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Logistics Firms Invest in Innovation, Impact Reduction to Counter Rising Costs

Top logistics companies made major financial and technology investments in the first half of the year, looking to leverage their capabilities with innovations and opportunities.

Ocean, air and ground transportation providers are reacting to the need for speed and efficiency in today’s business and consumer environment with their enterprising moves, with many taking steps to respond to the increasingly cross-border nature of the industries they serve, including apparel, textiles and footwear.

These logistics firms, which are the backbone of the supply chain, moving freight from raw materials and fabrics to wholesale goods to retail merchandise, also increased their sustainability commitments. Many of the advancements, like including alternative fuels and less impactful vehicles, came as collaborative efforts between transportation and technology companies.

Innovation

A.P. Moller – Maersk and IBM began the year by establishing a joint venture to provide more efficient and secure ways of conducting global trade using blockchain technology. The aim of the new company is to offer a jointly developed global trade digitization platform built on open standards and designed for use by the entire global shipping ecosystem. It is intended to address the need for more transparency and simplicity in the movement of goods across borders and trading zones.

Of the more than $4 trillion in goods shipped each year, 80 percent of the goods consumers use daily are carried by the ocean shipping industry. With the blockchain initiative, the aim is to lower the cost of trade documentation—which is estimated to reach 20 percent of physical transportation costs.

Focusing specifically on finding new ways to do things, DHL broke ground on an Innovation Center in Rosemont, Ill., that will exhibit the logistics technologies and innovations the company is implementing across the region, and drive development of future logistics and supply chain solutions. When the center opens, which is slated for summer 2019, it will join the DHL Innovation Center in Troisdorf, Germany, and the Asia Pacific Innovation Center in Singapore.

DHL Supply Chain, the contract logistics unit of DHL Group, has seen 15 percent average productivity increases in trials of augmented reality technology in warehouses using smart glasses that provide visual displays of order picking instructions and item locations. It has also deployed drones with surveillance cameras to improve security at warehousing sites in Brazil and Mexico. The division also uses collaborative robots designed to help with repetitive and precise tasks, such as picking and packing, in a number of its North American warehouses. DHL Global Forwarding and DHL Express also use virtual reality and artificial intelligence in countries like the U.S. and Chile for employee training programs, and to optimize customer service, the company noted.

Georgia-Pacific’s new Point A Center for Supply Chain Innovation hopes to bring together leading supply chain companies to develop new methods and solutions. Opening this month in an initial 15,000-square-foot space at Atlanta’s TechSquare Labs, Georgia-Pacific’s Point A Center for Supply Chain Innovation will serve as a collaborative space for businesses ranging from multi-national corporations to emerging startups and academic institutions.

The center will see between $5 million to $7 million in investment, and Georgia-Pacific said it has started recruiting members ranging from Delta Air Lines and Genuine Parts Co. to Georgia-Pacific’s parent company Koch Industries, which also owns the textile fiber and chemical company Invista.

E-commerce fulfillment

The rapid growth of e-commerce has spurred much investment in the logistics needed to serve it.

So far this year, DHL launched a global fulfillment platform that enables worldwide order management and an expansion of its fulfillment center network. This allows DHL Parcel and DHL eCommerce to offer online retailers a greater ability to serve their e-commerce logistics needs.

The new IT platform allows the company to provide online retailers access to all important e-commerce regions from a single source, which ensures secure data synchronization and an easy connection to new business locations or regions.

Looking to expand its e-commerce delivery capabilities, FedEx Corp. acquired P2P Mailing Limited, a provider of worldwide e-commerce transportation solutions. FedEx said P2P’s capabilities complement and expand its existing portfolio of offerings that serve the vital fast-growing global e-commerce marketplace.

P2P, headquartered in the U.K., provides customers with last-mile delivery options, leveraging its relationships with private, postal, retail and clearance providers in more than 200 countries. Its technology and processes provide plug-and-play options with carrier networks and customer systems.

Also coming together was Truckstop.com, a provider of transportation technology and load board solutions, and Chainalytics, a specialist in supply chain intelligence. They are now combining contract and spot rates from both databases into a single product on Truckstop.com’s Rate Analysis platform.

