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.
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
E-tailing giant Amazon.com, Inc. has made little secret of its desire to more effectively manage its own supply chain and to take over the supply chains of its customers, and its announcement late Tuesday that it will break ground later this year on a $1.5 billion air hub at Cincinnati/Northern Kentucky Airport is a major step on that quest.
The facility, to be located in the Cincinnati suburb of Hebron, Ky., will contain 11 buildings, according to a research note by Colin Sebastian, an analyst for Robert W. Baird, an investment firm. It will be the focal point of Seattle-based Amazon's growing fleet of dedicated freighter aircraft—of which 16 of a planned fleet of 40 are operational—to support its "Prime Air" network for two-day deliveries. More importantly, especially for traditional transport and logistics firms that don't think Amazon competes with them, this new facility places another piece in the company's ambitious jigsaw puzzle of controlling a greater portion of its supply chain, and those of its third party merchants that use the "Fulfillment by Amazon" (FBA) service, over time.
Though it is not clear, the assumption is that the Cincinnati hub will replace Amazon's existing operations at the nearby Wilmington, Ohio, air park, which were not dedicated Amazon facilities. A local report said Amazon employees there would be offered jobs in other parts of its network. The new operation is expected to employ 2,000 full-time workers, Amazon said.
Amazon chose the site for its central location, skilled workforce, and proximity to its other nearby fulfillment centers, Dave Clark, Amazon senior vice president of worldwide operations, said in a statement. Besides the air cargo fleet, Amazon has a network of 4,000 trailers, a crowd-sourced courier service, called "AmazonFlex," for last-mile deliveries, and an ocean freight forwarder license for its Chinese operation which enables it to serve the U.S. According to published reports, Amazon has handled the movement of 150 containers in the past few months. All of this, and what may be still to come, are enabling Amazon to move beyond its roots as an online retailer, and to define itself as a "transportation service provider" carrying freight for both its direct retail customers and third-party wholesalers participating in the FBA program.
SUPPORTING BOTH GOALS
The Cincinnati airport is ideally located to support both of those goals, sitting in a fast growing cargo hub that is part way between an "Amazon Prime Air" facility in Wilmington and the Amazon subsidiary Zappos.com's fulfillment center in Shepherdsville, Ky., said Jim Tompkins, CEO of supply chain consultancy Tompkins International.
By combining that central location with a growing aircraft fleet, Amazon could be positioning itself to move from standard two-day delivery for its Prime customers to one-day delivery, Tompkins said. Such fast service could help Amazon counter a competitive move from rivals like Wal-Mart Stores Inc., which said yesterday it would provide two-day shipping for free.
"The only hole in (Amazon's) bucket is when they have slow-moving items that can't be stored in all their fulfillment centers, so they're stored in just one or two distribution centers (DCs) instead of 40 to 50 sites," he said in an interview today. "The only way to do [next-day shipping] then is to have more air capacity and more airplanes. And that is exactly what they're doing."
Even for a company of Amazon's size, the only way to provide such fast fulfillment at a reasonable cost is to achieve enough volume to drive down the cost of order picking by automating its DCs and to cut the costs of home delivery by increasing delivery density, he said.
"That is part of the brilliance of Amazon: That they realize what drives efficiency in fast delivery and great customer service is to have high volumes. Scale is king," Tompkins said.
Amazon has 11 fulfillment centers in Kentucky alone, with at least 13 fulfillment centers within a 150-mile radius of the planned Cincinnati facility, providing plenty of package volume to generate significant per-unit savings, Sebastian of Baird said.
Transport savings have become one of Amazon's many Holy Grails. Its shipping costs have exceeded shipping revenue for several years, due to the explosive growth of its business and, the company believes, its lack of custodial control of its shipments. Tomorrow, Amazon releases its fourth quarter and year-end results, which will include shipping trends during the key holiday peak season.
The move to Cincinnati is a blow to Wilmington, which has spent the past eight years rebuilding its presence after package giant DHL Express ceased domestic U.S. service in 2009 and closed its national hub there. DHL today uses the same Cincinnati airport where Amazon will build its hub.
The air park has 1,300 acres, two runways, and 3 million square feet of office, industrial, and hangar space. In an email, Wilmington officials said they are optimistic about the air park's future. The work with Amazon "proved its ability to handle a major cargo project reliably and cost effectively," they said. City officials said they are in on-going discussions with other airlines. About 1,300 people are employed at 12 companies in the air park.
