Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
Amazon.com. Inc. is moving quickly to revamp its delivery network to gain more control over its fulfillment
infrastructure while reining in spiraling transportation costs, according to a supply chain consultant with close
ties to the e-tailing giant.
James Tompkins, who runs Tompkins International, a Raleigh, N.C.-based consultancy, said Amazon has divided the
nation into three segments based on population size: The top 40 markets, which comprise about half of the U.S. population;
the next 60 largest population areas that account for about 17 percent, and the remaining areas, which account for about
one-third.
The top 40 markets will be served by a private fleet being built by Amazon to support an expansion of its online grocery
business, called "Amazon Fresh," according to Tompkins. The next 60 will be served by an array of regional parcel delivery
carriers, he said. The remainder will be served mostly by the U.S. Postal Service, he said.
UPS Inc., which today handles much of Seattle-based Amazon's current deliveries, will not play a prominent role in the network
realignment, Tompkins said. Nor will FedEx Corp., which manages a lesser portion of Amazon's delivery business. An Amazon
spokeswoman was unavailable to comment.
Orders will be routed through Amazon's 55 fulfillment centers, with deliveries made the same day, the next day or, at most,
in two days, Tompkins said. Inventory will be positioned to exclusively support local deliveries. A national delivery network as
operated by providers like FedEx and UPS will be rendered irrelevant because they will be considered too slow to suit the typical
Amazon customer, he said.
Tompkins said that Amazon has a timeline for its rollout, but that he is unaware of the details. "They are moving on this very
aggressively," he said.
Amazon two years ago seriously considered a bid for FedEx as a means of buying into an existing delivery operation, according
to Tompkins. However, Jeffrey P. Bezos, Amazon's founder and CEO, backed away after determining FedEx's network structure was too
national in scope to fit Amazon's strategy of local fulfillment and delivery, Tompkins said. A FedEx spokesman declined comment.
Tompkins has worked in the supply chain management field for decades and is considered one of the nation's leading authorities
on its role in e-commerce. His relationship with Amazon is not clearly defined, a status seemingly more by design than coincidence.
When asked to describe the nature of his involvement with Amazon, Tompkins replied that he was contractually obligated not to
comment.
A "FRESH" EXPANSION
Though Amazon Fresh has been operating for five years, it is today only available in Seattle, San Francisco, and Los Angeles.
However, Amazon plans to expand the grocery business to between 30 and 40 U.S. markets in 2014, according to Tompkins.
Tompkins said the private fleet network would commingle groceries with general merchandise, thus building the scale needed to
make ground shipping cost-effective and to offer a compelling value to customers, Tompkins said. It would also set in motion a
chain of events that would result in Amazon competing with FedEx and UPS.
The online grocery business, which is plagued with high fulfillment costs, is not considered a particularly attractive
enterprise on its own. However, Bezos has used Amazon Fresh as a proving ground to test a more ambitious delivery model rather
than as a way to build a national grocery footprint, according to Tompkins. By using his own vehicles to deliver groceries, Bezos
has been able to fine-tune his own delivery network and understand the pros and cons of leveraging his own infrastructure than
those of the incumbents, Tompkins said. Now Bezos is poised to apply that knowledge on a broader scale, Tompkins said.
Transportation costs remain a thorny issue for Amazon. Its shipping expenses in 2012, the most recent period that full-year
figures were publicly available as of this writing, rose to more than $5.1 billion, up from nearly $4 billion in 2011, according
to the company's 10-K filing with the Securities and Exchange Commission.
Shipping costs in 2012 exceeded shipping revenue by nearly $3 billion, according to the filing. Amazon generates much of its
shipping revenue from third-party merchants who sell products through the company's site and use its fulfillment services for
storing inventory, picking and packing, and shipping.
In the filing, Amazon said it expected its "net cost of shipping"—the ratio of shipping costs to revenue—to continue rising as
parcel rates increase and more customers take advantage of the company's delivery offerings such as "Prime," which charges a $79
annual fee for unlimited two-day deliveries. Amazon has said it is considering a $40 annual price hike for Prime subscriptions.
Not everyone believes Amazon will migrate from FedEx and UPS so quickly. Scott Devitt, Internet analyst for investment firm
Morgan Stanley & Co., said during a late February webcast that Amazon will continue to leverage the established delivery
infrastructure and will not become a disruptive force in the delivery market. Amazon will continue to use its enormous buying
power to extract favorable rates from its delivery partners and will see that as a more attractive alternative to building out its
own network, Devitt said.
Frederick W. Smith, FedEx's founder, chairman, and CEO, told analysts recently that only FedEx and UPS have the delivery
networks capable of efficiently handling the demands of Amazon and other e-commerce providers. Smith said his company, UPS,
and the U.S. Postal Service would remain at the forefront of e-commerce shipping for the foreseeable future.
