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FedEx and UPS announced that after the holiday season they will switch to dimensional pricing for ground shipments. This could mean rate increases of 17-30% for larger packages.

Material Handling & Logistics
July-August, 2014

executives at the eyefortransport 3PL Summit in Chicago in mid-June estimate that this could mean rate increases of 17-30% for larger packages.

E-commerce retailers are searching for additional de­livery options as they embrace same-day and even same-hour deliveries to supply them with a competitive edge in this market.

Amazon's AmazonFresh same-day grocery delivery program began in 2008 in its hometown of Seattle, and last year expanded to Los Angeles and San Francisco. Walmart's Walmart to Go grocery delivery service began in 2011 in San Francisco and San Jose, Calif., and last October started in Denver. Target Store also reported in mid-June that it is testing same-day service in Boston, Miami and the Minnesota Twin Cities areas.

Mastering the Final Mile

Some retail chains like Home Depot are attempting to compete in the e-commerce space by offering customers on­line ordering and store pick-ups. The store pick-up option is fueling attempts to convert bricks-and-mortar stores to mini-distribution centers, including repurposing abandoned store locations to fulfill that role. Even if only a handful of com­panies are experimenting with these programs, the growth of e-commerce is fueling a trend not just toward adoption of omni-channel facilities, but also by increasing the number and geographic spread of warehouses and DCs—a reverse of the previous trend to fewer and larger facilities.

These retailers are taking a close look at a number of delivery options beyond owning their own delivery fleets, including using local parcel delivery companies. It is

estimated that 80 percent of deliveries in major metropol­itan areas are already made by local trucking companies.

Another potential approach would be following the business model developed by the passenger service Uber, in which individual automobile owners pickup and de­liver passengers in a cell-phone based service that is giv­ing fits to traditional services.

Although 3PL professionals shake their heads when they hear this idea—asking where they will get liability coverage and ensure drivers are qualified—advocates point out that when it comes to passenger service the driver qualfication and liability issues already have been successfully addressed by Uber.

A company called Cargomatic announced in late June that it is testing an Uber-like delivery service in southern California to connect regional shippers with small fleets and individual truck drivers, and it expects to expand that service to locations on the East Coast before the end of the year. Although Internet-based freight matching services have existed since the late 20th Century, Cargomatic prom­ises a faster service based on smartphone communications and a focus exclusively on local hauling jobs.

Whether or not this turns out to be a viable transportation alternative, one thing is clear: logisticians need to break out of conventional patterns of thinking to deal with this new world. Technological solutions may be the answer, ranging from exploiting marketing analytics and learning how to carve big data into more digestible pieces to improve plan­ning, and literally thinking outside the box when it comes to warehousing and transportation solutions.

Competition is never going away, and being able to answer challenges like the capacity crunch and radi­cally changing customer demands are what will help set your company apart. But that's why you get paid the big bucks, right?