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.
Brad Jacobs is shopping in Europe, and he has brought the big wallet.
Jacobs, the founder, chairman and CEO of freight broker and third-party logistics provider XPO Logistics Inc., announced last night one of the most ambitious bets in the 3PL industry's history by acquiring French transport and logistics giant Norbert Dentressangle S.A. for US$3.53 billion in cash and debt. The acquisition, the largest of Jacobs' acquisitive three-decade career spanning multiple industries, catapults Greenwich, Conn.-based XPO into the global big leagues by taking out one of the continent's most visible logistics operators.
Under the deal's terms, founder Norbert Dentressangle will sell his family's 67-percent ownership in the Lyon, France-based company for 217.50 euros per share. XPO will then tender for the balance of Dentressangle shares at the same price. The deal's value represents a 37-percent premium to Dentressangle's April 27 closing price.
Not since Deutsche Post DHL's US$6.7 billion purchase of the U.K. contract logistics provider Exel in 2005 can anyone remember a deal this large that involved a mostly nonasset-based provider. Dentressangle's capital expenditures equal just 2.5 percent of revenue, meaning its "asset intensity" is low, according to XPO.
The deal, slated to close by the end of June, will push XPO's annualized revenue to $8.5 billion, about two years ahead of its initial timeline for hitting that mark, the company said. Hervé Montjotin, Dentressangle's chairman and CEO, will become CEO of XPO's European business and president of the parent company, XPO said. Dentressangle will retain its Lyon headquarters, and XPO has pledged to keep all of the company's full-time employees for at least 18 months from the deal's closing date.
The Dentressangle name, which has been around since 1979, will disappear once the deal closes, and the business will be known as XPO Logistics. Jacobs said in an interview late last night that all of XPO's operating companies that have been known by other names, such as XPO Last Mile for its last-mile delivery business, have been rebranded under the XPO Logistics name.
In Dentressangle, XPO acquires a company that, in Jacobs' words, "is a mirror image of our own, only in Europe." Of Dentressangle's US$5.5 billion in 2014 revenue, about $2.7 billion comes from contract logistics (a somewhat fancy term for warehousing); $1.2 billion from freight brokerage; and $1.1 billion from company-owned, independently operated, and dedicated over-the-road trucking services. The balance comes mostly from air- and ocean-freight forwarding.
Retail and Fast Moving Consumer Goods (FMCG) customers account for 70 percent of Dentressangle's contract logistics business, according to Armstrong & Associates Inc., a consultancy. Dentressangle is also a leader in the handling of bulk and temperature-controlled goods, with 3.9 million cubic meters of temperature-controlled storage volume under foot, Armstrong said.
Both companies have been acquisitive, and have leveraged their dealmaking to expand into virtually all areas of logistics. For example, XPO was founded in 2011 with the objective of building footprints in brokerage, freight forwarding, expedited transport, and intermodal. Since then, it has expanded into contract logistics, transportation management, and last-mile deliveries, and gotten deeper into intermodal than Jacobs originally envisioned with its 2014 purchase of Dublin, Ohio-based Pacer International.
Jacobs said in the interview that XPO's penetration into other segments was driven by his desire to be a "comprehensive solutions provider," and by demands from shippers in the U.S. and abroad to work with a smaller universe of vendors with a myriad of service offerings integrated under one roof.
The U.S. accounts for about 26 percent of Dentressangle's contract logistics business, most of which came from its $750 million acquisition last July of Des Moines, Iowa-based Jacobson Cos. Jacobs said XPO became interested in Dentressangle after finishing second in the bidding for Jacobson. "We wanted to know more about who beat us," he said. After researching the company, Jacobs said the fit between the two firms was so compelling that he sought to begin talks in earnest.
The deal was finalized in the past two weeks during round-the-clock negotiations, Jacobs said. The strengthening of the U.S. dollar against the euro proved a tailwind, making XPO's purchase price about 20 percent cheaper than it would have been a year ago. "We are buying at an opportunistic time," Jacobs said. He added, though, that the bigger bang for the acquisition buck was "just a side benefit."
