How a new breed of warehouse is fuelling eCommerce


Traditional warehouses — large buildings sitting in affordable rural areas along popular shipping routes — have been replaced by new breeds of fulfillment centers. Retailers’ warehouse strategies are changing dramatically and becoming a more critical piece of the ecommerce landscape — from how the geographic location of each warehouse is chosen to how products are documented and placed in a warehouse’s inventory. These logistical innovations are allowing retailers to stay competitive and offer shipping options that keep their customers happy.
From retail powerhouses to small businesses, companies are using fresh warehouse tactics to fuel their ecommerce success.

Walmart Uses Drones in the Warehouse

In a recent demonstration, Walmart suggested it may soon be using drones in at least one of its distribution centers to inspect labels and inventory, a process that now takes employees about a month to complete with handheld scanners. Currently, Walmart uses a mix of supercenters and distribution centers to fulfill orders placed online.

This new venture with drones comes at a great time, as Walmart recently rolled out its new two-day subscription shipping service, Walmart ShippingPass. The service also offers free returns online and in-store. With more orders and returns bound to be made by subscribers of ShippingPass, speeding up the logistics process with warehouse drones will help the Walmart operations staff keep up with the imminent increased demand.

Target Transforms Storefronts into Warehouse Space

It’s no secret that brick-and-mortar stores are struggling to stay relevant. But companies like Target are now pushing past its brick-and-mortar roots by converting some of its storefront space to mimic warehouses in order to increase sales and adapt to the changing needs of the consumer. Target fulfilled 30 percent of its online orders from stores in Q4 as well as netting a record number of online customers who picked up their orders in person over the holiday season.

Although many retailers are still trying to strike the right ratio of inventory on store shelves vs. warehouse shelves, the proof for this strategy is in the pudding. Online sales for Target in Q4 jumped 34 percent, beating even the formidable Amazon — which had its biggest holiday shopping season ever and grew 26 percent in net sales. Target and other retailers will continue to adjust where products are kept as they diligently monitor where the demand originates.

Traditional retail is adjusting to the different expectations of consumers, changing their entire supply chain and points of sale to allow the consumer to have an excellent experience whether they buy in-store, online or via a catalogue. Customers can also choose whether they pick the goods up in-person or get them shipped with traditional methods, even within a couple of hours.

Amazon Builds Urban Warehouses

From 2013 to 2016, Amazon has opened roughly 33 of its 78 “traditional” warehouses in the U.S., according to estimates from MWPVL. On the other hand, Amazon opened 60 Prime Now hubs and fresh delivery stations in that same time frame. Prime Now hubs, according to MWPVL, are fulfillment centers built in dense urban areas that are filled with only the bestselling items for that particular metro area. These Prime Now hubs cater to customers who want one- and two-hour delivery timeframes.

Amazon is also experimenting with a third type of warehouse — the “sortation center.” Amazon sends small parcels to these facilities so it can rely less on FedEx and UPS and more on the U.S. Postal Service. Amazon employees sort and ship these packages to individual post offices since USPS is able to deliver small, lightweight packages for much less than private couriers. Amazon’s mix of all three types of warehouses will allow it to experiment in order to figure out the most efficient way to reduce the costs of shipping.

SMBs Use Predictive Data to Pinpoint New Warehouse Locations

Even small and medium-sized businesses are optimizing their warehouses in order to improve delivery times. For example, shipping software provider Endicia is working on using customer data and predictive analysis to guide the business decisions of small online retailers (its customers) in order to improve delivery for the end-consumer.

Predictive technology allows small businesses to meet consumer expectations and stand toe-to-toe with competitors. Looking at data from past shipments from customers can help small businesses figure out the best place to build a new warehouse, supply future shoppers with a more accurate delivery window, identify where to stock products based on customer demand, etc. The possibilities are endless when businesses have access to a large amount of data points.

