World’s longest rail tunnel will shift European cargo from trucks

Bruce Barnard, Special Correspondent | May 30, 2016 8:26AM EDT

Gotthard Base Tunnel

Switzerland will open the world’s longest rail tunnel June 1, paving the way for a major shift of cargo, mainly containers, from trucks to rail on one of Europe’s busiest transport corridors connecting northern European ports to the south of the continent.

The 57 kilometres (35.6 miles) Gotthard Base Tunnel, which cuts through the Alps, will be able to handle up to 260 freight trains a day at a maximum speed of 100 kilometers (62 miles) per hour through its two single track tunnels when commercial operations begin in December.

The tunnel, which cost 12.2 billion Swiss francs ($12.3 billion) and took 17 years to build, will overtake Japan’s 33.4 mile Seikan tunnel and push the 31.4 mile Channel Tunnel linking the U.K. and France into third place.

The tunnel is “a godsend for Europe,” which will serve as a vital link connecting the top northern ports of Rotterdamand Antwerp to southern Europe, according to Violeta Bulc, the European Union’s Transport commissioner.

The tunnel will cut transit times for containers on the key Rotterdam-Basel-Genoa route and is also expected to divert some traffic to southern European ports that currently pass through the Le Havre-Hamburg range.

The tunnel’s importance to Europe’s transportation system is highlighted by the fact that the opening ceremony will be attended by German Chancellor Angela Merkel, French President Francois Hollande and Italian Prime Minister Matteo Renzi.

The tunnel will also be able to handle 65 passenger trains a day travelling at speeds up to 250 km/hour.

The Best Retailers Combine Bricks and Clicks

Retail profits are plummeting. Stores are closing. Malls are emptying. The depressing stories just keep coming. Reading the Macy’s, Nordstrom, and Target earnings announcements is about as uplifting as a tour of an intensive care unit. The Internet is apparently taking down yet another industry. Brick and mortar stores seem to be going the way of the yellow pages. Sure enough, the Census Bureau just released data showing that online retail sales surged 15.2 percent between the first quarter of 2015 and the first quarter of 2016.

But before you dump all of your retail stocks, there are more facts you should consider. Looking only at that 15.2 percent “surge” would be misleading. It was an increase was on a small base of 6.9 percent. Even when a tiny number grows by a large percentage terms, it is often still tiny.

More than 20 years after the internet was opened to commerce, the Census Bureau tells us that brick and mortar sales accounted for 92.3 percent of retail sales in the first quarter of 2016. Their data show that only 0.8 percent of retail sales shifted from offline to online between the beginning of 2015 and 2016.

So, despite all the talk about drone deliveries to your doorstep, all the retail execs expressing angst over consumers going online, and even a Presidential candidate exclaiming that Amazon has a “huge antitrust problem,” the Census data suggest that physical retail is thriving. Of course, the shuttered stores, depressed execs, and tanking stocks suggest otherwise. What’s the real story?

Many firms operating brick and mortar stores are in trouble. The retail industry isgetting “reinvented,” as we describe in our new book Matchmakers. It’s standing in the path of what Schumpeter called a gale of creative destruction. That storm has been brewing for some time, and as it has reached gale force, most large retailers are searching for a response. As the CFO of Macy’s put it recently, ““We’re frankly scratching our heads.”

But it’s not happening as pundits predicted. In the heyday of the dot.com bubble, brick-and-mortar retail was one of those industries the Internet was going to kill – and quickly. The dot.com bust discredited most predictions of that sort. And in the years that followed, conventional retailers’ confidence in the future increased as Census continued to report puny online sales. And then the gale hit.

It is becoming increasingly clear that retail reinvention isn’t a simple battle to the death between bricks and clicks. It is about devising retail models that work for people who are making increasing use of a growing array of Internet-connected tools to change how they search, shop, and buy. Creative retailers are using the new technologies to innovate just about everything stores do from managing inventory, to marketing, to getting paid.

More than drones dropping a new supply of underwear on your doorstep, Apple’s massively successful brick-and-mortar-and-glass retail stores and Amazon’s small steps in the same direction are what should keep old-fashioned retailers awake at night. Not to mention the raft of creative new retailers, like Bonobos, that are blending online and offline experiences in creative ways.

