White House turns up the heat on airlines with baggage refund rule

By Ben Ames | October 19, 2016 | 1:08 PM

More than 700 million passengers are expected to board nine million domestic airline flights in America this year, and many of those travelers pay extra fees to check their baggage.

Now airlines may have to refund those $25 or $50 handling fees for each bag that is delayed in transit, according to a new rule proposed Tuesday by the Obama Administration. Airlines are already required to reimburse passengers for bag fees if their bags are lost, so the new rule would extend that policy to bags that are delayed.

Airlines face a complex challenge in tracking bags as they whisk through the skies above Rhode Island, North Dakota, or New Mexico, touch down briefly at a hub like Atlanta or Denver, and then take off again for final destinations. If approved, the new rules could make them rethink the way they charge for that service.

Just as online retailers are groaning under the weight of shipping and handling fees to support American consumers’ online shopping habit, airlines are trying to recoup the costs of material handling and the effort to track travelers’ bags along airport conveyors, tarmac freight cars, and airplane cargo bays. But instead of promising free shipping or express delivery like Amazon.com and other e-commerce giants, most airlines have followed a very different strategy—charging travelers extra to check their bags at all.

The problem with that strategy is that when an airline provides delayed delivery, it is not holding up its end of the bargain, the White House says. “Passengers should not be charged for services they do not receive,” the U.S. Department of Transportation said.

The proposed regulations would also require large U.S. airlines to overhaul the methodology they use to report mishandled baggage, so that passengers are better informed of their actual chances of receiving their checked baggage in a timely manner. Another proposed change would require airlines to share fee information for services—such as checked baggage or priority boarding—with ticket agents, so that customers can get an all-in-one price when they shop online.

The industry group Airlines for America has announced it plans to contest the proposed new regulations on the basis that airlines themselves have the best incentive to provide competitive fees and services.


Logistics saves the day in animated “Storks”

By Ben Ames | October 02, 2016 | 6:57 PM

Take your kid to see a PG-rated movie starring animated, talking animals, and the action is sure to take place in natural or residential settings like the Pleistocene epoch (“Ice Age”), a plastic brick city (“The Lego Movie”), the North Pole (“Happy Feet”), a New York apartment (“The Secret Life of Pets”), or a Toronto ice rink (“Inside Out”).

That streak came to an end on Sept. 23 when Warner Bros. Pictures released “Storks,” an 87-minute comedy adventure that is set in a cavernous warehouse run by a third party logistics provider (3PL) run by birds.

As everyone knows, storks have traditionally cornered the last-mile delivery market for human infants. But 18 years ago, an avian 3PL called Cornerstone decided to abandon that business model and devote its feathered, flapping delivery network to higher-margin parcels from a new client, an enormous online retailer called Corner Store Dot Com.

The movie opens with a flock of bustling package carriers whisking e-commerce purchases such as smartphones to customers impatiently awaiting curbside delivery… a scenario that will sound familiar to anyone who has worked in the logistics and fulfillment sectors in the past decade.

This pedestrian plot thickens when an ambitious stork named Junior (voiced by Andy Samberg) and an orphaned human named Tulip (voiced by Katie Crown) accidentally switch on the forgotten manufacturing line that produces living babies and have to make one last urgent, express delivery to get the kid to its loving family. Other voice actors include Kelsey Grammer, Jennifer Anniston, Jordan Peele, and Keegan-Michael Key.

In the chase scenes that follow, the animals flee through one supply chain milieu after another, from complex conveyors to towering gantry cranes, lift trucks, shipping containers, a maritime port, and a massive containership. As they struggle to deliver the baby—pun fully intended—they interact with a range of logistics equipment such as routing optimization computers, innovative cardboard packaging, and mobile e-commerce apps.

Toward the end of the action, our heroes even escape a kidnapping conundrum by turning to the magic of reverse logistics. You see, the greedy stork CEO Hunter had ordered his penguin henchmen to dress Junior as a baby and tie him to a chair, before Tulip arrived at the last minute and saved the day by… well, you’ve got to see it to believe it.

A crumbling infrastructure by any other name...

By Martha Spizziri | September 26, 2016 | 4:40 PM | Categories: Transportation

I'm a fan of the podcast 99 Percent Invisible, which points out how design affects our lives in ways that we often don't even notice. In a recent episode, the host, Roman Mars, interviewed Henry Petroski, a professor of civil engineering and history at Duke University. Petroski recently wrote a book called The Road Taken: The History and Future of America's Infrastructure.

