Supply Chain by the Numbers

- June 9, 2016 -

  Supply Chain by the Numbers for Week of June 9, 2016

Walmart Looks to Inventory Drones; Spot Market Rates Open Big Gap Versus Contract Pricing; Cost for Weighing Ocean Containers is Steep; Volvo Says New Truck Design Improves Mileage Big Time



That's how many days Walmart says it takes to complete a complete physical inventory in its massive 1 million+ square foot distribution centers using a combination of new drone and imaging technology. That according to a demonstration Walmart held for the media in one of its DCs in its headquarters town of Bentonville, AR last week. That versus about a full month to do an inventory using the traditional method of workers scanning bar codes with wireless RF terminals. The reports were vague on how the system - which was custom built for Walmart - actually works, but it appears a camera on each drone takes pictures at a rate of about 30 per second, and then video analytics of some type is able to determine from those pictures what inventory is in what location in what quantities. The time it does take is simply for a drone to fly up and down and through the many aisles of a DC. The idea is not new, but most previous concepts around using drones to take inventory envisioned reading RFID tags, not imaging. Walmart said it could deploy the technology in as little as 6-9 months.




That was the gap between spot market and contract US dry van truckload rates in April, widening substantially after being almost at par a month earlier. That according to a new report from investment firm Cowen and Co. and consulting firm Chainalytics, which are partnering on the monthly research. The now significant delta means shippers will increasing eschew contracted carriers to move freight through brokers and the spot market. The report also finds that spot rates for refrigerated loads were 6% to 9% below contract rates last month. All this as freight demand has cooled substantially in the past few months. But as shippers move to the spot market, it will of course have an impact on contract rates. John Larkin of Stifel recently reported that carriers were telling him shippers and brokers were looking for rates as much as 10% lower than current agreements. What's more, Swift Transportation, the largest US truckload carrier, said on a conference call earlier in the week that that it is shifting some of its trucks to servicing the the spot market from contract and dedicated carriage to capitalize on the trend.


That's the approximate improvement in diesel fuel mileage for a new concept heavy duty truck announced by Volvo Trucks this week. The latest in what has been a series of "super truck" type designs, a key factor in those fuel gains comes from a substantial 40% improvement in aerodynamic efficiency. That includes use of camera technology instead of traditional rearview mirrors, "newly developed" tires that lower rolling resistance, and a trailer that weighs two metric tons less than most current trailers, which translates into either lower fuel consumption or the possibility of higher payload. The truck has been in development since 2011, and a prototype was driven in an on-the-road test in Sweden last fall. While there are no plans to commercialize the full design any time soon, Volvo says some of its aerodynamic features have already been implemented on some of its existing vehicles, and more of the technology may be incorporated in the near future.



That's what container shipping carrier Orient Overseas Container Line (OOCL) is charging to weigh containers going on to one of its ships, in response to the looming requirements from the International Maritime Organization's Safety of Life at Sea or SOLAS convention that mandates accurate weights for containers before they are loaded on to a ship. The UN organization's new rules are meant to avoid problems with unbalanced loads that can result from inaccurate or unknown container weights, as well as damage from heavy containers being stacked on top of lighter ones. The rule was set to be enforced starting July 1, but that deadline has been relaxed amid chaos as to who and where the weighing will actually be performed - and who will pay the cost. Terminal operator DP World says it will weigh containers for $245, while carrier United Arab Shipping Company just announced it will chart a whopping 75% of the freight rate if it handles a container that can't be loaded on to a ship because the weight information has not been transmitted appropriately. OOCL will also charge a per mile fee if a drayage driver has to alter the normal route to get the container weighed. This is turning into a real mess.