Retail reinvention is not a simple process, and it’s also not happening on what used to be called “Internet Time.” Some Internet-driven changes have happened quickly, of course. Craigslist quickly clobbered newspaper classifieds and turned newspaper economics upside down. But many widely anticipated changes weren’t quick, and some haven’t really started. With the benefit of hindsight, it looks like the Internet will transform the economy at something like the pace of other great inventions like electricity: it will take decades, with occasional jolts, like the quick demise of video rental stores. B2B commerce, for example, didn’t move mainly online by 2005 as many had predicted in 2000, nor even by 2016, but that doesn’t mean it won’t do so over the next few decades.

But the gale is still blowing. The precipitous decline in foot traffic in recent years, even though it hasn’t been accompanied by a massive decline in physical sales, is the canary in the coal mine. People can shop more efficiently online and therefore don’t need to go to as many stores to find what they want. There’s too much physical real estate for the crowds, which is one reason why stores are downsizing and closing.

The rise of mobile has recently added a new level of complexity to the process of retail reinvention. Even five years ago most people faced a stark choice. Sit at your computer, probably at home or at the office, search and browse, and buy. Or head out to the mall, or Main Street, look and shop, and buy. Now, just about everyone has a smart mobile phone, connected to the Internet almost everywhere almost all the time. Even retailer gets a customer to walk in the store she can easily see if there’s a better deal online or at another store nearby.

So far, the main thing many large retailers have done in response to all this is to open online stores so people will come to them directly rather than to Amazon and its smaller online rivals. Many are having the same problem that newspapers have had. Even if they get online traffic, they struggle to make enough money online to compensate for what they are losing offline.

A few seem to be making this work. Among large traditional retailers, Walmart recently reported the best results, leading its stock price to surge, while Macy’s, Target, and Nordstrom’s nosedived. Yet year-over-year Walmart’s online sales only grew 7 percent, leading its CEO to lament, “Growth here is too slow.” Part of the problem is that almost two decades after Amazon filed the one-click patent, the online retail shopping and buying experience is fraught with frictions. A recent study graded more than 600 Internet retailers on how easy it was for consumers to shop, buy, and pay. Almost half of the sites didn’t get a passing grade and only 18 percent got an A or B.

The turmoil on the ground in physical retail is hard to square with the Census data. Unfortunately, part of the explanation is that the Census retail data are unreliable. Ourdeep look into those data and their preparation revealed serious problems. It seems likely that Census simply misclassifies a large chunk of online sales. It is certain that the Census procedures, which lump the online sales of major traditional retailers like Walmart in with “non-store retailers” like food trucks, can mask major changes in individual retail categories. The bureau could easily present their data in more useful ways, but they have chosen not to.

Despite the turmoil, brick and mortar won’t disappear any time soon. The big questions are which, if any, of the large traditional retailers will still be on the scene in a decade or two because they have successfully reinvented themselves, which new players will operate busy stores on Main Streets and maybe even in shopping malls, and how the shopping and buying experience will have changed in each retail category. Investors shouldn’t write off brick and mortar. Whether they should bet on the traditional players who run those stores now is another matter.

Plethora of opportunities for intermodal exists in Mexico

Lawrence J. Gross, president, Gross Transportation Consulting | May 29, 2016 10:00AM EDT

Lawrence J. Gross

One of the key intermodal frontiers in recent years has been Mexico. The Mexican railroads have been investing in their intermodal infrastructure and introducing new services. Many aspects of the cross-border trade would seem to be well-adapted to intermodal, not the least of which is the relatively long distances involved. 

But it’s been difficult to get a clear picture of intermodal activity because of a relative paucity of data. Although the Association of American Railroads and the Bureau of Transportation Statistics have provided some insight, the recent agreement between the two main Mexican rails — Kansas City Southern de Mexico and Ferromex — to begin reporting to the Intermodal Association of North America has enabled a more detailed and nuanced picture of the situation. Here are six key conclusions I’ve made from an initial examination of the data:

