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.
It wasn't a Christmas miracle, but UPS Inc. yesterday did deliver a post-holiday gift to millions of stakeholders by posting favorable fourth-quarter results that demonstrated the company's ability to finally get control of its peak-season flows.
Atlanta-based UPS posted operating profit of $2.17 billion, a 17.1 percent increase over 2014 levels, and an all-time record for that specific period. The three operating units—domestic package, international package, and supply chain and freight—reported double-digit profit increases year-over-year, UPS said.
Revenue of slightly more than $16 billion in the quarter was up 1 percent from 2014 levels, UPS said. Revenue growth was hurt by unfavorable currency fluctuations and reduced diesel and jet fuel surcharges due to the dramatic drop in oil prices, the company said.
Quarterly net income reached $1.33 billion, a 193.8-percent jump from 2014 levels. The 2014 net income results were adjusted downward to reflect a large noncash charge to account for defined-benefit pension obligations. The 2015 results were adjusted for a similar charge, but the amount was significantly less than in 2014.
UPS reported record peak volume of 612 million packages, up 47 million packages from the 2014 peak. UPS' peak delivery period runs from the day after Thanksgiving through Christmas Eve. For all of 2015, UPS delivered 4.7 billion packages, a 2.1-percent increase from 2014.
In the 2015 fourth quarter, UPS reported a 2.4-percent increase in average daily shipments, and it delivered to 1.9 million new U.S. addresses in December alone. UPS said the latter figure is a testament to e-commerce's growing relevance in holiday shopping and shipping.
Demand for the company's next-day and second-day air products rose by double-digit amounts year-over-year as more customers relied on fast, premium-priced airfreight services to deliver holiday gifts during the hectic last week before Christmas Day. David Ross, analyst for investment firm Stifel, said in a note yesterday that UPS saw a profitable shift from ground to air as shoppers with a 3- to 4-day delivery window were essentially forced to use next-day or second-day air services to ensure their packages were delivered no later than Christmas Eve.
The shift in mix was tantamount to a "hidden price increase" on those customers, Ross wrote. The analyst said that UPS also benefited from lower prices for purchased airfreight transportation. A UPS spokesman said that Ross' comments on a shift in delivery mix represented the analyst's opinion, and that the company could not confirm or deny their veracity.
In mid-January, DC Velocity reported that UPS had tweaked its network to avoid a last-minute package pileup that could disrupt deliveries. It created an extra delivery day for packages shipped on Dec. 21 and scheduled to be delivered by air in two days, or on the ground in three. This meant packages to be delivered in three days had to be tendered by Dec. 18 to arrive by Christmas Eve (Dec. 19 and 20 were weekends) while items shipped by air in two days had to be received no later than Dec. 21.
UPS declined to accept an undetermined number of last-minute shipments out of concern for overloading its network on Dec. 23 and 24. However, as the fourth-quarter results indicated, there was still substantial demand for air deliveries as the clock ticked down. "It just proved the price inelasticity close to Christmas," Ross wrote.
For UPS, the results proved a welcome change from the past two years, when it struggled to align its network with demand forces that were being increasingly influenced by online ordering. In 2013, UPS took enormous criticism for late deliveries of an avalanche of last-minute packages from e-tailers, which it was not prepared for. In 2014, it invested heavily to avoid a repeat of the 2013 fiasco, only to discover that volume growth didn't match its cost structure. Shippers, by and large, were pleased with UPS' service during the 2014 peak. Analysts and investors, however, were chagrined by the hit to the bottom line due to the increased expenses.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.