I’m Jay Kent, managing director of SLB Performance, a consulting firm that helps companies reduce supply chain costs, implement BI tools, and improve in-stocks and customer service. After 25 years of leading some of the most complex supply chains in the industry, I began advising companies in multiple industries and verticals. To mitigate costs and improve efficiencies, it’s important to understand the market. So twice a month, I’ll share parcel news and thoughts. Be sure to hit the subscribe button to receive the latest newsletter in your LinkedIn notifications.
We’re in the midst of the holiday peak season. Black Friday and Cyber Monday sales were strong as consumers took advantage of big sales. Retailers have a lot on the line this holiday season as many are trying to unload as much of their inventory as possible to make way for new, fresh inventories in 2023.
- Some, such as Macy’s, have been successful in reducing their inventory levels. During its Q3 call, the company noted that inventories were up 6% year-over-year. Part of its success, other than heavy discounting of items, was the establishment of 35 mini-distribution centers inside existing stores. “These semiautomated, mini-DCs totaling nearly 1 million square feet allow us to reduce shipping costs and split shipments, better utilize inventory in specific markets and regions and improve delivery speed, which will be an advantage this holiday season,” said CFO Adrian Mitchell on the Nov. 17 call.
Speed continues to be important
- LaserShip/Ontrac opened a sorting center near Philadelphia just ahead of the holiday peak season. As part of the center, the company invested in a fully automated small package sorter to increase the center’s sorting capacity to 31,000 packages per hour.
- Supply chain technology provider, Stord, introduced Stord Parcel, a carrier-agnostic last-mile delivery solution with advanced modeling to automatically choose the most efficient and cost-effective carrier and service level that meets the expected delivery date for all packages. “Today, most brands set up simple rules for service level selection based on standard carrier guidelines, which means they often opt for a more expensive service level to ensure on-time delivery,” explained Sean Henry, CEO and co-founder of Stord, “With Stord Parcel, brand operators can feel confident that their parcel program is truly optimized based on real, historical performance data rather than broad guidelines.”
- Better Trucks secured a $15 million round in funding. Better Trucks is a last-mile delivery carrier focused on next-day and two-day parcel shipping to residential customers, leveraging in-house technology to streamline the delivery process. Its shipping clients include leading national retailers delivering across the Midwest, Northeast, Southeast, and Texas, as well as e-commerce and fulfillment companies such as ShipBob. Better Trucks is also available on the leading multi-carrier shipping platforms such as EasyPost and ProShip. “This first outside investment allows us to expand our footprint and build upon our proprietary tech stack to deliver a better experience for our clients and their customers,” said Andy Whiting, Better Trucks co-founder, and CEO. “These investment partners share our vision for the next age of delivery that puts customers’ unique needs ahead of the outdated demands of legacy delivery companies.”
- Locus Robotics, which offers warehouse services like picking and packing and person-to-person transport through a fleet of autonomous mobile robots announced that it had raised $117 million and reached close to a $2 billion valuation.
Disappointing earnings
In response to a disappointing FYQ1 2023 earnings report for the period ending Aug 30, FedEx has reduced the frequency of some domestic and international flights and parked some of its cargo aircraft. In addition, it has reduced sorting points and consolidated loads at its domestic Ground unit. year due to a range of issues that include weakening markets in Asia and Europe.
- “We’ll have a solid peak this year but a little more moderate perhaps than what we’ve experienced the last two years, which I think our operations team will certainly appreciate,” Chief Financial Officer Mike Lenz said at the Bair 2022 Global Industrial Conference on Nov. 8.
- FedEx Freight is enacting furloughs in some U.S. markets as demand continues to ease. The move is due “to current business conditions impacting volumes,” according to published reports. “The company will continue to evaluate the environment and bring back furloughed employees as business circumstances allow.” The furloughs are expected to last around three months.
Pitney Bowes announced Q3 earnings on Nov. 1. Some commentary from the earnings transcript:
- In the quarter, Domestic parcel volumes were $36 million, down $4 million from prior year. Lower volumes were a result of softer overall e-commerce activity and a continued decline in inbound parcels from China. On the other hand, revenues were up 2% year-over-year on higher revenue per parcel. Ana Maria Chadwick – Executive Vice President and CFO
- Our Domestic Parcel network is well positioned to handle peak volumes this year as well as an expected increase in the run rate parcel volumes driven by recent new client wins. Since the beginning of the third quarter, 32 new Domestic Parcel clients have gone live ahead of peak. Ana Maria Chadwick – Executive Vice President and CFO
- Last quarter we also discussed the changes in the USPS reseller program. We now have finalized a new agreement with USPS that enables us to maintain and possibly improve the economics we had historically generated from the reseller ecosystem. The technology-oriented capabilities we have built over the years which support substantial volumes in the USPS network were integral to the new arrangements with USPS and reflect the benefits of our innovations to both USPS and shippers. We have also finalized a new agreement with eBay and we are pleased to continue to be an integral part of their international shipping program. Ana Maria Chadwick – Executive Vice President and CFO
Renewed interest in reverse logistics as retailers focus more on costs throughout their supply chains.
- FloorFound has launched what it said is the largest recommerce network in North America for oversized items. Through partnerships, the network includes facilities, fulfillment, and transportation, providing retailers of oversized items a “plug-and-play infrastructure” with little to no upfront investment, the company said.
- According to FloorFound, there are 12 million tons of furniture waste generated each year in the U.S., with 80% of that ending up in landfills.
- FloorFound has opened five “recommerce processing centers” that are approximately 500,000 square feet of reprocessing space. Each center is staffed and capable of consolidating returns, receiving consumers’ returned or traded-in items, as well as bulk transfers from warehouses or other collection points. It also has an integration with project44 to provide complete visibility and status of each item.
That’s it for now. Comments are always welcomed. Let me know what I missed. Stay tuned for the next newsletter on Dec 14 and don’t forget to hit the subscribe button to ensure you receive it in your LinkedIn notices.
-Jay