• Mexico’s intermodal market is in an early stage of development. Intra-Mexico intermodal traffic accounted for just 2.2 percent of the total North American intermodal market in March. It’s about one-fifth the size of the intra-Canada market.  Cross-border volume between the U.S. and Mexico is about one-third of the volume flowing across the U.S.-Canada border, coming in at about 2.0 percent of total North American volume. In total, about 4.2 percent of all North American intermodal volume involves Mexico.
• Mexico’s domestic market consists mainly of movements of international containers. Some 87 percent of all intra-Mexico (both originating and terminating in the country) revenue movements in March were of ISO containers. Domestic intermodal is in an early stage of development, with less than 4,000 revenue moves of domestic containers during March.
• The cross-border market is all about domestic equipment. Domestic equipment accounted for more than 97 percent of all intermodal revenue movements between the U.S. and Mexico.  With less than 1,000 revenue cross-border movements of ISO containers (including both directions) in March, it seems evident that the Mexican ports have yet to become a substantial alternative route for Texas and South Central inbound cargo. It should be noted, however, that this volume is more than double that of a year ago.
• Recent growth is minimal. Although we don’t have the data to look at long-term trends, and volume has undoubtedly increased, growth has been difficult to come by recently. Intra-Mexico volume in the first quarter of this year was down 4.6 percent from a year earlier, with movements of ISO containers down 6.8 percent. Movements of domestic containers grew a strong 16 percent over the same period, but from a small base. Moves across the U.S.-Mexico border grew by just 1.9 percent over the same period, with moves of domestic equipment up just 0.4 percent. Although domestic growth was about in line with the rest of the North American network, domestic container volumes actually grew at a slower rate than in the U.S., which had more robust domestic container growth offset by losses in trailer-on-flatcar volume. The balance of the cross-border growth was in ISO containers.
• It’s a container world. Over the last 12 months, only 550 trailer-on-flatcar moves have occurred within Mexico vs. 47,000 domestic container movements. Trailers are only slightly more important moving across the border: 7,500 in the last 12 months vs. 316,000 domestic boxes.
• The Midwest dominates the intermodal cross-border trade. Movements between the Midwest region and Mexico accounted for 30 percent of all movements involving Mexico and 71 percent of the cross-border trade. The next most important U.S. region was South Central, which was the originating or terminating point for about 13 percent of all cross-border revenue moves, with other regions accounting for lesser volumes.

The Bureau of Transportation Statistics is another important source of data on the cross-border trade. Based on BTS reports, loaded intermodal units accounted for approximately 11 percent of the loaded truck/intermodal loads crossing the border in 2015. This is less than the roughly 18 percent total intermodal share we have calculated for the U.S., but our market share figure is of long-haul moves only, while the BTS cross-border truck moves includes both short- and long-haul, so the figures aren’t directly comparable.

It does appear that intermodal in Mexico has room to grow. Domestic intermodal within Mexico is in its infancy. Given Mexico’s geography, with its relatively long hauls, there should be opportunities for intermodal to convert more freight off the highway.

Pallets: The Power Behind the Supply Chain

Pallet contributions to supply chain efficiency are letter perfect.Tags: Pallets, Logistics, Supply Chain

Although they may not receive as much attention as ERP systems or refrigerated trucks, for example, pallets are critical to distribution and logistics. They are key links in most companies' supply chains, essential for transporting everything from T-shirts to automotive parts to pharmaceuticals. When outfitted with the right technology, pallets also can provide visibility into the movement of the goods they carry. "Pallets are the cells of the supply chain," says Glenn Meeks, director of sales and marketing with Bettaway Transportation Logistics and Pallet Systems.

More than two billion pallets are in circulation at any given time in the United States, according to industry analysts. Approximately 94 percent of industrial and consumer goods in the United States travel on a pallet at some point in their movement from production or manufacturing plant to distribution facility to end customer.

Demand for pallets has been on the upswing. "The U.S. economy's recovery from its sluggish phase has led to an increase in procurement, production, and sales activities," says Sharan Raj, analyst with market research firm Technavio. These increases are driving demand for materials handling activities and products, including pallets. The global pallet market will grow at a compound annual rate of 4.6 percent between 2014 and 2019, predicts Technavio's Global Pallet Market 2015-2019 report.

Several other trends are affecting the pallet industry. Shifts in how consumers purchase products—such as the growing popularity of smaller stores and direct-to-consumer sales—are influencing pallet sizes. More companies are concerned about the impact of pallets on the environment, leading to a greater focus on sustainability and reusability. In food transportation, pallets with the ability to maintain a clean, contamination-free environment are garnering attention. In addition, more shippers are looking for technical capabilities that enable them to monitor pallet movements through the supply chain.

The pallet industry also is engaging in more outreach to other industry groups focused on the supply chain, such as trucking and warehousing associations, as well as government agencies charged with issuing regulations that impact pallets. With the proliferation of social media, incorrect information about the environmental impact of pallets can spread quickly. "As an industry, we need to dispel false information," Meeks says.

Identifying an optimal pallet solution starts with clear, thorough communication between the pallet provider and the shipper. Both need to know how the pallets will be used, and in which warehouse system and business model they'll operate. For instance, the right solution for a closed-loop system—where pallets travel from a company's distribution center to its own stores and back again, all via a private fleet—likely will differ from a system where pallets move from a firm's manufacturing plant to separate wholesalers and on to a variety of other locations.

