Every year brings changes to the delivery industry — and 2015 is no exception.
We’ve closely followed 2014 industry trends and Courier Magazine staff thinks its found a handful of trends that will gain traction this year.
Will you hire more employees rather than ICs?
If you’re Amazon, the answer to that question is “yes.”
In early October 2014, Courier came across some interesting information on one of Amazon’s site’s pages. The company is asking local delivery providers to execute last-mile delivery via Amazon’s Logistics landing page (logistics. amazon.com). This information alone isn’t too surprising, but the following caught our attention. Under the “Requirements” section on the page’s “Frequently Asked Questions” page, Amazon lists this inquiry: “Are drivers independent contractors or employees of the delivery provider?” The company’s answer? “Drivers must be employees of the delivery provider.”
Now, that’s interesting. Many delivery companies throughout the United States use independent contractors a lot, and understandably so. Delivery companies decide to use ICs for various reasons: ICs make great employees; the “driver” position often has a lot of turnover; companies often hire ICs quickly to handle seasonal rushes; and sometimes, employers don’t want to pay all of their drivers’ benefits.
Courier wonders if this designation will influence the overall delivery world. Will more companies want to hire drivers as employees to get in on some of Amazon’s business? Maybe...
While Amazon is only providing this opportunity in select cities (as of mid-December 2014, the company was hiring companies in Los Angeles, San Diego, San Francisco, San
Jose, Oakland, Philadelphia, and the New York metro), it will be interesting to see how many local companies take Amazon up on providing this service and begin to hire more drivers as employees. Weight change According to Transportation Insight, FedEx and UPS are changing its dimensional weight pricing in 2015. According to Charles Moore, vice president of Parcel Logistics, both companies have opted to build out new hubs, and to retrofit “older delivery centers with Enhanced Dimensional Weighing Systems” this coming year.
This excerpt is from Moore in the article “FedEx and UPS Dimensional Weight Change for 2015: Time to Measure the Cost:”
“Both major parcel carriers have recently announced that beginning in 2015, they will eliminate the exemption that has existed for ground packages of less than three cubic feet. Historically, only air, international and ground packages greater than three cubic feet were billed at either the greater of their actual weight or their dimensional weight. Moving forward in 2015, all ground packages will now be subject to dimensional weight, along with the potential for increased cost. The carriers’ position on this issue is to better align the rates that they charge with costs, which is influenced by BOTH the SIZE and WEIGHT of packages. In addition to creating additional revenue, the carriers hope that by subjecting all packages to dimensional weight billing that it will encourage shippers to reevaluate their packaging and ensure proper box selection when shipping.”
Local, trendy delivery
These “trendy” delivery endeavors are part of the growing expansion of same-day, on- demand delivery, but in 2015, these deliveries are becoming localized and more expansive. This isn’t surprising, given the small, boutique businesses that are popping up throughout the U.S. So, what are these new businesses and what are the companies focusing on providing?
Here are a few that stood out to Courier staff:
Beverage and food delivery services
While these services are fueled by apps and small startups, they are influencing local alcohol retail stores to partner with them and in turn, hire delivery drivers to take the product from point A to point B. Some of the services that are popping up in major cities include:
• Drizly, blog.drizly.com/ about-drizly/
• Drinkfly, http://drinkfly.com/
Recently, Starbucks announced that it’s getting in on the delivery game and will start delivering its treats and drinks. The highly-caffeinated company announced that it plans to start delivering in 2015. According to Hayley Peterson of the Business Insider, members of Starbucks’ “loyalty program” can request delivery through Starbucks’ mobile order and pay app, which launched in November 2014 in Portland. The entire service “will be rolled out nationwide next year. The delivery service will launch in the second half of 2015.”
In Peterson’s article, Howard Shultz, Starbucks CEO, explains that the company is making this shift to allow customers to participate in a more enjoyable retail experience that’s convenient.
Just as there are many companies that are now beginning to deliver boozy and caffeinated treats, there also are companies that are delivering food from a wide range of places.
Foxtrot: Foxtrot delivers food, drinks and tobacco, and hires its delivery drivers. This Chicago-based delivery company is app-based. (It also ensures legal and safe delivery.) foxtrot-external. squarespace.com
Fooda: Fooda also hires its own delivery drivers and assures timely delivery. They also “communicate with restaurant partners so you don’t have to.” fooda.com
WeDeliver: WeDeliver aims to “break the mold” when it comes to on-demand delivery by focusing on small business and B2B service. The service launched in 2013 to provide a delivery fleet to businesses, but now it also has added an app that allows businesses to sell items directly to their customers via on-demand delivery. Its goal: To become small businesses’ “digital storefronts.”
Clean tech
An increasing number of companies are beginning to use more sustainable fleets. An example: Courier recently saw a story about an article a company that wasn’t exactly a traditional delivery service, but it still “delivers.”
In Baltimore, Maryland, H&S Bakery will “unveil a fleet of 16 propane-fueled trucks to use for deliveries in Maryland and surrounding states,” reports the Daily Journal. “The bakery says the cars use clean-burning, domestically produced propane autogas.”
Another “more well known” service also is planning on adding some cleaner vehicles to its fleet, too.
The Environmental Defense Fund (EDF) and FedEx launched its partnership in 2004 to provide street-ready hybrid trucks. But FedEx only recently transitioned a lot of its fleet to hybrid vehicles. According to EDF.org, “As of 2010, FedEx operates one of the largest hybrid fleets in the industry, with more than 1,800 alternative energy vehicles worldwide, including the first all-electric parcel delivery trucks in the United States. Four electric FedEx trucks now operate in the Los Angeles area.”
And here’s what FedEx is up to now:
“The company has set a goal of improving the effciency of its entire fleet 20 percent by 2020. To achieve this, FedEx optimizes routes and uses smaller, more fuel-effcient ‘sprinter’ vans. Its couriers in New York City and London’s West End deliver many of their packages on foot and by bicycle. And the company continues to push the technology envelope with compressed natural gas vehicles in Italy, all-electric vehicles in Paris, and biodiesel trucks in Washington. D.C.” EDF
Self-driving trucks, robots working in warehouses, and drones An article from Bloomberg Businessweek reports that the logistics industry will most likely be the “training ground” for automated vehicles. A big statement, but believable, considering shipping and delivery companies could use the technology in non-public areas, such as storage facilities and warehouses.
Facilities and warehouses are perfect areas to test the technology without harming humans. And DHL may be the first company to start this trend. The company recently released a report that expressed the desire to test driverless vehicles in non-populated areas.
Businessweek also reports that robots, as well as automated pallet movers, will be used more in the future thanks to improved technology. The article explains that while these systems have been in use for years, they stop and shutdown once “they encounter obstacles to ensure safety.” Soon there will be technology capable of deploying “vision-guidance technologies” that include “depth cameras and lasers to improve efficiency, and include more steps of the shipping process.”
The report also states that robots will be used more in different places, such as in shipyards, ports, and airports to automatize movement of pallets and swap containers.
In the article “Aiming for self-driving freight” by Sean Kilcarr at FleetOwner, Kilcarr expresses that it’s no surprise that self-driving vehicles are going to be used more:
“Autonomously guided vehicles or ‘AGVs’ are a regular fixture in manufacturing plants
and warehouses all over the world these days -- indeed, many of the plants crafting engines and even tires for the trucking industry rely on self-guided transporters in every-day operation.”
The report also touches on advancements with driver assistance systems and the possible use of drones in the future.
Do any of these trends strike a note with you? If so, contact me at [email protected]. We’d love to write about your company’s advancements.