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.
If the 2015 peak-season parcel-delivery saga is ever chronicled, the overarching narrative could be how the nation's largest transportation company accomplished more by handling less.
After two years of trial and error, UPS Inc. appears to have gotten this past year's holiday porridge close to just right. It tweaked its vast domestic network to effectively add an extra day of delivery cushion. Perhaps more important, given the growing amount of sway e-tailers have come to hold over their delivery providers, UPS declined to accept an undetermined—but no doubt large—number of packages during the last week of the shipping cycle, refusing to accommodate last-minute shipping demands that would stress its network.
According to Satish Jindel, head of SJ Consulting Group Inc., UPS effectively created an additional day of delivery time for packages shipped on Dec. 21 and scheduled to be delivered either by air in two days or on the ground in three. This meant packages moving in three-day service had to be tendered by Dec. 18 to arrive by Christmas Eve, Jindel explained. For two-day deliveries, the additional day meant that Dec. 21 was the cutoff for parcels arriving by Christmas Eve, Jindel said. Separately, UPS chose not to accept overnight deliveries on Christmas week from customers who, for the most part, did not use its overnight service during the same week in 2014, Jindel said. UPS' goal was to avoid overloading its network with unplanned volume on Dec. 23 and 24, Jindel said.
Many shippers turned away by UPS headed to rival FedEx Corp., which accommodated most of the volume. In a turnabout from the 2013 peak, when UPS took enormous criticism for late deliveries of an avalanche of last-minute packages that it was unprepared for, it was FedEx that bore the brunt of the social media backlash as it struggled with the additional last-minute volumes.
Susan L. Rosenberg, a UPS spokeswoman, said the company "engaged with more customers this year than before for updated forecasts to develop detailed operating plans, and we were disciplined to adhere to (those) plans." Rosenberg said the company "would balance accepting volume with maintaining UPS network integrity," adding that it would take business "where we could without putting service commitments at risk."
Though there were service hiccups in 2015—UPS' during the "Cyber Monday" online ordering hysteria and FedEx's around mid-December—both companies performed adequately through the cycle, according to industry data. Adjusted for issues like weather that are out of the carriers' control, UPS had a 96.10-percent on-time delivery rate, while FedEx clocked in at a 94.56-percent on-time delivery rate, according to consultancy Shipware LLC. Those were improvements over 2013 and 2014 results, according to the firm.
FedEx and the U.S. Postal Service, which reported the best on-time performance according to SJ data, issued statements praising their organizations' performance but offering little else in the way of analysis.
For UPS, last month's outcome was a far cry from two years ago, when its air network, gummed up by the parcel avalanche, was saddled with late deliveries of millions of holiday packages. It was attacked in the popular press and skewered on social media. Amazon, one of UPS' largest customers, made its dissatisfaction clear by saying soon after the holidays that it would re-evaluate its delivery options in the wake of the problems. Though industry experts said UPS' operations were hamstrung by bad weather and unrealistic delivery commitments by e-merchants so close to Christmas, the episode hurt UPS' image and put planning for the 2014 peak a top priority.
UPS in 2014 invested heavily in fleet, infrastructure, and manpower, only to discover that the peak volumes did not live up to expectations. Customers praised the quality and reliability of UPS' service. However, investors and analysts were taken aback by the high costs relative to the disappointing volumes.
USPS' stellar delivery performance stemmed in large part from its handling of massive amounts of last-mile deliveries for Amazon, a heavy user of the Post Office's "Parcel Select" service, where packages are inducted by large-volume users deep into the postal pipeline for short—and normally uneventful—trips, mostly to residences. About 70 percent of Amazon's holiday shipments moved through Parcel Select, 62 percent directly from Amazon and 8 percent from UPS' "Surepost" service, where UPS pushes packages into USPS' system for last-mile delivery, according to SJ data.
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 U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills said.
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.