Supply chains are constantly changing as new rules, technologies, resources and market trends transform operations. Here's a skim of the week's indexes, technology announcements, expansions and M&As from around the web.
In Case You Missed It
- Ever wonder how Tesla scaled its production so quickly? Supplier relations are the key.
- Stock volume, diversity and new technology are changing warehouse management: here's how to adapt.
- The Internet of Things promises to disrupt at least 5 industry supply chains by 2020.
Market Snapshot
Ports are pivotal to supply chains, and shifts in trade and the shipping industry have recently placed the link on the spotlight to improve efficiency.
This week, the U.S. government released two landmark reports on best practices and performance measures for ports. While each report taken independently only cements what many stakeholders already know in terms of best practices and trends, together, and in combination with future versions of the annual reports, they promise to help shippers and carriers alike make decisions based on reliable benchmarks.
The first report, released by the Department of Commerce, describes the best practices ports must follow to adapt to larger vessels, higher trade volumes and consolidation, among other issues. Above all, the report emphasizes the importance of stakeholder collaboration, technology adoption, transparency and benchmarking to improve supply chain visibility.
The second report, released by the U.S. Department of Transportation, seeks to provide those benchmarks in the form of performance measures of the nation's ports.
In doing so, the agency also created a definitive list of the busiest ports in the U.S. by throughput and capacity. The 167-page report profiled the top 25 ports, providing graphical descriptions and comparisons of each by port type, and various capacity and throughput measures (11 total indicators).
A few highlights: unsurprisingly, the top U.S. ports in nearly all categories were the Port of Los Angeles, the Port of Long Beach, and the Port of New York and New Jersey. Also unsurprising: Gulf Coast ports typically handled more dry bulk, on average, and West Coast ports received larger vessels, on average.
However, setting aside dry bulk capacity to focus on container shipping, the Ports of Savannah, Virginia, Houston, Oakland, Seattle, Tacoma and Charleston appeared as the rising stars of mid-sized ports. These same ports are also investing heavily in infrastructure expansions and consistently receiving more, and larger vessels.
Finally, various ports have on-dock rail facilities for intermodal access, with the Ports of Los Angeles, Long Beach and New York-New Jersey typically leading the list. Most ports only have one such access point, however, with only the mid-sized ports of Charleston, Jacksonville, Seattle and Tacoma boasting two or more in addition.
Technically Speaking
The Jetsons may soon be coming to a skyline near you – at least, according to Airbus Group’s CEO.
Reuters reports the CEO told a digital technology conference in Munich the company expects to test a prototype of a self-piloted flying vehicle by the end of 2017. Apparently, the race to develop self-driving cars had the unintended side effect of making this once forlorn dream a reality.
Sure, it’s just a prototype — but if the development of flying vehicles mirrors the race for self-driving cars, other companies, suppliers and even the government may soon jump in to ensure once the technology is ready, it is safe and available.
In fact, if you look at the proliferation of other flying technology, it seems to already be happening. Lockheed Martin is producing a cargo blimp to reach inaccessible sourcing sites, while Amazon recently patented technologies for a flying warehouse and a fleet of drones to use for mobile distribution.
Speaking of Amazon patents, the company entered the self-driving vehicle space recently by patenting a technology that would help autonomous cars and trucks navigate reversible lanes, Recode reports. The patent addresses a common question raised by the new technology: how will it adapt to the nation’s storied infrastructure?
Fortunately, the Department of Transportation has taken the lead in ensuring guidelines are in place to resolve such issues. U.S. Transportation Secretary Anthony Foxx yesterday announced a “Vehicle-to-Infrastructure (V2I) Guidance” that will help state and local agencies upgrade the nation’s infrastructure. The move is part of a broader goal of improving highway safety by having vehicles share information with each other and take emergency action if necessary.
This is all part of a larger tech trend, however, that seeks to connect the world and its supply chains through the Internet of Things.
