Wednesday, October 11, 2017

'Flex'-ing its Muscles

Amazon wants to control everything – but you knew that.

The massive online retailer is experimenting with a new delivery service intended to make more products available for free two-day delivery and relieve overcrowding in its warehouses, according to people familiar with the plan, which will push the online retailer deeper into functions handled by longtime partners United Parcel Service Inc. and FedEx Corp. The service began two years ago in India, and has been slowly marketing it to U.S. merchants in preparation for a national expansion. Amazon is calling the confidential project Seller Flex, and began it on a trial basis this year in West Coast states with a broader roll out planned in 2018, sources said. Amazon declined to comment.

Amazon will oversee pickup of packages from warehouses of third-party merchants selling goods on and their delivery to customers’ homes – work that is now often handled by UPS and FedEx. Amazon could still use these couriers for delivery, but Amazon will decide how a package is sent instead of leaving it up to the seller. Handling more deliveries itself would give Amazon greater flexibility and control over the last mile to shoppers’ doorsteps, let it save money through volume discounts, and help avoid congestion in its own warehouses by keeping merchandise in the outside sellers’ own facilities.

Last year, Amazon introduced Seller Fulfilled Prime, which lets merchants who don’t stow items in Amazon warehouses still have their products listed with the Prime badge, meaning they’ll be delivered within two days. The merchants had to demonstrate they could meet Amazon’s delivery pledge, and many used UPS and FedEx for deliveries. The new service gives Amazon control over those deliveries instead, even if it continues to use third-party couriers. Seller Flex would also give Seattle-based Amazon more visibility into the warehousing and delivery operations of its merchant partners, potentially helping it make full use of their product inventory, storage space and proximity to customers while still guaranteeing quick delivery.

The project underscores Amazon’s ambitions to expand its logistics operations and wean itself off the delivery networks of UPS and FedEx. A rush of last-minute holiday orders in 2013 forced Amazon to issue refunds to shoppers who didn’t get gifts in time, highlighting the perils of being overly dependent on outside parcel services for a main part of its business pledge – quick, reliable delivery.

Amazon is relentless in developing innovative technology to increase efficiency in its supply chain. That focus can and should ‘deliver’ a message to the rest of us.

Kirk Shearer
800-989-0054 x103

Wednesday, September 6, 2017

The Enemy of My Enemy

Walmart and Google team up to battle a common foe – Amazon.

First written in Sanskrit 2,500 years ago, “the enemy of my enemy is my friend” counts among mankind’s oldest precepts. The concept had Churchill and Roosevelt partnering with Stalin’s Soviet Union against Hitler during World War II, and now has mega-corporations Google and Walmart joining up to battle a common threat – Amazon. 
The two companies said Google would start offering Walmart products to people who shop on Google Express, the company’s online shopping mall, reported the New York Times. It’s the first time the world’s biggest retailer has made its products available online in the United States outside of its own website.
The partnership is a testament to the heat both companies feel from internet behemoth Amazon's dominance in online shopping is an existential threat to brick-and-mortar retailers like Walmart, while more people are starting web searches for products they might buy on Amazon instead of Google.
But working together does not ensure Walmart and Google will be any more successful. For most consumers, Amazon remains the primary option for online shopping. No other retailer can match the size of Amazon’s inventory, the efficiency with which it moves shoppers from browsing to buying, or its many home delivery options. Walmart’s website sells 67 million items, up from 10 million early last year. Amazon sells hundreds of millions of items. In July, about 83.6 million people visited Walmart’s website, only half as many visitors as Amazon had. 

Demonstrating the primacy of logistics, Walmart has been partially repurposing its retail stores as e-commerce fulfillment centers, offering in-store pickup for products ordered online including groceries, and Google Express will offer free delivery with a $95 annual membership, a direct knockoff of Amazon Prime. Walmart may never catch Amazon online, but industry experts say if their partnership with Google can make them a strong number two, that could be enough.

Kirk Shearer
800-989-0054 x103

Wednesday, August 23, 2017

Truck Drivin' Man

YRC moves to streamline network, provide shorter hauls for drivers

There is a reason that truck drivers are the subject of jukeboxes full of country songs. Longhaul truckers face long hours wrestling their big rigs down the highway, and too many nights away from their honky tonk angel back home. 

Keeping their Teamsters happy wasn't the stated motive of the extensive operational changes just announced by less-than-truckload (LTL) giant YRC Freight, but is an important added benefit in an industry that has struggled to keep enough drivers in their cabs.  

The LTL carrier is adding eight distribution centers (DCs) without building any new facilities, planning to unlock underutilized capacity by converting eight existing terminals to DCs. This will speed up service and effectively add 837 doors of "transfer capacity" to the YRC network, allowing the company to handle an additional 7,000 shipments a day. 


