Above the Fold: Supply Chain Logistics News (July 2, 2020)

Since tomorrow we will be observing Independence Day, here is the supply chain and logistics news that caught my attention this week:

YRC Worldwide: Too Big to Fail?

If you’re a U.S. taxpayer, you’re now a shareholder of YRC Worldwide.

The Treasury Department announced yesterday that it will loan $700 million to YRC Worldwide in exchange for U.S. taxpayers acquiring an almost 30 percent stake in the company. Here are some excerpts from Treasury’s announcement:

YRC is a leading provider of critical military transportation and other hauling services to the U.S. government and provides 68% of less-than-truckload services to the Department of Defense. This loan will enable YRC to maintain approximately 30,000 trucking jobs and continue to support essential military supply chain operations and the transport of industrial, commercial, and retail goods to more than 200,000 corporate customers across North America.

“We are pleased for Treasury to make this loan pursuant to the CARES Act,” said Secretary Steven T. Mnuchin. “This loan will enable a critical vendor to the Department of Defense to maintain significant employment while providing appropriate compensation to taxpayers.”

Would you have willingly invested $700 million in a debt-burdened company that has struggled financially for more than a decade, a company that had a market cap of $70 million prior to the announcement? Or is YRC simply too big to fail, especially when you consider its role in supporting the U.S. Department of Defense?

I’m sure there will be plenty of debate regarding this loan. It’s just another episode in the long-running soap opera of YRC Worldwide, which includes a 2018 lawsuit filed by the Justice Department against the carrier for allegedly overcharging the Pentagon millions of dollars for shipping from 2005 to 2013. 

CPG Companies Focusing on Contactless Delivery

Back in May, I wrote that paperless pickup and delivery processes are not enough; the new goal is contactless. 

Validating this trend is the news from the Consumer Brands Association announcing this week “that it has brought together 23 consumer packaged goods (CPG) companies and retailers to launch a new task force that will study the impact of a contactless pick-up and delivery protocol to create greater efficiencies and reduce employee risk during deliveries.” Here are more details from the announcement:

The Contactless Delivery Task Force brings together manufacturers, supply chain partners and retailers to develop scalable, uniform standards for safely transporting and exchanging freight, with an initial focus on electronic bills of lading (eBOL).

“COVID-19 challenged CPG companies to keep their supply chains moving efficiently and their workers healthy in a tremendously difficult environment,” said Tom Madrecki, Consumer Brands vice president, supply chain and logistics. “As CPG companies identify ways to increase supply chain efficiencies and ensure employee safety, electronic delivery verification through a contactless pick-up and delivery process is a natural solution. We’re excited to bring the industry together to create standards that will allow companies to provide consumers around the world with the products they need every day.”

Transferring from a paper delivery verification system to a digital platform provides safety, productivity and visibility benefits to every employee involved in bringing a product from a manufacturer’s warehouse to the store shelf. Digitization allows back-office personnel to receive real-time updates while working at home as well as lets drivers and recipients practice physical distancing at the point of delivery.

As I wrote in May, “among other things, supply chain digital transformation is about eliminating waste from the value chain. This includes eliminating manual and paper-based business processes, which remains prevalent in many logistics and delivery operations.”

This is another example of how the COVID-19 pandemic has not only disrupted supply chains, but is also serving as a catalyst for change and innovation.

And with that, have a happy holiday weekend!

Song of the Week: “Another Minute” by Cause & Effect