Honeywell International and Intel announced a new partnership last week to provide retailers with IoT solutions for their inventory and logistics needs, DC Velocity reported. The industrial giant has been positioning itself to deliver data-based supply chain solutions over the past year, with both its acquisition of material handling solutions provider Intelligrated, and its attempted acquisition of JDA Software.
Similarly, Target recently invested seed funding in a retail supply chain monitoring startup Inspectorio, which participated in the company’s Techstars retail accelerator last year. The startup aims to help retailers increase quality control through closer factory inspections and data analysis, the Minneapolis StarTribune reports.
In other news, Simbe Robotics’ inventory-tracking robot Tally made a splash at the National Retail Federation’s Big Show this week; Postmates and DoorDash announced they would begin pilot testing autonomous delivery robots in Redwood City, CA and Washington, D.C.; and CargoSphere updated its document upload platform to provide real-time rates for carriers.
Breaking Ground
New warehouses and distribution centers do not just add jobs, they also contribute greatly to local economies. A case in point: Amazon's choice of Wilmington Air Park (located near Dayton, OH) as its Prime Air cargo hub boosted the airport's operations, which led to plans to hire 100,000 new employees. Now, the airport will also improve its infrastructure with a $3 million state grant and open a second runway in order to meet demand.
Similar stories can be found across the U.S. and, in fact, Amazon's logistics footprint just keeps on growing. The e-commerce giant turned logistics and fulfillment provider announced this week it would open two new distribution centers nationwide.
On Tuesday, the company announced it would open a 1.2 million-square-foot fulfillment center in North East, MD, marking the third such facility in the state. And on Wednesday, the company revealed it would open its ninth Texas distribution center in Coppell, TX. The company did not specify the size of the new facility, but noted it would allow for 1,000 more full-time positions in the city.
In non-Amazon news, Fairfield, OH will see a new $30 million, 40-acre, two-building Union Centre Logistics Park complete construction by late summer. The Fairfield Journal-News reports the new construction should help bring in additional developments to the Cincinnati region as its industrial vacancy is "very low."
Elsewhere, business leaders in northern Utah are hoping to reap similar benefits by building an inland port in Salt Lake City. Gov. Gary Herbert recently created an Inland Port Exploratory Committee and hired a consultant to explore the costs and benefits of such a project in more depth, but officials are convinced the opportunity would help Utah become a major freight hub.
Mergers & Analysis
Rumors of an Orient Overseas Container Line (OOCL) takeover surged this week as The Wall Street Journal reported, based on "sources familiar with the matter," that state-owned COSCO Group (which recently merged with China Shipping) was preparing an up-to $4 billion bid for the shipping line. The Wall Street Journal adds Evergreen Line and CMA CGM are also "potential buyers," but have not gotten as far in the process as COSCO.
The acquisition rumors spread like wildfire last week, leading stocks for OOCL's parent company OOIL to surge up to 30% at the time, but OOCL has denied their veracity while warning against trading on rumors, according to IHS Fairplay. Regardless, similar situations and surprise acquisitions lend credence to the stories, and the company's stock remains roughly 27% above its value a month ago.
Meanwhile, the Mediterranean Shipping Company, Hyundai Merchant Marine and bankrupt-line Hanjin Shipping likely rejoiced this week as U.S. Bankruptcy Judge Sherwood approved the sale of Hanjin's 46% stake in Total Terminals International, which operates terminals at the Port of Beach and the Port of Seattle.
Once the deal was approved, MSC and HMM announced a new deal wherein HMM would acquire 20% stake in Total Terminals International, making it minority owner pending customary approval.
In other news, the North American Chassis Pool Cooperative launched a new chassis pool in Ohio this week, to be managed by Consolidated Chassis Management and will serve Columbus, Louisville and Cincinnati at minimum. In addition, American Shipper reports TFI International subsidiary TransForce recently purchased World Courier Ground U.S. and changed its name to TForce Critical to provide package and courier, less-than-truckload, truckload and logistics services primarily aimed at the medical industry.
Finally, Oracle announced it would acquire API software design firm Apiary to help improve Oracle's API Integration Cloud offering, Seeking Alpha reported.