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.
The transportation industry's worst-kept secret, Amazon.com Inc.'s decision to lease 20 Boeing 767 freighters from all-cargo operator Air Transport Services Group Inc. (ATSG) to launch its own domestic air delivery network, was formally disclosed yesterday. The question for the moment is which hide the Seattle-based e-commerce beast will tan by this announcement.
According to Satish Jindel, founder and president of SJ Consulting Group Inc., the hide could belong to another beast: UPS Inc. According to SJ estimates, two-day air deliveries from Amazon's burgeoning DC network to end customers, the type of service it will likely be providing through the ATSG deal, accounted for two-thirds of the $2.1 billion in revenue the Atlanta-based transport and logistics giant generated from Amazon last year. Part of that business will be hived off, Jindel said. The only question is how much.
Amazon will leverage the ATSG network to execute two-day deliveries of goods to locations that cannot be reached by ground from one of its 72 U.S. fulfillment and redistribution centers, Jindel said. In many cases, the air network will be used to fulfill orders for goods that aren't in the fulfillment centers nearest the destination, he added.
Jindel said Amazon would likely use the planes to carry consolidations of thousands of packages that are picked up along multiple points. For example, a plane leaves Seattle with shipments bound for Atlanta, but makes several stops along the way to aggregate what may be equal to two to five thousand pounds of individual parcels, he said. The consolidation will be broken down at or near Atlanta, and tendered to the U.S. Postal Service—which already moves 62 percent of Amazon's direct ground parcels—for the final delivery, Jindel said.
Glenn Zaccara, a UPS spokesman, did not address the issues raised by Jindel. Zaccara said in a statement that UPS has a good relationship with Amazon and that it continues to work with the e-tailer to support its global logistics requirements. Amazon, which rarely, if ever, publicly discloses its operating plans, left it to Wilmington, Ohio-based ATSG to announce the deal on its web site. Nothing appeared on Amazon's corporate site.
Last summer, Amazon began leasing five of the aircraft in what amounted to a pilot program. An additional 10 planes are expected to come on line by year's end, with at least five more in 2017. Rob Martinez, CEO of consultancy Shipware LLC, said the combined airlift could support up to 500,000 packages a day, an estimate that Martinez said is based on certain assumptions about shipment size. That figure, which would be slightly more than 10 percent of Amazon's daily count of 4 million shipments, is a "significant start" toward the company building out its own air delivery network, he said.
Amazon's decision to control its network is believed to be based on reining in third-party transportation spending, which has escalated in recent years as ordering demand from its site has exploded, and on providing a more direct and personalized shipping experience. Its goal, according to some, is to go beyond supplementing the capacity provided by its transport partners to function as an asset-based, third-party logistics provider (3PL) to manufacturers, retailers, and other businesses. Colin Sebastian, who follows Amazon for investment firm Robert W. Baird and Co. Inc., has estimated Amazon has a $400 billion market opportunity for delivery, freight forwarding, and contract logistics services.
John Haber, CEO of consultancy Spend Management Experts, said that Amazon will now look to Europe and sign a similar contract with a provider on the continent. Haber said it had been rumored around the Christmas holidays that Amazon had leased a Boeing 737 freighter operated by charter carrier ASL Airlines France, which is part of Dublin-based ASL Aviation Group. In early February, ASL and Dutch delivery company TNT Express signed a conditional agreement calling for ASL to buy two cargo airlines owned by TNT Express, which is in the process of being acquired by FedEx Corp. for US$4.8 billion. TNT's Belgian airline TNT Airways and its Spanish carrier Pan Air Líneas Aéreas SA will have to be divested due to European airline ownership regulations.
Editor's note: This story has been updated to include comments from UPS.
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.