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.
UPS Inc. yesterday unveiled a series of sweeping operational measures designed to avoid a repeat of the delivery problems
that plagued it during last year's peak holiday shipping season. The moves should also position the company for the rapid and
secular changes occurring in shipping habits and their impact on its business.
For the first time in UPS' 107-year history, it will operate a full U.S. air and ground pickup, delivery, and sorting
network on the day after Thanksgiving, which this year falls on Nov. 28. In the past, the Atlanta-based transportation and
logistics giant has only operated its domestic air-delivery network on that day.
By deploying its full network capabilities on Nov. 28, UPS will gain an additional operating day during what will be, like
last year, a relatively compressed peak season. It will also help UPS maintain a more balanced operation throughout the peak
period because it will not forfeit a full pickup and delivery schedule, Mark Wallace, vice president of engineering for U.S.
domestic operations, told reporters yesterday in Louisville, Ky., the site of UPS' main global air hub known as "Worldport."
UPS this peak season will have 19 delivery days and 18 pickup days (it does not make pickups on Christmas Eve). There were 17
delivery days in 2013. One additional day this year will come by virtue of the calendar. Operating its full network on the day
after Thanksgiving will create the second additional day, Wallace said.
UPS will add about 6,000 of its familiar brown package-delivery cars to its fleet over the peak season, a move Wallace said
will boost its package-car capabilities by 10 percent over last year. At Worldport, UPS will add 900 staging positions for the
trailers that bring letters and packages to the 5-million-square-foot facility for sorting and that then deliver sorted pieces
to their final destinations. The trailer expansion will bring the number of trailer-staging positions at Worldport up to 1,500.
It also signals a major change in the 32-year-old Worldport's utilization from being almost exclusively an air hub to being a
facility with greater multimodal capabilities, Wallace said. The expanded package-car and trailer-staging operations will remain
in place after peak season, Wallace added.
UPS has also built what it calls "mobile distribution center (DC) villages" that will function across its U.S. network,
starting with the peak period, Wallace said. The facilities, which the executive described as "pop-up" DCs, will be hauled by
train to selected sites, assembled, and placed in operation. The centers come in different sizes, with their dimensions
distinguished by the number of truck dock doors. A prototype of the largest size, which consists of 90 doors, was used in Queens,
N.Y., during last year's peak year; it has since been moved to Richmond, Calif., near Oakland, where it sits today. In the years
ahead, UPS plans to reposition these mobile centers to provide additional capacity as e-commerce demand warrants, Wallace said.
In the Dallas-Fort Worth metroplex, an increasingly important part of UPS' network, the company will open a 400,000-square-foot
hub and packaging center facility at Fort Worth's Alliance Airport complex. This facility, set to open by the start of peak season,
will be capable of processing 20,000 packages per hour and accommodating 152 package cars. If the complex opens on time, it will
have been built in less than a year. Wallace says that it is unprecedented for UPS to construct a fully operational hub from
scratch in such a short period of time. In addition, UPS will open a package pickup and delivery facility with 150 package car
positions and 24 dock doors in McKinney, a north Dallas suburb.
UPS is also making other investments in anticipation of peak season, according to Wallace. The company plans to significantly
increase the number of aircraft available to it during peak season, Wallace said, although he would not further elaborate. UPS'
contract carriers that see a lot of action during peak will be equipped with more IT visibility tools than ever before, he said.
By the start of the peak season, twice as many company drivers as last year will possess the company's "On-Road Integrated
Optimization and Navigation" (ORION) driver navigation software designed to direct drivers along the most efficient delivery
route, Wallace said. The software evaluates more than 200,000 alternate ways a driver can operate a route and is slated to be
available to all U.S. drivers by 2017.
Wallace emphasized that the multiple steps are designed for "peak season and beyond." In UPS' case, the post-peak world will be
one increasingly dominated by e-commerce. Today, business-to-consumer (B2C) shipments, the vast majority of which come from online
orders, comprise 40 to 45 percent of UPS' traffic mix. The surge in B2C traffic has come faster and stronger than the company
anticipated, forcing it to re-adjust its business. It also shifts UPS' emphasis from the business-to-business (B2B) segment—its
bread and butter—to lower-yielding B2C traffic.
AVOIDING ANOTHER HOLIDAY DELIVERY DISASTER
The moves will also be a culmination of a year of intense planning—and a $500 million investment—following the
much-publicized delivery snafus that occurred during last year's peak season. At that time, a deluge of e-commerce shipments,
many of which came from online orders placed as late as Dec. 21 and 22, unexpectedly hit UPS' network, causing millions of holiday
packages to be delivered after Christmas.
A number of parcel delivery experts cast the blame for the late shipments on merchants that overpromised on delivery
commitments and blindsided UPS with unanticipated volumes. However, the problems gave UPS a reputational black eye, and
led company executives to vow that such a situation would never happen again.
UPS' image was not helped by comments from e-tailing giant Amazon.com soon after the holidays that it would re-evaluate its
delivery options in the wake of the problems. Throughout 2014, Amazon has expanded the Sunday delivery network it operates in
concert with the U.S. Postal Service (USPS). Amazon is also considering building its own delivery network comprising independent
truck operators dedicated to Amazon, regional parcel carriers, and USPS. Under the concept, UPS and FedEx Corp. would play only
marginal role in the new Amazon network.
In January, UPS sent a letter to key customers apologizing for the mishaps, explaining why they occurred, and assuring them
there would be no repeat. During the year, UPS has met regularly with high-level customers to prepare for the upcoming cycle.
The customer meetings, many of which have been conducted weekly, have focused on improving forecasting methods, which were found
lacking last year as a result of the unforeseen explosion in e-commerce. The goal, according to Wallace, is for UPS and its
customers to be in sync when determining volume commitments so UPS can size its network capabilities to predetermined traffic
flows.
Wallace said industrial engineering executives have been meeting regularly with large customers since the beginning of 2014;
never before in its history have UPS' engineers been so deeply and regularly involved with customers from such an early stage in
the process, he said.
Wallace said a combination of factors—inclement weather in parts of the country as well as capacity and forecasting
shortcomings—led to the problems last year. "There wasn't one area you could point to," he said.
This year's peak will be the first major test for David L. Abney as UPS' new CEO. The impact of this season's performance will
be amplified for Abney, who had been UPS' chief operating officer and was arguably better at his job than anyone in transportation
and logistics. Abney assumed his new post Sept. 1.
Of all the uncertainties surrounding this year's peak, one clear message emerges: E-commerce will dominate holiday shopping and
shipping. According to consultancy Forrester Research, nearly three-quarters of all annualized e-commerce now occurs during the
holiday season.
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.