Robots and artificial intelligence are set to handle the logistics this holiday season. From automated arms handling apparel at a Gap Inc. GPS -1.02% warehouse to thousands of floor-hugging robots scuttling through XPO Logistics Inc. XPO -0.94% distribution centers, technology is on the agenda in supply chains this year, WSJ Logistics Report’s Jennifer Smith writes. Companies are responding to twin trends: the growth of e-commerce is pushing retailers and logistics to keep goods moving rapidly through distribution channels; and a tight labor market has some companies struggling to fill warehouse jobs at the usual seasonal hiring pace. Much of the technology is being used in distribution operations, where workers pulling carts or driving forklifts are increasingly working alongside machines built to keep goods moving quickly. About 16.5% of organizations across several industries including warehousing now use commercial service robots, and 21.5% have them in pilot programs, according to an IDC survey.
The freight-shipping boom that has fueled the trucking industry this year is showing signs of leveling off. Truck orders eased back in September after two record-setting months, WSJ Logistics Report’s Erica E. Phillips writes, extending manufacturing backlogs as red-hot summer shipping demand appears to be cooling down. ACT Research and FTR say orders remain strong, exceeding 42,000 Class 8 trucks last month, and ACT’s Kenny Vieth says he expects orders to stay near the 40,000 mark through the rest of the year. Still, measures of trucking demand aren’t growing the way they were earlier in the year, and any softness that reins back rising freight rates could cause trucking companies to tap the brakes on fleet plans. Truck makers have plenty to keep them busy: ACT says the manufacturing backlog is now nearly 11 months, even as the factories churn out 1,300 new rigs a day.
The shape of supermarkets is starting to change as grocery chains suddenly wake up to digital commerce. Stores are resetting food racks, detailing workers to help with curbside pickup and setting up home delivery operations, the WSJ’s Heather Haddon writes, as they race to keep shoppers from shifting more of the $800 billion in annual food and beverage spending to online firms like Amazon.com Inc. E-commerce represents less than 5% of U.S. grocery sales, but food and beverage sales are growing far faster online than in traditional supermarkets. Among the changes, food companies are scrutinizing their supply chains to keep from running out of stock as e-commerce orders swell. One analysis showed online grocery out-of-stock rates hover at 15%, nearly double in-store averages. Kroger Co. has fined suppliers who don’t deliver on time and in full, and Walmart Inc. has given more business to those consistently delivering on time.
SUPPLY CHAIN STRATEGIES
A warehouse-assistant robot developed by the Karlsruhe Institute of Technology demonstrated in Germany in June. Photo: Krisztian Bocsi/Bloomberg News
A growing part of the supply chain for China’s domestic consumer market is developing outside the country itself. Companies looking to sell in China increasingly are targeting Chinese residents in Australia, looking for middlemen buyers known as “daigou” to buy goods and ship them back to Shanghai, Shenzhen and elsewhere. The WSJ’s Mike Cherney reports companies like Unilever PLC are building on informal practices in which students or tourists have shipped goods back home, turning them into something more like industrial export operations that can bring the Chinese buyers hefty profit margins. For the foreign sellers, the daigou provide a low-cost channel into the Chinese market that doesn’t require warehouses or distribution networks in China itself. Daigou operate all over the globe, but Australia is a focus because of the influx of Chinese nationals in recent years, creating a wholesale business worth some $720 million by one estimate.
‘ It’s a fight for talent…It’s like ‘Game of Thrones’ out there. ’
Number of the Day
Year-over-year increase in rail carloads of petroleum and petroleum products in September, according to the Association of American Railroads.
IN OTHER NEWS
An index of service-sector activity in the U.S. rose to its highest level on record last month. (WSJ)
The U.S. private sector added 230,000 jobs in September. (WSJ)
EBay Inc. is accusing Amazon.com Inc. of illegally trying to poach sellers for its own marketplace through eBay’s messaging system. (WSJ)
Honda Motor Co. will work with General Motors Co. to jointly develop a fully autonomous car for mass production. (WSJ)
U.S. mining company Peabody Energy Corp. has held discussions to buy Drummond International LLC, Colombia’s top coal exporter. (WSJ)
Barnes & Noble Inc. is considering a sale of the company after receiving expressions of interest from multiple parties. (WSJ)
Matthew Rose, who engineered the sale of BNSF Railway Co. to Berkshire Hathaway , will retire as executive chairman of the railroad next year. (Dallas Morning News)
The National Retail Federation expects U.S. holiday-season sales to grow at a slower rate than last year. (Associated Press)
France plans to add 700 customs officers over the next three years to prepare for Brexit. (Lloyd’s Loading List)
German auto components manufacturer Sika is opening a factory in Querétaro, Mexico to supply auto makers in the country. (Automotive Logistics)
Maritime fuel suppliers are assuring shipping companies they will have bunker fuel widely available that will comply with new global emissions restrictions. (Lloyd’s List)
Container ship owner Seaspan corp. is offering $200 million to bail out bankrupt offshore construction businessSwiber Holdings. (Seatrade Maritime)
The Baltic Exchange’s chief says commodities exports from South America are helping the shipping industry fend off the impact of trade tensions. (Nikkei Asian Review)
A California labor board ordered XPO to pay a driver $123,074 for misclassifying him as an independent contractor. (Daily Breeze)
The turnover rate for drivers at large truckload carriers reached the highest level since 2015 in the second quarter. (Commercial Carrier Journal)
Amazon began construction of an 885,000-square-foot distribution center on the site of a former steel plant in Bessemer, Ala. (Birmingham News)
Discount grocer Aldi is opening 130 stores and three distribution centers in the U.K. over the next two years. (Logistics Manager)
Warehousing company Amware Fulfillment acquired the fulfillment services unit of Iron Mountain Inc. (American Shipper)
California-based e-commerce retailer iHerb is opening a distribution center in Pennsylvania’s Lehigh Valley. (Allentown Morning Call)
Deliveroo chief Will Shustill delivers pizza occasionally even as the food delivery startup has grown to a $2 billion valuation. (South China Morning Post)
Paul Page is deputy editor of WSJ Logistics Report. Follow him at @PaulPage, and follow the entire WSJ Logistics Report team: @brianjbaskin, @jensmithWSJ and @EEPhillips_WSJ. Follow the WSJ Logistics Report on Twitter at @WSJLogistics.
Write to Paul Page at [email protected]