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Supply Chain by the Numbers
   
 

- March 30, 2017 -

   
  Supply Chain by the Numbers for Week of March 30, 2017
   
 

Interesting New Concept for Air Cargo Drone; Invesment Dollars Pouring in to Logistics Sector; Plans for Incredible Megacity in China; US Truck Driver Turnover Inexplicably Continues to Fall

   
 
 
 

20%

That is the expected increase in shipping costs versus traditional ocean freight in a drone-based air cargo service being developed by a new company called Natilus, according to a report on the Wired.com web site this week. The idea: dramatically reduce the costs of air cargo transport through use of unmanned aircraft to find a sweet spot in delivery time and cost between ocean freight and traditional air shipping. The company's full vision is for a large drone aircraft able to carry some 200,000 pounds of cargo, but for now it is developing a 30-foot long prototype drone that can carry about 700 pounds of cargo as a proof on concept. It plans on making its first test run sometime this summer, taking 30 hours to carry freight between Los Angeles and Hawaii. The drones will fly at an altitude of approximately 20,000 feet, well below commercial planes, but high enough to be fuel-efficient. The company says the trips across oceans would cost about half of what current commercial air freight transport runs, and travel just a bit slower than manned cargo aircraft.

 
 


 
 
 

$200 Million

That's how much US venture capitalists invested in logistics related companies in 2016 - up from just $60 million in 2013, as investors see big opportunities in companies looking to improve the flow of freight. That total investment, for example, includes the $25 million that Turvo - a company that has been quietly developing software that tracks orders across the supply chain, from the moment an order is placed through delivery and invoicing - recently raised from Activant Capital. Turvo's CEO says the platform allows people/companies at different points in the process to communicate with each other. Freight-forwarding company Flexport has raised $94 million to date to be the Uber of ocean container shipping. Just this month, shipping-technology startup Freightos, which has developed a marketplace for finding ocean and air cargo service from Asia, raised $25 million in a funding round led by General Electric's GE Ventures arm. The bottom line: these investments are helping to bring a whole new generation of logistics solutions – and if you have a bright idea, the money to commercialize it may be out there.

 
 
 
 
 

130 Million

That's about how many people are expected to live in a "megacity" under development in China. Sitting on the northeast coast of China, Jing-Jin-Ji - which stands for "Beijing-Tianjin-Hebei" - is a central plank of the country's economic development plan over the next century. The megacity will encompass an area roughly the size of all of New England. In November, the Chinese government approved $36 billion to build 700 miles of rail within three years to support the plan. In the longer term, 24 intercity railways are planned for completion by 2050, eight alone by 2020. The goal is a "one-hour commuting circle" across the area, according to the government, addressing commuting times that take many hours to go relatively short distances. With 13,670 miles, China already boasts of the world's longest network of high-speed rail lines, which serve trains traveling 120 mph to 220 mph, with plans to build 10,000 miles of such rail capability. A crucial part of the strategy is the revitalization of Tianjin as a base for advanced manufacturing and international shipping. Beijing would remain as the nation's capital and its political and cultural center, while Hebei province would shift to clean manufacturing and wholesale trading.

 
 
 
 

71%

Somewhat inexplicably, that was the rate of driver turnover at large truckload US carriers – defined as those with $30 million in revenue – in Q4 2016, according to the latest data released this week by the American Trucking Associations. That was down 10 percentage points from Q4 2015, and the lowest level seen at large fleets in six years. The turnover rate at smaller truckload carriers fell 16 percentage points to just 64%. The turnover rate at less-than-truckload fleets dipped one point to 8%, the lowest level since the first quarter of 2016. The continued decline in turnover rates has some wondering what has happened to the supposed driver shortage crisis, and is difficult to explain in what seems to be a strong overall US jobs environment, with low unemployment. "Continued declines in turnover rate reflects the overall choppiness of the freight market," explains ATA Chief Economist Bob Costello. "As inventory levels throughout the supply chain are drawn down to more normal levels, and freight volumes recover, we should see turnover rise along with concerns about the driver shortage."

 
 
 
 
 
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