Today’s Pickup: Cities drowning in deliveries; auto logistics firms may get squeezed

Good day:

A deluge of delivery vehicles is inundating the world’s big cities, and urban mobility paralysis may set in unless steps are taken to manage the continued surge in last-mile deliveries resulting from e-commerce demand, according to a report published earlier this month by the World Economic Forum, consultancy McKinsey & Co., Leaseplan and the World Business Council for Sustainable Development. The top 100 cities will see a 36% increase in delivery trucks by 2030, the report said. This will raise emissions by 32% and congestion by more than 21%, it predicted. Add to that the projection that cities will house 60% of the world’s population by 2030, and the problems appear to only get worse. More than 2 billion people worldwide will buy goods online by the end of next year, and the online share of worldwide retail sales will hit 20% by 2023. The proliferation of autonomous vehicles will add to the burden, the report said; 2024 will be the year when most Original Equipment Manufacturers will release AVs that are advanced enough to either not need a driver to operate it or not need a human in the vehicle at all.

Did you know?:

Two-thirds of 1,800 multimodal shippers surveyed by less-than-truckload (LTL) and logistics provider Averitt Express expect higher volumes this year, a 3.36% drop from 2019 and the lowest level in the survey’s five-year history. About 12% of respondents struggled with capacity challenges in 2019 compared to 26.05% in 2018, while 43% said that tariffs had a negative impact on their business, slightly higher than 2018. Only 5% viewed tariffs as a positive in 2019.


“I would be worried about a recession coming out of left field that hurts demand.”

— Hamad R. Moghadam, chairman and CEO of logistics real estate titan Prologis Inc., on what could derail the eight-year bull run in the sector. Oversupply concerns are unlikely to be the cause of any broad slowdown, he said.

In other news:

Shrinking OEM, parts supplier margins to squeeze auto logistics operations

As OEMs and automotive parts suppliers see their margins decline, cost pressures are going to increase on logistics operators, especially those supporting Tier 1 suppliers. (Automotive Logistics)

FedEx warns of scam

According to the company, people have been getting fraudulent text messages asking them to follow a link to set up their delivery preferences so FedEx can mail them a package. The message includes a tracking number and uses target’s names. Clicking the link in the message takes users to a scam website that asks people to fill out a survey. It prompts them to put in their personal and credit card information so they can be sent a free gift. (Lexington, Kentucky, Channel 18)

Last Uber holdout in North America gives in

The last major North American city to not allow Uber to operate, Vancouver, British Columbia, has cleared Uber and rival Lyft to do business. Both launched service on Jan. 24. (Vancouver Sun)

Delaware port operator expands services

Gulftainer, which manages Delaware’s Port of Wilmington, has added services at the port under the Momentum Logistics brand. (Delaware Business Now!)

Digital platform promises full warehouse automation

A new digital platform is enabling “hands-free” visibility and automated warehouse operations, using Radio Frequency Identification (RFID). Cargocast pinpoints the location of each piece of cargo within a two-foot radius. Processes such as goods acceptance can then be fully automated, Cargocast said. (The Loadstar)

Final thoughts:

It seems as if Brad Jacobs has been in this business for decades, when in reality XPO Logistics Inc., the company Jacobs founded, has been around for only nine years. That is the kind of imprint that Jacobs has made. As XPO plans to divest four business units, all of which are solid, established companies with combined revenue of about $13 billion, Jacobs’ unique skill set deserves a mention. He is both an accomplished capital allocator and a proven operator of businesses. That is rare in any industry. For example, Berkshire Hathaway Inc. Chairman and CEO Warren Buffett is a capital allocator extraordinaire, but he leaves the running of Berkshire’s business, such as BNSF Railway, to others who Buffett knows are more capable than he in those roles. Carl C. Icahn is a brilliant investor, but his one major operating endeavor in transportation, running the old Trans World Airlines, didn’t go well. Whether one likes Jacobs or agrees with his approach, his ability to successfully blend both skills — and to have done it more than once (think United Rentals Inc.) — is something that should be appreciated.

Hammer down, everyone!