April Update

It’s coming up close to a month since I last updated the blog. Plus, it’s been quite a while since I last wrote on what I was up to. Well, the team and I just finished the second big report of the year – Latin America Logistics and Transport and I think it turned out really well. The team decided to try out a few things with this particular report that I’m sure readers will appreciate. What are they? Well, you’ll just have to see for yourself. :)

I haven’t forgotten my plans for part two of Latin American e-commerce logistics companies. In fact, I have the notes but it seems things just keep getting in the way of actually completing this task. A bad trait I’ve always had – a tendency to flit from one project to the next, whatever strikes my fancy at the moment. But, I will finish it soon because I believe it’s a story that needs to be shared. There’s been alot of press concerning Asia, the US and Europe’s e-commerce logistics and I feel folks need to know there’s also alot going on in the LATAM e-commerce logistics space as well.

So, this coming week is going to be a busy one….

Amazon hosts tours of some of its fulfillment centers so I decided to give it a try and lo and behold I got a response back from the company to let me know of an upcoming tour of its Chattanooga facility. So, Tuesday afternoon I will be checking that out.

Tuesday and Wednesday the Home Delivery/E-Tail/Click and Collect Conference is in town and I will be tweeting from there on both days as well.

In the midst of all of this I’m finishing off an article for Port Technology on the US East Coast ports and changing trade lanes. I pulled some trade data from the US government and was somewhat surprised with the results. I’m not sure when the article will be published but I’ll be sure to send it out via Twitter when it’s available.

I also have my Cold Chain IQ post to work on which I’ll also send out via Twitter later in the week.

Lastly, I’m reportless for the next few months! So, what am doing? Ah….updating our fantastic portal – a task that has been long overdue. Project Portal is what we’re calling this task and it’s one in which I’m updating and expanding the North American section. For portal subscribers, let me know what you think as the analysis is posted and for non-subscribers, you can request a demo of the portal, just let me know.

As for the next Ti reports, look for the annual Contract Logistics report to be published the end of this month. After that, in late May, I believe, will be a first for us – FMCG Logistics and Transport and then the always popular Freight Forwarding report in mid-July.

And so, with that, it’s a pretty day here and I have a few chores to complete before we sit down and enjoy Easter Dinner.

Thanks,

Cathy

Brazilian delivery startups, Uber-style

As Ti’s second report of the year, Latin America Logistics and Transport, gets set for publication later this week, curiosity of the region’s logistics’ startups got the best of me so I decided to see what was up. What I found was that Uber-like delivery start-ups are popping up in this region and in particular in Brazil.

Indeed, there is a good article on this subject posted on the website, Nearshore Americas. In its article, In Latin America’s Booming e-Commerce Sector, Start-ups Aim to Improve on Logistics”, the website highlights Brazilian start-up Loggi. Based in Sao Paulo, about 35% of Loggi’s sales come from e-commerce. It has been operating since 2013 and provides motorcycle and bicycle courier express services via an app – place an order and the closest messenger will be notified to make the delivery. Customers are also able to monitor the delivery in real time as well.

In 2014, the company introduced a digital delivery service in which after delivery, the customer can view the digital signature of the person responsible for receiving.

While the main customer base of the company is corporate, Loggi is working towards attracting more consumers. According to the Istoe Dinheiro website, the startup has about 500 couriers and 2,000 registered customers. On an average day, it registers a thousand deliveries with sales of R $500,000 per month (about USD $154,000/month).

Yes, there is some resemblance to the Uber app, and in fact one of the original investors of Loggi was Kees Koolen, a former director of the Uber application and former president of Booking.com. However, Loggi is quick to note that there are differences between them and Uber. Most importantly, Loggi works with a biker base licensed by the Government of São Paulo.

While it sounds promising, Loggi faces growing competition from the likes of other similar start-ups such as Rapiddo and MovMov.it. How will each of these businesses differentiate themselves? Is this business model sustainable? Lots of questions and fun to watch as it plays out. Traditional couriers such as US-based companies FedEx and UPS offer domestic services within parts of Brazil as well and you can bet each one is closely following this trend of “Uber-style courier services” in not only Brazil but around the world as more of these start-ups pop up elsewhere. Will it impact FedEx and UPS negatively? probably not but the technology/ease of requesting delivery may create changes in how one request such services.