XPO gets a foothold in a region that is roughly twice the size of the U.S. market, and perhaps more importantly, is in the early stages of outsourcing logistics activities. Jacobs estimated that only about 27 percent of European firms currently outsource their logistics work. XPO also said it would gain traffic density on road lanes covering about 90 percent of the Eurozone's GDP-producing regions.
Jacobs' pivot to Europe comes on the heels of XPO losing out on several attractive bids. Besides the Jacobson deal, it saw Singapore-based 3PL provider APL Logistics fall into the hands of Japanese giant Kintetsu World Express—thwarting Jacobs' desire to establish a foothold in the trans-Pacific market--and, most recently, Command Transportation LLC—a Chicago-based truckload broker that Jacobs coveted—acquired by Echo Global Logistics Inc.
Jacobs has said he will not overpay for a potential asset no matter how desirable, and it is believed the winning bidders in those deals went to levels that XPO would not match. Dentressangle was purchased at a multiple of 9.1 times projected 2015 earnings before interest, taxes, depreciation, and amortization (EBITDA). In today's M&A environment, that is considered a reasonable multiple for a well-regarded 3PL.
John G. Larkin, lead transport analyst for investment firm Stifel, Nicolaus & Co., said in a note last night on the Dentressangle deal that "we, and most others we suspect, were not thinking of European companies as acquisition targets, and we were not contemplating companies of this size."
In the interview, Jacobs said XPO had been "quietly talking" to other European companies about possible tie-ups. Now, with a highly visible asset like Dentressangle in tow, those conversations will likely take on more intensity, he said.
The New York-based industrial artificial intelligence (AI) provider Augury has raised $75 million for its process optimization tools for manufacturers, in a deal that values the company at more than $1 billion, the firm said today.
According to Augury, its goal is deliver a new generation of AI solutions that provide the accuracy and reliability manufacturers need to make AI a trusted partner in every phase of the manufacturing process.
The “series F” venture capital round was led by Lightrock, with participation from several of Augury’s existing investors; Insight Partners, Eclipse, and Qumra Capital as well as Schneider Electric Ventures and Qualcomm Ventures. In addition to securing the new funding, Augury also said it has added Elan Greenberg as Chief Operating Officer.
“Augury is at the forefront of digitalizing equipment maintenance with AI-driven solutions that enhance cost efficiency, sustainability performance, and energy savings,” Ashish (Ash) Puri, Partner at Lightrock, said in a release. “Their predictive maintenance technology, boasting 99.9% failure detection accuracy and a 5-20x ROI when deployed at scale, significantly reduces downtime and energy consumption for its blue-chip clients globally, offering a compelling value proposition.”
The money supports the firm’s approach of "Hybrid Autonomous Mobile Robotics (Hybrid AMRs)," which integrate the intelligence of "Autonomous Mobile Robots (AMRs)" with the precision and structure of "Automated Guided Vehicles (AGVs)."
According to Anscer, it supports the acceleration to Industry 4.0 by ensuring that its autonomous solutions seamlessly integrate with customers’ existing infrastructures to help transform material handling and warehouse automation.
Leading the new U.S. office will be Mark Messina, who was named this week as Anscer’s Managing Director & CEO, Americas. He has been tasked with leading the firm’s expansion by bringing its automation solutions to industries such as manufacturing, logistics, retail, food & beverage, and third-party logistics (3PL).
Supply chains continue to deal with a growing volume of returns following the holiday peak season, and 2024 was no exception. Recent survey data from product information management technology company Akeneo showed that 65% of shoppers made holiday returns this year, with most reporting that their experience played a large role in their reason for doing so.
The survey—which included information from more than 1,000 U.S. consumers gathered in January—provides insight into the main reasons consumers return products, generational differences in return and online shopping behaviors, and the steadily growing influence that sustainability has on consumers.
