Morai-Logistics-Blog-Labour-Dispute

It was around this time last year when the West Coast Port labour dispute was in full swing and many different businesses both in North America and abroad were feeling the effects. What had started as tensions between the International Longshore and Warehouse Union and the Pacific Maritime Association, led to negotiations failing over wage and labour conditions. From October 2014 to March 2015, the port’s ability to effectively and efficiently process cargo was severely impacted as several cargo-laden ships were not unloaded and instead left stranded up and down the coast.

Several companies were unable to ship their products in a timely manner leading to the accumulation of more and more extra supplies and products. This inventory glut crowded warehouses, eventually forcing companies to cut back on their new orders to clear out their backed-up storage facilities, costing several different businesses in the short and long-term. A new study by the Washington Council on International Trade came out this week and it analyzes the costs and impact of the labour dispute across multiple industries and sectors, including agriculture and food processing, retail, and transportation and manufacturing.

Several different estimates were forecasted at the time as to the cost of the slowdown. “Kurt Salmon consulting firm previously estimated the slowdown would cost U.S. retailers $7 billion. The Manhattan Institute conservative think tank projected apple farmers alone lost $19 million during each week of the slowdown. The North American Meat Institute estimated their losses to be more than $40 million each week” cites this article on USNews.com reflecting on the topic.

The study gives a breakdown as to the actual price tag for the slowdown which ended up being very significant for both the U.S economy, trade, and several different industries:

  • U.S. exports dropped by more than $11 billion (nearly 6 percent) between May 2014 and February 2015.
  • An estimated $558.8 million in exports were not shipped by water during those months. Some exporters diverted to air cargo, increasing shipments by air a total of $152.6 million.
  • The value of goods that were not shipped during the period was $403.2 million.
  • Importers racked up an additional $345.1 million in additional costs through reductions in inventory incurred by retailers, delayed delivery of components to manufacturers and so forth.
  • Demurrage (storage) fees that would not have occurred if there were no port congestion totaled $7 million, and truck-idling costs of $14.2 million resulted.
  • Fruit and meat rotted aboard idle West Coast ships, many of which were anchored off relatively warm ports like Los Angeles.
  • Shipping companies rolled out surcharges upward of $1,000 per container on some ships to help cover expenses related to failed deliveries.

The total cost the study determined, is $769.5 million, however the council is very clear that this is only the short term cost. Long-term costs will be more far reaching. “Future costs, such as damaged client relations resulting in the loss of business or sole source contracts, can have long-lasting impacts on Washington businesses,” said the study. “While these impacts are not quantified in this report, they are real and potentially much greater than the near-term costs presented above.”

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!

Morai-Logistics-Blog-Recycling-Logistics

The slippery slope of falling oil prices

In less than two years, the price of oil has gone from over $100, to just beneath $30 a barrel. The rapid price decline is having a major impact across most North American industries in one way or another. Most often, the exact net impact is complicated to determine because the industry or business may lose out in some areas, but benefit in others. However, when it comes to the business of recycling, the downward slide of oil prices has been unambiguous. The impact has been almost entirely negative. As oil prices continue to fall, so does the profitability of most companies who offer recycling services to cities and other businesses.

Though recycling is generally agreed by most consumers to be good for the environment, the actual cost of the process is something that isn’t discussed. Some of the costs involve emissions from shipping to be processed materials to recycling centers, which use a lot of energy and water. This means that the falling price tag of oil makes it so after a certain price point, it is simply cheaper for businesses to invest in creating new plastics and materials rather than recycle old ones.

“Abundant oil is the latest headache for recyclers. New plastics are made from the by-products of oil and gas production. So as plentiful fossil fuels saturate global markets, it has become cheaper for the makers of water bottles, yogurt containers and takeout boxes to simply buy new plastics”, writes the New York Times in this article. ” This, in turn, is dragging down the price of recycled materials, straining every part of the recycling industry” it continues.

New technology and new problems for sustainability efforts

The reduced price in oil isn’t alone in negatively impacting the recycling sector. As electronic products become ever smaller and cheaper, they are also impacting recycling cost and efforts:

Electronics devices contain less and less valuable materials and precious metals, which make reduce the size of economic urban mining opportunities. In itself, this isn’t a bad trend, but it does carry negative impacts when combined with designs that make materials harder to extract

The growing popularity of online shopping is also making itself felt in terms of environmental cost. In particular, the incredible amount of cardboard needed every day to meet consumer demand, and the subsequent freight that is needed to ship and deliver it. For some context, The United States alone produced 35.4 million tons of containerboard in 2014.