The move comes as logistics costs have become volatile over fuel prices and demand for faster delivery, with transportation playing a pivotal role in creating greater efficiency. It’s similar in nature to Freightos’ recent deal with Baltic Exchange to launch the Freightos Baltic Index, which creates a snapshot of the global shipping container market augmented by 12 additional regional indexes.

In line with that, Pitney Bowes and ChannelAdvisor, a provider of cloud-based e-commerce solutions, formed a strategic relationship to improve shipping and logistics for commercial clients. The agreement will see ChannelAdvisor fully integrate Pitney Bowes’ Complete Shipping APIs into its new shipping management suite.

E-commerce merchants that use ChannelAdvisor’s shipping management suite can now use the Pitney Bowes’ Complete Shipping APIs to create U.S. Parcel Service shipping labels, access guaranteed delivery services, track packages and help manage shipments and inventory.

FedEx Office, a subsidiary of FedEx Corp., and Walmart Inc. reached a deal to place 500 new FedEx Office locations within select domestic Walmart stores in the next two years. This marks an expansion of a successful pilot program already spanning 47 locations in six states.

It also follows a somewhat similar agreement between Amazon and Kohl’s to open Amazon shops in 10 of its locations. The 1,000-square-foot areas offer a full range of Amazon IoT, including Echo and Fire TV, and the company’s home services.

Sustainability

On the sustainability front, UPS said it is working with U.K.-based technology firm Arrival to develop a pilot fleet of 35 electric delivery vehicles (EVs) to be tested in London and Paris as part of its carbon emission-reduction strategy. The zero-tailpipe-emission, lightweight composite vehicles have a battery range of more than 150 miles, which UPS noted is significantly higher than other EVs currently in service.

The vehicles will also come equipped with Advanced Driver Assistance Systems (ADAS) that help to improve safety and reduce driver fatigue. The ADAS features combine with an advanced vehicle display to provide the driver with an intelligent and connected vehicle, UPS said.

“This initiative will help UPS attain its global carbon reduction goals for the company’s facilities and fleets,” Peter Harris, director for sustainability at UPS Europe, said.

UPS also installed a new charging technology at its central London depot, designed to overcome the challenge of simultaneously recharging an entire fleet of electric vehicles without the need for an expensive upgrade to the power supply grid. UPS currently has more than 300 electric vehicles deployed in Europe and the U.S., and nearly 700 hybrid electric vehicles. UPS also plans to deploy 50 plug-in electric delivery trucks that will be comparable in acquisition cost to conventional-fueled trucks, collaborating with Workhorse Group Inc. to design the vehicles from the ground up, with zero tailpipe emissions.

For FedEx, the move toward curbing its impact also involved electric vehicles. The company said it added nearly 300 electric vehicles to its fleet last year, bringing the total number of EVs to more than 2,100. FedEx Freight also announced plans to order 20 of the Tesla Semi fully electric trucks.

DHL Freight purchased four liquefied natural gas powered Stralis trucks from IVECO in Belgium, which will be employed to create a sustainable transport solution for one of the world’s largest developers and sellers of athletic footwear and sportswear.

In the last two decades, the option to choose sustainable shipping has evolved, growing from a niche market mostly confined to local urban solutions to now being cost-effective and implementable for heavy loads over long distances, DHL noted. The trucks purchased by DHL Freight meet the strict Euro 6 emissions standards, making them an key choice for future operations.

Compared to diesel, the use of liquid natural gas reduces particulate matter emissions by 99 percent and nitrogen dioxide by 96 percent. CO2 is reduced by up to 10 percent and can be reduced up to 95 percent by using bio methane.

Countries congregating at the United Nations’ International Maritime Organization in London adopted an initial strategy on the reduction of greenhouse gas (GHG) emissions from ships as they set out a broad vision to phase those emissions out from global shipping as quickly as possible. The new strategy calls for GHG emissions from international shipping to be reduced by at least 50 percent by 2050 compared to 2008 levels.

The strategy would help alleviate the increased costs when petroleum prices spike. Major ocean freight carriers were recently forced to institute “emergency bunker recovery measures” to counter a hike in the price of the main source of fuel for container ships.

“The shipping industry is experiencing sustained growth, but was hit in the first quarter by the sharp increase in bunker prices,” Rodolphe Saadé, chairman and CEO of CMA CGM Group, said. CMA CGM joined 2M Alliance members, Maersk Line and Mediterranean Shipping Company in implementing the surcharge.

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