Above the Fold: Supply Chain Logistics News (December 4, 2020)

There are lots of words and phrases associated with 2020: COVID. Cancelled. Unprecedented.

But as several news items from this week show, there is another phrase (from a popular 1996 movie) that is making the rounds in the supply chain and logistics realm: Show me the money!

It’s what technology and service provider startups are shouting, and they’re getting it: more than $500 million in announced raises this week alone.

Read on for the details, plus the rest of this week’s supply chain and logistics news:

Parcel Capacity Isn’t Infinite

There is a tendency to think that transportation capacity is infinite. You can always find someone to move your freight; it all depends on how much you’re willing to pay.

While that’s been historically true, 2020 is like no other year — particularly for parcel shipments, which has experienced several years worth of growth in just a few months. There is a limit to what parcel networks can handle and it’s being reached.

“United Parcel Service Inc. imposed shipping restrictions on some large retailers such as Gap Inc. and Nike Inc. this week, an early sign that the pandemic-fueled online shopping season is stretching delivery networks to their limits,” writes Paul Ziobro in the Wall Street Journal. Here’s more from the article:

The delivery giant on Cyber Monday notified drivers across the U.S. to stop picking up packages at six retailers, including L.L. Bean Inc., Hot Topic Inc., Newegg Inc. and Macy’s Inc., M 2.46% according to an internal message viewed by The Wall Street Journal and confirmed by UPS workers in different regions. “No exceptions,” the message said.

The temporary limits, which some drivers say they haven’t seen during previous holiday seasons, are a sign that UPS is metering the flow of packages into its network to preserve its performance during one of the busiest shipping weeks of the year. The National Retail Federation estimated that online shopping jumped 44% over a recent five-day stretch that included Black Friday and Cyber Monday.

What does this mean moving forward? In a recent episode of Talking Logistics, Todd Benge, Vice President of Parcel Operations at Transportation Insight (a Talking Logistics sponsor), said that he believes we’ll see regional carriers gain strength and traction in the year ahead, and that we’ll see a number of startups enter the parcel delivery market too (see “The Evolving Complexity In The Parcel Environment” for other insights from our conversation).

From crisis comes opportunity. 

$500+ Million in Supply Chain Tech & Services Investments

Speaking of opportunity, investors see plenty of it in supply chain and logistics startups. Here’s a summary of the $500+ million investments announced this week:

Shipmonk, “a leading provider of direct-to-consumer (DTC) fulfillment and technology solutions, today announced a $290 million growth equity round, led by global growth investor Summit Partners…ShipMonk’s proprietary ecommerce management platform is designed to free growing online businesses from the hassle and time-intensive – but increasingly important – process of managing backend logistics. Its API integrations sync with leading shopping cart and marketplace platforms, such as Shopify, to automatically import orders across every sales channel and support a seamless and quick fulfillment experience. Orders are processed at ShipMonk’s U.S. warehouse locations strategically located throughout the United States to facilitate fast delivery of products to customers.”

Flock Freight, as reported by VentureBeat, “closed a $113.5 million round to accelerate developments of its algorithmic pooling technology for truckload shipping and logistics. The injection of capital comes after Flock Freight reached 12,000 in pooled shipments across thousands of shippers, a 296% increase between 2018 and 2019…Flock Freight’s marketplace pools less-than-truckload (LTL) and partial-truckload (PTL) freight shipments so they can be shipped via a full truckload service…Flock Freight also offers instant ‘prebates’ that lower contracted truckload rates when shippers have freight that measures 44 linear feet or less. With this program, Flock Freight automatically moves eligible freight with shared truckload shipping, ostensibly delivering same-quality truckload service at more palatable prices.”

FLEXE, “the on-demand warehousing and fulfillment leader, announced the close of its $70 million Series C funding…FLEXE will use the new funding to invest in its team and technology, building solutions that help enterprise-class retailers and brands better execute flexible omnichannel operations. The COVID-19 pandemic accelerated the shift to online shopping. eCommerce sales saw the same rate of growth in 10 weeks as the previous 10 years. That growth, as well as increased consumer demands for fast, free shipping, has exposed the need for businesses to quickly scale and adapt their logistics networks without investing billions of dollars in fixed warehousing infrastructure.”

Stord raised a $31M Series B led by Founders Fund. “At Stord, our mission is to provide our best-in-class logistics network and software to shippers so they can build fast, scalable, technology-driven supply chains at a fraction of the cost (and even less time) it would take for them to build themselves. We call this the cloud supply chain. Whereas building a traditional supply chain requires investing substantial time and money in physical infrastructure, complex legacy software, and human expertise, our cloud-supply chain is built to fundamentally abstract these complexities. Stord provides brands a cloud-based platform that offers complex logistics services, with service levels typically only available for the largest brands, and with utility-like pay-as-you-go pricing that a brand can leverage from startup to enterprise-level scale.”

More than two years ago in “Supply Chain Transformation: Not Just Digital, But Physical Too,” I wrote the following:

What’s becoming clear is that digital supply chain transformation is not enough; companies also have to transform their physical supply chain networks to adequately meet the more demanding challenges and opportunities before them…While digital transformation has been getting the lion’s share of attention from analysts and technology companies, you cannot overlook the importance of physical transformation — that is, the importance of recognizing that your supply chain and distribution networks, which were originally designed to flow truckloads of products from large distribution centers to stores, are becoming outdated in this new market where speed of delivery and inventory reduction are paramount.

The COVID-19 pandemic has not only accelerated the growth of e-commerce, it has also accelerated the physical transformation of supply chain networks. Many of these startups are leading the way in enabling this transformation, and in the process, they are a growing competitive threat to “traditional” third-party logistics providers (3PLs) who should have seized this opportunity long ago but are now in defensive mode.

Again, from crisis comes opportunity.

And with that, have a happy weekend!

Song of the Week: “Whatever You Want” by Crowded House