Good day,
This week’s “much sizzle but little steak” award goes to FedEx Corp.’s. June 7 decision to drop Amazon.com, Inc. as a domestic air express customer. The media voraciously devoured the story because it had symbolic value and involved two high profile companies. Yet the terminated business, about $150 to $200 million a year, represents just 15 to 20 percent of the $850 million in business that Amazon gives FedEx, according to consultancy ShipMatrix. That business isn’t going away, at least not yet. Given that FedEx’s total revenue is just under $70 billion, the lost business is one or two rungs above a rounding error. To put it in perspective, FedEx several years ago paid about $250 million to settle a suit in California alleging that a group of ground-parcel drivers were employees rather than contractors. The endgame here is fairly routine: FedEx drops a low-margin customer that it has been pulling away from for years, while Amazon now routes parcels through its expanding air fleet. That’s all it is, folks.
Did you know?:
The North American third-party logistics market will grow at a 6 percent compounded annual rate through 2027 to become a $266 billion business, according to Research and Markets.
Quotable:
“In our industry we see a lot of logistics promises that are not backed by assets and fall through,” Scott Leveridge, U.S. division resident of T-Force, a final-mile provider that has partnered with CFI Logistics to create a final-mile delivery network comprised of truckload assets and logistics knowledge. Both are units of Canadian firm TFI International. Leveridge was quoted in Logistics Management.
In other news:
China keeps top spot for global supply chain manufacturing scalability
Companies looking to shift supply chains from China may have their hands full. (Ventureoutsource.com)
Clean freight traffic is elusive as California rolls toward zero emissions
To achieve a carbon-free transport future, the state will need to cover a lot more ground in a short time.(CALmatters)
When investing in infrastructure, invest in freight
Best bang for the public buck comes in a “serious investment” in freight, particularly in the freight that does not travel on highways. (Eno Transportation Weekly)
Project developing special coating to help prevent the spread of pests in freight transport
The Bio-Vectors project will help develop a functional coating with insecticidal and repellent properties against flies and mosquitos for cardboard containers and packaging suitable for food contact. (European-Coatings.com)
Artificial intelligence, machine learning are revolutionizing Indian logistics and transport
The twin technologies are enhancing everyday business activities and strategies, and are improving logistics on a global scale (Entrepreneur India)
Final thoughts:
The American logistics real estate party continues to rage on, but one reveler has decided to take its leave. Singapore-based GLP’s recent $18.7 billion sale of about 90% of its U.S. logistics property assets to Blackstone Real Estate may represent more than a phenomenal ROI (try 120 percent in four years). It could signal, at least in GLP’s view, a top in the market after an unprecedented 8-9 year run. In very short order, the Singapore parent went from front-burnering an IPO of its U.S. assets to shedding almost all of it. The company did say it will continue to invest in the U.S. logistics market. That begs the question, though, as to why it would break up a 36-market network that took four years to build just to sell it and get back in again. Unless, of course, GLP foresees a more attractive entry point at lower prices.
Hammer down everyone!