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On Demand News: 04/24/19

DW Morgan Company OnDemand Supply Chain News-While You Were Shipping: Buying futures for average trucking rates by region.

While You Were Shipping

Supply Chain Stories You May Have Missed That Recently Caught Our Eye

24 April, 2019 // Is the Chicago to Atlanta Route The Next Pork Belly Play? (Wall Street Journal; tiered subscription access) Deutsche Borse unit Nodal Exchange recently announced 11 new futures contracts to hedge trucking costs. The idea is an effort to tame recent trucking price volatility. Under the new system, investors could buy futures for average trucking rates by region, on specific popular routes or averaged for the entire United States. The instruments follow the introduction of seaborne freight futures last year on the Singapore Exchange, which have since generated about $6.4 billion in trades. WSJ points out that most new futures ideas fail, but this could become a valuable tool for manufacturers. Of course, if speculators gain interest in the market,  it might also help a few day traders pay for that GI Joe with the Kung Fu grip.

Playing With The (Ware)House Money. (Transport Topics) We have reported on the venture cash pouring into transportation technology startups. Now, the warehouse is having its own monetization moment as FlowSpace ($12 million from a group led by Canvas Ventures) and Stord ($12.3 million, Kleiner Perkins) gain additional investment funding. Both companies seek to make flexible, on-demand and by-the-pallet storage available nationwide to shippers, with online visibility to all warehouse locations and easy fulfillment / distribution services. This is the second investor round for both FlowSpace and Stord.

Trucking Keeps On … Changing? (Wall Street Journal; tiered subscription access) US trucking payrolls grew at a slower rate in the first quarter, while total jobs actually shrank by 1,200. There has still been a net gain of 144,500 trucking, warehouse and last-mile delivery jobs over the past 12 months, but it’s not the clear sellers’ market of 2018. WSJ explains that short-term factors are in play including the Q4 inventory build-up due to changing tariff concerns, as well as potential long-term softening in demand.

Blockchain Starts to Grow Up. (Ernst & Young) The hype still exceeds the reality, but this EY report gives a good overview on current applications of the distributed ledger technology in real-world supply chains—from wine provenance to food safety, fleet management and (gulp) even new possibilities for taxation. Money quote from John Langley, Jr., Clinical Professor of Supply Chain Management at Penn State: “We are at the stage where the ability to analyze and respond to what the data can tell us is becoming one of the most disruptive tools available. Again and again it is being proven, with the right data and the ability to analyze and respond to that data, companies can win. Blockchain combined with other technologies becomes an absolute game changer.”

Telematics provider CalAmp’s CEO, Michael Burdiek, has a dog in the IoT race, no doubt. But, his recent IoT Agenda guest editorial mirrors the common-sense logic and approach we have long advocated for Morgan clients. “Why haven’t we seen more people connect the dots?” he asks. “My sense is that sometimes you don’t see an advanced solution until you’ve made enough progress in the industry to uncover the advanced business problem behind that solution.” 

We’re also pleased to see Gartner’s 2019 Supply Chain Executive Conference theme announced. This year’s event, May 13-16 in Phoenix, will explore “A New Era: Converging the Physical and Digital Supply Chains.” In our practice, we have seen too many manufacturers address digitization as a separate problem from what’s actually happening in the physical world. The results of that thinking often are solutions that capture a lot of information but don’t accurately capture the whole enterprise process. So, opportunities to identify and improve performance are limited.

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