Five qualities determine whether a pallet is right for a particular operation, according to Meeks. These are:

1. Strength: Can it handle the load?
2. Stiffness: Will it hold its shape under the weight of the load?
3. Durability: Will it hold up under the handling it will receive?
4. Functionality: Is it right for the unit load and the handling equipment?
5. Price: Does it provide value?

Many pallet solutions providers work with their customers to identify the best options.CHEP, a global provider of supply chain solutions for the consumer goods, food and beverage, and manufacturing and retail sectors, works closely with its customers to understand their needs.

"CHEP provides a wide array of supply chain platforms, including pooled, recycled, fractional, and custom pallets," says Dan Martin, senior vice president of sales at CHEP USA's North American headquarters in Atlanta. "In addition, our supply chain solutions portfolio of services, which we launched in June 2015, adds tremendous value by saving companies money, time, and resources."

A CUSTOMIZED APPROACH

iGPS, a provider of world-class supply chain solutions that leverage sustainable, intelligent shipping platforms, approaches "all our clients cognizant of their unique needs and differences," says Jeff Liebesman, CEO. "We provide customized supply chain solutions."

Processes and business approaches may differ between working with a manufacturer or a retailer. "The solutions need to be relevant to their specific needs, utilizing a total system approach," Liebesman says.

Along with communication between the pallet provider and the user, proper training is key. For instance, warehouse workers switching from wood to plastic pallets may need to learn how to handle the material. "Companies can work with us to identify the best practices in materials handling," says Mike Ludka, senior product manager for the retail supply chain with ORBIS Corporation, a Oconomowoc, Wis.-based provider of plastic reusable packaging programs.

MATERIAL ASSETS

Pallet users can choose from a variety of materials. Currently, wood accounts for about 95 percent of the pallet market. "Wood pallets are strong, durable, inexpensive, and highly customizable," says Raj. They're also available in a variety of sizes and strengths. However, demand for pallets made from alternative materials, especially plastic, is expected to grow. All materials have unique characteristics, and the right choice can vary from one application to another.

Wood is all natural and fully recyclable. Manufacturing costs for wood pallets are significantly lower, which keeps prices down across the supply chain, says Adrian Potgieter, senior vice president of sales with PECO Pallet, an Irvington, N.Y.-based leader in pallet rental services.

PECO pallets also have been certified by the Safe Quality Food Institute. The certification "is a testament to our commitment to providing high-quality pallets that meet or exceed U.S. Food and Drug Administration (FDA) safety requirements," he adds.

PECO pallets are constructed from quality number two grade Douglas fir and southern yellow pine wood that's responsibly harvested in North America. The denser grain of these woods results in greater durability. In addition, the lumber used in PECO pallets is kiln-dried, rather than chemically treated. This seals the wood cells to reduce contamination risk, and creates a stiffer pallet that is less prone to deflection and breakage.

Safety goes hand-in-hand with quality. PECO pallets can hold 2,800 pounds and can be safely stacked and loaded in high-reaching overhead racks. "PECO's high-quality pallets work smoothly in automated processing lines, avoiding equipment jams that might lead to employee injury or product damage," Potgieter says.

Plastic pallets have several shortcomings. "They tend to slip in refrigerated environments, and can be prone to deflection when stored in overhead racks," Potgieter says. "When damaged, plastic pallets are more difficult and expensive to repair than wood pallets."

But plastic pallets also offer many advantages. "Our pallets are less prone to breaking than wood, which reduces product damage," Liebesman says. They eliminate wood splinters and nails that frequently jam manufacturering equipment and can shut down assembly lines and automated storage and retrieval systems (AS/RS), which can negatively impact productivity. Likewise, plastic pallets are lighter, which can reduce the risk of injury to handlers and cut transportation costs.

Unlike wood, plastic pallets cannot absorb bacteria and are exceptionally easy to clean, Liebesman adds. That reduces the threat of product contamination, eliminates the need for fumigation or chemical treatments, and minimizes other outside pollutants that can materialize from wood pallets.

The issue of hygiene and sanitation within the supply chain has been a growing focus of regulatory agencies including the U.S. Department of Agriculture and the FDA. "While always a concern for the industry, hygiene issues have moved to the forefront," Liebesman says.

One example is the recently issued final rule on the Sanitary Transportation of Human and Animal Food, which is part of the Food Safety Modernization Act. The regulation advances the "FDA's efforts to protect foods from farm to table by keeping them safe from contamination during transportation," according to the administration.

