In the Precision Software News Round-Up: 22 June 2018, US logistics spend reached $1.5 trillion in 2017, Mars hopes to secure the vanilla supply chain, FedEx is to pay $6.6 billion for new Boeings, and in the Precision Report, we look at DTC for manufacturers.
MARS HOPES TO FIX VANILLA SUPPLY CHAIN
Chocolate maker Mars is sending a team to Madagascar to secure the future of their vanilla supply. Mars plans to have representatives in-country for ten years. The company aims to implement a new model to increase returns for vanilla producers as well as fix the vanilla supply chain. The price of vanilla has soared in the last five years. In 2013, vanilla sold for $20 per kilo; this June prices were as high as $515 per kilo. As a result, it is vulnerable to theft. Despite the high prices, farmers receive low returns. For more on this, please see Supply Chain Dive.
US LOGISTICS SPEND REACHED 1.5T IN 2017
US businesses spent a huge $1.5 trillion on logistics last year. This represented a 6.2 percent increase over 2016. Those figures come from the Supply Chain Management Professionals’ annual State of Logistics Report. The report concluded that costs rose because of tight capacity and high fuel prices as well as a shortage of truck drivers. Logistics costs increased across the board last year. There was a 9.5 increase in dedicated trucking costs, while LTT freight rose 6.6 percent. Parcel and express deliveries also increased — driven by e-commerce, prices rose 7 percent. To read the full article, please click here.
FEDEX TO SPEND $6.6B ON NEW CARGO PLANES
FedEx Corp is to spend $6.6 billion on upgrading its fleet. The company is to add 12 of Boeing’s medium-size 767 freighters and 12 of the larger 777 cargo aircraft. The new planes will not add much capacity however. FedEx is retiring older air freighters with the new planes. However, David Bronczek, Chief Operating Officer with FedEx, remarked that this could change. “We’ve added very few incremental planes along the years here,” he said. “On the other hand, if we continue to see strong growth like we’re seeing now we could use them to add capacity.” For more details, please click here.
BPOST AIMS TO BECOME “INTERNATIONAL E-COMMERCE LOGISTICS PLAYER”
Belgian postal operator, bpost has announced plans to “become an international e-commerce logistics player.” The company aims to generate 45 percent of its revenue outside Belgium and 60 percent by parcels and logistics activities by 2022. “As the environment and customer needs are changing rapidly, bpost’s traditional business in Belgium is under pressure with mail volume decline accelerating (up to -7% expected in 2018). Therefore bpost has to capture the growth of parcels (double digit volume growth expected in 2018) and logistic activities related to e-commerce in the Belgium-Netherlands (Be-Ne) region, Europe, North America, and Asia,” the postal operator stated. To read more, see the bpost press release.
TRADE WAR FEARS NEGATIVELY IMPACTING GLOBAL ECONOMY
This week, the New York Times reported that fears of a looming trade war is having a negative effect on the global economy. Fewer shipments are leaving ports and air freight terminals while prices for raw materials are rising. According to the International Air Transport Association, air freight traffic levelled off during the first quarter of 2018, particularly in Europe and Asia. Similarly, there has been no growth in container ship freight this year. Commodities markets have also been impacted as China looks to replace American suppliers. However, the US appears to be better insulated than most countries to weather the storm of trade hostilities. For the full report, please see the New York Times.
BENEFITS, CHALLENGES, SOLUTIONS: DTC FOR MANUFACTURERS
Manufacturers have traditionally relied on retailers and resellers to reach their customers. With the growth of e-commerce, the distance between manufacturers and end-consumers has shortened. As a result, manufacturers now have greater access to their customers, and many are now choosing to sell direct-to-consumer (DTC). However, e-commerce platforms also allow rivals to flourish. Established brands are competing with start-ups as well as competition abroad. In the latest Precision Report we look at DTC for manufacturers, along with the challenges, benefits and solutions to support this sales model. To read the full report, please click here.