After abandoning their attempt to compete with UPS and FedEx in the American package delivery market 10 years ago, DHL is making a careful attempt to reenter the marketplace.
After testing the service for the past 2 years, DHL recently announced the formal launch of its new venture, called Parcel Metro. Initially, the service will be available in New York, Chicago, and Los Angeles, with expansion to San Francisco, Atlanta, Washington, D.C. and Dallas to follow.
Parcel Metro, while using the international parcel warehouses in the US that DHL maintained after pulling out of their ill-fated domestic delivery service, takes advantage of local couriers and delivery companies to make the final delivery.
Parcel Metro and Amazon’s recently announced Shipping with Amazon service can both be viewed as a response to the recent rise in shipping rates posted by FedEx and UPS. The companies claim the higher fees are necessary due to the higher costs they experience when making deliveries to homes as opposed to businesses. These home deliveries continue to surge due to the increase in ecommerce transactions.
Why did the chicken cross the road? Well, it appears that, at least in the UK, it’s not to get to KFC. The chicken restaurant has had to temporarily shutter over half of its 900 restaurants in the UK due to a lack of chicken caused by glitches with its new supply chain.
KFC, owned by Yum Brands, announced a revamping of its supply chain in November 2017, entering into a deal with DHL and QSL (Quick Service Logistics) that DHL referred to as ‘groundbreaking’ at the time, and ending their deal with the distribution firm Bidvest. However, only a week after the new arrangement took effect, incomplete or delayed deliveries have forced KFC to admit that ‘getting fresh chicken out to 900 restaurants….is pretty complex’.
The GMB labor union had apparently raised warning flags about the move away from Bidvest, saying it would ‘have consequences’. They have recently posted on their Twitter account that the issue was ‘entirely avoidable’.
Some of the chicken used by KFC is sourced from UK farms, and some comes from overseas suppliers, depending on the actual menu item.
One logistics expert said that the start of any new contract is usually the riskiest period, but knowing that, the involved parties usually have ‘planned to death’. Also, instances like this are typically not as publicly visible as in this case.
Some KFC stores are company-owned, and some are franchised, so the experiences of employees in the closed stores will vary.
As you can imagine, KFC customers in the UK were not amused by this turn of events, and both QSL and DHL’s apologies ‘for any inconvenience’ did little to satisfy social media posters.
North American trucking companies ordered almost 50,000 big rigs in January, says a report by ACT Research. This is the highest number of orders in nearly 12 years, and more than twice the January 2016 level.
This buying frenzy is fueled by a number of factors, primarily the strong demand for freight transport and the expected cash influx from the recent tax changes. Additionally, what is being seen now is partially just a result of natural boom-and-bust cycles, as orders soared in 2014 and tanked in ’15 and ’16, helping to create the current need for trucks.
Also, a strong holiday season and stricter rules regarding how long drivers can stay on the road have contributed to the current shortfall of available trucks.
Shipping costs for last minute runs have recently risen as much as 30%. While the availability of additional trucks should help to moderate shipping costs, it will probably take a while.
Most of the trucks ordered in January won’t be delivered for six months or more, and once they are available, the question of who is going to drive them remains.
The industry is still struggling to provide the necessary drivers for the big rigs they currently have. Some trucking companies are trying to solve the problem by ordering easier-to-drive trucks, and others are providing free training.
XPO Logistics, the busiest provider of what is referred to as ‘last mile’ deliveries to North America homes, recently announced that it expects to participate in 750,000 home deliveries in 2018 in its recent European expansion as it continues to grow its network of delivery contractors.
The company originally tested the service in the Netherlands, the UK, and Ireland, later expanding to France and Spain. It currently counts the giant Swedish furniture retailer Ikea as one of its customers.
XPO Logistics is based in Greenwich CT, and handles around 13 million deliveries of larger items such as furniture in the US yearly.
Analysts described the expected European volume as a nice start. XPO has grown from sales of $175 million in 2012 to its current level of around $15.4 billion, primarily through acquisitions. The potential for the European market is said to be in the ‘multi-multi billion dollar range’.
Online sales have fueled the market for delivery of bulky items directly to homes, and Europe is seen as a prime opportunity for expansion, particularly for items that require installation, due to the current market fragmentation.