Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.
There are shouts, and there are whispers. The shouts are what get our attention. But the whispers are often equally worthy of note, if not more so. It's through whispers that critical nuggets of information are frequently exchanged.
Take the recent round of conferences and trade shows, for example. This year, the shouting was all about two topics: blockchain and Amazon. In keynotes, breakout sessions, and even casual hallway conversations, those subjects dominated the discussion—which is hardly a surprise given their potential to transform the practice of supply chain management.
But there were whispers as well—whispers about a development that has the potential to rock your supply chain world and to do it in ways you might never expect. The subject? Tariffs. Specifically, the tariffs the government has slapped on millions of dollars' worth of imported goods as part of an escalating trade war with China and other trade partners. While the war's outcome is still to be determined, the effects of those tariffs are already rippling through global supply chains, with sometimes surprising results.
For instance, consider the headline above: Fritos, aluminum, and unintended consequences. Those don't seem like dots that could easily be connected, but they are.
Here's the deal, much of which was recently reported in a podcast from NPR: The price of corn is in a slight decline, yet the price of Fritos, the venerable corn-based snack food, is on the rise. A spot check of local vending machines confirms the price has jumped 20 percent in the past few weeks. So what's up with that?
An experienced supply chain professional would look immediately to what's happening on the logistics end. We all know that the price of processed foods has more to do with labor, real estate, and transportation expenses than with the cost of the raw materials—in this case, corn. And indeed, all those cost components are on the rise. Yet they don't tally up to anything close to an increase to $1.50 from $1.25 for a bag of Fritos. So, again, what's going on here?
Well, for one thing, there's the matter of corporate parenthood. Fritos are produced by Frito-Lay. Frito-Lay is a subsidiary of PepsiCo.
PepsiCo happens to be one of the world's largest consumers of a raw material called aluminum. You're probably starting to catch our drift here.
Aluminum, you may recall, is one of the commodities caught in the crosshairs in the ongoing trade war. In late May, President Trump slapped a 10-percent tariff on aluminum imports, ostensibly to protect aluminum manufacturing jobs. While the effect on the job market remains to be seen, this much is already clear: Big consumers of aluminum—like producers of energy drinks, beer, and soda—stand to take a painful price hit.
Still, if PepsiCo is adjusting its prices in anticipation of a spike in the cost of aluminum, why doesn't it simply raise the price of a can of cola rather than a bag of corn chips? The short answer is, it can't. Or to be precise, it probably doesn't feel it's in a position to do so. It seems Americans' appetite for sugary soft drinks is declining, while the consumption of savory snack foods, like Fritos, is rising. (Yes, we were surprised by that too.) In the face of flagging demand for soda, PepsiCo may well be reluctant to raise the price of a can of Mountain Dew or Pepsi. However, it appears confident the market will accept a 20-percent increase in the price of a bag of corn chips.
So, amid all the shouting about topics like blockchain and Amazon, keep an ear out for whispers about tariffs and trade wars. As the now-connected dots between Fritos and aluminum demonstrate, they can indeed have unintended consequences.
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.