Coronavirus Upheaval Triggers Corporate Search for Supply-Chain Technology
Date: Wednesday, April 29, 2020
Source: The Wall Street Journal
From digital systems to robots, companies are stepping up investments aimed at simplifying and speeding up their logistics operations
Tiffany Parker has always enjoyed catching up with the truckers who haul loads of potatoes from Parker Produce Co., her family’s farm near St. Augustine, Fla.
The coronavirus pandemic has her rethinking that approach. To reduce the risk of infection, Ms. Parker—a self-described “old fashioned” type who hunts with a bow-and-arrow and relishes trips to the bank or grocery store—is looking to replace the triplicate forms she uses to record freight shipments with digital bills of lading.
“You are still handing them [drivers] paper bills, and they are signing them and exchanging them,” Ms. Parker said. “There’s a lot of contact you could probably avoid.”
Similar decisions are taking place across scores of loading docks, warehouses and logistics management offices as companies of all sizes take a new look at technology that can help them adapt their operations to a changing business landscape under coronavirus restrictions.
Supply-chain upheaval from the pandemic is presenting the tech world with a sudden and unexpected proving ground for automation, digital platforms and other tools that had been low on the priority lists for companies’ logistics operations. From delivery software to mobile robots that help workers fulfill e-commerce orders, those offerings are drawing attention in industries where thin margins have often left companies clinging to older, highly manual operations.
“We’ve had countless calls from carriers saying they have shippers and drivers that want contactless paperwork” since the pandemic, said Frank Adelman, chief executive of transportation software company Pegasus TransTech LLC, which does business as Transflo.
Before coronavirus spread across the U.S., digital paperwork accounted for a small share of the freight bills the company processes. Now, “we think in the next 90 days it could be as high as 30%,” based on the level of interest from big trucking companies, Mr. Adelman said.
The pandemic, and the lockdowns that states have imposed on businesses, have triggered an earthquake in supply and demand, with supply chains straining under a rush toward e-commerce for food, cleaning products and other goods as consumers hunker down. Daily U.S. e-commerce sales jumped 49% in the period between March 12 and April 11 compared with the March 1 to March 11 baseline, according to Adobe Analytics, which tracks activity on thousands of websites.
The spike in online volumes is driving a surge in demand for equipment from logistics automation providers like Japan’s Daifuku Co., which makes robots and other material-handling products, said Jeremie Capron, head of research at ROBO Global LLC, a research and investment-advisory firm.
The warehouse automation market had been accelerating before the pandemic. Now, Mr. Capron said, “the more mature companies that have established products and solutions are selling more than ever, to retail and to omnichannel” customers.
U.K. online grocer Ocado Group PLC, which licenses its technology to supermarkets around the world including Kroger Co., said it is talking with some customers about accelerating their plans to build out e-commerce fulfillment centers.
“If there are two topics that are now at the top of grocery boardroom agendas world-wide, they are Covid-19 and how to build successful online capabilities,” said Luke Jensen, chief executive of the company’s Ocado Solutions subsidiary.
Some companies looking to boost output during lockdown are turning to so-calledcollaborative robots that navigate warehouses to help human workers fulfill orders. Unlike conveyor belts or other fixed equipment, the autonomous mobile units can be added quickly to existing distribution operations to help cope with swings in volume.
Logistics technology startup Fetch Robotics Inc. has done several remote deployments of its self-navigating robots in recent weeks through video calls, including to a pet-products supply company struggling to meet increased demand. “Right now there is a real business need, so there’s urgency and it’s easier to get things pushed through” the corporate approvals process, Fetch CEO Melonee Wise said.
Many of Fetch’s existing customers are adapting their use of robots to support social distancing, she said, using them to carry goods short distances between people to reduce contact as well as for longer runs across the warehouse.
Fulfillment provider Distribution Management Inc. said its fleet of more than 100 robots is helping the company cope with increased volatility. The units from 6 River Systems are used at three of the company’s five facilities, and before the pandemic had boosted productivity by about 38%, said Chief Marketing Officer Greg Welchans. Now, he said, “if a warehouse is down because of the virus and we need to clean, we can shift that business” by shipping some robots to another location.
Still, economic uncertainty is also putting pressure on some logistics-technology ventures.
In early April startup KeepTruckin Inc., whose technology helps carriers manage fleets and track driver behavior, laid off 350 employees, or about 18% of its workforce, in a cost-cutting effort amid sharp swings in trucking demand because of the pandemic.
Digital freight-forwarding startup Freightos recently laid off 50 employees, about 20% of the company’s workforce, even though its online air cargo bookings grew 59% in the first quarter from the fourth quarter of 2019.
“Despite the growth so far, we’ve cut back to make sure we’re financially independent in times of financial uncertainty, prioritizing profitability over radical growth, and, regrettably, letting some great people go,” Freightos Chief Marketing Officer Eytan Buchman said.