How do we get the logistics infrastructure that we need?

By Susan Lacefield | February 02, 2017 | 8:11 AM

With this week's confirmation of Elaine Chao as Secretary of Transportation, we get closer to seeing if the Trump Administration can make good on its promise of to invest $550 billion in the nation's infrastructure. But how can supply chain managers in private industry make sure that funding gets where it needs to go to benefit their own companies? 

Part of the answer may lie in developing relationships with government and local economic development agencies, according to an article in the Journal of Business Logistics written by Yemisi A. Bolumole, David J. Closs, and Frederick A. Rodammer of Michigan State University: "The Economic Development Role of Regional Logistics Hubs: A Cross-Country Study of Interorganizational Governance Models." 

The latest issue of our sister publication CSCMP's Supply Chain Quarterlyinterviews the lead author, Yemisi Bolumole, who asserts: "In the private sector, we've been taught to focus on B2C (business-to-consumer) and B2B (business-to-business) interactions. This paper is a call to attention of the importance of business-to-government (B2G) interactions. ... Supply chain managers must continue to embrace and incorporate into their decisions an understanding that public sector actions impact what they do. The presence or lack of public policies that inhibit or enhance supply chain efficiency can really have an effect on a firm's total landed cost. "

Check out the full article here: http://www.supplychainquarterly.com/columns/20161214-governance-models-for-regional-logistics-hubs-and-why-they-matter/


How much booze do Californians drink, anyway? Second firm offers same-hour alcohol delivery

By Ben Ames | January 26, 2017 | 9:21 AM

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Last-mile delivery service Postmates Inc. is adding same-hour alcohol delivery to its suite of on-demand restaurant and shopping parcel courier service. The offer is available only in San Francisco and Los Angeles for now, but the company plans to expand the service to other markets soon.

The San Francisco-based urban logistics startup promises 24-hour, on-demand delivery from restaurants and stores in the cities it covers, across a network of cities in 25 states.

Postmates partners with retailers by offering an application programming interface (API) software tool that merchants can add to their websites and instantly start offering home delivery. The company then deploys its corps of couriers to ride, drive, or walk to each nearby urban address and deliver the package.

In fact, Postmates does not restrict itself solely to human parcel carriers. Last week, the company said it was joining the British robotics startup Starship Technologies to test fleets of self-driving parcel-delivery robots that roll from stores to consumers’ homes along sidewalks.

By adding alcohol to the range of products it handles, Postmates is joining an express delivery market already serving thirsty customers in California. The announcement follows a similar service unveiled last month by Saucey, an e-commerce delivery company that specializes in carrying alcohol. In its announcement, Saucey teamed up with retailer BevMo to offer same-hour booze delivery in the California cities of San Francisco, Los Angeles, San Diego, and Sacramento.

Despite the competition, Postmates intends to distinguish its service by delivering a wider range of products than just six-packs and wine bottles, and made a point of saying that the new alcohol service is open to all local retailers, not just a single retail partner.

“This is the first of many new on-demand shopping experiences to come,” Postmates wrote in a company blog. “As we continue to build infrastructure that bridges online and offline local commerce, we are excited to deliver you a new Postmates experience — the best beverages in your city in 25 minutes or less.”


Feds name 10 pilot sites for autonomous vehicle proving grounds

By Ben Ames | January 24, 2017 | 1:44 PM

Research into self-driving vehicles has been advancing at high speed in recent months, with American roads already bustling with robo-cars like Alphabet Inc.’s Google autonomous car, Tesla’s Model S in “autopilot” mode, and Uber Technologies Inc.’s self-steering Ford Fusion.

The technology is impressive when it works, but one question that still stumps government regulators is how to safely test the machines. Leaders are caught between the need to capture a valuable business opportunity by hosting the nascent industry and the duty to protect local drivers from potential collisions with these unmanned, two-ton, rolling science experiments.

For example, while Austin, Texas, and Pittsburgh, Penn., have hosted autonomous cars on their streets, California recently put the brakes on a test program by Uber, and the Cambridge, Mass.-based self-driving car developer nuTonomy Inc. tests its software on cars in distant Singapore. Europe also gained momentum in testing autonomous trucks, when convoys of paired, semi-automated "smart" trucks arrived last year at Rotterdam harbor in the Netherlands from starting points as far away as Sweden and Germany.

On Thursday, the U.S. Department of Transportation used one of its final acts under the outgoing Obama administration to establish some clarity in this confusing area by designated 10 “proving ground pilot sites” to encourage testing and information sharing around automated vehicle technologies.

The sites are:

* City of Pittsburgh and the Thomas D. Larson Pennsylvania Transportation Institute

* Texas AV Proving Grounds Partnership

* U.S. Army Aberdeen Test Center, in Maryland

* American Center for Mobility (ACM) at Willow Run, in Michigan

* Contra Costa Transportation Authority (CCTA) & GoMentum Station in California

* San Diego Association of Governments in California

* Iowa City Area Development Group

* University of Wisconsin-Madison

* Central Florida Automated Vehicle Partners

* North Carolina Turnpike Authority

The proving grounds all have different facilities that can be used to gauge safety, manage various roadways and conditions, and handle various types of vehicles. Final locations were chosen from a competitive group of over 60 applicants, including academic institutions, state Departments of Transportation, cities, and private entities and partnerships.

With private industry investing heavily in the race to build self-driving cars and trucks, these sites could soon become crucial centers of development for the future of autonomous vehicles.


Starbucks offers omnichannel latte

By Ben Ames | October 28, 2016 | 1:21 PM

Stop by your local Starbucks coffee shop and you may see a strange phenomenon; there can be a dozen steaming-hot prepared drinks waiting on the counter, but only a scattered handful of people on foot standing in the café to get them.

What gives? Is the popular coffee chain going out of business? Are the busy employees just training, learning how to make the latest designer latte and generating a stack of free drinks?

No, it turns out that Starbucks is doing just fine. In fact, the unclaimed drinks are a sign that its latest e-commerce fulfillment effort is a hit with consumers. Just like major omnichannel retailers like Walmart and Best Buy, Starbucks has launched a buy-online-pick-up-in-store plan. Retailers across the shopping spectrum offer similar "BOPUS" plans, with giants like Macy’s, Kohl's, and Nordstrom often offering discounts for consumers to pick up purchases themselves and save money on shipping.

Of course, Starbucks doesn't ship hot coffee, but the massive chain sees significant time savings in allowing customers to order ahead. Starbucks rolled out its “Mobile Order & Pay” plan in 2014 for Portland-, Ore.-area users of its mobile app. The offer spread quickly, and the system is now available at some 7,400 stores. If that sounds like a lot, remember that the coffee giant has 24,000 retail stores in 74 countries worldwide.

Clearly, customers enjoy ordering their drinks online, but the new approach is not so popular with some of the chain’s green-aproned employees. It turns out that online orders have a tendency to arrive in massive numbers, burying baristas under a sudden wave of demand for scones, muffins, and cappuccinos. Since consumers can place orders on their own phones nearly simultaneously, the orders accumulate much faster online than when people wait patiently in line to place those orders one by one.

Just this week, I stepped in to my local Starbucks in the middle of the morning commute, and was startled to find it nearly empty at 8:05am. The barista shrugged and said it had been a hectic morning because they’d had 40 orders come in all at once from Starbucks Mobile. He started to explain that some orders took longer to fulfill than others when his colleague called out in a clear voice: “Mobile order for Madeleine!”

And another virtual sale was made.

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.

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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