Above the Fold: Supply Chain Logistics News (June 26, 2020)

By Adrian Gonzalez

Earlier this week, I wrote about my broken air conditioning system and how I was held hostage by a minimum order quantity policy. Not an hour after publishing the post, my son complained that there was no hot water when he showered. I raced down to the basement and confirmed my fear: our hot water heater had burst, leaving a wet mess in the basement.

My wife and I spent our 23rd wedding anniversary pulling up carpet tiles and mopping the basement floor. According to Hallmark, “air” is the gift theme for celebrating 23 years of marriage, but we got lots of water instead — and a new water heater.

They say that bad things come in threes. I’m bracing for what’s coming next.

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

Amazon Acquiring Zoox: A Step Toward Autonomous Deliveries?

Various sources are reporting that Amazon is acquiring Zoox, a startup that has been developing an electric self-driving vehicle, in a deal worth over $1 billion. As summarized by The Verge:

The acquisition would be Amazon’s biggest investment yet in self-driving car technology, and one of its biggest purchases ever. However, at the moment it’s unclear what exactly Amazon plans to use the technology for. The Information notes that Amazon could use the technology for autonomous deliveries, similar to its existing robot and drone delivery projects, while the Financial Times says that Amazon will use the acquisition to produce an autonomous ride-hailing fleet to compete with the likes of Alphabet’s Waymo.
Zoox has been developing a bi-directional vehicle with no steering wheel or discernible front or back end, allowing it to comfortably travel in either direction, which the company said would enter testing in 2020. Zoox has been testing its self-driving technology in a fleet of retrofitted Toyota SUVs in San Francisco and Las Vegas.

Over the past few years, the hype around driverless cars has outpaced reality. Drones, which I originally believed faced even more hurdles to becoming a delivery mode, have actually made more progress in recent years, with various success stories already out there (see UPS drone delivery service).

That said, considering the risks and challenges delivery drivers now face due to COVID-19, maybe driverless deliveries will be another trend that this pandemic will accelerate. And if Amazon is willing to make a $1+ billion investment in this opportunity, you can’t help but pay attention.

World Trade: Better or Worse Days Ahead?

“World trade fell sharply in the first half of the year, as the COVID-19 pandemic upended the global economy,” reports the World Trade Organization. Here’s more from the press release:

The volume of merchandise trade shrank by 3% year‑on‑year in the first quarter according to WTO statistics. Initial estimates for the second quarter, when the virus and associated lockdown measures affected a large share of the global population, indicate a year‑on‑year drop of around 18.5%.

None of this is surprising considering all of the lockdowns. But what can we expect for the balance of 2020?

The WTO’s 20 April annual trade forecast…set out two plausible paths: a relatively optimistic scenario in which the volume of world merchandise trade in 2020 would contract by 13%, and a pessimistic scenario in which trade would fall by 32%. As things currently stand, trade would only need to grow by 2.5% per quarter for the remainder of the year to meet the optimistic projection. However, looking ahead to 2021, adverse developments, including a second wave of COVID‑19 outbreaks, weaker than expected economic growth, or widespread recourse to trade restrictions, could see trade expansion fall short of earlier projections.

All of the “adverse developments” mentioned are starting to emerge, so the scales are tilted toward the pessimistic scenario.

DHL Supply Chain, Blue Yonder, and Microsoft: Integrating Robots in the Warehouse

Remember when the biggest technical challenge many logistics operations faced was integrating their transportation management system (TMS) with their warehouse management system (WMS)? That’s still a work in progress for many companies, if they haven’t given up already.

In this age of increased automation in the warehouse, integrating robotic systems with WMS and other systems is the latest challenge. “We have more than 2,000 operational sites across DHL Supply Chain, so we know how complex, time-consuming and costly it can be to integrate new robots into existing platforms and connect to our clients’ various warehouse management systems,” said Markus Voss, Global CIO and COO at DHL Supply Chain, in a press release announcing “a new ‘plug & play’ robotics platform in collaboration with Microsoft, and leading artificial intelligence (AI) driven digital fulfillment provider Blue Yonder.”

“This is exactly where the new platform is so effective,” added Voss. “Our first implementation on the new platform with 6 River Systems at one of our Madrid sites is already showing a 60% reduction in integration times, but with subsequent deployments we foresee further improvements of up to 90%.”

When it comes to supply chain technology, nothing is ever truly “plug & play” — but this partnership is addressing a real challenge in the industry, one that will only become more important to solve as more companies (shippers and logistics service providers alike) implement robotic systems in their operations.

Now, about that TMS-WMS integration…

And with that, have a happy weekend!

Song of the Week: “The Adults Are Talking” by The Strokes