Amazon continues to change the face of retail. What does it mean for freight forwarders?

The Amazon effect – from MHD magazine

Amazon continues to change the face of retail and recent news hints that the e-commerce giant will have a greater impact on logistics providers in the future. The retailer recently ramped up its ocean freight services and has begun trying to woo shippers from FedEx and UPS as it aims to gain more control of its supply chain. With Amazon showing no signs of letting up, this could signal changes that may bring great transformation to the supply chain industry. Read more

FedEx ends contract with Amazon

FedEx has made the decision to not renew the FedEx Express U.S. domestic contract with Amazon as the company wishes to focus on serving the broader e-commerce market.
In an announcement FedEx stated that this decision does not impact any existing contracts between Amazon and other FedEx business units or relating to international services.
Amazon is not FedEx’s largest customer. The percentage of total FedEx revenue attributable to Amazon represented less than 1.3 percent of total FedEx revenue for the 12-month period ended December 31, 2018.
“There is significant demand and opportunity for growth in e-commerce which is expected to grow from 50 million to 100 million packages a day in the U.S. by 2026. FedEx has already built out the network and capacity to serve thousands of retailers in the e-commerce space. We are excited about the future of e-commerce and our role as a leader in it,” FedEx declared.
 

Amazon invests in delivery start-up Deliveroo

Deliveroo has announced that Amazon is leading a new $575MM Series G shared funding round. This will make Amazon the largest investor in this round.
Amazon joins existing investors T Rowe Price, Fidelity Management and Research Company, and Greenoaks.
According to the company, this series of funding will bring customers the food they want whenever and wherever they want it, offering even more work for riders, and helping restaurants to grow their businesses by reaching new customers.
“Amazon has been an inspiration to me personally and to the company, and we look forward to working with such a customer-obsessed organisation. This is great news for the tech and restaurant sectors, and it will help to create jobs in all of the countries in which we operate,” Will Shu, founder and CEO of Deliveroo said.
“We’re impressed with Deliveroo’s approach, and their dedication to providing customers with an ever increasing selection of great restaurants along with convenient delivery options. Will and his team have built an innovative technology and service, and we’re excited to see what they do next,” Doug Gurr, Country Manager, Amazon UK said.
The new investment will contribute to:

  • Growing Deliveroo’s engineering team based in its London headquarters
  • Expanding Deliveroo’s delivery reach in order to continue offering its service to new customers
  • New innovations in the food sector, for example through delivery-only super kitchens “Editions”, as well as new formats that will help restaurants expand to new areas at a lower cost and lower risk, bringing more choice to local neighbourhood
  • Increased support for restaurant partners, and new tools to offer riders flexible and well-paid work

Read more about Deliveroo in Australia here.

Volkswagen partners with Amazon to automate its manufacturing and logistics processes

Amazon and Volkswagen have announced a multi-year, global agreement to build the Volkswagen Industrial Cloud, a cloud-based Industrial digital production platform that will  transform the automotive company’s manufacturing and logistics processes.
Volkswagen will rely upon the breadth and depth of Amazon Web Services’ (AWS) portfolio of services, including IoT, machine learning, analytics, and compute services to increase plant efficiency and uptime, improve production flexibility, and increase vehicle quality.
The Volkswagen Industrial Cloud will bring together real-time data from all of the Volkswagen Group’s 122 manufacturing plants to manage the overall effectiveness of assembly equipment, as well as track parts and vehicles.
“We will continue to strengthen production as a key competitive factor for theVolkswagen Group. Our strategic collaboration with AWS will lay the foundation. The Volkswagen Group, with its global expertise in automobile production, and AWS, with its technological know-how, complement each other extraordinarily well. With our global industry platform we want to create a growing industrial ecosystem with transparency and efficiency bringing benefits to all concerned,” Oliver Blume, Chairman of the Executive Board of Porsche AG and Member of the Board of Management of Volkswagen Aktiengesellschaft responsible for ‘Production’ said.
“Volkswagen’s industrial cloud, which will reinvent its manufacturing and logistics processes, is yet another example of how Volkswagen continues to innovate and lead. Volkswagen’s and AWS’s collaboration will have a profound impact on efficiency and quality in production throughout Volkswagen’s global supply chain, as Volkswagen gains access to the broadest and deepest cloud with the most functionality, the most innovation, the highest performance and security, and the largest community of partners and customers of any other infrastructure provider. We are tightly aligned across Volkswagen’s businesses to help them reimagine the future of automobile manufacturing by taking advantage of all the benefits the cloud can deliver,” Andy Jassy, CEO of AWS said.

