Good day,
One of the great untold stories of the 10-year economic expansion – in fact of the past 40 years – has been the logistics industry’s role in mitigating the booms and busts that have plagued U.S. economic cycles throughout their history. Andy Kessler, the excellent columnist for the Wall Street Journal, highlighted this phenomenon in a recent piece. Advanced logistics practices, underpinned by vastly improved information technology, have enabled business to “control inventory and prevent over-investment” in ways that weren’t possible until the 1980s and 1990s, Kessler wrote. Historically, businesses lacked the visibility to effectively calibrate supply and demand. Thus, they would over-order and pay the price. Those scenarios are fewer and farther between than ever, and the economy has the logistics discipline to thank for it.
Did you know?:
The market for logistics “digital twins,” a virtual representation of a physical thing that simulates the thing’s physical state and behavior, will grow 38 percent a year to a $26.5 billion business by 2025, according to transport and logistics provider DHL.
Quotable:
“We don’t have any sacred cows.”
– FedEx Corp. Chairman and CEO Frederick W. Smith, responding to an analyst’s query about why FedEx hasn’t pushed for a deeper restructuring of its FedEx Express air and international unit in light of continued weak results at the unit. FedEx, Smith said, will evaluate the unit’s prospects should the weakness continue.
In other news:
Jefferies raids BB&T for logistics M&A pros
Jefferies Financial has hired several investment bankers from BB&T Corp. who will focus on transport and logistics. (Reuters)
Amazon warehouse workers in Minnesota plan Prime Day strike
Amazon.com Inc. warehouse workers in Minnesota plan to strike during the annual event, scheduled for July 15-16. (Bloomberg)
Waresix lands $14.5 million to push digital logistics in Indonesia
Company looks to capitalize on ground floor opportunities. (TechCrunch)
You say you want a (logistics) revolution?
Well, you know, that’s what will happen with the emergence of 5G cellular networks, writes the CEO of JD Logistics, the logistics unit of Chinese e-commerce giant JD.com. (World Economic Forum)
Sumitomo buys into Vietnam port operator as businesses move from China
The Japanese trading house has invested in Gemadept in a bid to capitalize on growing demand in Vietnam as manufacturers shift production to Vietnam from China. (Nikkei Asian Review)
Final thoughts:
We’re still chewing over Japanese e-commerce research firm Rakuten Intelligence’s recent report that Amazon self-delivers up to 48 percent of its orders. We are not sure about the methodology, though we think that figure is quite high. A more realistic number, according to data from ShipMatrix, which covers the industry as close as anyone, is that Amazon’s self-deliver ratio is at 24-25 percent. Even this number is highly significant considering Amazon’s consistently surging volumes. Not that long ago, Amazon handled maybe 10 to 12 percent of its orders. A doubling of self-deliveries speaks to the large investment Amazon has made in its shipping network, and its growing confidence in handling more of its orders itself.
Hammer down everyone!