It's no secret that the federal gas tax isn't nearly keeping up with the costs of road maintenance, but raising it isn't a popular idea with voters. The interview pointed out that, with the advent of hybrid and electric cars, a fuel tax might not be the best way to fund highway projects anyway. Instead of taxing gas, says Petroski, we should be taxing miles. Pilot programs to do that are underway, but there are problems with that idea, too. Petroski thinks it will be at least 10 years before a new funding mechanism is in place—but he does think it will happen.

A surprising fact that came up during the interview: the word "infrastructure" is actually pretty new. Infrastructure projects were called "public works" up until about the 1980s, according to Petroski. But because people started to equate public works with dubious "pork-barrel" projects, advocates began using the term "infrastructure" instead.

Mars suggested that reclaiming the phrase "public works" might help motivate the voting public to fund those programs. After all, the word "infrastructure" is pretty abstract and hard to get excited about. "Public works," on the other hand, emphasizes that we, the people, benefit from these projects.

The episode is called "Public Works: Rethinking America's Infrastructure." It's just under 20 minutes long, and it's worth a listen. 

Finnish government to launch autonomous cargo ships by 2025

By Ben Ames | September 23, 2016 | 7:28 AM

Plans to launch robotic cargo ships took another step forward this week when the Finnish government announced plans to launch a suite of unmanned maritime products and services by 2025.

In pursuit of that goal, the Finnish Funding Agency for Innovation—known as Tekes—will help finance the development of an autonomous marine ecosystem by a combination of information and communications technology (ICT) startup firms and established marine suppliers. And once those new teams are ready to test their robo-ships, Finland’s Ministry of Transport and Communications has promised to apply flexible standards for the trials of autonomous vessels in the country’s waters.

“We are especially enthusiastic about colliding our world class ICT start-up scene with strong maritime players,” Tekes program manager Piia Moilanen said in a release. “New networks will boost exchanging ideas and create pioneering community for intelligent shipping.”

As a first step toward that goal, the shipping initiative has convened a group of industry partners led by Finnish incubator DIMECC Ltd., an acronym for digital, internet, materials & engineering co-creation. The group hopes to draft a common roadmap for reaching autonomous marine operations by coordinating development between businesses, research institutes, engineering societies, and government authorities.

One of those partners will be Rolls-Royce, the marine, automotive, and aeronautic engine manufacturer that recently announced a plan to build a demonstration version by 2020 of a shore-based control center for remote-controlled cargo ships.

Starship robots deliver donuts in San Francisco

By Ben Ames | September 22, 2016 | 12:27 PM

San Francisco residents see a lot of curious things on the sidewalks that helped launch the hippy movement of the 1960s. But even jaded Californians could be forgiven for gaping when a self-driving, Estonian, robotic delivery vehicle cruised down the Richmond District’s Balboa Street this week.

The autonomous, six-wheeled, picnic cooler steered carefully down the sidewalk at a pedestrian 4 mph before stopping at a predetermined address, opening its lid, and releasing its precious cargo of fresh pastries.

In addition to delivering donuts, the promise of driverless parcel transport could have huge implications for last-mile logistics. But while Amazon.com Inc. is still testing its aerial drones, these rolling robots are well into their demonstration phase.

The vehicles are a product of Starship Technologies, an Estonian startup staffed by two founders of Skype, the Swedish voice-over-internet-protocol (VOIP) telephony company now owned by Microsoft Corp.

Starship ran earlier tests of the 40-pound, single-package delivery platforms earlier this year at various sites in England, Scotland, Wales, and Northern Ireland, and said in March that it said to launch U.S. trials soon.

That day is now here, and curious onlookers can see proof at Starship’s Instagram site. No word yet on whether the robots have been trained to take selfies.

Bloomberg Businessweek asks: "Will Amazon kill FedEx?"

By Martha Spizziri | September 09, 2016 | 9:38 AM | Categories: Transportation

In case you missed it: last week, Bloomberg Businessweek published an article titled "Will Amazon Kill FedEx?" 

As the title indicates, the piece speculates that Amazon aims to upend FedEx and UPS—a topic we've written about here and elsewhere.

A few of the more interesting facts from the Bloomberg article:

  • There's been resistance to Amazon's expansion in at least a couple of major European cities.
  • According to a June Deutsche Bank report, Amazon has patented a technology called "anticipatory package shipping," which will allow it to figure out when a customer will need products replenished and have a package ready in advance. The technology should save Amazon money, since it potentially could use a slower shipping method and still get shipments to customers exactly when they're needed.
  • Also from the Deutsche Bank study: Amazon has employed "hundreds of Ph.D. mathematicians" whose job is to model logistics networks.

There's also a short (about 10 minutes) interview with the article's author.

Amazon also recently hired lawyer Seth Bloom, who used to be general counsel to the Senate Antitrust Committee, as a lobbyist.

