Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
Retailing powerhouse Amazon.com Inc. will buy organic grocery chain Whole Foods Market for $13.7 billion in a move that boosts Amazon's share of the U.S. grocery sector and instantly gives the online giant access to more than 460 brick-and-mortar stores.
The transaction is expected to close in the second half of 2017, following regulatory and shareholder approval. Seattle-based Amazon shared few details on its plans for the merger, but said that Whole Foods would continue to operate stores under its own brand name and that John Mackey, its co-founder, would remain as CEO.
Known for stocking organic foods and charging premium prices, Austin, Texas-based Whole Foods had sales of $16 billion in 2016 and employs 87,000 people. The chain operates stores in the U.S., Canada, and the U.K.
In the short term, the blockbuster move puts enormous pressure on grocers, which have already struggled through a year of disappointing profits. The country's largest supermarket chain, Kroger Co., saw its stock price plunge yesterday after reporting a second straight quarter of declines in same-store sales—stores open more than a year—and lowering its earnings forecast under increasing pressure from competitors, including those that sell groceries and pre-packaged meals online.
Amazon has already put a toe in the water of the $675 billion U.S. retail grocery sector with food delivery services like Amazon Fresh and Amazon Prime Now. But buying Whole Foods shows that the e-tailer is now turning the full force of its nationwide warehouse and logistics network to retail food sales.
"The game-changing piece is that they're now completely vertically integrated into the grocery sector," Deliv CEO Daphne Carmeli said in an interview. Crowd-sourced, last-mile parcel company Deliv competes with Instacart and Amazon in providing same-day delivery for online grocery orders. "Now supermarkets and grocers will have to compete not only with each other and with nontraditional rivals like Wal-Mart and Target, but with Amazon," Carmeli said.
In response to the latest move, rival grocers now need to redouble their efforts to retain their core customers by offering additional services such as home delivery and online ordering, Carmeli said.
Buying Whole Foods also delivers a major blow to Amazon's retail rival Wal-Mart Stores Inc., which had previously seen grocery sales as an area where it could differentiate itself from Amazon, she said.
OVERNIGHT BRICK-AND-MORTAR NETWORK
In the long term, Amazon's acquisition of Whole Foods could have an impact on retail sectors beyond just grocery, because it allows the company to expand from purely online sales into brick-and-mortar stores, industry watchers said.
Amazon could have achieved such physical scale and density by building that footprint itself over a period of years, but buying Whole Foods lets it reach that goal practically overnight, according to a note to investors from investment firm Robert W. Baird.
With Whole Foods in hand, Amazon can also forge a dual-track grocery strategy by connecting its Prime and Prime Now memberships with last-mile delivery, the Baird note said. That is consistent with Amazon's approach of supporting multiple customer touch points and offering as many "modes" of delivery as consumers desire, Baird said.
That practice of meeting customers' fulfillment preferences across all available channels is at the core of omnichannel fulfillment practices, said John Santagate, research manager for supply chain execution at IDC Manufacturing Insights, a consultancy in Framingham, Mass. "Perhaps the acquisition is a means to enable fresh food delivery by leveraging Whole Foods retail stores as distribution centers, enabling Amazon to maintain its online model but do so in a market that has largely lagged in terms of online purchase adoption," Santagate said.
However, the path to merging its online might with a storefront sales environment will not be a simple transition, warned Jeff Smith, a supply chain management and analytics professor at Virginia Commonwealth University. "I think this will open a whole new set of challenges for Amazon, as the inventory control, and associated distribution, will require an additional set of capabilities," Smith said.
Amazon must now decide whether it will maintain Whole Foods' market niche as a vendor of premium organic foods, whether it will manage store inventory for both in-person and online shoppers, and whether it will compete with food delivery services, Smith said.
If Amazon can find the right strategy to manage those challenges, it could use the Whole Foods acquisition as a way to legitimize its grocery arm, leverage its existing distribution capabilities to meet consumer demands, and tap into a rising demographic wave of millennials who use online food delivery at unprecedented rates, Smith said.
Online sales in 2015 accounted for a scant 0.1 percent of total grocery sales, according to Commerce Department data.
The German forklift vendor Kion Group plans to lay off an unspecified number of workers as part of an “efficiency program” it is launching to strengthen the company’s resilience and maintain headroom for future investments, the company said today.
The new structural measures are intended to optimize Kion’s efficiency, executives said in their fourth quarter earnings report.
“While internal programs to continuously improve product, production, and services costs were already up and running throughout 2024 and will continue, further structural measures will address a more efficient setup for Kion in Europe. This is expected to have an impact on personnel requirements subject to consultations with the respective employee representative bodies as required by local laws,” the report said.
“The efficiency program is addressing developments in the macroeconomic environment. European economies are struggling to gain momentum – this affects key customer industries in the Industrial Trucks & Services segment, where Chinese competitors have been improving their market position in the aftermaths of the recent pandemics,” Kion said.
The move comes as Kion reported that it finished its 2024 financial year with slightly improved revenue of $11.9 billion (over $11.8 billion in 2023), and profitability (measured as earnings before interest and taxes (EBIT)) that significantly increased to $951 million (over $820 million in 2023).
The company now plans to pay $249 to $269 million in financial year 2025 to implement the cost saving measures. Following that one-time charge, it expects to achieve sustainable cost savings of $145 million to $166 million per year, beginning in 2026.