Online customer expectations for shipping are constantly changing and becoming more challenging to meet. Traditional warehouse models alone do not make sense for online retailers who are trying to keep up with their customers’ shipping demands. The ability to offer affordable two-day shipping, same-day shipping and affordable returns requires some innovative thinking on the part of ecommerce businesses.

Online retailers that want to offer faster and more convenient shipping options to their customers need to adapt the right mix of innovative warehouse strategies for their businesses. Researching which locations make sense to build future warehouses, finding more efficient ways to account for inventory and using already owned space to house products offered online are all ways that a small business can keep up with the big names in retail.

Extract taken from   http://goo.gl/DKz9FD

By Amine Khechfé

http://www.supplychaindigital.com/

Strong Truck Engine Sales Seen Ahead of Class 8 Emission Standard

Total North American Class 8 truck production peaked in 2015, with ACT Research predicting at that time lower demand in 2016 and 2017 followed by recovery.

A pre-emission boom is forecast in 2019 and 2020, before a sharp drop into 2021, according to a new report by ACT Research and Rhein Associates.

The N.A. On-highway CV Engine Outlook, available now, is designed to present historical trends, current activity and forecasts of engine demand in on-highway commercial vehicles. The report analyzes significant trends in engine displacement, engine type (diesel, gasoline, natural gas, and other), captive versus non-captive engines, and premium versus non-premium power for Class 8 vehicles.

“This analysis of engine history and its related forecast highlight the trends in engine type and displacement,” said Tom Rhein, president of Rhein Associates. He added, “New and revised engine introductions over the next few years —together with emission impacts — will lead to changes in demand.”

According to Ken Vieth, ACT’s senior partner and general manager, “The Class 8 engine analysis centers on diesel engines because gasoline engines are not available in trucks of this size. And OEM-installed alternative-fuel engines (natural gas) are currently only available from Cummins Westport: ISL-G (8.9L) and ISX-12G (11.9L).”

Vieth continued, “Demand for natural gas engines has slowed in 2016, constituting less than 2 percent of total engines used in Class 8 trucks.”

Rhein Associates is a major supplier of powertrain information to worldwide clients enabling accurate and informed business decisions and marketing plans. RAI produces three publications: The Rhein Report (leading monthly newsletter), The Future of Diesel Engines (a five-year history and forecast book), and various engine databases as well as accomplishing various consulting projects.
ACT is a worldwide leading publisher of new and used commercial vehicle industry data, market analysis and forecasting services for the North American market

Extract taken from   http://goo.gl/9RCLEQ

By Trucking News Staff

http://www.truckingnewsonline.com

Motor Carrier Regulations Update: Caught in a Trap

The New York Times has called President Barack Obama the “regulator in chief.” Why? The nation’s 44th president has led a regulatory assault on American business—specifically the $748 billion trucking industry.

In fact, during Obama’s two terms, Washington regulators have produced 600 major regulations with dozens more in the pipeline. And while not all of them affect trucking, of course, many do. They cover everything from emissions, safety reporting of accidents, hours-of-service (HOS), electronic onboard recorders, entry-level training, fuel-mileage standards, overtime pay, hair follicle testing for drug cheaters, speed governors, sleep apnea testing, diesel emission standards and visas for foreign workers who might ease the truck driver shortage.

While economically deregulated since 1980, interstate trucking is still massively regulated at the federal level by the Department of Transportation (DOT), the Department of Labor, the Environmental Protection Agency (EPA), the Occupational Safety and Health Administration and scores of other units within other departments. In the meantime, states are nearly as aggressive.
Thomas J. Donohue, president and CEO of the U.S. Chamber of Commerce and former chief of the American Trucking Associations (ATA), sees all the fine print coming out of the agencies in Washington and sums it up in three words: “A regulatory tsunami.”

In 2016, George Washington University’s Susan Dudley and Washington University’s Melinda Warren conservatively estimated that 279,000 federal workers staff regulatory agencies. To put this in perspective, in 1960 at the end of President Dwight Eisenhower’s second term, that number was just over 57,000.