It’s not all bad

Despite the increasing cost tied to recycling plastics and other oil-based items rather than making new ones, some companies are still committing to their recycling and sustainability efforts. Some big companies such as Pepsi and Procter & Gamble are buying more recyclable material to meet sustainability goals. The online and e-commerce sector is also making strides towards lessening its environmental footprint according to Dennis Colley, the president of the Fibre Box Association — the trade group for the corrugated paper, or cardboard, industry — who states that 90 percent of corrugated packaging were recycled.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!

Third party logistics (3PL) companies offer resources for companies to outsource all or part of their supply chain management. When you select your 3PL you are essentially selecting another member of your organization. As the 3PL will be acting an extension of your company, it is essential that you find out if the 3PL you are viewing is the right fit for your business.

This month we’ve created an infographic to help you select the right 3rd party logistics provider!

5 Questions to Ask Before Selecting a 3PL

Morai-Logistics--5-Questions-to-Ask-3PL

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!

Morai-Logistics-Blog-tech-car-manufacturing

Last week, an article in the Wall Street Journal covered the changing technology that are now coming as standard in automotives, and how it is creating changes in car manufacturing supply chains. In the article, WSJ writers Yoko Kuota and Jeff Bennett reported that auto part makers are quickly looking to adapt after the entry of Google and other tech focused businesses into car manufacturing with the services and features their automotives offer.

For large automotive parts companies, this means focusing on installing newer technology into their cars while forgoing more traditional features to optimize space.

“General Motors Co.’s pricey new sedan isn’t unique in leaving a few old standbys out. New cars hitting dealerships this year—ranging from bread-and-butter Dodge sedans to edgy Audi coupes—are shedding familiar features to save weight or keep up with fast-moving technology. Versions of Toyota Motor Corp. ’s latest Prius hybrid, for instance, lack a spare tire”, write Kuta and Bennet. “Well-known components like ignition keys and analog gauges are going the way of cigarette lighters and hand-cranked windows” they continue. Other staple features that some newer model cars no longer come with are lighters, analog displays, and even rear view mirrors in some cases.

More technology on the horizon

Even with all the innovations that both tech companies and the quickly adapting car manufacturers are offering their customers, several analysts are predicting that there are still many more not-so-distant features on the horizon.

For example, Forbes contributor Karl Brauer writes in this article a list of features which he believes will become the standard for cars made past 2020. Here is the list:

  • Driver Override Systems
  • Biometric Vehicle Access
  • Comprehensive Vehicle Tracking
  • Active Window Displays
  • Remote Vehicle Shutdown
  • Active Health Monitoring
  • Four-Cylinder Supercar
  • Smart/Personalized In-Car Marketing
  • Reconfigurable Body Panels

Functionality Versus Branding

In Kuota and Bennett’s WSJ article, there was the sense from those interviewed that to compete with the likes of Google, car part manufacturers would have to adapt by forgoing traditional features in their newer model vehicles. However, such an approach applied across the industry could hurt some car manufacturers. Especially if those car makers brand themselves and their product a certain way.

“A great car in Germany is not the same as a great car in the US. A great car in Germany is seen by many consumers to be a car that can be driven at 200km per hour on the autobahn” writes Professor Dominique Turpin in this article. “When Volkswagen – the quintessential people’s car tried to launch a luxury car, the Phaeton, it did not really take off. Through the development of a portfolio of brands, however, the Volkswagen Group has ably met the challenge to meet different customer needs” continues Professor Tupid.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!

Morai-Logistics-Blog-Chocolate-Supply-Chain

There was an article in the Wall Street Journal last week about everyone’s favorite treat. Candy makers Mars Inc., Hershey Co., Modelez International Inc. (maker of Cadbury), and other big food companies are sharing private data on cocoa farming practices and crop yields despite being competitors in an effort to help cocoa farmers see greater yields.

The reason for this is that the surging demand for chocolate is far outpacing the supply available, so they are trying different pilot programs to address the problem. The shortage of cocoa isn’t a new issue. In 2014, a Slate article citing a report in Bloomberg Pursuits, quoted that by the year 2020 there could be a gap of 1 million metric tons between how much cocoa the global population wants and how much farmers can produce. It also surmised that by 2030, that gap would double in size.

There are several factors that are attributed to the gap between demand and supply:

  • Global chocolate consumption has grown steadily since the 1990s, with overall consumption predicted to hit 8.5 million tons in 2020.
  • Consumers in China and India are eating more chocolate, creating a potential two billion more chocoholics according to several articles.
  • Global demand for chocolate rose 0.6% to a record 7.1 million tons in 2015, led by a 5.9% jump in Asia.
  • Dark chocolate, which requires more cocoa to produce than other forms of chocolate, has become more popular according to this Vice article.
  • As of last September, Ghana’s cocoa production fell by 18 percent from the year before. Production is expected to be down again in part thanks to an El Niño that has put Africa into one of its worst droughts in 30 years.
  • The strength of the dollar may also be attributed to cocoa’s success over the past five years writes this article on CNBC.