What’s the difference between delivering passengers and delivering parcels?

By Ben Ames | August 29, 2016 | 9:08 AM

Boston residents learned this week that a “pop up mass transit” system called Bridj was experimenting with delivering parcels as well as passengers, and could soon use neighborhood lockboxes and mobile robots to carry each package to its final destination.

“We’re going to start to introduce autonomous vehicles and autonomous delivery devices over the coming months, using Boston as a laboratory,” the firm’s 26-year-old cofounder and chief executive, Matthew George, told the Boston Globe.

Commuters in Boston, Washington, D.C., and Kansas City can already use a smartphone app to summon one of Bridj’s 14-person mini-buses, which use routing software to calculate malleable, on-the-fly bus routes. Like a shared ride on the taxi-alternative service Uber Technologies Inc., the two-year-old business is touted as an alternative to typical mass transit options like fixed-route commuter buses or subway networks.

But just as Uber has extended its ride-hailing system to last-mile parcel delivery, Bridj is also exploring ways to put boxes as well as butts in its vehicles’ seats. In a twist on other last-mile parcel delivery services, Bridj plans to use its passenger vans to drop items at local lock-boxes, then deploy either human couriers or small robots to carry each box to its final street address.

The idea faces several hurdles before it takes off in practice, since Bridj hasn’t yet chosen a delivery robot from its experiments with manufacturers, or obtained permission from the city of Boston to drive the autonomous critters down urban sidewalks. Another specter is potential vandalism or cargo theft committed on the slow-moving bots.

Despite these challenges, Bridj’s ideas on ways to improve last-mile delivery are hardly unique. In recent months, inventors in both Israel and in England have unveiled similar plans to dispatch packages to urban locations in wheeled autonomous robots.

The concept of using centralized lockers as distribution hubs for urban neighborhoods is even more popular, with pilot projects underway by some of the industry’s biggest names, including Atlanta-based supply chain giant UPS Inc., Durham, N.C.-based Bell and Howell LLC, and German transport and logistics firm Deutsche Post DHL Group.

Bridj hopes to emerge from this pack of parcel-toting hopefuls by building its service from a mixture of all three popular ideas—ride hailing, central lockboxes, and robot delivery. Only time will tell if the creative recipe works.

Self-driving car startup nuTonomy races Uber & Google to develop robo-taxis

By Ben Ames | August 26, 2016 | 11:02 AM

The race to develop self-driving vehicles took another lurching step forward yesterday when a Cambridge, Mass.-based tech startup called nuTonomy Inc. launched a public trial of its robo-taxi service on the bustling streets of Singapore.

The news comes just days after iconic ride-hailing service Uber Technologies Inc. accelerated its own effort to create self-driving taxis when it paid a reported $680 million to buy the San Francisco-based, autonomous trucking startup Otto and unveiled a $300 million deal with Volvo Car Group to build the technology into sedans and SUVs.

The sight of nuTonomy’s cars may be familiar to Singapore locals, since the company has been running daily autonomous vehicle tests in the city’s one-north business district since April. But those tests took on a high-octane flare on Aug. 25 when nuTonomy first invited residents to use its ride-hailing smartphone app to book a free ride in a self-driving car.

Passengers will not be completely alone, since a nuTonomy engineer rides along in each vehicle, monitoring performance and preparing to seize control if needed.

Formed in 2013 by a pair of robotics engineers from the Massachusetts Institute of Technology (MIT) named Karl Iagnemma and Emilio Frazzoli, nuTonomy has developed specialized autonomous driving software. The company works with partners to integrate that software with sensors and processors, then installs the entire system in a Renault Zoe or Mitsubishi i-MiEV electric vehicle.

In May, nuTonomy got a turbo boost in its race to test autonomous cars on public roads before industry heavyweights like Uber, General Motors Co. and Alphabet Inc.’s Google self-driving car when the company announced it had raised $16 million in funding from Highland Capital Partners LLC and Singapore’s economic development body.

Despite the impressive technology and jaw-dropping investment funds fueling the autonomous vehicle sector, industry experts say it will be at least another decade until providers can clear the regulatory and social speed bumps of unleashing unchaperoned robo-taxis on public streets.

In the meantime, nuTonomy is posting videos of the ongoing tests of its self-driving cars with unseen engineers riding shotgun.

The bimodal imperative

By Toby Gooley | July 19, 2016 | 2:41 PM | Categories: Supply Chain

In May I attended Gartner’s Supply Chain Executive Conference in Phoenix, Ariz. The conference sessions covered everything from software to sales and operations planning to supply chain strategy and much, much more. (I suspect I wasn’t the only one who wanted to clone myself in order to attend more sessions.) There were numerous opportunities to learn from Gartner analysts, technology providers, and supply chain leaders from a wide range of industries. And, of course, the event featured announcements of Gartner’s Top 25 Supply Chains list as well as their annual “Magic Quadrant” assessments of software and logistics service providers.