Changes to YRC Freight's US network will be matched by changes in its driver workforce. The company told the Teamsters union, which represents YRC's more than 7,000 drivers, it plans to create 84 "utility employee" positions for truck drivers. Operating within a 175-mile radius of the carrier's 31 DCs, these drivers will work in shorter haul lanes than traditional linehaul drivers, and be home most nights. Along with "meet and turn" relay operations handing off trucks from one driver to another, YRC expects to eliminate 195  layover trips and 267 overnight hotel stays each night, helping drivers get home faster and more often. 


Besides reuniting drivers and their families, the YRC steps will translate to a 15 percent overall increase in capacity by the time the network enhancement is completed in October, said YRC Freight president Darren Hawkins. The changes come as greater demand for LTL service is tightening capacity, with 11 straight months of manufacturing growth piling shipments onto LTL docks. 


Emerging trends in e-commerce are seeing companies place smaller DCs closer to customers, meaning incoming freight to those centers is more likely to be LTL rather than truckload, putting increased importance on the "middle mile" of any given cargo move.

So in the immortal words of the big rig classic song -
 "Convoy," "Let them truckers roll. 10-4." 

Kirk Shearer
800-989-0054 x103

Tuesday, August 8, 2017

Winter Is Coming

Era of cheap freight costs may be ending, says report.

Shippers have enjoyed a long run of low logistics costs, particularly if you separate out the parcel delivery sector. But the times of bargain logistics, “fueled” by a dramatic drop in energy prices over the last two years, may be coming to an end.

This was the takeaway from the recent 2017 State of Logistics Report, presented by the Council of Supply Chain Management Professionals (CSCMP) in Washington, DC. US business logistics costs dropped 1.5 percent last year to $1.39 billion, the first decline since 2009, but companies should expect those costs to climb again in 2017.

“Shippers are demanding low prices, and I don’t think that’s going to be sustainable,” said Marc Althen, president of Penske Logistics. “Ocean (carriers) are losing money every year, and that’s not sustainable,” said Miguel Gonzalez, director of global logistics at DuPont, ranked 23rd on the list of top US exporters and 94th among US importers. 

Spending on “water” services, including international ocean and domestic waterways, dropped 10 percent to $40.6 billion, the CSCMP report said. Spending on truckload freight dropped 1.6 percent.

Business spending on parcel shipping soared due to growth in e-commerce, rising 10 percent to $86.3 billion, while rail spending dropped 11 percent to $71.9 billion, marking the first time parcel eclipsed rail as the second largest mode, measured by shipper spend. 

Transportation providers have predicted the end of low pricing before. But general business activity continues at robust levels, and there is not likely to be anything on the horizon comparable to the collapse in oil prices, which saw crude fall from $115 per barrel in June 2014 to under $35 in February 2016. 

Many savvy producers are “relying more on strategic partners…to mitigate the risk,” said Gonzalez. “We have to be prepared."

Kirk Shearer
800-989-0054 x103

Tuesday, August 1, 2017

'Can't you see I'm working here?' On the Job - Sort Of: Dock 'workers?

District Court case highlights off-contract labor deals that drive up port costs.

File this under “maybe I’m in the wrong line of work.” 

The attorney for a New Jersey longshoreman charged with fraudulently collecting round-the-clock pay of nearly $500,000 a year said his defense will be that the dockworker was not required to show up for a regular work day, only to be “on call." The case in Newark’s US District Court highlights a web of off-contract side deals that provide a group of International Longshoremen’s Association (ILA) workers at the Port of New York and New Jersey with 24-hour, 365-day hourly pay, most of it at overtime rates. 

Paul Moe Sr., a Local 1804-1 member and general foreman in the rubber-tired gantry department at APM Terminals, was charged with using false time sheets to collect more than $9,000 a week in round-the-clock pay while showing up infrequently, usually for three hours or less, reported the Journal of Commerce. He continued to collect his pay even during trips to Aruba and Florida.

Moe is one of a number of ILA members with off-contract agreements, unique to the East Coast’s largest port, that pay them whenever their terminal, container yard, or work gang is operating. The Waterfront Commission of New York Harbor said such deals pay workers more than $140 million a year for hours they don’t work. 

Waterfront Commission hearings in 2010 highlighted no-show and “low-show” jobs that paid ILA shop stewards and timekeepers for 24 to 27 hours per day, resulting in annual pay of over $400,000 for a handful of workers. Commission officials said these lucrative jobs were awarded to a “privileged few,” some with family ties.

According to the commission, New York-New Jersey’s port labor costs are driven up by the side deals guaranteeing 24/7 pay, and by other longstanding pay and work practices, including a unique “continuous operation” system that keeps dockworkers on the job until they finish working a ship. Over 60 percent of the NY-NJ port hours worked are paid at overtime rates.

The attack on Maersk, one of the largest transportation companies, highlights the importance of cyber security to avoid becoming a victim. As a basic step, employees dealing with shipping - or, really, anything - can be warned once again not to open any email attachments if they are not 100 percent sure of the source.

Kirk Shearer
800-989-0054 x103