Tompkins said that Amazon has been planning its strategy long before the well-publicized delivery problems that occurred during
the 2013 holiday season, when about five million of its shipments were not delivered in time for Christmas. Much of the fallout
was laid at the feet of UPS, though some have argued that Amazon erred by understating how many packages were coming UPS' way
toward Christmas day, thus overwhelming the Atlanta-based carrier's air network and triggering the backlog.
Amazon is still smarting from the fiasco, however. The company's fulfillment executives believe UPS and FedEx are not investing
enough in equipment, infrastructure, and other resources to keep up with Amazon's growth, according to a person familiar with the
matter.
These days, every move in the e-commerce space is significant because of its enormous potential. E-commerce has penetrated just
10 percent of the U.S. market, and between 6 and 7 percent of the global market, according to Morgan Stanley estimates. Based on
projected annualized growth rates of 15 percent, e-commerce could be a $1 trillion worldwide business by 2016, according to the
firm.
Warehouse automation orders declined by 3% in 2024, according to a February report from market research firm Interact Analysis. The company said the decline was due to economic, political, and market-specific challenges, including persistently high interest rates in many regions and the residual effects of an oversupply of warehouses built during the Covid-19 pandemic.
The research also found that increasing competition from Chinese vendors is expected to drive down prices and slow revenue growth over the report’s forecast period to 2030.
Global macro-economic factors such as high interest rates, political uncertainty around elections, and the Chinese real estate crisis have “significantly impacted sales cycles, slowing the pace of orders,” according to the report.
Despite the decline, analysts said growth is expected to pick up from 2025, which they said they anticipate will mark a year of slow recovery for the sector. Pre-pandemic growth levels are expected to return in 2026, with long-term expansion projected at a compound annual growth rate (CAGR) of 8% between 2024 and 2030.
The analysis also found two market segments that are bucking the trend: durable manufacturing and food & beverage industries continued to spend on automation during the downturn. Warehouse automation revenues in food & beverage, in particular, were bolstered by cold-chain automation, as well as by large-scale projects from consumer-packaged goods (CPG) manufacturers. The sectors registered the highest growth in warehouse automation revenues between 2022 and 2024, with increases of 11% (durable manufacturing) and 10% (food & beverage), according to the research.
The Swedish supply chain software company Kodiak Hub is expanding into the U.S. market, backed by a $6 million venture capital boost for its supplier relationship management (SRM) platform.
The Stockholm-based company says its move could help U.S. companies build resilient, sustainable supply chains amid growing pressure from regulatory changes, emerging tariffs, and increasing demands for supply chain transparency.
According to the company, its platform gives procurement teams a 360-degree view of supplier risk, resiliency, and performance, helping them to make smarter decisions faster. Kodiak Hub says its artificial intelligence (AI) based tech has helped users to reduce supplier onboarding times by 80%, improve supplier engagement by 90%, achieve 7-10% cost savings on total spend, and save approximately 10 hours per week by automating certain SRM tasks.
The Swedish venture capital firm Oxx had a similar message when it announced in November that it would back Kodiak Hub with new funding. Oxx says that Kodiak Hub is a better tool for chief procurement officers (CPOs) and strategic sourcing managers than existing software platforms like Excel sheets, enterprise resource planning (ERP) systems, or Procure-to-Pay suites.
“As demand for transparency and fair-trade practices grows, organizations must strengthen their supply chains to protect their reputation, profitability, and long-term trust,” Malin Schmidt, founder & CEO of Kodiak Hub, said in a release. “By embedding AI-driven insights directly into procurement workflows, our platform helps procurement teams anticipate these risks and unlock major opportunities for growth.”
Here's our monthly roundup of some of the charitable works and donations by companies in the material handling and logistics space.
For the sixth consecutive year, dedicated contract carriage and freight management services provider Transervice Logistics Inc. collected books, CDs, DVDs, and magazines for Book Fairies, a nonprofit book donation organization in the New York Tri-State area. Transervice employees broke their own in-house record last year by donating 13 boxes of print and video assets to children in under-resourced communities on Long Island and the five boroughs of New York City.
Logistics real estate investment and development firm Dermody Properties has recognized eight community organizations in markets where it operates with its 2024 Annual Thanksgiving Capstone awards. The organizations, which included food banks and disaster relief agencies, received a combined $85,000 in awards ranging from $5,000 to $25,000.
Prime Inc. truck driver Dee Sova has donated $5,000 to Harmony House, an organization that provides shelter and support services to domestic violence survivors in Springfield, Missouri. The donation follows Sova's selection as the 2024 recipient of the Trucking Cares Foundation's John Lex Premier Achievement Award, which was accompanied by a $5,000 check to be given in her name to a charity of her choice.