“In order to maintain headroom for investments ensuring our future, to further strengthen our competitiveness and our resilience, we must manage our cost base. This requires structural and sustainable measures,” Christian Harm, CFO of Kion, said in a release.
By the numbers, fourth quarter shipment volume was down 4.7% compared to the prior quarter, while spending dropped 2.2%.
Geographically, fourth-quarter shipment volume was low across all regions. The Northeast had the smallest decline at 1.2% with the West just behind with a contraction of 2.1%. And the Southeast saw shipments drop 6.7%, the most of all regions, as hurricanes impacted freight activity.
“While this quarter’s Index revealed spending overall on truck freight continues to decline, we did see some signs that spending per truck is increasing,” said Bobby Holland, U.S. Bank director of freight business analytics. “Shipments falling more than spending – even with lower fuel surcharges – suggests tighter capacity.”
The U.S. Bank Freight Payment Index measures quantitative changes in freight shipments and spend activity based on data from transactions processed through U.S. Bank Freight Payment, which processes more than $43 billion in freight payments annually for shippers and carriers across the U.S.
“It’s clear there are both cyclical and structural challenges remaining as we look for a truck freight market reboot,” Bob Costello, senior vice president and chief economist at the American Trucking Associations (ATA) said in a release on the results. “For instance, factory output softness – which has a disproportionate impact on truck freight volumes – is currently weighing heavily on our industry.”
Volvo Autonomous Solutions will form a strategic partnership with autonomous driving technology and generative AI provider Waabi to jointly develop and deploy autonomous trucks, with testing scheduled to begin later this year.
The announcement came two weeks after autonomous truck developer Kodiak Robotics said it had become the first company in the industry to launch commercial driverless trucking operations. That milestone came as oil company Atlas Energy Solutions Inc. used two RoboTrucks—which are semi-trucks equipped with the Kodiak Driver self-driving system—to deliver 100 loads of fracking material on routes in the Permian Basin in West Texas and Eastern New Mexico.
Atlas now intends to scale up its RoboTruck deployment “considerably” over the course of 2025, with multiple RoboTruck deployments expected throughout the year. In support of that, Kodiak has established a 12-person office in Odessa, Texas, that is projected to grow to approximately 20 people by the end of Q1 2025.
Businesses dependent on ocean freight are facing shipping delays due to volatile conditions, as the global average trip for ocean shipments climbed to 68 days in the fourth quarter compared to 60 days for that same quarter a year ago, counting time elapsed from initial booking to clearing the gate at the final port, according to E2open.
Those extended transit times and booking delays are the ripple effects of ongoing turmoil at key ports that is being caused by geopolitical tensions, labor shortages, and port congestion, Dallas-based E2open said in its quarterly “Ocean Shipping Index” report.
The most significant contributor to the year-over-year (YoY) increase is actual transit time, alongside extraordinary volatility that has created a complex landscape for businesses dependent on ocean freight, the report found.
"Economic headwinds, geopolitical turbulence and uncertain trade routes are creating unprecedented disruptions within the ocean shipping industry. From continued Red Sea diversions to port congestion and labor unrest, businesses face a complex landscape of obstacles, all while grappling with possibility of new U.S. tariffs," Pawan Joshi, chief strategy officer (CSO) at e2open, said in a release. "We can expect these ongoing issues will be exacerbated by the Lunar New Year holiday, as businesses relying on Asian suppliers often rush to place orders, adding strain to their supply chains.”
Lunar New Year this year runs from January 29 to February 8, and often leads to supply chain disruptions as massive worker travel patterns across Asia leads to closed factories and reduced port capacity.
Women are significantly underrepresented in the global transport sector workforce, comprising only 12% of transportation and storage workers worldwide as they face hurdles such as unfavorable workplace policies and significant gender gaps in operational, technical and leadership roles, a study from the World Bank Group shows.
This underrepresentation limits diverse perspectives in service design and decision-making, negatively affects businesses and undermines economic growth, according to the report, “Addressing Barriers to Women’s Participation in Transport.” The paper—which covers global trends and provides in-depth analysis of the women’s role in the transport sector in Europe and Central Asia (ECA) and Middle East and North Africa (MENA)—was prepared jointly by the World Bank Group, the Asian Development Bank (ADB), the German Agency for International Cooperation (GIZ), the European Investment Bank (EIB), and the International Transport Forum (ITF).
The slim proportion of women in the sector comes at a cost, since increasing female participation and leadership can drive innovation, enhance team performance, and improve service delivery for diverse users, while boosting GDP and addressing critical labor shortages, researchers said.
To drive solutions, the researchers today unveiled the Women in Transport (WiT) Network, which is designed to bring together transport stakeholders dedicated to empowering women across all facets and levels of the transport sector, and to serve as a forum for networking, recruitment, information exchange, training, and mentorship opportunities for women.
Initially, the WiT network will cover only the Europe and Central Asia and the Middle East and North Africa regions, but it is expected to gradually expand into a global initiative.
“When transport services are inclusive, economies thrive. Yet, as this joint report and our work at the EIB reveal, few transport companies fully leverage policies to better attract, retain and promote women,” Laura Piovesan, the European Investment Bank (EIB)’s Director General of the Projects Directorate, said in a release. “The Women in Transport Network enables us to unite efforts and scale impactful solutions - benefiting women, employers, communities and the climate.”