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.
XPO Logistics Inc. is working on a multi-year initiative to dramatically compress "last mile" delivery times for shipments of heavier goods ordered online, according to the company's founder, chairman, and CEO.
In an interview late yesterday, Bradley S. Jacobs said XPO plans to execute 1- to 2-day deliveries of heavier consignments by the end of the decade, which would be a significant reduction from the 5- to 6-day delivery time window that is today's benchmark for heavy consignments. As a large hauler, Greenwich, Conn.-based XPO possesses the scale that would be a critical factor in hitting those targets, Jacobs said.
The ambitious plan to improve heavy-goods deliveries is part of a broad emphasis on heavier shipments across XPO's network. The company's less-than-truckload (LTL) fleet, on average, runs about 65 percent full. XPO's objective is to raise that to 75 percent in the short to medium term, and to 85 percent over the long term, Scott Malat, XPO's chief strategy officer, said today on an analyst call to discuss first-quarter financial results.
Each 1-percentage-point increase would add $9 million annually to XPO's bottom line by improving utilization of its trailers, even though it would result in lower revenues at each 100-pound weight break, Jacobs said. The yield per "hundredweight," is a key measure of an LTL carrier's performance.
XPO's typical weight per LTL shipment was 1,393 pounds as of the end of 2016, Malat said on the call today. The industry average is around 1,600 pounds. XPO is targeting single-digit annual percentage increases in its LTL "load factor" for this year and next, Malat said.
XPO's LTL unit, which consists of 8,500 tractors and 25,000 trailers, is the second-largest in North America, behind FedEx Freight, Memphis-based FedEx Corp.'s LTL unit. XPO entered the LTL space by buying transport and logistics provider Con-way Inc. in 2015 for $3 billion. Con-way's LTL unit, Con-way Freight, was the second-largest LTL carrier at the time of the acquisition.
The company's last-mile initiative is also a response to heightened expectations from e-commerce customers. As retailers expand their digital storefronts, they are making a wider range of shipments available for purchase. As a result, increasing volumes of transactions involve heavier products with irregular dimensions. This has created challenges for traditional parcel companies because their package sortation systems were not designed to efficiently process shipments of orders like skis and exercise equipment, to name just two.
However, customers ordering such products have the same delivery expectations as those receiving a small parcel. The delivery experience has become a key determinant in influencing a consumer's buying decision.
XPO's first-quarter revenue from last-mile operations grew 16 percent from the first quarter of 2016, according to the company's quarterly results disclosed late yesterday. E-commerce accounts for about 20 percent of XPO's last-mile traffic, a figure that is bound to increase.
In an effort to capitalize on the growth of last-mile demand for heavy goods, XPO is assembling a network to connect its contract logistics, less-than-truckload (LTL), and last-mile operations. The service is in the pilot phase, and is expected to be rolled out by year's end.
Virtually all LTL carriers have shied away from last-mile deliveries, which is the fastest-growing segment of surface transport, because their terminal networks are not designed to support that type of specialized operation. In addition, many heavy goods delivered to residences require some degree of installation, complicated skill sets that most LTL drivers don't possess. XPO provides this so-called "white glove" service largely through its 2013 acquisition of Marietta, Ga.-based last-mile delivery specialist 3PD Inc., whose drivers were also trained as installers.
In a related development, XPO reported strong first-quarter results, paced by its LTL operation, which reported a 49-percent increase in year-over-year operating income. Daily LTL tonnage in North America rose 4.8 percent quarter over quarter, the company said. However, John G. Larkin, transport analyst for investment firm Stifel Financial Corp., noted that XPO utilized 5.8 percent fewer tractors to carry the additional tonnage in the quarter. Larkin said in a research note today that the trend "underscores the extent of the operating leverage the company now has within their asset-based operations." This leverage will become a potent factor should industrial demand—which is LTL's bread and butter—begin to rebound, Larkin added.
The equity markets applauded the results, sending the value of XPO shares up 8 percent to $52.65 a share.
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 U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills said.
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.