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.
UPS Inc. should risk a short-term strike by the Teamsters union if that's what it takes to win contractual concessions that provide the labor flexibility it needs to compete in a more demanding environment spawned by the growth of e-commerce, an investment firm said today.
Wolfe Research LLC, which has followed the transportation sector for years, said it's unlikely the Teamsters will strike UPS. However, it added that the Atlanta-based company should not only prepare for it but perhaps embrace it as a means to an end. The Teamsters and UPS are negotiating a new collective bargaining agreement to replace the current five-year pact that expires July 31.
Scott H. Group, Wolfe's lead transport analyst, said in a note that "this is a really important labor contract for UPS to get right if it wants to start leveraging strong e-commerce growth." Group said that UPS "needs significantly more labor flexibility" in the upcoming contract, and that taking a strike should be considered if it leads to "long-term labor flexibility and thus better operating leverage for shareholders."
The last time the Teamsters struck its largest employer was in August 1997, when members stayed out for 15 days. The strike cost UPS about $950 million, inflicted a huge public relations black eye, and resulted in business defecting to rivals like Memphis-based FedEx Corp. Some of that lost business never returned to UPS.
Earlier this week, UPS' 268,000 unionized workers voted overwhelmingly to authorize its leaders to call a strike if talks break down. The move does not mean a strike is imminent or inevitable; in fact, it is seen as pro forma, because union leaders would need the legal tools to take action if there is no other recourse.
The negotiations come amid a different landscape than what existed in 2013. Today's environment is increasingly influenced by the growth of e-commerce—which today accounts for about 9.1 percent of all retail sales, the development of high-tech tools to process and deliver parcels, and the rise of Amazon.com Inc. as a bona fide logistics provider and a possible competitor to UPS.
UPS has made clears that it wants to explore technologies like drones and autonomous vehicles as a means to more efficiently handle the e-commerce delivery surge. The Teamsters, on the other hand, see such technologies as a possible threat to their jobs.
In a survey of 50 shippers conducted over the past two days, 4 percent of current UPS customers have shifted their traffic this year as a result of the talks, according to Group. This is up slightly from less than 1 percent of shippers, reported in the last survey, in April, he said.
Following the strike authorization vote, 17 percent of current UPS shippers said they expect to shift volumes, while another 30 percent are preparing contingency plans, according to the Wolfe survey. "Comments from shippers suggest that share shifts away from UPS will accelerate more materially if UPS doesn't announce a tentative deal by the end of June, and for sure by late July," Group wrote.
Steve Gaut, a UPS spokesman, declined comment on the Wolfe report and the status of the negotiations. In an e-mail, Gaut said that "we are confident that UPS and the Teamsters can achieve a pact that is good for both the company and employees."
Rob Martinez, co-founder and CEO of Shipware LLC, a parcel consultancy, said he hasn't seen any shifts away from UPS as a result of the negotiations. He predicted that lead negotiators would reach a tentative agreement in 30 days on a national contract.
The national contract would not take effect until it is ratified by the rank and file and the various local agreements, known as "supplementals," are approved by the respective union locals.
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.