Satish Jindel, president of consultancy SJ Consulting, believes Amazon is taking a big gamble relocating from Wilmington to Cincinnati. In a letter to be sent tomorrow to Amazon Chairman and CEO Jeffrey P. Bezos, Jindel said Amazon would save about $1 billion by developing a hub in Wilmington, and that it would be up and running sooner. Jindel added that it would be easier and less expensive to hire and train workers in Wilmington than in Cincinnati. In a phone interview today, Jindel said Amazon would have an all-cargo facility at Wilmington at its disposal, whereas at Cincinnati it would share space with passenger airlines.
Though Jindel has doubts about the move, he doesn't have any doubts about Amazon's strategy. The fast-growing FBA service has been taking business from Memphis-based FedEx Corp. and UPS Inc., both of whom had these merchants as former customers, Jindel said. What's more, consumers and businesses that order on Amazon's website were once the customers of retailers that are FedEx and UPS shippers, he said.
"FedEx and UPS need to get their heads out of the sand and bring in outside people with a different vision" of dealing with a company like Amazon, Jindel said.
Leaders at American ports are cheering the latest round of federal infrastructure funding announced today, which will bring almost $580 million in Port Infrastructure Development Program (PIDP) awards, funding 31 projects in 15 states and one territory.
“Modernizing America’s port infrastructure is essential to strengthening the multimodal network that supports our nation's supply chain,” Maritime Administrator Ann Phillips said in a release. “Approximately 2.3 billion short tons of goods move through U.S. waterways each year, and the benefits of developing port infrastructure extend far beyond the maritime sector. This funding enhances the flow and capacity of goods moved, bolstering supply chain resilience across all transportation modes, and addressing the environmental and health impacts on port communities.”
Even as the new awardees begin the necessary paperwork, industry group the American Association of Port Authorities (AAPA) said it continues to urge Congress to continue funding PIDP at the full authorized amount and get shovels in the ground faster by passing the bipartisan Permitting Optimization for Responsible Transportation (PORT) Act, which slashes red tape, streamlines outdated permitting, and makes the process more efficient and predictable.
"Our nation's ports sincerely thank our bipartisan Congressional leaders, as well as the USDOT for making these critical awards possible," Cary Davis, AAPA President and CEO, said in a release. "Now comes the hard part. AAPA ports will continue working closely with our Federal Government partners to get the money deployed and shovels in the ground as soon as possible so we can complete these port infrastructure upgrades and realize the benefits to our nation's supply chain and people faster."
Supply chains are poised for accelerated adoption of mobile robots and drones as those technologies mature and companies focus on implementing artificial intelligence (AI) and automation across their logistics operations.
That’s according to data from Gartner’s Hype Cycle for Mobile Robots and Drones, released this week. The report shows that several mobile robotics technologies will mature over the next two to five years, and also identifies breakthrough and rising technologies set to have an impact further out.
Gartner’s Hype Cycle is a graphical depiction of a common pattern that arises with each new technology or innovation through five phases of maturity and adoption. Chief supply chain officers can use the research to find robotic solutions that meet their needs, according to Gartner.
Gartner, Inc.
The mobile robotic technologies set to mature over the next two to five years are: collaborative in-aisle picking robots, light-cargo delivery robots, autonomous mobile robots (AMRs) for transport, mobile robotic goods-to-person systems, and robotic cube storage systems.
“As organizations look to further improve logistic operations, support automation and augment humans in various jobs, supply chain leaders have turned to mobile robots to support their strategy,” Dwight Klappich, VP analyst and Gartner fellow with the Gartner Supply Chain practice, said in a statement announcing the findings. “Mobile robots are continuing to evolve, becoming more powerful and practical, thus paving the way for continued technology innovation.”
Technologies that are on the rise include autonomous data collection and inspection technologies, which are expected to deliver benefits over the next five to 10 years. These include solutions like indoor-flying drones, which utilize AI-enabled vision or RFID to help with time-consuming inventory management, inspection, and surveillance tasks. The technology can also alleviate safety concerns that arise in warehouses, such as workers counting inventory in hard-to-reach places.
“Automating labor-intensive tasks can provide notable benefits,” Klappich said. “With AI capabilities increasingly embedded in mobile robots and drones, the potential to function unaided and adapt to environments will make it possible to support a growing number of use cases.”
Humanoid robots—which resemble the human body in shape—are among the technologies in the breakthrough stage, meaning that they are expected to have a transformational effect on supply chains, but their mainstream adoption could take 10 years or more.
“For supply chains with high-volume and predictable processes, humanoid robots have the potential to enhance or supplement the supply chain workforce,” Klappich also said. “However, while the pace of innovation is encouraging, the industry is years away from general-purpose humanoid robots being used in more complex retail and industrial environments.”