Sweet Logistics

The plan to address the gaps in supply revolve around enabling farmers to grow greater yields in increasingly difficult growing conditions. To this end, Mars Inc., Hershey’s, and Mondelez International, have been sending agriculture experts abroad to teach farmers how to space young trees at planting, prune them, and apply fertilizer. Mondelez alone has promised $400 million by 2022 towards this project.

Hershey’s and Mars have sent agronomists to cocoa-producing countries to teach farmers how to graft a new cocoa plant to an existing under producing plant. “There is often a tech element involved, too. Hershey’s supplied farmers in Ghana, the world’s second-largest cocoa producer, with weather and marketing information by text message, and those who followed the advice produced 46 percent more cocoa” writes Vice.

Time will tell if the efforts will be enough to accommodate the growing demand from the millions of future chocoholics around the world. 2016 isn’t a very encouraging year for the chocolate industry as many of the same problems plaguing it have carried over into the new year. However, the efforts by the companies involved look like they may yield the needed results in the long term thereby likely preventing any sort of future “chocopocalypse”.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!

If 2015 could be summarized in a word, that word would be “uberification” as the on-demand delivery model really took off. Many industries have been affected by uberification, with several entrepreneurial ventures popping up this last year with their pitch being “Uber, but for X”. Given that uberification is focused strictly on the distribution and not necessarily production of goods, this means that this latest trend will have the greatest impact on the last-mile end of the supply chain.

To kick off our first ebook of the year, let us look at a bit of the history of this trend and why it has evolved so suddenly!

eBook – Uberification and Its Impact on Logistics

Click the Cover Image below to access our ebook!

morai-logistics-blog-uberification

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!

morai-logistics-blog-amazon-soar

Flying high

So it’s not really a surprise at this point, but e-commerce giant did well over the holidays, very well. Not only did it manage to ship packages to 185 countries during the holiday season, but it also managed to expand its Prime subscription service by more than 3 million people (and sell an Adele CD every 3 seconds on Cyber Monday).

According to an article on The Verge, over 200 million items were shipped for free to Prime subscribes. With another successful holiday season under its belt, it also isn’t a surprise that Amazon is expanding in new areas to better manage its business in the coming years. It looks like that this year, Amazon is focusing on innovating the transportation and delivery of its packages. Amazon is currently in talks to launch its own air freight line which it would start by leasing 20 Boeing 767 freighter jets.

The company is currently heavily reliant on UPS, FedEx, and the U.S Postal Service for its deliveries, but it looks like it would like to exert more control over its product especially for its Prime members. This is likely due to avoid another debacle like that of two year ago when the holiday crunch delayed UPS from delivering important Christmas gifts before the holiday leading to Amazon refunding shipping charges and offering customers a $20 gift card.

According to this USA Today article, Amazon building its own transportation logistics network would mean three things:

  • It gives the company capacity. Amazon needs to in-source more of its transportation logistics so it can continue to grow
  • It gives Amazon control over delivery, which is a large part of the customer experience.
  • Amazon is a master at building infrastructure for itself and then selling excess capacity to others at a profit.

Although having its own transportation logistics would be helpful, it doesn’t cheap. Leasing newly built Boeing 767F jets runs $600,000 to $650,000 a month. “Used converted freighter jets, which Amazon will likely have to launch the cargo business, cost about $300,000 to $325,000 per month to lease” writes the Seattle Times.

Flying higher

Leasing a fleet of Boeing 767F jets isn’t the only reason Amazon is in the news currently. Thanks to a project called “Blue Origin” with which Jeff Bezos is involved with, Amazon may someday also have affordable commercial suborbital to orbital flight to make it’s deliveries. The company tested out its New Shepard rocket last month which is designed to carry six passengers.

The rocket reached an altitude of 62 miles (100 km) – breaching the boundary between Earth’s atmosphere and space – and landed back at the launch site eight minutes later, the company said.
“Fellow billionaire entrepreneur Elon Musk, founder and chief executive officer of rival rocket company Space Exploration Technologies, or SpaceX, used his Twitter feed to congratulate Bezos and the Blue Origin team on the landing, a technology that SpaceX is also pursuing” wrote Supply Chain 247.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!

Morai-Logistics-blog-santa-tracker

Every year on this day, the North American Aerospace Defense Command (NORAD) “tracks” and broadcasts Santa Claus’ location as he leaves his home in the North Pole and delivers presents too all the children of the world.

