Above the Fold: Supply Chain Logistics News (March 4, 2022)

1 million refugees have fled Ukraine in one week.

A million people, packing what little they can, leaving their home behind,
through gunfire and debris, their future and safety uncertain.

I’m trying to wrap my mind around it, trying to make some sense of it all, but I come up empty, except for this: we learn nothing from history.

It just repeats.

In this week’s supply chain and logistics news:

Russia-Ukraine Conflict Impacts Supply Chains 

Assuming there is no quick resolution to this conflict (i.e., it lasts for weeks or longer), how big of an impact will it have on your supply chain?

We asked members of our Indago supply chain research community that question this week; they will receive the results later today.

The answer depends on your industry and whether you have operations or suppliers in Ukraine or Russia, but the reality is that due to how interconnected we all are, almost every supply chain will experience some impact.

“Several of the world’s largest freight forwarders [including DHL, Kuehne + Nagel, DB Schenker and DSV] have suspended services to Russia, citing growing restrictions from shipping lines and air carriers that are cutting off the country’s access to global trade lanes over Moscow’s invasion of Ukraine,” reports Paul Page in the Wall Street Journal. “Container shipping lines A.P. Moller-Maersk A/S, Mediterranean Shipping Co. and CMA CGM SA had earlier this week suspended their freight services to and from Russia, with exceptions for foodstuffs, medical shipments and humanitarian aid. Many major freight operators have already frozen operations in Ukraine, closing offices and telling workers there to remain home.”

As we experienced with the COVID-19 pandemic, when you shut down or disrupt trade lanes anywhere in the world, it has a ripple effect on other trade lanes. What happens in Russia and Ukraine from a logistics and transportation perspective ultimately matters everywhere else.

Meanwhile, as reported by MarketWatch, Landstar System said “it estimates it could lose up to $100 million in first-quarter revenue, and up to 18 cents a share in earnings, as a result of Russia’s invasion of Ukraine. The company said two of the largest independent sales agencies, [which] generated a total of 13% of its 2021 revenue, have ‘significant operations’ based in Ukraine. And the disruption of the Ukraine-based operations of the two agencies would have an adverse impact of about $20 million to $25 million a week in truckload revenue.”

How do you deal with all of this uncertainty?

As I wrote back in July 2019 in “Certainly, Maybe: Dealing With Supply Chain Uncertainty,” the first step is to staying informed of what’s happening — with sanctions, border crossings, transportation service disruptions, your Tier 1, 2, and 3 suppliers in the region, and so on. There are plenty of great sources of information out there, including from logistics service providers and technology companies. For example, Transporeon and Descartes (both Talking Logistics sponsors) have launched information hubs related to the Russia-Ukraine crisis (see their websites here and here, respectively).

E2open Acquires Logistyx

Over the past couple of years, E2open (a Talking Logistics sponsor) has been broadening the scope of its logistics capabilities via various acquisitions, including its acquisition of BluJay Solutions which was completed last September. This week the company strengthened its parcel shipping capabilities by acquiring Logistyx for $185 million (Logistyx achieved approximately $40 million in revenue in 2021). Here are some excerpts from the press release:

With the combination, E2open enhances its global footprint for multi-carrier e-commerce shipment management, offering companies a complete range of shipping capabilities needed to scale and respond to growing market needs.

Logistyx’s global parcel system augments E2open’s direct-to-consumer e-commerce offerings, creating a complete global footprint for multi-carrier parcel management. The combination adds a carrier library of over 550 global carrier integrations including UPS, FedEx, DHL and USPS, to E2open’s leading network. The solution manages the carrier certification process to keep clients in compliance, while making it easier to compare and review spot rate options, which is critical in a capacity-constrained environment.

22 years ago, when I first started as an industry analyst, parcel shipping was the frog of the transportation management system (TMS) market. None of the leading TMS vendors at the time wanted anything to do with parcel shipping, in large part due to the ongoing carrier compliance work required. The net result was a bunch of standalone parcel shipping vendors and a lot of ineffective integrations between solutions. Two decades later, the rise and explosive growth of e-commerce has transformed parcel shipping from a frog to a prince — not only for TMS and supply chain software vendors, but also for their retail and manufacturing customers as parcel shipping becomes a growing part of their overall transportation spend.

And with that, have a happy weekend.

Song of the Week: “History Repeating” by Propellerheads ft. Miss Shirley Bassey