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.
Business shutdowns and economic turmoil triggered by the pandemic have created tight trucking capacity throughout North America, but shippers still have options that can allow them to continue getting parcels delivered at reasonable rates and speeds in this “carriers’ market,” according to a panel held today at the Council of Supply Chain Management Professionals’ (CSCMP) EDGE 2020 conference.
“It has become a carriers’ market,” said Wayne MacGregor, director of logistics at Indigo Books and Music Inc., a Toronto, Ontario-based retailer that operates 88 superstores and 94 small format stores, shipping over 4 million e-commerce parcels per year.
“Because of the limitations of Covid and social distancing, for many carriers there are more parcels than their network can manage, so they’re being prescriptive with some of their large shippers in terms of the number of parcels they’re willing to accept, and limiting some of those numbers.”
That has created situations where if a carrier has the capacity to carry 1 million parcels per week and they have 1.3 million coming in, they’ll emphasize the million parcels that make the most money for them, as opposed to honoring previous contracts.
Another impact of the tight market has been to trigger rate hikes and additional surcharges imposed by the “big three” carriers—the U.S. Postal Service, UPS Inc., and FedEx Corp.—said Carson Krieg, co-founder and director of strategic partnerships at Convey, a Texas-based firm that makes a cloud-based platform for improving shippers’ visibility by connecting disparate data and processes.
“The carriers have adopted a ‘take it or leave it’ attitude,” MacGregor said. “We had tried to get rates that were as competitive as possible—based on what the market and our purchasing power would allow—but if you’re at the bottom of the totem pole in terms of profitability for the carriers, that can introduce risk in terms of their willingness to carry your load.”
Those conditions are putting pressure on shippers’ efforts to balance cost, speed, and customer service, so some retailers are turning to new strategies to address the tight market.
First, Indigo adjusted some of its operational patterns to help boost carriers’ efficiency at picking up and dropping off their loads, in order to take the conversation off the question of rates alone, he said. For example, the company began allowing its customers to ship to centralized “hold for pickup” locations, where multiple parcels are held in urban lockers so delivery trucks can make a single stop instead of visiting 20 different consumers’ houses for home delivery.
Second, the company accelerated a plan it had begun two years earlier to diversify the number of carriers it uses to contract deliveries. That approach comes with risk, however, because most carriers grant lower rates for shippers who commit to sending larger volumes. Another drawback to diversification is that it makes it harder to ensure good visibility and freight tracking, since various carriers have different web portals and data standards, especially with smaller fleets.
To address those problems, Indigo began working with Convey, which says its “delivery experience management” solution helps to optimize all steps of a buyer’s journey — from presenting competitive delivery dates pre-purchase through outcome-based shipment execution to shopper communication, exception management, and transportation analysis.
And in a third step, Indigo offered to commit some of its business to business (B2B) volume to carriers, instead of looking to book fleets solely for business to consumer (B2C) shipments. That made its bids more attractive to carriers because it allows them to build greater route density, leading to greater profitability, MacGregor said.
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.