Employees of dedicated contract carrier Lily Transportation donated dog food and supplies to a local animal shelter at a holiday event held at the company's Fort Worth, Texas, location. The event, which benefited City of Saginaw (Texas) Animal Services, was coordinated by "Lily Paws," a dedicated committee within Lily Transportation that focuses on improving the lives of shelter dogs nationwide.
Freight transportation conglomerate Averitt has continued its support of military service members by participating in the "10,000 for the Troops" card collection program organized by radio station New Country 96.3 KSCS in Dallas/Fort Worth. In 2024, Averitt associates collected and shipped more than 18,000 holiday cards to troops overseas. Contributions included cards from 17 different Averitt facilities, primarily in Texas, along with 4,000 cards from the company's corporate office in Cookeville, Tennessee.
Electric vehicle (EV) sales have seen slow and steady growth, as the vehicles continue to gain converts among consumers and delivery fleet operators alike. But a consistent frustration for drivers has been pulling up to a charging station only to find that the charger has been intentionally broken or disabled.
To address that threat, the EV charging solution provider ChargePoint has launched two products to combat charger vandalism.
The first is a cut-resistant charging cable that's designed to deter theft. The cable, which incorporates what the manufacturer calls "novel cut-resistant materials," is substantially more difficult for would-be vandals to cut but is still flexible enough for drivers to maneuver comfortably, the California firm said. ChargePoint intends to make its cut-resistant cables available for all of its commercial and fleet charging stations, and, starting in the middle of the year, will license the cable design to other charging station manufacturers as part of an industrywide effort to combat cable theft and vandalism.
The second product, ChargePoint Protect, is an alarm system that detects charging cable tampering in real time and literally sounds the alarm using the charger's existing speakers, screens, and lighting system. It also sends SMS or email messages to ChargePoint customers notifying them that the system's alarm has been triggered.
ChargePoint says it expects these two new solutions, when combined, will benefit charging station owners by reducing station repair costs associated with vandalism and EV drivers by ensuring they can trust charging stations to work when and where they need them.
New Jersey is home to the most congested freight bottleneck in the country for the seventh straight year, according to research from the American Transportation Research Institute (ATRI), released today.
ATRI’s annual list of the Top 100 Truck Bottlenecks aims to highlight the nation’s most congested highways and help local, state, and federal governments target funding to areas most in need of relief. The data show ways to reduce chokepoints, lower emissions, and drive economic growth, according to the researchers.
The 2025 Top Truck Bottleneck List measures the level of truck-involved congestion at more than 325 locations on the national highway system. The analysis is based on an extensive database of freight truck GPS data and uses several customized software applications and analysis methods, along with terabytes of data from trucking operations, to produce a congestion impact ranking for each location. The bottleneck locations detailed in the latest ATRI list represent the top 100 congested locations, although ATRI continuously monitors more than 325 freight-critical locations, the group said.
For the seventh straight year, the intersection of I-95 and State Route 4 near the George Washington Bridge in Fort Lee, New Jersey, is the top freight bottleneck in the country. The remaining top 10 bottlenecks include: Chicago, I-294 at I-290/I-88; Houston, I-45 at I-69/US 59; Atlanta, I-285 at I-85 (North); Nashville: I-24/I-40 at I-440 (East); Atlanta: I-75 at I-285 (North); Los Angeles, SR 60 at SR 57; Cincinnati, I-71 at I-75; Houston, I-10 at I-45; and Atlanta, I-20 at I-285 (West).
ATRI’s analysis, which utilized data from 2024, found that traffic conditions continue to deteriorate from recent years, partly due to work zones resulting from increased infrastructure investment. Average rush hour truck speeds were 34.2 miles per hour (MPH), down 3% from the previous year. Among the top 10 locations, average rush hour truck speeds were 29.7 MPH.
In addition to squandering time and money, these delays also waste fuel—with trucks burning an estimated 6.4 billion gallons of diesel fuel and producing more than 65 million metric tons of additional carbon emissions while stuck in traffic jams, according to ATRI.
On a positive note, ATRI said its analysis helps quantify the value of infrastructure investment, pointing to improvements at Chicago’s Jane Byrne Interchange as an example. Once the number one truck bottleneck in the country for three years in a row, the recently constructed interchange saw rush hour truck speeds improve by nearly 25% after construction was completed, according to the report.
“Delays inflicted on truckers by congestion are the equivalent of 436,000 drivers sitting idle for an entire year,” ATRI President and COO Rebecca Brewster said in a statement announcing the findings. “These metrics are getting worse, but the good news is that states do not need to accept the status quo. Illinois was once home to the top bottleneck in the country, but following a sustained effort to expand capacity, the Jane Byrne Interchange in Chicago no longer ranks in the top 10. This data gives policymakers a road map to reduce chokepoints, lower emissions, and drive economic growth.”