William Kovacs, U.S. Chamber senior vice president for Environment, Technology & Regulatory Affairs, says that Congress is mostly at fault. He says Washington bureaucrats feel they need to do something to justify their jobs, and trucking appears to be a ripe target.

The result in trucking is that the industry is not only being hit with new and creative rules, but it’s seeing a backlog of other rules such as the HOS 34-hour restart provision awaiting final word from the Federal Motor Carrier Safety Administration.

Whatever happens on these various rules, one thing is certain: shippers will pay more. That’s because in the thin-margin trucking business—carriers make on average 3% to 4% margin even in good years—there’s no place else to absorb these costs.

“It’s going to feel like a tremendous weight to bear because we have everything coming at us,” says Derek Leathers, president and CEO of Werner Enterprises, the nation’s 4th largest truckload (TL) carrier. “But to the extent that you can get out in front of regulations, it can work to your advantage.”
Analysts are warning that while the large mega-carriers have the savvy leadership and economies of scale to survive, other less well-capitalized carriers may fall victim to the regulatory onslaught.
“Looking ahead, smaller carriers may struggle under the weight of forthcoming regulations, competition for drivers and their reliance on truck brokers,” says John Larkin, veteran trucking analyst for Stiefel Inc. “Some slow consolidation may be inevitable as small carriers decide it’s not worth continuing in business given a challenging spot market and the coming requirement to operate in absolute compliance with federal regulations.”

With this heated environment in mind, let’s take a deeper dive into the regulatory maze facing truckers and work to figure out which new rules will be making the most impact on shipper transportation strategies and budgets.
“Black boxes”

Electronic logging devices (ELDs), also known in trucker parlance as “black boxes,” are about the size and weight of a Bible and are abhorred by many drivers and adored by most large trucking fleets.
Major truck fleets have long hinted that some independent drivers fudge their legal hours of service using paper logs—hence the reason that larger fleets pushed for mandatory ELDs. However, the Owner-Operator Independent Driver Association (OOIDA) has sued the DOT on grounds that the devices don’t help safety and merely are another tool for “harassment” of drivers. The case is pending in the 7th Circuit Court of Appeals. 

ELDs are not necessarily a new development. In fact, the 28 European Commission countries as well as some Central and South American countries currently require them. Costing about $300, these tamper-proof devices are in line to be required on all trucks in the United States by the end of next year—and major fleets say they’re worth every dollar.

“Simply put, it makes us safer as an industry,” says Chuck Hammel, president of less-than-truckload (LTL) carrier Pitt Ohio. He adds that the immediate productivity hit in eliminating illegal hours is between 7% and 10%, but that can be mitigated over time as carriers learn what they can and cannot do.

“ELDs provide many operational advantages internally,” says Hammel. “First and foremost, it gives you visibility as to when the driver is moving or sitting and exactly how many hours the driver has left to drive. This is critical information to have when scheduling pickups.”

Big carriers such as Swift Transportation, Schneider, Werner and others have been using ELDs for many years. In fact, Werner was the first large carrier to convert from paper logs to ELDs in 1998. “ELDs don’t make a fleet safer by themselves,” says Werner’s Leathers. “That comes through investments in safety training and creating a culture of safety within the organization. But it assures that shippers, carriers and drivers are on the same page when it comes to expectation of transit times.”















The emissions game

A new Class 8 truck cost roughly $80,000 a decade or so ago. Today, that same truck costs roughly $140,000 before any fleet discounts for multiple orders.

The 2017 model Peterbilt, Freightliner, Paccar, Volvo or Mercedes all come outfitted with world class emissions controls, costly electronics and other devices that OEMs say have eliminated as much as 98% of particulate matter into the atmosphere.

As Phase 2 of National Highway Traffic Safety Administration (NHTSA) and EPA truck emissions regulations are set to start in the coming years, carriers and government officials say shippers ought to get ready to help pay for them. The EPA estimates these Phase 2 rules, which start on Jan. 1, 2018, for trailers will be followed by tractor regulations coming in three rollouts through 2027. The EPA says that the move is projected to cut greenhouse gases (GHG) 13% by 2021, 20% by 2024 and 25% by 2027.