Among the results, 62% of consumers said that having more accurate product information upfront would reduce their likelihood of making a return, and 59% said they had made a return specifically because the online product description was misleading or inaccurate.
And when it comes to making those returns, 65% of respondents said they would prefer to return in-store, if possible, followed by 22% who said they prefer to ship products back.
“This indicates that consumers are gravitating toward the most sustainable option by reducing additional shipping,” the survey authors said in a statement announcing the findings, adding that 68% of respondents said they are aware of the environmental impact of returns, and 39% said the environmental impact factors into their decision to make a return or exchange.
The authors also said that investing in the product experience and providing reliable product data can help brands reduce returns, increase loyalty, and provide the best customer experience possible alongside profitability.
When asked what products they return the most, 60% of respondents said clothing items. Sizing issues were the number one reason for those returns (58%) followed by conflicting or lack of customer reviews (35%). In addition, 34% cited misleading product images and 29% pointed to inaccurate product information online as reasons for returning items.
More than 60% of respondents said that having more reliable information would reduce the likelihood of making a return.
“Whether customers are shopping directly from a brand website or on the hundreds of e-commerce marketplaces available today [such as Amazon, Walmart, etc.] the product experience must remain consistent, complete and accurate to instill brand trust and loyalty,” the authors said.
When you get the chance to automate your distribution center, take it.
That's exactly what leaders at interior design house
Thibaut Design did when they relocated operations from two New Jersey distribution centers (DCs) into a single facility in Charlotte, North Carolina, in 2019. Moving to an "empty shell of a building," as Thibaut's Michael Fechter describes it, was the perfect time to switch from a manual picking system to an automated one—in this case, one that would be driven by voice-directed technology.
"We were 100% paper-based picking in New Jersey," Fechter, the company's vice president of distribution and technology, explained in a
case study published by Voxware last year. "We knew there was a need for automation, and when we moved to Charlotte, we wanted to implement that technology."
Fechter cites Voxware's promise of simple and easy integration, configuration, use, and training as some of the key reasons Thibaut's leaders chose the system. Since implementing the voice technology, the company has streamlined its fulfillment process and can onboard and cross-train warehouse employees in a fraction of the time it used to take back in New Jersey.
And the results speak for themselves.
"We've seen incredible gains [from a] productivity standpoint," Fechter reports. "A 50% increase from pre-implementation to today."
THE NEED FOR SPEED
Thibaut was founded in 1886 and is the oldest operating wallpaper company in the United States, according to Fechter. The company works with a global network of designers, shipping samples of wallpaper and fabrics around the world.
For the design house's warehouse associates, picking, packing, and shipping thousands of samples every day was a cumbersome, labor-intensive process—and one that was prone to inaccuracy. With its paper-based picking system, mispicks were common—Fechter cites a 2% to 5% mispick rate—which necessitated stationing an extra associate at each pack station to check that orders were accurate before they left the facility.
All that has changed since implementing Voxware's Voice Management Suite (VMS) at the Charlotte DC. The system automates the workflow and guides associates through the picking process via a headset, using voice commands. The hands-free, eyes-free solution allows workers to focus on locating and selecting the right item, with no paper-based lists to check or written instructions to follow.
Thibaut also uses the tech provider's analytics tool, VoxPilot, to monitor work progress, check orders, and keep track of incoming work—managers can see what orders are open, what's in process, and what's completed for the day, for example. And it uses VoxTempo, the system's natural language voice recognition (NLVR) solution, to streamline training. The intuitive app whittles training time down to minutes and gets associates up and working fast—and Thibaut hitting minimum productivity targets within hours, according to Fechter.
EXPECTED RESULTS REALIZED
Key benefits of the project include a reduction in mispicks—which have dropped to zero—and the elimination of those extra quality-control measures Thibaut needed in the New Jersey DCs.
"We've gotten to the point where we don't even measure mispicks today—because there are none," Fechter said in the case study. "Having an extra person at a pack station to [check] every order before we pack [it]—that's been eliminated. Not only is the pick right the first time, but [the order] also gets packed and shipped faster than ever before."