STRENGTH AND STABILITY

Like the pallets they offer, the companies behind them should be strong, stable, and capable of handling the job they are assigned. When considering a pallet provider, Meeks of Bettaway recommends asking, "Does the provider have the resources, stability, and experience to provide the pallet management solution that meets your company's needs?" Any evaluation should consider the provider's ability to supply the right pallet at the right place and time. After all, pallets aren't of any use if they aren't in place when they're needed.

Given how pallet needs can vary between companies and industries, providers should offer a range of solutions. For instance, most consumer-facing companies move products at a relatively fast pace. "This is where pallet recycling, reuse, and recapture becomes even more important," Meeks says.

Conversely, companies that operate in business-to-business markets tend to turn products less frequently, but may require specialized sizes or types of pallets that can handle big, heavy, or bulky items. "Shippers should look at the opportunities to leverage different services, whether that's recapturing pallets or using specially designed ones," Meeks adds.

CUSTOMERS COME FIRST

Strong customer support and service also contribute to a quality pallet solution, and should include more than just an 800 number. PECO, for instance, employs dedicated service reps throughout North America. They work directly with customers to follow up on questions and identify new ways to increase efficiencies and reduce costs throughout the supply chain.

Bettaway offers national coverage complemented by local service. "We strive to provide pallet management solutions that allow customers to focus on their core business," Meeks says. As a full-service third-party logistics provider that also offers asset-based trucking and warehouse services across the nation, Bettaway can provide a total supply chain solution, he adds.

A pallet provider's capacity to offer innovative solutions is another factor to consider. For instance, ORBIS operates a materials innovation facility. On-site chemists constantly evaluate different materials to provide customers with the pallet solutions that best meet their needs, Ludka says.

When working with customers who have unique needs, ORBIS assesses whether it can best serve them by creating a new solution. For example, because distribution companies often need to conserve space, ORBIS offers a pallet design that nests individual units within one another. When the pallet isn't loaded, its feet compress into the open foot pockets, slashing its height by about two-thirds. The pallet's light weight also allows for easier maneuvering by operators, yet it's durable enough to withstand the handling that occurs as it moves through the supply chain.

ORBIS also launched the Pally—a pallet and dolly in one. By pressing the foot pedal, an operator can shift the Pally from static to mobile. In the warehouse, the Pally can be used like a true pallet; it's also static and thus safe to use on trailers. But when the Pally is used to deliver products to retailers, operators can activate the mobile feature and offload the trailer without additional equipment. Companies can save money and space by cutting their inventory of both pallets and dollies.

REPORTING FOR DUTY

One area where technology and innovation play an important role is in reporting and analysis capabilities offered by pallet providers. Many companies operate increasingly lengthy and often global supply chains, and are undertaking efforts to hold less inventory in their pipelines, which is driving their focus on decision support. More companies are demanding systems that allow them to track their goods and the pallets moving them, and pallet providers are responding.

"Our customers want to become more efficient and save money without sacrificing quality or on-time delivery," says Martin. Through its data-driven Value Chain Mapping solution, CHEP helps customers evaluate their entire supply chain to identify an average of 12 ways they can become more efficient, save money, and reduce environmental impact.

"CHEP has collaborated closely with its customers on supply chain solutions that have saved them $13 million over the past nine months by identifying opportunities and implementing solutions that increase efficiency," Martin says.

iGPS works with manufacturers and retailers to map and optimize their supply chains. Wherever possible, iGPS helps them efficiently employ underutilized capacities—say, in transportation—to drive shared savings, Liebesman says. The company's iDepot and Total Pallet Management programs generate shared savings and income to retailers, driving down total costs and increasing efficiencies throughout the supply chain.

In addition, iGPS's "track and trace" intelligent platform features integrated RFID technology. Every pallet contains a unique serial number that can provide actionable reporting in real time. The same technology also can provide real-time information on environmental changes, help reduce product damage or loss, and even notify supply chain managers of suspicious activity.

Bettaway offers a mobile app its customers can use to "manage and track the movement of their goods from their phones," Meeks says.

Red<>Link™ is a proprietary online management tool for PECO customers. Users can log in 24 hours a day to place orders, check delivery dates, view invoices, and generate reports. "By providing our customers easy access to the same information PECO uses, we can work together to manage pallet flows, identify problem areas, and find new ways to reduce costs," says Potgieter. PECO also offers sophisticated analytical tools such as Roambi and Tableau, which provide real-time visibility for companies with complex networks.

