Good Times in Logistics

It’s earnings season and everyone from A (Aramex 2017 full-year revenues up 9% over 2016, net profits up 2% to Dh435.4 million) to Y (YRC adjusted EBITDA for 2017 $274.2 million) is singing a happy tune (I’m sure there is a Z logistics provider out there with solid 2017 earnings, too, but you get the point).The big guys keep getting bigger—XPO saw consolidated operating income rise 27.6% to $623 million for 2017, analysts are predicting that FedEx will report revenue for the most recent quarter up 7.9% over same quarter year previous, and UPS reported fourth-quarter net income of $1.1 billion, after reporting a loss in the same period a year earlier (though still getting hammered by the street).A rising tide in the form of steady global economic expansion—and in particular the explosive growth in ecommerce—is floating all boats. Investors are seeing solid, even spectacular, returns and finally wages seem to be heading north. While cost per unit for certain logistics services are going up somewhat, on whole transportation costs remain stable as shippers and carriers continue to see efficiencies improve and significant investment dollars subsidize the more inefficient new economy delivery services (looking at you, Same Day).It would seem to be a great time to be in logistics, right? And it is. But all this money is not sitting still. Capital investment by companies large and small is on a record pace as cash flows into real estate, equipment, technology and, critically, new service offerings. The Wall Street Journal last week reported on Amazon’s ‘Ship with Amazon’ service, adding the third leg of the stool to their logistics network by adding pickup services to their warehousing and delivery operations. DHL is rapidly expanding their Parcel Metro service, FedEx now offers parcel pick up at Walgreens, and everyone from Target to Walmart is buying delivery services companies.All these billions of investment dollars facilitate the continued diversification of end consumer delivery options. Retail customers can choose if they want something delivered to their house next week, their office tomorrow, or in a locker this afternoon, or they can always just pick it up in the store today at lunch. Equally diverse are the options for returning that sweater that just did not fit right after the holidays.The industry is responding full throttle to the ever-accelerating pace and diversification of customer demand. What does this proliferation of options mean to the shippers, especially the retailers, who need to ensure the quality and continuity of the customer experience? An increasing need to partner with organizations that understand the market, anticipate trends, and have the sophistication to manage and sustain a quality end consumer journey from check out to (if needed) return.This article was originally published on LinkedIn.

Chris Miller

Chris Miller is VP of Logistics at Narvar. He's an experienced leader with deep supply chain knowledge and a history of successfully leading organizations across all facets of operations, sales, and finance.

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