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While the launch of Supply Chain by Amazon may have some in the transportation industry feeling nervous, many experts say the mega-retailer’s latest initiative is no surprise. After years of investing in fulfillment strategies and supply chain infrastructure, the consensus is that the move is a no-brainer for the e-commerce giant. But will Amazon’s big bet pay off?
However, Amazon isn’t the only big player making big moves: a subdivision of UPS is taking a new approach to deter porch pirates, and the top brass at discount giant Dollar General is working hard to bring transportation in-house. Here's what you need to know in the industry that’s always moving.
Industry leaders are paying attention as retail giant Amazon begins its foray into the supply chain space. Supply Chain by Amazon, announced in a Sept. 12 press release, offers shippers “an end-to-end, fully automated set of supply chain services that will provide sellers with a complete solution to quickly and reliably move products directly from their manufacturers to customers around the world.”
Industry experts, however, say that Amazon’s entry into the competitive fulfillment space was only a matter of time: “It was more a matter of when it was going to happen,” John Haber, Chief Strategy Officer at Transportation Insight, told The Loadstar. “They already had the network pretty much put together. This is a huge opportunity for Amazon to grow the business.”
UPS Capital, the financial arm of parcel carrier UPS, is taking the initiative to combat package theft, which has increased by nearly 50 million instances from 2021 to 2022. The DeliveryDefense program launched in July through InsureShield, the insurance division of UPS Capital. The program uses integrated data analytics to give shippers an in-depth understanding of the safety of a particular delivery location. The program also helps shippers choose alternative delivery locations and select a delivery insurance option if needed.
“DeliveryDefense empowers merchants to select optimal approaches for seamless and successful deliveries, prioritizing the customer experience,” Mark Robinson, President at UPS Capital, said in a statement on InsureShield’s website. “By proactively identifying and addressing potential shipping issues, DeliveryDefense data ensures a smooth customer journey. Merchants can leverage alternative options, such as nearby UPS Store locations or other convenient access points, to optimize delivery outcomes.”
Following the resolution of a contentious period of negotiations with the Teamsters, UPS plans to pay out the largest portion of the five-year labor deal in the first year. This strategy will position the parcel transportation provider to meet the significant initial pay raise demanded by the Teamsters while prioritizing its continued, long-term investment in supply chain advancement and automation.
However, given the problematic volume and inflationary environment, UPS leadership is less than thrilled to be making significant changes to the bottom line: “We put more cost in our business this year than we had anticipated, in an environment where the volume has receded,” UPS CEO Carol Tomé said, as quoted by SupplyChainBrain. “That puts some pressure on the margin, which is reflected, I think, in the share price.”
As retailers adapt to a volatile transportation landscape, discount retailer Dollar General is choosing to invest in its overland transportation capabilities rather than outsource work to carriers and 3PLs. The company hopes to expand its fleet of 1,800 tractors to 2,000 by the end of 2023. Currently, the company uses its fleet to cover roughly half of its transportation requirements, according to Dollar General CEO Jeff Owen during an Aug. 31 earnings call.
Amazon is urging sellers to place holiday inventory in the retail giant’s fulfillment network as soon as possible to ensure inventory resilience during the busy holiday shipping season. In October, the company will focus the efforts of its fulfillment centers primarily on receiving inventory. In November and December, fulfillment centers will pivot to focus on processing customer orders.
“As we do every year during September and October, our fulfillment center teams are focused on receiving processes to ensure that your products are properly placed in the right fulfillment centers,” according to a recent corporate message to merchants. “In November and December, we'll focus on processing customer orders. This temporary shift in emphasis from receiving shipments to fulfilling customer orders will ensure faster delivery speed and maximize your sales potential during the holiday season.”
Following last week’s decision by UAW leadership to strike, workers at Detroit’s Big Three automakers — General Motors, Ford, and Chrysler — walked off the job to show their discontent with stagnant wages amidst growing profits.
Union leaders say the “Stand Up” strike aims to affect various facilities throughout the country rather than a single manufacturing hub. “The Stand Up Strike is a new approach to striking. Instead of striking all plants all at once, select locals have been called on to ‘Stand Up’ and walk out on strike,” Union President Shawn Fain said in a Sept. 18 statement. “If the automakers fail to make progress in negotiations and bargain in good faith going forward, more locals will be called on to Stand Up and join the strike.”
More than 300 suppliers of Apple Inc., one of the world’s largest tech companies, have committed to using 100% clean energy in their production of Apple products, according to Supply Chain Dive. The company’s sustainability initiative, known as the “Supplier Clean Energy Program,” is part of an effort to reach total carbon neutrality across all products by 2030.
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