However, it will come with a considerable price. The cost for the trailers-only rule in 2018 is estimated at $1,090, but the per-vehicle tractor costs will be $12,300 by 2027.

“These standards are ambitious and achievable, and they’ll help ensure that the American trucking industry continues to drive our economy—and at the same time protect our planet,” says Gena McCarthy, EPA administrator. “We expect these will drive innovation as well as protect the air we breathe.”

ATA officials contend they were “cautiously optimistic” that the new rules were workable, and that the 10-year phase-in period for the regulation would not be unduly disruptive to fleets and manufacturers.

“While today’s fuel prices are more than 50% lower than those we experienced in 2008, fuel is still one of the top two operating expenses for most trucking companies,” says ATA president and CEO Chris Spear, noting that ATA worked with Washington officials for the past four years to ensure that these fuel efficiency and greenhouse gas standards took into account the wide diversity of equipment and operations across the trucking sector.

“ATA developed and adopted a set of 15 guiding principles to serve as our major parameters for inclusion in the final rule,” says Glen Kedzie, vice president and energy and environmental counsel for the ATA. “We’re pleased that our concerns such as adequate lead-time for technology development, national harmonization of standards and flexibility for manufacturers have been heard and included in the final rule.”

But some carrier executives are skeptical of the EPA because of past problems with emissions regulations. John White, chief marketing officer for U.S. Xpress, says that the recent EPA-required changes in 2010 and 2012 resulted in some problems with engine filters and after-market treatments.
“All of the larger fleet operators accelerated our trade-in cycles because of down time and maintenance,” says White. “We dumped a lot of low mileage trucks onto the used truck market place.”

Speed limiters, and more

What else is coming down the regulatory pipeline for trucking? For one, the government wants to put the brakes on the trucking industry. In fact, NHTSA and the DOT are proposing speed governors on new trucks with a maximum speed probably around 62 to 68 miles per hour, although it says it’s waiting for public comments to determine the exact highest speed.

Transportation secretary Anthony Foxx says that the safety measure could save lives and more than $1 billion in fuel costs each year; and, more importantly for truckers, the rule wouldn’t require the retrofitting of the approximately 3.5 million older tractor-trailer trucks on the highways.

“It’s a reasonable rule,” says Leathers. “We have speed limiters set at 65 mph, but they can be brought down to 62.” The key, he says, is to find the correct relationship between safety and fuel economy.

Since 2006, the ATA has adopted a policy in favor of limiting the maximum speed of new trucks to 68 miles per hour. The proposed ruling sets up yet another fight between owner-operators, which are against the governors, and the organized trucking industry, which is in favor of the speed limiters.

OOIDA says that according to DOT data, less than 8% of fatal crashes involving trucks are speeding-related, compared to almost 30% for passenger vehicle crashes. The owner organization also says that speed limiters for trucks would result in a significant speed differential between cars and trucks on roads like interstate highways.

Safety advocates contend that the safest highways are those where traffic travels at the same or similar speeds. For every speed differential of 1 mile per hour between vehicles, the likelihood of interaction increases. Trucking executives agree that speed uniformity on the highways is key. “Speed should not be a competitive landscape,” adds Leathers.

Road ahead

State regulators are not far behind Washington bureaucrats when it comes to causing heartburn for truckers. Trucking executives say that state-specific regulations in California and elsewhere governing meal breaks, overtime pay and other issues threatens to create a “patchwork” of inefficient state regulations affecting interstate commerce.

Already, some LTL carriers have instituted a “California surcharge” of 2% or more on shipments in and out of the Golden State. As states get more aggressive in targeting the trucking industry for taxes and other fees, carriers worry that they’ll be ripe targets or even more creative rules.

“It’s an onslaught,” adds Werner’s Leathers. “It’s more than I’ve seen in a lifetime, and it just keeps on coming. They seem very efficient in finding ways to legislate things that cannot be legislated.” 