ONE SIZE DOES NOT FIT ALL

Within the United States, the most common size wooden pallet is the standard 40-inch by 48-inch Grocery Manufacturers Association (GMA) pallet. Working with a single size aids efficiency, as warehouses and equipment can standardize around it. Costs increase when pallet dimensions vary, as more of them need to be manually unloaded, Raj notes. In addition, a uniform size and design allows for optimizing warehouse space through efficiencies in stacking or racking pallets loaded with products.

At the same time, demand for varying pallet sizes appears to be growing. Just 25 percent of new pallets are the GMA standard, according to one industry source.

Changing customer demands are prompting pallet providers to offer a wider range of sizes. For instance, the proliferation of small-format retail stores—such as convenience and smaller drug stores—along with the increase in direct-to-consumer shipments is prompting a shift away from traditional pallet footprints.

The traditional 40-inch by 48-inch pallet, a staple in the United States, is set up for bulk deliveries. However, few smaller stores, let alone consumers, take deliveries in bulk. Convenience or dollar stores, for instance, may struggle to accommodate 40-inch by 48-inch pallets.

Half-pallets, which measure 40-inches by 24-inches, are a popular alternative. They work well for end-aisle displays in grocery stores, as well as for businesses with smaller footprints. CHEP's half-pallet solution is proving to be a popular option because it increases delivery flexibility and decreases operational costs, especially when it comes to inventory optimization and pick operations in multiple store formats.

"Our half-pallets can reduce warehousing labor and handling costs by up to 25 percent," Martin says. "In addition, they may reduce out-of-stocks of high-volume products, and improve retailer support and sell-in for new products and seasonal promotions."

STAYING IN SPEC

No matter which size is best for a particular application, "the uniformity and accuracy of pallet dimensions is critical, especially for companies that use automated production lines," Potgieter says. "Pallets that are out of spec or damaged can cause equipment jams." This often leads to employee downtime and possible injury, and can increase equipment repair costs, and/or product damage.

Conversely, accurate pallet design and size can enhance material handling efficiency in all phases of unit loading. In particular, adhering to tight tolerances is essential when pallets operate through large AS/RS, as it helps ensure ease of movement and can eliminate delays resulting from system failures and hang ups.

PECO builds pallets to strict specifications, and inspects and repairs pallets as needed, every time they cycle through a PECO depot. That way, the company ensures its customers get uniform, high-quality pallets every time, Potgieter says.

iGPS plastic pallets are a uniform and consistent size, shape, and weight, Liebesman notes. In addition, they aren't altered during the supply chain process.

Most companies that use pallets want to minimize any negative impact on the environment. Today's pallet solutions—both wood and other materials—can help them achieve that goal.

To start, most pallets are designed to be reused over a period of years. In addition, the companies that produce both wood and plastic pallets take steps to do so efficiently.

"Whenever you can talk reusable packaging, there's a huge sustainability advantage," Ludka says. Reusing pallets, rather than continually turning to new pallets, can cut the amount of water and energy used and produce fewer carbon emissions. Most pallet providers have seen their products in use for years—and even decades—after they were manufactured.

"If a company gets the right pallet size and uses it properly—that is, doesn't go outside the parameters—they'll get extended use out of the product," Ludka says.

Each PECO pallet is utilized in an average of four operations each year, and is in use for more than 10 years, Potgieter says. That's a result of the high-quality wood from which the pallets are manufactured, as well as the company's strict maintenance standards, he adds.

Pallet solution providers can help customers cut their environmental impact in additional ways. CHEP's unique transportation solutions, for example, allow shippers to eliminate empty truck miles by identifying fleet optimization and cost-saving carrier synergy opportunities.

"For instance, over a nine-month period, CHEP helped customers eliminate almost 4.5 million empty truck miles and generate $5 million in new revenue," Martin says. "That solution also allowed those companies to eliminate more than 23 million pounds of carbon emissions."

As these examples show, pallets—and the services offered by the companies that provide them—can help companies streamline and improve their supply chains. Pallets are "one of the key considerations in modern logistics," Raj says. They help products travel efficiently, reliably, and safely.

Three Retailers Who Threaten Amazon

MAY 27, 2016 | BY DAN BERTHIAUME

Amazon.com is starting to appear like the ‘Teflon e-tailer.”

 

According to eMarketer data, Amazon captured $79.3 billion in U.S. e-commerce sales between April 2015 and April 2016, growing 13% year-over-year. Its next-closest rival, Walmart, took in just $13.5 billion online in that period. However, Amazon may not be invincible.