So, I plan to spend the next week looking for some more interesting Latin American logistics start-up companies and will write on what I find for the next blog post. If you know of any and would like to share them with me, drop me a line.

Thanks!

Cathy

Who needs brick and mortar sites? E-retailers do

Amazon.com may have had the head start in e-retailing but traditional brick and mortar retailers have caught on and have invested heavily by expanding services online and creating an “omni-channel” experience for customers.

Now pure-play e-commerce players seem to be taking a page out of traditional retailers’ book and are introducing their own “omni-channel” strategy by opening brick and mortar locations. However, these locations are not your typical retail stores.

For example, Zappos tested the waters in time for the 2014 holiday season. Along with its partner, retail logistics startup, OrderWithMe, a 20,000 sq. ft. popup store was erected for the season at Las Vegas’ Western Hotel. Open 24/7 and consisting 16 rooms, the store offers a showroom of shoes and apparel. A kiosk is available with OrderWithMe’s ShopwithMe technology for customers to simply scan items to order.

Amazon is also dabbling with store-fronts. It’s partnership with Purdue University has resulted in two physical locations on the campus for pick-ups, returns, customer service and a handful of Amazon devices available for students to demo.

In addition to its partnership with Purdue, it’s rumored that Amazon is in talks with bankrupt Radio Shack to purchase some of its stores (Ok, forgive me… I’m going to take just a minute to pat myself on the back because this is something I suggested earlier in 2014). Anyway, a potentially good move for Amazon to not only to allow customers to test, feel and experience goods in-person but also a good move logistically.

For e-retailers such as Zappos and Amazon, these physical locations can serve as shipping and return hubs – they are closer to customer and thus can also allow for same day or perhaps even less than same day delivery. Not to mention, this reverse “omni-channel” approach may serve as a different type of “click and collect” location perhaps, but one that will also benefit delivery companies such as FedEx, UPS, USPS and regional carriers. In any case, these locations are altering the supply chains for e-retailers much like the omnichannel strategy that many brick and mortar retailers have adopted.

Expect more e-retailers to follow or to even partner up to open physical locations. However, caution is needed as many of these e-retailers have yet to turn a profit so this maybe the point in which we see a consolidation within the industry.

Interested in finding out more on e-commerce logistics? Be sure to check out Ti’s latest report, Global e-Commerce Logistics.

UPS Looks to Cut Costs and Implement Peak Residential Surcharges

UPS’ recent earnings release was hardly inspiring. While revenue and volumes were up, the costs associated with these increases were a set-back for the company. For additional details on the financial aspects, my colleague, Thomas Cullen, will provide his thoughts in Ti’s newsletter while I enjoy a few days of vacation.

But of course, I’d like to put down a few thoughts of my own. It’s been well documented the investments UPS has made throughout 2014 to avoid a repeat of the 2013 holiday season. However, this time around, instead of leaving customers empty-handed, UPS left its investors empty-handed. I applaud UPS for going all out to make sure packages were delivered on a timely basis during the 2014 holiday season. But, a concern I have is the fact that this is a company that has been built on the talents of industrial engineering. Its pride and joy has been the efficiency of its hubs and networks all the way down to the likes of measuring and timing of how long it takes to get from the package car to the front door of a delivery spot – and in the most cost effective manner. How could they have gotten it so wrong?

An interesting comment from the earnings call caught my ear – it’s difficult to forecast e-commerce – and I think for right now that’s correct. But a word of advice to UPS and other traditional delivery providers (i.e. FedEx), figure it out and fast. Regional carriers, start-up companies and Amazon are all growing and expanding delivery networks. Technology is playing a fantastic role and all are taking advantage of it. The key is being agile.

So, to get to that agility, UPS announced how it would proceed in 2015. Cutting costs where it can is priority while expanding hub capacity in key areas, continuing its implementation of ORION and the use of SurePost Redirect and Access Points in taking costs of its system. In fact, it was noted in one publication that it cost three times as much to deliver packages to a home than to a business which receives more packages in a single stop.