E-commerce logistics market growth starting to slow

The latest report from Ti shows a market still expanding rapidly, but one in which competition, challenges and new entrants are raising questions over future development opportunities
The global e-commerce logistics market grew by 18.2% in 2018. Still a relatively nascent sector, e-commerce logistics growth is well above that seen in other logistics markets. Emerging markets are showing the fastest expansion, but even in developed economies, growth rates in nominal terms are usually in double-digits. Ti expects the global market to grow at an expected nominal 2018-2023 compound annual growth rate (CAGR) of 11.8%.
Ti’s latest figures suggest the cross-border component is a significant driver of this uplift. Cross-border e-commerce is bringing supply chain stakeholders into direct contact and challenging the status quo. But while gaining access to millions, if not billions, of new customers is an attractive proposition for e-commerce companies, targeting purchasers in foreign markets is not the easiest of strategies.
The report also examines the trend for offering more omni-channel retail solutions, likely to be a key requirement moving forward. This is largely driven by the purchasing behaviour of consumers, who demand a seamless experience enabled by the use of different channels to order, pay, collect and return products. They demand more delivery and returns options and leverage retailers against each other to get the best value for their money.
In addition, Global e-commerce Logistics 2019 examines e-fulfilment and last mile cost structures, and provides analysis of structural variations by geography and retail sector.
The report authors spoke extensively with senior management and leaders at the largest e-fulfilment and last mile providers globally, as well as with niche e-commerce logistics providers. A common theme was the threat posed by global retail platforms managing their own logistics requirements whilst also offering services to third parties.
The entry of players such as Amazon, Alibaba and JD.com is forcing many to consider what the future of e-commerce logistics might look like. The report’s lead author, Viki Keckarovska, senior research analyst at Ti, said: “While some would say that Europe’s legacy infrastructure and market structures are unfit for the new e-retail world, it could equally be argued that Europe boasts probably the most efficient logistics and transport sector in the world. Ti’s discussions with logistics executives and leaders in the market suggest Europe’s legacy infrastructure is seen as a hindrance to the development of efficient e-retail distribution networks, with facilities in the ‘wrong’ place and markets which were more focused on B2B rather than B2C deliveries.”

Amazon’s wage rises: too little, too reluctant

The announcement that Amazon will raise wages in the USA and UK shows that the company’s workers are starting to win the argument for fair treatment, says the ITF.
However, while this move is welcome, it has only been made after widespread criticism of Amazon’s employment model, and serious problems remain across the company’s transport supply chain – including in Australia.
Research by the International Transport Workers’ Federation (ITF) shows that Amazon spends more on transport and logistics than most of the world’s largest transport companies. In addition to its warehouse operations, it directly runs van delivery and air freight services and uses a vast subcontracted trucking network, as well as moving huge volumes of goods through ocean shipping.
Although some workers will receive a pay rise as a result of these measures, they stop well short of creating a fair employment model that respects basic worker rights.
ITF General Secretary Stephen Cotton said: “All Amazon workers across the world deserve decent pay and conditions, and crucially the right to be represented at the negotiating table by independent unions. If Amazon was serious about reform it would make sweeping changes to its transport supply chain.
“That would mean overhauling the employment status of Amazon Flex drivers, who work under ‘pay per delivery’ contracts that are among the most precarious in the gig economy. It would mean enforcing a credible due-diligence system across its trucking supply chain to ensure that labour standards are upheld. And it would mean only using shipping lines covered by ITF agreements, as this is the only way to prevent labour violations at sea.
“Amazon has a long way to go until it can be considered a truly responsible employer. Along with our allies across the labour movement, transport unions worldwide will continue piling pressure on the company until that day arrives.”
 

Amazon doubles Melbourne capacity in Sydney

Amazon’s second distribution centre, located in Moorebank, South West Sydney, has opened its doors.  The company’s distribution network – with centres in Melbourne and now Sydney – is set to provide customers with faster delivery and expanded product range and availability, the company said.
The new centre, located in Moorebank has a 43,000 square metre footprint, nearly double the size of the Melbourne DC.
The new distribution centre will provide opportunity for thousands of small and medium sized Australian businesses who sell on amazon.com.au and use the Distribution by Amazon program to more easily access customers across the country
“This is an exciting milestone for Amazon in Australia.  The Sydney facility in Moorebank will help Amazon ensure that customers enjoy fast and reliable delivery across more areas of the country,” said Robert Bruce, Amazon director of operations.  “The new Sydney centre builds on the capabilities of our first distribution centre in Dandenong South in Victoria, and expands our ability to service the growing customer demand.”
Amazon said the Sydney distribution centre will bring new jobs to the local economy and provide the thousands of small and medium sized Australian businesses who use Distribution By Amazon (FBA) on amazon.com.au with an opportunity to more easily access millions of customers across the country.  Sellers using FBA will automatically have their products eligible for Prime, Amazon’s newly launched subscription service that provides customers with benefits such as free two-day business delivery, entertainment, and access to members-only deals events, such as Prime Day.
Liverpool Mayor Wendy Waller said: “It is great to welcome the Amazon distribution centre now it has opened its doors in Moorebank. We have seen such a positive response from our local community since Amazon announced it was coming. We look forward to having good jobs for people close to where they live and working with Amazon as a partner in the local community. We expect the Sydney distribution centre will become a key logistics hub thanks to its strategic position in South West Sydney.”
 
 

Humans, robots to share the work at Amazon DC

Amazon.com plans to open its fourth Michigan distribution centre in Gaines Township, creating more than 1,000 full-time jobs with “compelling benefits and opportunities to engage with Amazon Robotics in a highly technological workplace”.
Amazon employees will work alongside “innovative technologies” at the 80,000 square metre DC to pick, pack and ship small items to customers such as books, electronics and toys. The facility will feature technology such as Amazon Robotics that will assist employees in fulfilling customer orders.
“We are very pleased to welcome Amazon to Gaines Township with this new type of Amazon Robotics distribution centre,” said Gaines Township Supervisor Robert DeWard. “This is a huge win for Western Michigan and a wonderful opportunity for our entire region, providing jobs for subcontractors, suppliers, and the 1,000 employees who will join the Amazon team.”
Amazon also offers full-time employees programs like Career Choice, where the company will pre-pay up to 95 per cent of tuition for courses related to in-demand fields, regardless of whether the skills are relevant to a career at Amazon. Since the program’s launch, over 16,000 employees have pursued degrees in game design and visual communications, nursing, IT programming and radiology, to name a few.
 

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