Extract taken from   http://goo.gl/J1iqAb

By John D. Shulz

http://www.logisticsmgmt.com

Uber sets its sights on long-haul trucking and brokerage markets

For shippers, carriers, brokerages and really all other industry stakeholders that have not given much thought to the possibility of Uber becoming a truckload carrier, it appears it may be time to change that mindset.

That is due to a couple of different reasons. One is the ride sharing service’s recent acquisition of self-driving truck startup company Otto for roughly $680 million. Upon completion of this deal in August, an Otto blog posting noted that “with Uber, we will create the future of commercial transportation: first, self-driving trucks that provide drivers unprecedented levels of safety; and second, a platform that matches truck drivers with the right load wherever they are,” en route to building the backbone of what it called the “rapidly-approaching self-driving freight system.”

Another reason was clearly spelled out in a Reuters report published yesterday that explained, with Otto in the fold, Uber is keen on becoming both a freight hauler and technology partner for trucking. And this comes with the expectation that in 2017 Otto-branded trucks, as well as others with Otto technology, will start moving freight headed for warehouses and stores, Otto Co-Founder told Reuters.

Uber’s goals are seriously ambitious to be sure. The report explained that it is now pitching its services to shippers, truck fleets, and independent drivers, not just to outfit trucks with self-driving technology but also to be a player in the highly competitive $700 billion truckload brokerage arena, too, which is replete with major players such as C.H. Robinson Worldwide, XPO Logistics, Echo Global, and many other players.

But the goals may need to be tempered somewhat, on the actual freight-hauling side specifically, with a current fleet of six trucks that Otto plans to expand to 15.

What’s more, it is one thing to say you are going to do these things and truly influence the market in profound ways, but it’s an entirely other thing to execute and make that happen.

That was made clear in a report issued earlier this year by supply chain consultancy Armstrong and Associates, which was based on feedback from 27 companies providing Uber for Trucking services, or “Digital Freight Matching” (DFM), which Armstrong said reflects these types of services far more accurately.

“One of the key components of Uber’s model is the commodity-like nature of the ride-hailing service,” Armstrong said.  “The principle behind Digital Freight Matching may be simple, but the trucking industry is not. Domestic transportation is not a simple commodity. Complexities arise in the form of specialized equipment types, shipments transported via multiple modes, and necessary exception handling for service issues such as equipment breakdowns.

Shipments are high-value and time sensitive. Placing an Uber-like app atop a complex industry doesn’t truly address the problem. Shippers and Carriers alike will be disappointed if this is the extent of the ‘solution.’”

And even with its now publicly stated goals to enter the freight transportation market, many industry observers do not expect immediate buy-in to Uberization within the space by Uber or other like-minded companies.

Stifel analyst John Larkin made that clear in LM’s Truckload Brokerage roundtable earlier this year, noting that while Uberization is something that will evolve but not burst onto the scene either.

“Shippers…are simply not going to turn over a $250,000 load to a company that has technology, but little knowledge or experience in the highly nuanced world of freight transportation,” he said. “Instead, the larger, better capitalized brokers will incrementally move us in the direction of more automated brokerage by rolling out automated modules that will gradually make brokerage less people intensive. Shippers will undoubtedly experience less heartburn with this approach.”

While self-driving trucks bring potentially bring some bright spots into freight transportation, such as possibly helping to alleviate the longstanding driver shortage, it also will come with challenges, including the impact of poor transportation infrastructure, and legal ramifications that could stem from accidents involving self-driving trucks, YRC President James Welch said at this week’s Council of Supply Chain Management Professionals Annual Conference in Orlando.

While it is clear self-driving trucks are a part of the future, there is a lot of ground to cover before it comes to fruition. Uber appears to be game in attempting to make a splash into the market, with an eye on becoming a market player, too. It is way to early to say what will or won’t happen, but it certainly looks like it will be an interesting ride.

Extract taken from   http://goo.gl/h6SwNT

By Jeff Berman

http://www.logisticsmgmt.com