The system has increased inventory accuracy as well. According to Fechter, it's now "well over 99.9%."
IT projects can be daunting, especially when the project involves upgrading a warehouse management system (WMS) to support an expansive network of warehousing and logistics facilities. Global third-party logistics service provider (3PL) CJ Logistics experienced this first-hand recently, embarking on a WMS selection process that would both upgrade performance and enhance security for its U.S. business network.
The company was operating on three different platforms across more than 35 warehouse facilities and wanted to pare that down to help standardize operations, optimize costs, and make it easier to scale the business, according to CIO Sean Moore.
Moore and his team started the WMS selection process in late 2023, working with supply chain consulting firm Alpine Supply Chain Solutions to identify challenges, needs, and goals, and then to select and implement the new WMS. Roughly a year later, the 3PL was up and running on a system from Körber Supply Chain—and planning for growth.
SECURING A NEW SOLUTION
Leaders from both companies explain that a robust WMS is crucial for a 3PL's success, as it acts as a centralized platform that allows seamless coordination of activities such as inventory management, order fulfillment, and transportation planning. The right solution allows the company to optimize warehouse operations by automating tasks, managing inventory levels, and ensuring efficient space utilization while helping to boost order processing volumes, reduce errors, and cut operational costs.
CJ Logistics had another key criterion: ensuring data security for its wide and varied array of clients, many of whom rely on the 3PL to fill e-commerce orders for consumers. Those clients wanted assurance that consumers' personally identifying information—including names, addresses, and phone numbers—was protected against cybersecurity breeches when flowing through the 3PL's system. For CJ Logistics, that meant finding a WMS provider whose software was certified to the appropriate security standards.
"That's becoming [an assurance] that our customers want to see," Moore explains, adding that many customers wanted to know that CJ Logistics' systems were SOC 2 compliant, meaning they had met a standard developed by the American Institute of CPAs for protecting sensitive customer data from unauthorized access, security incidents, and other vulnerabilities. "Everybody wants that level of security. So you want to make sure the system is secure … and not susceptible to ransomware.
"It was a critical requirement for us."
That security requirement was a key consideration during all phases of the WMS selection process, according to Michael Wohlwend, managing principal at Alpine Supply Chain Solutions.
"It was in the RFP [request for proposal], then in demo, [and] then once we got to the vendor of choice, we had a deep-dive discovery call to understand what [security] they have in place and their plan moving forward," he explains.
Ultimately, CJ Logistics implemented Körber's Warehouse Advantage, a cloud-based system designed for multiclient operations that supports all of the 3PL's needs, including its security requirements.
GOING LIVE
When it came time to implement the software, Moore and his team chose to start with a brand-new cold chain facility that the 3PL was building in Gainesville, Georgia. The 270,000-square-foot facility opened this past November and immediately went live running on the Körber WMS.
Moore and Wohlwend explain that both the nature of the cold chain business and the greenfield construction made the facility the perfect place to launch the new software: CJ Logistics would be adding customers at a staggered rate, expanding its cold storage presence in the Southeast and capitalizing on the location's proximity to major highways and railways. The facility is also adjacent to the future Northeast Georgia Inland Port, which will provide a direct link to the Port of Savannah.
"We signed a 15-year lease for the building," Moore says. "When you sign a long-term lease … you want your future-state software in place. That was one of the key [reasons] we started there.
"Also, this facility was going to bring on one customer after another at a metered rate. So [there was] some risk reduction as well."
Wohlwend adds: "The facility plus risk reduction plus the new business [element]—all made it a good starting point."
The early benefits of the WMS include ease of use and easy onboarding of clients, according to Moore, who says the plan is to convert additional CJ Logistics facilities to the new system in 2025.
"The software is very easy to use … our employees are saying they really like the user interface and that you can find information very easily," Moore says, touting the partnership with Alpine and Körber as key to making the project a success. "We are on deck to add at least four facilities at a minimum [this year]."