UPS also announced it would implement peak residential surcharges on a customer segmented basis. These surcharges will focus on SurePost and residential packages. According to the CEO, “pricing strategies will be designed to ensure we’re properly compensated for the value we provide.”

There’s no denying the value UPS provides in delivering packages but these residential surcharges along with the recent annual rate hike as well as the change in price calculation to dimensional weight pricing may lead one to ponder alternatives. For retailers, the existence of “free shipping” may be in jeopardy and with no “free shipping” the risk of losing customers may rise.

In addition, UPS’ international business, particularly Europe, also noted increased in-country expenses because of demand during peak season exceeded network capacity.

2015 will be another year in which UPS has its work cut out for them. Cost cutting, enhancing its network and changes in product demand are among the issues facing the company. During the earnings call, UPS noted that products distributed closer to consumers resulted in some trade down from premium products. This will be a trend that the company will have to pay close attention to as this where a lot of start-up companies, in particular, are focusing on and could be competitive threat to UPS.

For more thoughts, be sure to sign up for Ti’s newsletters. Just visit the website at http://www.transportintelligence.com for more details.

Report back from Cargo Logistics Canada

This year has started off on a great note. Ti published its first report of the year a couple of weeks ago – Global E-Commerce Logistics – which has proven quite popular. And, for me an opportunity to speak at the Cargo Logistic Canada Conference which was held January 28 – 29 in Vancouver. Ti was a media sponsor for this event as well.

A great crowd was on hand at the conference. It seems there was something for everyone with sessions going on all day both days. I’m not sure what the final count for the attendance was but I was told it was in the neighborhood of 2,000.

I was lucky enough to be on two panel discussions:

  • Global Trade Impacts & Trends
  • Which Canal are You?

Great conversation in both of these sessions – Shifting trade lanes, the growing importance of emerging markets and how Canada is and will be affected were among the discussion points.

Also of great interest was the US West Coast port situation which seems to have positively affected the Canadian West Coast ports, Prince Rupert and Vancouver. However, Vancouver is going through a bit of rough patch with its truck drivers and that was evident with some demonstrations outside of the convention center by the time I left for the airport.

Prince Rupert has been a true success story as I mentioned to a couple of publications. In addition, I had the great pleasure of chatting with the Port’s marketing manager and learned more about the Port. Speaking of ports, I enjoyed a great chat with the folks from the Port of Halifax and with the Port of Charleston. Paul McClintock, COO of the SC Port Authority which oversees the Port of Charleston was on a panel discussion with me. Wow. The things they are doing to get truck drivers in and out quickly, deepening the harbor for the big vessels and expanding port operations was amazing to hear. Definitely a strong competitor for Savannah but I still can’t help but think a “Super Port”, combining the two ports would be a great move for them both. But, unfortunately politics have to play into all of this.

Anyway, a quick trip around the trade show to check out the many vendors resulted in a great conversation with the folks from AAL – Austral Asia Line. Being a container type of person that I am, they were happy to give me a quick lesson in break bulk, project cargo and heavy lift operations. They have operations world-wide and are in expansion-mode but seem to be particularly strong within the Asia-Pacific region. Not bad considering all the opportunity there!

The trip ended too early for me but I am happy to say the organizers are bringing the event to the US in December. So, mark your calendar for Dec. 2 and 3 for Cargo Logistics America in San Diego and for those of you planning for 2016, Cargo Logistics Canada will be Feb. 17 and 18 in Montreal.

My special thanks to Peter, Tiffany and Gennifer for making me feel so welcomed! You all did a fantastic job in organizing a great event. Thank you so much.

A survey request from a freight forwarding start-up

Yes. Another freight forwarding survey request but one from a start-up company here in the US. It’s completely anonymous and only takes a couple of minutes to take. Also, if possible, feel free to share the survey link with others.

So, please help an up and coming freight forwarder out. If there are enough responses, perhaps a nice blog post will be in order to summarize the findings.

Purpose of the survey: According to the company, the survey is designed to learn about the challenges ocean consolidators face in their sales and marketing processes and the role of technology in the current ocean freight sales and marketing process.

https://www.surveymonkey.com/s/Z8GWPZT

Thanks again,

Cathy