An eight-year veteran of the Georgia company, Hakala will begin his new role on January 1, when the current CEO, Tero Peltomäki, will retire after a long and noteworthy career, continuing as a member of the board of directors, Cimcorp said.
According to Hakala, automation is an inevitable course in Cimcorp’s core sectors, and the company’s end-to-end capabilities will be crucial for clients’ success. In the past, both the tire and grocery retail industries have automated individual machines and parts of their operations. In recent years, automation has spread throughout the facilities, as companies want to be able to see their entire operation with one look, utilize analytics, optimize processes, and lead with data.
“Cimcorp has always grown by starting small in the new business segments. We’ve created one solution first, and as we’ve gained more knowledge of our clients’ challenges, we have been able to expand,” Hakala said in a release. “In every phase, we aim to bring our experience to the table and even challenge the client’s initial perspective. We are interested in what our client does and how it could be done better and more efficiently.”
Although many shoppers will
return to physical stores this holiday season, online shopping remains a driving force behind peak-season shipping challenges, especially when it comes to the last mile. Consumers still want fast, free shipping if they can get it—without any delays or disruptions to their holiday deliveries.
One disruptor that gets a lot of headlines this time of year is package theft—committed by so-called “porch pirates.” These are thieves who snatch parcels from front stairs, side porches, and driveways in neighborhoods across the country. The problem adds up to billions of dollars in stolen merchandise each year—not to mention headaches for shippers, parcel delivery companies, and, of course, consumers.
Given the scope of the problem, it’s no wonder online shoppers are worried about it—especially during holiday season. In its annual report on package theft trends, released in October, the
security-focused research and product review firm Security.org found that:
17% of Americans had a package stolen in the past three months, with the typical stolen parcel worth about $50. Some 44% said they’d had a package taken at some point in their life.
Package thieves poached more than $8 billion in merchandise over the past year.
18% of adults said they’d had a package stolen that contained a gift for someone else.
Ahead of the holiday season, 88% of adults said they were worried about theft of online purchases, with more than a quarter saying they were “extremely” or “very” concerned.
But it doesn’t have to be that way. There are some low-tech steps consumers can take to help guard against porch piracy along with some high-tech logistics-focused innovations in the pipeline that can protect deliveries in the last mile. First, some common-sense advice on avoiding package theft from the Security.org research:
Install a doorbell camera, which is a relatively low-cost deterrent.
Bring packages inside promptly or arrange to have them delivered to a secure location if no one will be at home.
Consider using click-and-collect options when possible.
If the retailer allows you to specify delivery-time windows, consider doing so to avoid having packages sit outside for extended periods.
These steps may sound basic, but they are by no means a given: Fewer than half of Americans consider the timing of deliveries, less than a third have a doorbell camera, and nearly one-fifth take no precautions to prevent package theft, according to the research.
Tech vendors are stepping up to help. One example is
Arrive AI, which develops smart mailboxes for last-mile delivery and pickup. The company says its Mailbox-as-a-Service (MaaS) platform will revolutionize the last mile by building a network of parcel-storage boxes that can be accessed by people, drones, or robots. In a nutshell: Packages are placed into a weatherproof box via drone, robot, driverless carrier, or traditional delivery method—and no one other than the rightful owner can access it.
Although the platform is still in development, the company already offers solutions for business clients looking to secure high-value deliveries and sensitive shipments. The health-care industry is one example: Arrive AI offers secure drone delivery of medical supplies, prescriptions, lab samples, and the like to hospitals and other health-care facilities. The platform provides real-time tracking, chain-of-custody controls, and theft-prevention features. Arrive is conducting short-term deployments between logistics companies and health-care partners now, according to a company spokesperson.
The MaaS solution has a pretty high cool factor. And the common-sense best practices just seem like solid advice. Maybe combining both is the key to a more secure last mile—during peak shipping season and throughout the year as well.
The Boston-based enterprise software vendor Board has acquired the California company Prevedere, a provider of predictive planning technology, saying the move will integrate internal performance metrics with external economic intelligence.
According to Board, the combined technologies will integrate millions of external data points—ranging from macroeconomic indicators to AI-driven predictive models—to help companies build predictive models for critical planning needs, cutting costs by reducing inventory excess and optimizing logistics in response to global trade dynamics.
That is particularly valuable in today’s rapidly changing markets, where companies face evolving customer preferences and economic shifts, the company said. “Our customers spend significant time analyzing internal data but often lack visibility into how external factors might impact their planning,” Jeff Casale, CEO of Board, said in a release. “By integrating Prevedere, we eliminate those blind spots, equipping executives with a complete view of their operating environment. This empowers them to respond dynamically to market changes and make informed decisions that drive competitive advantage.”