Above the Fold: Supply Chain Logistics News (May 5, 2023)

By Adrian Gonzalez

50 miles.

I plan to cycle 50 miles tomorrow as I continue to train for the JDRF Ride in Burlington, VT, which is just 85 days away. I’ll be cycling 100 hilly miles that day, along with other Logistics Leaders for T1D Cure teammates.

Am I in shape to cycle 50 miles? I’ll find out tomorrow.

What I do know is that I’m behind schedule on reaching my fundraising goals. And that we have more team sponsorships available.

(Thank you TranzAct Technologies for sponsoring the team again this year!)

How can you help? Please consider making a tax-deductible donation to help the cause. You can do so via my rider page: http://www2.jdrf.org/goto/AdrianLL4T1DCure

If you’re a supply chain technology company or a logistics service provider, please consider sponsoring our team. We have a variety of sponsorship packages still available, which include many benefits, so if you’re interested in learning more, please contact me for details.

Thank you for listening.

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

On Second Thought: Shopify Exits Logistics

I first wrote about “The Convergence Of Logistics And Commerce (And Social Networking Too) in August 2016. The post was in response to news at the time that Symphony Commerce had raised $11 million to grow its fulfillment business. As I wrote in the post, “Yes, Symphony, a company that started out as a software company enabling the front-end of the e-commerce process, is now a third-party logistics provider (3PL) too.”

Three years later, in June 2019, Shopify announced its Shopify Fulfillment Network that “will provide U.S. merchants with a network of distributed fulfillment centers, and uses machine learning to ensure timely deliveries and lower shipping costs, putting their brand and customer experience front and center.” The convergence of commerce and logistics continues, I wrote at the time.

I revisited this topic again this past February in “The Ongoing Convergence Of Logistics And Commerce.” By this time, however, things hadn’t worked out as planned for Symphony Commerce (the company was acquired by Quantum Retail in May 2018). But there were other data points showing this convergence continuing, like several large retailers starting to offer logistics services and the launch of the Flexport App on Shopify.

That was then, this is now.

Flexport announced this week that it is acquiring the assets of Shopify Logistics, including Deliverr, which Shopify had acquired last year for $2.1 billion. According to the press release:

Through the integration of Shopify Logistics [which has over 50 warehouses in its fulfillment network], Flexport will strengthen its advanced AI-driven optimization to streamline the full global supply chain, reducing costs and improving reliability for customers…Flexport will also become the official Shopify Logistics Partner and provider of Shop Promise for millions of Shopify merchants. Shop Promise enables transparent shipping timelines, including two-day and next-day delivery options to customers of Shopify merchants and will be extensible to all major commerce platforms. These services will be powered by Flexport and available on the merchant-facing Shopify Fulfillment Network app, which offers merchants an integrated logistics experience through Shopify.

It seems like not every company is a logistics company, after all.

As I wrote last September in “Retailers Offering 3PL Services: What Is Going On?”:

The challenge, of course, is that logistics is a low-margin business. Turning logistics from a cost center to a revenue generator is easier than turning it into a profit center.

Also, “Should logistics be a core competency that we keep in house instead of outsourcing?” is a very different question than “Should operating a logistics business be a core competency?” Answering “yes” to the first question does not mean that you should answer “yes” to the second question too. Some will learn this the hard way.

But is every company still a technology company?

There is another type of convergence that has been happening for many years. As I wrote way back in September 2014 in “Convergence Is The Word For 3PLs”:

But there’s another convergence taking place in the market, one that’s driven by the changing needs and expectations of customers. This second convergence is transforming the very definition and value proposition of 3PLs. What we are seeing is the convergence of business models, specifically the business models of service providers, technology companies, and consulting firms.

This convergence is evident in Flexport’s announcement this week, as this excerpt illustrates:

Traditional supply chain technology has failed to create a single system for end-to-end supply chain planning, visibility and execution [emphasis mine]. Flexport intends to change all that, reducing out-of-stocks for customers, costs for companies, and decreasing the environmental impact of the movement of goods.

Is Flexport a 3PL? A technology company? Something else?

The fact is that virtually no leading service provider calls itself a 3PL today. Flexport, for example, refers to itself as “the leading tech-driven logistics platform.”

Platform is also the way Uber Freight describes itself (see my “What’s In a Name?” commentary from last November).

The bottom line is that the lines between service providers, technology companies, and consultants continue to blur, as companies continue to look for partners (regardless of what you call them) that can provide them with the right mix of services, technology, and advice to help them achieve their desired outcomes.

And with that, have a happy weekend!

Song of the Week: “The Way” by Manchester Orchestra