Above the Fold: Supply Chain Logistics News (November 8, 2019)

This week we completed our 27th Indago survey since launching in April. This week’s question: 

What impact do you foresee (or are already experiencing) on ocean rates heading into 2020 as a result of the new IMO 2020 emissions standards?

Our members will receive the results of the survey later today.

Haven’t joined yet? We have received some great testimonials from current members, including this one from the VP of Operations at a Food & Beverage Company:

“Joining Indago has been great. On a monthly basis I complete an easy 5-minute survey about important topics in Supply Chain (I often complete the survey on my smartphone). I find value in completing the survey; it gives me a reason to spend a moment defining my perspective on strategic topics. In return, I am able to see the results of the survey and the perspectives of my peers. On a few occasions, I’ve reconsidered my position based on what the community suggests, and other times, I’m happy to see the validation of my views (especially on topics that have been overhyped in the trade journals). Because the surveys are anonymous, it’s a risk free way to engage the Supply Chain community and get quick, honest feedback.”

If you are a supply chain and logistics practitioner from a manufacturing, retail, or distribution company, I invite you to learn more about Indago and join our research community. It is confidential, there is no cost to join and the time commitment is minimal (2-5 minutes per week) — plus your participation will help support charitable causes like JDRF, American Logistics Aid Network, American Cancer Society, Feeding America, and Make-A-Wish.

I also invite you to follow us on LinkedIn.

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

Positive Developments in US-China Trade Talks (For Now)

In a post earlier this week highlighting a Talking Logistics episode I did with Ben Bidwell from C.H. Robinson, I joked that trade and tariffs were like the weather in New England: if you don’t like it now, just wait a minute because it will change.

“China and the United States have agreed to roll back tariffs on each others’ goods as part of the first phase of a trade deal, officials from both sides said on Thursday, offering a new sign of progress despite ongoing divisions about the months-long dispute,” reported Reuters yesterday.

Then again, Michael Pillsbury, an outside adviser to Trump, had this to say in the article: “There is no specific agreement for a phased rollback of the tariffs. The American side has been ambiguous when and which tariffs will be lifted. The Chinese have some wishful thinking and are trying to soothe their domestic hardliners that the tariffs will someday come off.”

And maybe by the time this post gets published, President Trump will have tweeted something that changes the course of US-China trade relations yet again.

What will happen on December 15th when the next round of tariffs on China imports is scheduled to take effect? Just like the weather that day, we’ll just have to wait and see.

What we do know is the cost of the tariffs paid to date. As reported by The Hill:

U.S. consumers and businesses paid a record $7.1 billion in tariffs in September due largely to President Trump’s trade war with China, according to an analysis of federal data released Wednesday.

Roughly $4.1 billion of the $7.1 billion in import taxes paid by Americans in September were levied through tariffs Trump imposed on Chinese goods since 2018. The total amount in tariffs paid by Americans has increased 59 percent since September 2018 and rose $600 million since August 2019, according to the analysis.

Tariffs are also having an impact on import volumes. As Jennifer Smith reported in the Wall Street Journal this week:

U.S. logistics operators say shipping imports are waning heading into the holidays in a sign that companies may be paring down inventories after stocking up heavily to get goods in place ahead of new tariffs.

U.S. imports of consumer products such as cellphones, toys and apparel plunged in September, with imports of goods from China down 4.9% from August, the Commerce Department said this week.

At the neighboring ports of Los Angeles and Long Beach, which together make up the biggest U.S. gateway for the container trade in retail consumer goods, combined loaded imports fell 1.9% in September from a year ago.

Bottom line: when it comes to US-China trade relations — and let’s not forget Brexit — it’s a roller coaster ride with more dips and twists ahead. 

UPS: Drones and Holiday Returns

Another milestone in drone delivery.

UPS and CVS “announced the successful completion of the first revenue-generating drone delivery of a medical prescription from a CVS pharmacy directly to a consumer’s home. This was followed by another delivery of a medical prescription to a second customer in a nearby retirement community.” Here are some details from the press release:

The flights launched from a CVS store in Cary, NC and flew to CVS customers’ homes. The drones flew autonomously but were monitored by a remote operator who could intervene if necessary. The drone hovered about 20 feet over the properties and slowly lowered the packages by a cable and a winch to the ground. One of the packages was delivered to a CVS customer whose limited mobility makes it difficult to travel to a store to pick up a prescription.

Looks like drones are making up ground (or maybe even surpassing) driverless trucks in becoming a viable delivery mode. 

But what if a drone makes a delivery and then you change your mind and want to return the product?

Maybe there’s a future for drones in facilitating product returns. UPS also announced this week that “consumers will ship via UPS more than 1 million return packages back to retailers daily, a pace that is expected to last into early January. An initial spike in returns is expected the week before Christmas, with 1.6 million packages being returned each day the week of Dec. 16…The second and largest spike in returns, which UPS dubs ‘National Returns Day,’ is expected to occur on Jan. 2 with a whopping 1.9 million packages returned through the UPS network – a 26 percent increase from last year’s peak returns day.”

Well, as I wrote back in January 2018, product returns is the hangover headache of e-commerce for retailers — and it’s only getting worse. 

But one person’s problem is another person’s opportunity. 

In research we conducted recently (commissioned by Nulogy) that explored the strategic importance and growth opportunity of value-added services (VAS) within the third-party logistics (3PL) industry, returns management ranked second in terms of growth opportunity. 

BluJay Solutions’ Freight Market Index

The first phase of Supply Chain Operating Networks was about connecting companies and computers together to facilitate the timely and accurate flow of data and documents between trading partners. The next phase is about facilitating communication and collaboration between supply chain and logistics professionals — the people side of supply chain management. And it’s about providing these professionals with network-based business intelligence and analytics to help them make smarter decisions faster

I wrote that back in December 2013 as part of my supply chain and logistics predictions for 2014. Over the past five years, as supply chain operating networks have grown, we’ve seen the rise of network-based business intelligence and analytics offerings. BluJay Solutions (a Talking Logistics sponsor) has been offering insights into freight rates via its BluDex index for years (originally called LeanDex when it was launched by LeanLogistics, which BluJay later acquired). The company has expanded its offering, announcing this week “the launch of the Freight Market Index, a monthly report providing transportation market intelligence for shippers, carriers, and industry professionals.” Here are more details from the press release:

The Freight Market Index (FMI) is comprised of an elaborate set of key performance indicators (KPIs) derived from the over $18 billion in annualized freight under management transacting within BluJay’s Global Trade Network. The FMI goes beyond other indices to provide intelligence not only into key rate, capacity, service, and performance trends by lane, equipment, and other factors but also further into quartiles within the individual metrics. BluJay’s powerful single-source dataset enables shippers, carriers, and other supply chain experts to understand how performance compares relative to industry standards. This data can be used to understand opportunities or trade-offs between cost and service to drive decisions for business value.

Is supply chain data and insights becoming more valuable than software? You certainly need software to take action informed by the data, but it’s the combination of the two that delivers the greatest value.

And with that, have a happy weekend!

Song of the Week: “Calm Down” by Pete Yorn