Businesses are setting aside huge sums to budget for unplanned supply chain issues, creating what Supply Chain Dive, in a recent article, called a new form of insurance without a policy or an agent. For example, an automotive supplier, faced with the prospect of huge fines – as well as the possibility of lost business – in the event its customer’s line goes down for want of critical parts, will spend thousands of dollars to ensure an air charter is available to whisk the needed parts to their destination as fast as possible. The story cited a report from Cambridge Property & Casualty that an unidentified auto company will levy a $500 per-minute penalty if a late delivery shuts down its assembly line. That translates to $30,000 an hour, or $3.6 million over five days. Under the circumstances, spending $15,000 or so on a charter service offers the supplier peace of mind, which is what insurance is all about anyway.
Did you know?
Through May, Indian logistics start-ups raised $6.25 billion in venture capital in just five deals. That’s a six-fold increase from the amount raised during all of 2018, in 20 deals, according to Your Story, an Indian platform.
If GDP is 3 percent or better, he’ll win.”
– Emory University Economist Jeffrey Rosensweig commenting recently on President Trump’s chances of reelection next year.
In other news:
For short-sea shipping to work, get the feds out of the way
Inland waterway transport, known as short sea shipping, accounts for just 6 percent of U.S. tonnage, compared to Europe at 40 percent. The status quo will remain until government stops making excuses for why short-sea won’t work. (Cato Institute)
Location apps in logistics vogue
Once considered creepy, location apps are now seen as critical for safety in logistics. (NPR)
Unjamming rail freight bottlenecks key to Chicago’s transport destiny
Illinois Gov. Jay Pritzker wants to complete 20 “bottleneck mitigation” projects that lead to routine gum-ups of Chicago’s rail network. The projects, though, need to be funded. (Crain’s Chicago Business)
Going dockless in Baltimore
The city will select up to four companies that operate e-bikes and e-scooters that can be unlocked via app, and don’t require a station for parking. The permits will run for one year, and start in August. Applications are due by July 24. (Technical.ly)
No-deal Brexit “catastrophic for Northern Ireland logistics sector
A report from the Northern Ireland Civil Service said the region’s businesses rely on free access to customers in the U.K. and EU, and such access would be severely curtailed by a no-deal Brexit. The resulting delays, costs and disruption would render the nation’s businesses less competitive, the report warned. (The Loadstar)
One aspect about the Amazon-FedEx-UPS parcel delivery cage match that is finally getting a proper airing is that the latter two companies are in different businesses than the first. UPS and FedEx have deep supply chain management relationships with customers that include, but are certainly not confined to, transportation. For all its resources and growth, Amazon has not approached the stage where it can deeply embed itself in the logistics functions of its customers. Maybe someday that will happen. For now, though, FedEx and UPS bring capabilities to their shippers that Amazon cannot match.
Hammer down everyone!