Archive for the ‘Logistics’ Category

Last week, we had a post on how the rise of e-commerce was messing with college dorms. Now the Wall Street Journal is reporting that the influx of package deliveries is also causing headaches at apartment complexes across the country (Web-Shopping Deluge Boxes In Landlords, Oct 20).

The onslaught has turned management offices of apartment buildings into de facto receiving centers as landlords grapple with recording packages, tracking tenants down to pick them up and finding places to store the parcels.

Camden Property Trust, the 14th-largest U.S. apartment operator by number of units, stopped accepting parcels at all of its 169 properties nationwide this year. Executives said the Houston-based landlord, which has roughly 59,000 units in 10 states and the District of Columbia, had received almost a million packages in 2014, and the rate was increasing by 50% a year. …

Each package results in about 10 minutes of lost productivity, Camden executives estimated. At a rate of $20 an hour for employee wages, that amounts to about $3.3 million a year, they said.

Beyond the staff costs, there are a number of other complications. For example, having the office at a complex open normal business hours may suffice for most things, but if residents leave for work before 8:00AM and don’t get home before 6:00PM, coordinating pick up can be a hassle for both the landlord and the resident. There is also a question of liability. If the office signs for a package as a courtesy for a resident, who is on the hook when it somehow goes missing? Given that these problem scale with more delivery, I can understand the desire to refuse to accept packages. Of course, that decision is not terribly popular with many renters. The article has multiple quotes from people who now have packages delivered to a relative’s house or who are just itching for their lease to be done so they can move to a more accommodating complex. (more…)

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Many years ago, I worked as an office assistant in my college dorm. One of the responsibilities was letting residents know if they had received a UPS package. Anything sent via regular mail went to the campus post office where we were all assigned a box. Since UPS couldn’t deliver to the post office box, it came to the dorm where someone would get around to writing out a paper form so the student could be notified. It wasn’t a particularly efficient process, but once you got past the start of the school year, there weren’t too many packages to deal with.

But times have changed! The Daily Campus (of the University of Connecticut) reports that UConn’s mailrooms are getting overwhelmed (Mailroom backup continues as officials search for solutions, Oct 5).

The number of packages received by the university for residential students has been increasing drastically in recent years, in large part due to the rise in online purchases, Assistant Director of Building Services Tracy, told The Daily Campus in an earlier article. As a result, there is a growing need to find long-term solutions beyond hiring more staff.

According to Cree, more than 100 student workers are involved in work related to the residential mailrooms.

In order to fix some immediate problems, plans have been made to modify existing mailrooms in the next few weeks. These alterations are intended to allow packages to be processed much more efficiently. …

In addition to these immediate changes that are to be put in place, UConn is also considering other ways to efficiently deal with the influx of packages and alter the current infrastructure to better reflect the needs of students. …

“We have been discussing the possibility of creating central locations for sorting, but also discussing distribution systems to get the packages delivered sooner,” [executive director of Building Services Logan] Trimble said.

The earlier article referenced above claims that UConn is receiving 3,000 packages per day. The Business Insider article on UConn’s mailroom woes notes that the school has about 31,000 students. Some of those presumably live off campus and have their Amazon sent to their apartments so we are probably looking at over 10% of on-campus students getting packages every day. I am glad my dorm assistant days are behind.


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IKEA has big growth plans. According to the Wall Street Journal, it aims to increase its revenue by €50 billion by 2020 — 74% higher than its 2014 revenue (IKEA Can’t Stop Obsessing About Its Packaging, Jun 17). Part of that growth is going to come from expanding into new markets, some may come from new formats, but a lot of it has to come from selling more stuff through existing stores. And that is going to require finding ways to cut prices to move more volume.

That’s where design comes in. IKEA is reviewing products in order to find ways to reduce their production and — importantly — their distribution costs. As this graphic demonstrates, this is pretty much a war on air.



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When a firm makes something, should it also take responsibility for delivering the product? For many firms, the answer is a firm”no”. They happily hand over the logistic of schlepping products to some third party. Most firms are happy to let someone else own trucks and recruit drivers. That’s what make the story of Ashley Furniture so interesting (A Radical Supply Chain Idea: Own Your Trucking Operation, Apr 29, Wall Street Journal).

Ashley Furniture Industries Inc., the largest U.S. maker and retailer of furniture, has resisted that trend. It owns and operates about 800 trucks and delivers the vast bulk of its own products from factories to stores. “We think it is a core competency,” says Todd Wanek, chief executive of the family-owned company.

Ashley employs about 3,000 people in transport and warehouse functions in the U.S., nearly a quarter of its U.S. head count. Its distribution centers feature racks specially designed to speed loading, and its managers arrange for trucks returning after they deliver their furniture to carry loads for other companies for a fee. Its drivers, dubbed Ashley Ambassadors, are also charged with building customer relations.


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The West Port labor strife is now over but issues remain. There are still dozens of ships waiting for their turn at Southern California ports and there are numerous bottlenecks in getting containers off ships and to their destinations. The Wall Street Journal has had a couple of recent articles dealing with how these logistical disruptions have affected supply chains as well as how the ports might possibly run better.


First up is how the ports customers are reacting (Ports Gridlock Reshapes the Supply Chain, Mar 5). The West Coast doesn’t have a monopoly on US ports, of course; they are just the most convenient to Asia. However, as the graphic above demonstrates, shipping to the East or Gulf Coasts are an options if you are willing to wait a bit longer to get your goods. Currently, the West Coast handles about half of US cargo shipments but, according to an executive of the Port of Los Angeles, a third of their volume is “purely discretionary” in the sense that it could go to another port.  (more…)

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As you may have heard, West Coast ports are having some labor issues. The Pacific Maritime Association (which represents the shipping lines and terminal operators) and the International Longshore and Warehouse Union have been going at it, affecting about 20,000 workers at 29 West Coast ports. (Can’t name 29 Wet Coast ports? See here.) The LA Times has a nice summary of what is in play. In a nutshell, management claims that the union is engaging in a slow down (effectively striking while getting paid, see here) while the union claims that they are responding to safety concerns (at LA and Long Beach) and that management is misrepresenting their position. In any event, what has resulted is lots of delays and a  slew of ships waiting off the coast for their chance to unload. (Never seen a slew of ships? Check out these images.)

OK, that’s all well and good, but how is this affecting supply chains? The sheer scale of the problem is rather mind-blowing. If it were just a question of losing one port, things wouldn’t be too bad. Ships bound for LA, could be sent to Oakland or Seattle. But it’s the entire West Coast. If the goods need to be offload to an US port, that means going all the way to the Gulf Coast or the East Coast. It’s not clear that is an easy solution. Part of why LA and Long Beach are such busy ports is that they have an entire infrastructure to support them. Even if a ship could get to, say, Charleston, it’s not clear that it would do a lot of good for some of the customers whose stuff is on the ship. If a company’s whole logistics system is based on breaking bulk in the Central Valley, having a bunch of containers in South Carolina is, at best, an inconvenience. (more…)

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Over time, this blog has had a lot of posts about shipping containers. Here is another one.

More specifically , we have from Vox and short video on the history and economic impact of shipping containers and why container ships keep getting bigger and bigger (How cargo ships got so huge — and transformed the world economy, Jan 22).

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