Above the Fold: Supply Chain Logistics News (August 28, 2020)

On this Friday morning, our thoughts and prayers are with everyone impacted by Hurricane Laura. Our friends at the American Logistics Aid Network (ALAN) are tracking the situation and stand ready to help as needs arise. I encourage you to check their website for the latest updates and needs; you can also make a donation to support their ongoing efforts.

(ALAN is also one of the charities that our Indago members support, so you can also help them by joining our research community and selecting ALAN as your charity). 

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

Best Buy Converting Stores into Ship-from-Store Hubs 

As reported by CNBC, starting next month, Best Buy “will start testing a ship-from-store hub model. About 250 stores — about a quarter of its approximately 1,000 stores — will be specially designated to handle a higher volume of packages, though all stores ship online orders.” Here’s more from the article:

About 60% of Best Buy’s online orders are either picked up at stores or by curbside or shipped from them.

“It’s not about less stores,” [Best Buy’s CEO Corie Barry] said. “It’s probably about using stores differently and meeting the customer where they want to be met.”

This is yet another example of how e-commerce is not only serving as a catalyst for digital transformation, it is also serving as a catalyst for the physical transformation of supply chain networks.

An Imbalance in U.S.-Mexico Freight Lanes

First the “good” news: compared to May 2020, transborder truck freight between the United States and Mexico in June 2020 was up 58.5% to $31 billion, according to the Bureau of Transportation Statistics. However, compared to June 2019, it was down 12.9%.

But the numbers only tell part of the story. As with domestic freight lanes, COVID-19 has also created an imbalance in transborder freight lanes. 

The Loadstar highlights findings from Transplace’s Third Quarter 2020 Logistics Market Update, which reports that “most of Mexico’s larger cities are still in lockdown, or barely open to commerce, which has resulted in a sharp drop in demand for consumer goods and other imports.” Here’s more from the article:

The drop in imports is affecting northbound trucking as well as intermodal capacity in Mexico, which is normally generated by import traffic, Transplace noted.

“With the current situation, northbound equipment and capacity is very limited inside Mexico and capacity constraints have expanded to Laredo, San Diego, El Paso and other border crossing points, generating an imbalance limiting available trucks for northbound (moves) and increasing rates.”

It reported that customers were paying for empty truck runs from border crossing points to their manufacturing plants in Mexico in order to secure northbound capacity…Shippers pay 15%-40% higher rates to move their cargo from the border to US destinations, Transplace reported.

Now that is an extreme example of empty miles! It is also an example of how interconnected global supply chains are, and how a weak link anywhere impacts the system as a whole.

PINC and project44 Partnership

PINC (a Talking Logistics sponsor) and project44 announced a partnership this week that “aims to empower industry-leading shippers and carriers with end to end real-time shipment visibility and yard management automation capabilities for an enhanced supply chain experience.” Here’s more from the press release:

Distribution centers, warehouses, and manufacturing plants are looking to improve gate velocity, optimize driver turnaround times, and reduce costs while becoming Shippers-of-Choice. project44’s shipment and ETA data in concert with PINC’s Yard Management System‘s real-time asset and load data will accelerate the check-in process and provide customers with actionable dynamic load scheduling visibility. Organizations will also gain real-time insights into critical yard asset and load lifecycle transitions through project44’s Advanced Visibility Platform™.

According to a research study we recently conducted (to be published soon), companies recognize that having digital yard management capabilities provides a range of business benefits beyond the yard. As one respondent put it, “Yard management is incredibly important and often overlooked. Benefits include improved warehouse efficiency (e.g., labor / scheduling), improved customer service, reduced inventory, and reduced transportation costs (linehaul, detention, etc.).”

And yet, according to Logistics Management’s most recent Technology Usage Study, only 8% of companies are currently using a yard management system (YMS). 

Why the low implementation rate? For some companies, their yard operations haven’t reached a critical level of complexity and shipping/receiving volume to justify an investment in a YMS. For many more companies, however, the reason is due to an outdated and limited view of the business benefits a YMS provides “beyond the four fences” of a yard.

We explore this topic in more detail in the upcoming research report, so stay tuned.  

With regards to the linking of real-time freight visibility with yard management, it is similar to the integration of visibility solutions with transportation management systems (TMS). As I wrote earlier this week in TMS: Everybody’s Favorite New Partner, the reason companies want visibility is not just to see and observe, but to do something with the data and insights collected. It’s the doing, the actions taken to improve their logistics operations (including yard operations, which impact transportation and warehousing too) that ultimately delivers value. 

And with that, have a happy weekend!

Song of the Week: “What You Gonna Do?” by Bastille ft. Graham Coxon