  

Here are three retailers who could pose a real challenge to Amazon’s e-commerce dominance: 

 

Jet.com

Jet.com only launched in July 2015, but is already estimated to be capable of generating $500 million in revenue annually and raised $700 million in funding as of December.

 

And although Jet’s mainstays are CPG and HBC, it is rapidly spreading its assortment wings. In February, it greatly expanded its home goods presence by purchasing online home products retailer Hayneedle.

 

In April, Jet started testing a fresh grocery delivery service, directly competing against AmazonFresh. While Jet makes customers wait one or two days for their groceries, as opposed to as little as one or two hours for AmazonFresh deliveries, it requires no membership fee.

 

Jet uses a proprietary algorithm to find the lowest possible price on each item from its extensive network of retail partners, and offers free two-to-five day shipping for orders more than $35. If the customer demand and internal costs line up, this could be a high-flying omnichannel offering.

 

Walmart

The world’s leading discount retailer may currently trail Amazon in the e-commerce sphere, but Walmart is not meekly accepting the status quo.

 

As part of its efforts to unseat Amazon, Walmart offered its own version of the Amazon Prime Day online sales event last summer, and now is directly taking on Amazon Prime with a beta test of a similar program called ShippingPass.

 

The two-day delivery service costs about half of the $99 annual Amazon Prime membership fee, with customers trading one day of shipping for a lower cost. Walmart has the advantage of fulfilling from its network of thousands of local stores, which could lead to shorter delivery times, at least for customers close to a store.

 

Walmart has also treaded on Amazon’s turf by providing online grocery delivery and free cloud hosting, and by testing delivery drones. While Walmart may never have quite as broad an online assortment as that of Amazon, it offers about 7 million items online. This gives the retailer a lot of potential to grow at the expense of its main e-commerce rival.

 

Uber

Technically ride-sharing service Uber is not a retailer, but the company’s aggressive moves into the online delivery space makes it a legitimate competitor for Amazon’s business. The UberRush service uses Uber drivers to deliver merchandise from retailers to customers for a $5-$7 fee, often in minutes.

 

Unlike other online retailers and delivery providers, Uber already has profit built into its routes from paying passengers. Further boosting its e-commerce margins, drivers are all independent contractors and the company operates no physical infrastructure and holds no inventory.

 

UberRush is still in limited pilot mode and faces hurdles such as local regulations and dependence on the cooperation of retail partners. Nevertheless, the company that has been obtaining significant marketshare from the taxi industry clearly has its eyes on e-commerce as the next business model it seeks to disrupt.

Logistics: The $350 billion opportunity tech hasn’t cracked yet

JAIME JIMENEZ, ICONTAINERS MAY 28, 2016 11:02 AM

TAGS: JAIME JIMENEZ, LOGISTICS

Image Credit: Suwin/Shutterstock

Uber is consolidating its food delivery business, shuttering an instant delivery option only a few weeks after its official launch. The move suggests that the company’s courier-provided meals posed a greater logistical challenge than the giant company anticipated.

If Uber couldn’t do it, it’s not hard to see why some of the other high-end courier startups like DoorDash and Instacart are struggling as well. Is it possible that, by making instant gratification a hallmark of the logistics industry, we are missing other less consumer-friendly but more profitable opportunities? Here are a few places the logistics industry might look as it considers its next wave of innovation:

1.  Price transparency (and abolishing General Rate Increase)

The actual cost of shipping is one of the best-kept secrets in the world. When you’re moving something large from point A to point B, whether it’s a car or a thousand laptops, there are tons of hidden costs that even the most experienced players are estimating. The logistics industry in America is incredibly massive and competitive, accounting for almost 10% of the GDP. Yet for all that cash, it’s really hard to account for where it all goes. That’s because most carriers use what the industry refers to as the General Rate Increase (GRI) to determine prices in a way that leaves no choice for customers. The application of the GRI is somewhat inconsistent, usually due to low demand on a specific route or low margins due to overcapacity or high oil prices, but it often amounts to paying several hundred dollars more during a certain period of time. Since everyone in the industry applies the GRI, prices across the board are suddenly increased and there’s not much customers can do about it.

2.  Supporting small exporters 

The number of independent players in the industry means that a lot of these firms’ essential value boils down to who they know. They have relationships with customers who request quotes, and their reason to exist is to call up other middlemen to try and get a good rate. That’s a really hard environment for small businesses, and particularly for small exporters and farms that don’t have a ton of leverage to negotiate with. This makes it prohibitively expensive for them to seek out international markets where their goods can fetch a higher price. The logistics industry needs to come up with more solutions to the problems facing small exporters and businesses. One place we could start is by improving payment methods that make it easier to issue guarantees to smaller exporters, so they don’t have to assume too much risk.

