Order Fulfillment in Review: February 2016
If you work in or around our industry, February felt like a month dominated by e-commerce fulfillment news.
From the analysis of the 2015 holiday season and the huge role played by online sales to the big brand retailers grappling with their online strategies for the future, last month made it clear that delivering in the digital age is about more than having every product imaginable under one vast roof.
There were other important headlines, of course, and that's what our monthly review is here to do: gather all of the major supply chain stories from February into one place so that you can catch up quickly.
Fulfillment Review: February 2016
Here's what we saw last month, as retailers started to draw a line under their 2015 performance and set out new strategies to drive them through 2016 and beyond:
- Despite the predicted seasonal surge in 2015, major retailers Walmart and Sears/Kmart reported results that failed to inspire confidence. Instead, they appear to be driving store closures, as online giant Amazon goes from strength to strength and all of its established retail rivals review their e-commerce fulfillment strategies to get back on track.
- Rail and road freight volumes experienced a sluggish start to 2016, for the most part, although intermodal carloads on the country's railroads did post a healthy 12.9% gain on February of last year. The Association of American Railroads reported mixed signals for their sector during February, while the American Trucking Association confirmed that month-on-month tonnage fell by 1.4% in January. Poor weather and uncertain economic indicators coming out of important global markets such as energy and imported consumer goods are cited as current concerns.
- UPS made a significant investment of $28 million in Silicon Valley startup Deliv, which leverages a fleet of contract drivers to effect same-day deliveries. Acknowledging that on-demand delivery within 24 hours is "still a bit of a mystery to us," Big Brown plans to use its stake in Deliv to better understand where it can compete.
- Amazon had a busy start to the year in January and showed no signs of slowing down last month, announcing an expansion of on-demand driver activities, an increased minimum order value to qualify for its free shipping policy, and with rumors floating around that the online giant is exploring a significant increase in bricks-and-mortar stores. The latter has since been dismissed as mere conjecture, but the influence that Amazon exerts on our evolving fulfillment sector continues to grow wider and deeper as the weeks roll by.
- Positive news on the Panama Canal expansion, which its administrator says should now be finished by the end of June. The project has been incrementally delayed by almost two years in total, first as a result of administrative disputes and more recently due to additional repair work required on the waterway's walls.
- 12 key trade nations gathered in Auckland, New Zealand last month to sign the Trans-Pacific Partnership, an important formality on the road to implementing one of the largest trade deals in history. The deal still faces many months, perhaps even years before its full weight will be felt, however, as individual nations must now debate and ratify the agreement at home before it can be rolled out and begin to take effect.
Order fulfillment continues to be heavily influenced by developments online, be it consumer behavior or new technology that will be integrated into the warehouse. Staying on top of these trends is an important part of understanding how you can make the most of this progression.
Stick with us this month, as we focus on the ongoing evolution of fulfillment and what it means for your business over the next five to ten years.