Above the Fold: Supply Chain Logistics News (February 5, 2021)

I missed out on the GameStop craziness all together. I didn’t own the stock, I didn’t buy it, I didn’t sell it, I just read about it in the newspaper.

I’m no richer this week than I was a week ago, but I’m certainly poorer after $2,500 in unexpected car repair bills. $2,500 spent to get me back to zero.

On the other side of the ledger, thanks to the support of our Indago supply chain research community, we donated $250 this week to our charity partners (JDRF, American Cancer Society, Feeding America, Make A Wish, and American Logistics Aid Network). I wish it had been $2,500 to balance things out, but we’ll get there. You can help us by joining Indago. You’ll not only gain insights and advice from your peers in the industry, you’ll also be making a difference in people’s lives. Learn more at https://joinindago.com/research/ .

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

Where’s My Container? Maybe Under the Sea

If your order has been delayed, there is a small chance it could be sitting at the bottom of an ocean. As Kim Link-Wills reports in American Shipper:

The World Shipping Council reported on average only 1,382 containers were lost at sea per year between 2018 and 2019…Between Nov. 30 and Jan. 31, more than 2,675 containers were lost in five incidents at sea. That’s almost double the annual average in just a two-month period.

Why are more containers being lost at sea? Costas Paris provides some insight in a related article in the Wall Street Journal:

Naval architects and engineers say a string of circumstances have to come together to create the catastrophic event known as parametric rolling. They say that as ships become bigger and containers are stacked as high as multistory buildings, the stability of vessels on the open waters is a growing concern.

“It is a big factor in container losses and it happens when waves hit the bow not head-on, but at an angle,” said Fotis Pagoulatos, an Athens-based naval architect. “Ships pitch up and down as they steam ahead but they can also go into a rolling motion from side to side. This can become uncontrollable and displace a lot of boxes that fall over.”

Ah, the law of unintended consequences kicks in again, this time in the push to build ever-larger mega-ships. 

From Crisis Comes Opportunity: Startup Alternatives to UPS, FedEx, and USPS

The surge in e-commerce has created a capacity crunch in parcel shipping, which has made it more difficult and expensive for shippers to meet the delivery expectations of their customers. We’ve discussed this topic in several Talking Logistics episodes recently, including an episode with JP Wiggins from 3Gtms and an episode with Shawn Winter from Descartes

But from crisis comes opportunity. In this case, an opportunity for startups to provide an alternative to UPS, FedEx, and USPS. Pandion is one example. “Introduced in stealth mode in September with $5 million in seed funding, [Scott Ruffin’s] startup Pandion aims to help major retailers offer affordable one- and two-day deliveries and compete with his former employer [Amazon],” reports Spencer Soper in Bloomberg Businessweek. Here’s more from the article:

Because Amazon commands almost 40% of U.S. e-commerce spending, Pandion will go after the remaining 60%, which includes big retailers such as Walmart, Target, and Wayfair. “It’s really tough to compete with Amazon, and you can’t compete without an alternative to FedEx and UPS,” says Ruffin, a former Marine Corps logistics officer who spent the past two years working in Walmart Inc.’s e-commerce transportation operations. He’s hiring engineers, including former Amazon employees, and will begin opening a handful of Pandion package sorting centers later this year, using contract trucking companies to transport packages. Ruffin says the still-tiny company should be able to handle up to 10 million packages a month by November and reach half the U.S. population.

Pandion is not alone in its quest to get a slice of the e-commerce fulfillment pie, and I’m sure others will emerge in the weeks and months ahead too (followed by mergers and acquisitions). Simply put, this time next year, shippers will have a broader selection of parcel carriers and fulfillment providers to choose from as their e-commerce volumes continue to grow.

And with that, have a happy weekend! 

Song of the Week: “Get the Balance Right!” by Depeche Mode