3.  Bureaucracy and language barriers

A lot of people don’t quite realize the number of old-fashioned barriers that still endure despite waves of technological innovation across almost every other sector. Logistics is not as exciting as building automated cars or rockets, but there’s a lot that technology could do in the way of automation that could help small players navigate complicated bureaucracies and language barriers. Not speaking the right language makes it hard, if not impossible, to negotiate for yourself effectively; and the technology that does exist is still difficult for non digital-natives to use. We must also work with governments to create policies that are friendlier to smaller businesses. This would be good for importers and exporting nations alike, since smaller manufacturers usually also offer products of a higher quality.

Innovation has a tendency to overlook the drier kinds of challenges that exist in industries such as logistics and shipping. That’s probably why Uber decided to brand itself as “your own personal driver” as opposed to a company that “moves things and people from point-A to point-B.” Logistics is a massive, $350 billion industry, but it’s in dire need of a face-lift. From price-transparency to customs, translation, and paperwork, it’s filled with unnecessary busy-work that discourages ambitious small to midsize firms and frustrates the technologically adept. By getting the little things right first, we can set our industry up to attain new heights.

NIKE Unveils Its Most Advanced, Most Sustainable Distribution Center

NIKE, Inc. today unveiled the latest expansion of its European Logistics Campus in Belgium that will accelerate the company’s drive to serve consumers faster, through a more responsive, agile supply chain. By 24/7 Staff

May 27, 2016

The expansion will make Nike’s European operations more efficient, more responsive and more sustainable, enabling growth by serving consumers across Nike.com, Nike retail and wholesale partners in 38 countries, all from a single inventory location.

“Globally, we ship more than one billion units of footwear, apparel and equipment every year, which demands an agile, innovative and sustainable supply chain,” said Eric Sprunk, Chief Operating Officer, NIKE, Inc.

“The expansion of our European Logistics Campus demonstrates our commitment to bring the full range of Nike products to consumers more quickly, where and when they want it – whether it’s one pair of Flyknit shoes or a 10,000-item order for a retailer.”

“We demand an agile, innovative and sustainable supply chain”Eric Sprunk, Chief Operating Officer, NIKE, Inc.

This latest investment in a state-of-the-art centralized distribution network in the center of Europe, which employs more than 3,000 people, allows Nike to serve a vast network of retailers and consumers not just on the continent, but across the world.

“Our facilities in Belgium are a pinnacle example of how sustainable innovation is embedded into Nike’s growth strategy, which enables us to maximize our performance while minimizing our footprint,” said Bert Stevens, Vice President of Supply Chain Operations, Nike Europe.

“The success of this expansion is a result of excellent teamwork, with great cooperation from local and national governments, and support from many partners and the local community.”

Sustainable innovation influenced all aspects of the facility, from the drawing board through to final construction, emphasizing Nike’s vision for a low-carbon, closed-loop future as part of the company’s growth strategy.

Key features of this new facility include:

• The European Logistics Campus uses 100% renewable energy, and sources energy from five locally generated sources: wind, solar, geothermal, hydroelectric and biomass. Six wind turbines on-site produce enough electricity to power 5,000 households, and the on-site solar panels cover the size of three soccer fields.
• The facility is fed by an infrastructure of canals, railways and highways. 99% of inbound containers reach the local container park, by water, not road, saving 14,000 truck journeys a year
• Moving away from a traditional structure that requires more steel and concrete, the warehouse is a rack-supported building, reducing waste and material used, thereby minimizing its footprint.
• More than 95% of waste generated on-site is recycled. Pathways used by employees around the facility are made from recycled footwear material.
• Natural light provided by many windows, a unique daylight capture system and smart, automated LED lighting help to reduce electricity costs, reduce environmental impact and provide a more productive workplace.
• The facility was carefully designed to expand while supporting biodiversity. For example, sheep will help naturally maintain the landscaping, and on-site beehives will contribute to biodiversity through the pollination of flowers around the facility and in the local area.

Beyond emphasizing Nike’s vision for a low-carbon, closed-loop future, the new campus expansion enables the company to more quickly serve its consumers with performance products when and where they want them across 38 countries.

This expansion marks the fifth period of growth for Nike’s European Logistics Campus, which stretches across four locations in Belgium: Laakdal, Meerhout, Herentals and Ham.