There were so many sessions, topics, demonstrations, and discussions packed into each day of the conference that it would be hard to identify a single, overarching message. But if I had to focus on just one, it would be this: to succeed in business now and in the future, you need to follow two distinct supply chain paths.

Gartner calls this principle the “bimodal supply chain.” Here—in very simplified terms—is how Chief of Research David A. Willis described it in his opening keynote. You can think of Mode 1 as analog and designed for stability, efficiency, and operational excellence. Mode 2 is digital and designed for agility and innovation—an approach supported by advanced analytics, automation, and connectivity. A company that follows both paths will be “industrialized and innovative, lean and effective but agile,” he said.

The digital side of the supply chain will encompass e-commerce, the Internet of Things, predictive analytics, “big data,” machine-to-machine communication, and demand sensing, among other things. Algorithms will rule the day, and data scientists, analysts, and information technologists will become an integral part of supply chain organizations, Willis predicted.

Does this mean the end of “old school” supply chain management? Definitely not. Willis emphasized that the digital and analog sides of supply chain operations are not in competition; rather, they are complementary and should work together. He cited the example of the home goods retailer Williams-Sonoma, which now derives half of its revenue from online business. The company had to devote considerable resources to adapting its supply chain and its information technology resources to serve that channel, but it did not sacrifice growth in its brick-and-mortar retail channel or disrupt its traditional operations.

The “bimodal supply chain” is catching on as a management strategy, becoming a guiding principle for companies like HP, Schneider Electric, and Discount Tire. Gartner, of course, has a vested interest in pushing the concept; the more companies buy into it, the more opportunities to sell its advisory services and research papers on the topic. But the bimodal supply chain is neither a gimmick nor an empty promise. In fact, it makes perfect sense for companies in almost every industry. Who could argue with a strategy that encourages supply chain organizations to prepare for the data-driven business of the future while reinforcing the value of good, old-fashioned operational excellence?

Truck drivers will be replaced by autonomous vehicles within 10 years, former Facebook executive warns

By Ben Ames | July 13, 2016 | 8:05 PM

The relentless drive of Silicon Valley startup companies is on track to make the truck driving profession obsolete within a decade, according to a former Facebook executive who recently published a tell-all memoir about his years at the huge social media firm.

Speaking in a radio interview with Boston’s WBUR on July 13, author Antonio García Martinez discussed his business book "Chaos Monkeys: Obscene Fortune and Random Failure in Silicon Valley."

Named for a software application used by the online movie-rental company Netflix to model the impact of unpredictable events on its ability to stream movies and TV shows to its customers, the term “chaos monkeys” also describes the futility of predicting which tech startups will succeed and what impact they will have on society, he said.

“Just imagine a wild monkey rampaging through a large computer center, kicking over boxes and pulling on cables. Silicon Valley right now is sort of like the zoo where the chaos monkeys are kept,” Martinez said on WBUR’s On Point program.

“They run around society and they pull the plug on things like taxis, and they ship an app called Uber, where anyone can become a taxi driver. Or they pull the plug on hotels and anyone with a spare bedroom or a weekend cottage can suddenly become an innkeeper [with Airbnb],” he said.

Driven by that creative instinct, waves of technology startups are sweeping through American society, “pulling the plug” on many traditional industries in a frantic search for the next great business success. However, no firm has the motivation—or even the capability—to forecast how its invention will affect the personal lives of fellow citizens, he said.

“Consider what will happen to truck drivers when autonomous vehicles are standard; and that’s going to happen in 10 years,” Martinez said. “If you look at a map of the most popular job in every U.S. state, for a large number of states, truck driving is the most popular profession—it’s the one way that non-college educated people can make a good living--and that’s going to go away in 10 years. That’s not going to exist as a job in 10 years. And nobody is thinking about that. I think that’s going to be a real problem down the line.”

Quoting the venture capitalist and former Netscape founder Marc Andreessen, Martinez predicted that the future will soon hold only two types of jobs—you’ll either tell the computer what to do, or you’ll be told by the computer what to do.

“I think that will be the reality for a large swath of the economy, and what happens in that world is a real question. There are not going to be jobs for a lot of people in this economy within 10 to 20 years,” Martinez said. “When the chaos monkeys visit, it’s a question of is your life going to be the same before and after?”

The opinions expressed herein are those solely of the participants, and do not necessarily represent the views of Agile Business Media, LLC., its properties or its employees.

Thoughts from our editors.

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