This article on CNET goes into colorful detail about the origins of the now 65 year old Christmas-themed program:

“One morning that December, U.S. Air Force Col. Harry Shoup, the director of operations at CONAD, the Continental Air Defense Command–NORAD’s predecessor–got a phone call at his Colorado Springs, Colorado, office. This was no laughing matter. The call had come in on one of the top secret lines inside CONAD that only rang in the case of a crisis.

Grabbing the phone, Shoup must have expected the worst. Instead, a tiny voice asked, “Is this Santa Claus?”

“Dad’s pretty annoyed,” said Terri Van Keuren, Shoup’s daughter, recalling the legend of that day in 1955. “He barks into the phone,” demanding to know who’s calling.

“The little voice is now crying,” Van Keuren continued. “‘Is this one of Santa’s elves, then?'”

What had happened is that a local paper had run an ad with a large picture of Santa Claus that urged kids to call the displayed number to talk “personally any time day or night”.
However, the number listed on the ad was wrong by a digit. Rather than talking to jolly St. Nick, children were calling into a very special phone line that was only supposed to ring if the Cold War heated up and Russia attacked.

Thanks to the wrong digit in the ad, many hopeful kids called in excited to be and eagerly anticipating their chance to tell Santa want they want personally. Realizing what had happened and not wanting to crush the expectations of so many children, those on the other end of the line decided to pretend to be Santa and his helpers. From there a tradition was born.

Now every December 24th, children can call NORAD to find out where in the world Santa is located.

Tracking Santa Today

“Tracking Santa” is more difficult and resource intensive than many would imagine. Here’s the short list of some of the stats behind the scene:

Although the program is led by NORAD, it comes to no cost to tax payers. Instead, it is paid for by its corporate partners and through the hard work of the people working on helping to track Santa.
It is through their efforts that Christmas can remain special a little longer for thousands of children around the world.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!

Morai-Logistics-Blog-ecommerce-slow-down

Kurt Salmon, a global management consulting firm, recently put out a study of online orders from 62 different retailers. The study analyzed online orders that were shipped to consumers, as well as those picked up in-store to measure shipping speed, accuracy and cost.

The most interesting find in the study, is that on average, order-to-delivery time for the 62 major retailers was slower by 20% than last year’s average:

In fact, only 40% of buy online, pick up in store (BOPUS) transactions were error free this year, compared to 91% of delivered orders in the study and 98% of delivered orders during the rest of the year. This huge service gap—especially in such a customer-facing area—exposes retailers and can leave customers out in the cold

On the positive side, the amount of retailers surveyed from last year is now at 90%, up 15%. Retailers offering free shipping on anything in their catalogue rather than select items has also increased. This number has grown by 50%.

“Improved execution enabled 80% of retailers to complete orders within two weeks of Cyber Monday, up from 66% in 2014, with 9% fewer cancelled orders. Overall delivery time has increased 21% from 2014”, writes the study.

An article on CNBC.com also describes how although there is a gap, the deadline for deliveries has gained an additional day.

According to a study by customer analytics firm StellaService, Dec. 21 is the most common deadline put in place by retailers promising standard or free shipping by Dec. 25. That’s one additional day compared to last year, when the most common cutoff date was Dec. 20.

morai-logistics-cnbc-retailers-standard-shipping

Source: CNBC

It’ll be important for e-commerce companies to improve their order-to-delivery times not only to meet current customer demand, but also future customer demand. Looking at data from this past Black Friday and Cyber Monday, it looks like Cyber Monday has already eclipsed the former as the shopping holiday.

According to this article from LogisticsManagement.com, the sales breakdown for the two holidays was as follows:

  • Sales expectation for Cyber Monday were expected at $3 billion, a first for the holiday
  • This is a 12% annual increase and a 50% increase from 2012, according to Adobe
  • According to an analysis by ShipMatrix, 91 percent of orders delivered by UPS’ ground service during Cyber Week were on time, compared to 97 percent during that time frame last year.
  • Black Friday sales dropped from $11.6 billion in 2014 to $10.4 billion in 2015, according to data from ShopperTrak
  • Online sales between Thanksgiving and Sunday were up 17 percent to $8.03 billion, according to Adobe

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!

With the rapidly changing environment of the logistics and supply chain industry, it has been a busy one for mergers and acquisitions (M&A) in the third-party logistics sphere. There is a lot of pressure for 3rd party logistics providers to expand their services; customers and clients are now looking more and more for a one-stop solution for all of their logistics and supply chain needs. Combine this with a need to drive scale in specific markets and a desire to go global for rapidly growing companies and you’ve got a recipe for a healthy M&A environment.

This month we thought we’d focus on exploring how these concepts are affecting 3PLs and compiled the most insightful facts we could find!

9 Facts Looking at the Trend of Mergers and Acquisitions in Third-Party Logistics

morai-logistics-infographic-9-facts-looking-at-mergers-and-acquisitions-in-3pls

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!