure Everything,” lack of standards is one of the main barriers to blockchain adoption. Remember when video cassette recorders first came out and there were two dueling formats, Betamax and VHS? It wasn’t until VHS won out as the standard that sales of VCRs took off. Well, nobody wants to bet on the Betamax equivalent of blockchain, which is why developing broadly-accepted blockchain standards is critically important to driving adoption, especially in supply chain management.

The irony, however, is that once standards are established, it wouldn’t surprise me if each company and industry will start bastardizing them, as we have seen with other “standards” such as electronic data interchange (EDI) where companies proceeded to add and rearrange fields, thus contributing to the integration and data quality challenges that plague supply chains today.

And let’s not ignore another problem: blockchain doesn’t erase the fact that supply chains still suffer from crappy data. It doesn’t erase the integration challenge of aggregating, cleansing, and linking together data that is spread out across many different applications (some of them built in the 1970s), across many different companies and countries (some with limited or no IT capabilities), and stored and sent in many different formats (including email and faxes).

In short, blockchain by itself does not solve the “garbage in, garbage out” data quality problem; you’ll still have garbage data, but in a distributed ledger that’s better encrypted and traceable.

Kenco Expands Supply Chain Innovation Lab

One of my supply chain predictions for 2018 was that software vendors and third-party logistics providers will make it easier for customers to innovate. Here’s an excerpt of what I wrote:

Many manufacturers and retailers are starting to look at their third-party logistics (3PL) partners not just as providers of transportation and warehousing services, but also as technology providers and innovation labs.

Kenco Group (a Talking Logistics sponsor) is a great example. In response to this trend, the company launched Kenco Innovation Labs in 2015, where its dedicated team of innovation specialists “collaborate with customers to identify, research, and prototype leading-edge ideas and processes,” including drones, 3D printing, gamification, augmented reality, AGV pallets, and wearable scanners. Kenco has also partnered with technology companies to bring new innovations to market faster (see Collaborative Supply Chain Innovation: Bringing Solutions to Market Faster for a case study example).

Kenco this week announced plans “to open a dedicated physical warehouse space, an expansion of the Supply Chain Innovation Lab which was originally announced in 2015. The 10,000 square foot space will serve as a true test facility for the Kenco team of innovation specialists to assess value-added technology and provide advanced visibility into these solutions.” According to the press release:

The first technologies that will be brought into the space include NextShift Robotics, a fundamentally unique autonomous mobile robotics solution; Stocked Robotics, a provider of a cloud-based AI platform and software suite that transforms existing manual fleets of material handling vehicles into autonomous swarms; LogistiVIEW, an AI and vision-driven picking software for smart glasses; and WMS software like JDA and HighJump.

What is a 3PL? The definition is (and needs to be) much broader today than in the past, as I discussed a few years ago in “3PLs, What Business Are You In?

And with that, have a happy weekend!

Song of the Week: “Don’t Be So Hard On Yourself” by Alex Lahey