AJOT Insights

Returns, blockchain lead opportunities, according to presenters at SMC3 event

Jun 29, 2018

Logistics providers have hundreds of billions of dollars of opportunities related to returns of purchases and blockchain implementation, according to presentations at SMC3’s Connections 2018 collaborative supply chain intelligence conference.

Executives of FedEx Supply Chain, IBM, C.H. Robinson, TOTE Maritime Alaska, DHL Supply Chain and TMW Systems were among industry leaders sharing these and other insights at the event, held June 25-27 at The Greenbrier in White Sulphur Springs, West Virginia.

“The forward supply chain has been optimized in every way, but now reverse logistics can be seen in the same way,” said Brad Parrish, vice president of FedEx Supply Chain. “Returns represent a $642 billion opportunity.”

That figure, Parrish said, is nearly double the $340 billion annual amount ascribed to all e-commerce activity.

Brad Parrish, vice president of FedEx Supply Chain, points to the $642 billion opportunity provided by reverse logistics. (Photo by Paul Scott Abbott, AJOT)
Brad Parrish, vice president of FedEx Supply Chain, points to the $642 billion opportunity provided by reverse logistics. (Photo by Paul Scott Abbott, AJOT)

“The rub,” as Parrish put it, is that only 48 percent of returns can be resold at full price, but that doesn’t stop the demand to get rejected goods back to retailers, and besides, he said, “Retailers build loyalty through returns.

“Return parcel consolidation by providing an in-store return option to address consumer expectations creates a sizeable opportunity for LTL [less-than-truckload] and truckload carriers,” he said, encouraging a bringing together of e-commerce and brick-and-mortar returns.

Even more impressive may be logistics industry opportunities related to blockchain technology, according to presenters in a separate panel session.

Noting estimates that blockchain – the DNA of data – offers a $750 billion opportunity in transportation in the United States alone,Stephen Rogers, vice president of supply chain transformation at IBM, said the ability of blockchain to furnish a shared digital ledger significantly reduces conflict and risk.

Stephen Rogers, IBM’s vice president of supply chain transformation, sees blockchain and the internet of things as “a marriage made in heaven.” (Photo by Paul Scott Abbott, AJOT)
Stephen Rogers, IBM’s vice president of supply chain transformation, sees blockchain and the internet of things as “a marriage made in heaven.” (Photo by Paul Scott Abbott, AJOT)

Rogers, whose current initiatives include blockchain implementation for container shipping giant Maersk, said he sees blockchain and the internet of things as “a marriage made in heaven.”

Speaking on the same panel, Brian Glick, founder and chief executive officer of supply chain integration platform firm Chain.io, cautioned, however, that many consultants today are bandying the term “blockchain” simply to secure contracts – a practice he termed “blockwashing.”

In a featured address, John Wiehoff, chief executive officer of third-party logistics leader C.H. Robinson, said blockchain provides lots of opportunities for process improvement, adding that digital processes and analytics have helped facilitate “probably the best pricing environment we’ve had in a long time.”

ohn Wiehoff, chief executive officer of C.H. Robinson, believes both opportunities and threats are at all-time highs for logistics providers. (Photo by Paul Scott Abbott, AJOT)
ohn Wiehoff, chief executive officer of C.H. Robinson, believes both opportunities and threats are at all-time highs for logistics providers. (Photo by Paul Scott Abbott, AJOT)

“Both the opportunities and the threats are at all-time highs,” Wiehoff said.

Opportunities to serve offshore domestic markets such as Alaska, Hawaii and Puerto Rico were highlighted in a session led by Alex Hofeling, director of marketing for ocean carrier TOTE Maritime Alaska, and Steve Hartmann, vice president of sales and marketing for Lynden Transport, which offers trucking and related services with a focus on the Alaska market.

While climatic conditions and the 49th state’s sheer size continue to pose challenges, Hofeling said, a growing military presence, abundant natural resources and impending recovery from a depressed-oil-prices-spurred recession are factors boding well for providing logistics for Alaska.

Hartmann commented that both Alaska and a Puerto Rico steeped in recovery from last year’s Hurricane Maria, as well as Hawaii, provide particular opportunities for supply chain firms.

“When it’s done right,” Hartmann said, “there’s a huge opportunity in these offshore markets.”

Another opportunity to which attention was drawn at Connections 2018 is exercising the ability for “shipping less air,” according to a presentation by a pair of North American solutions design managers for DHL Supply Chain, which has developed algorithm-based tools for facilitating optimization of both shipping carton size and building of pallets.

Especially since the recent implementation of dimensional weight pricing, the chance to save money through such optimizations has become significant, they said.

“We’re not shipping air, we’re actually shipping money,” said Dr. Manjeet Singh, an industrial engineer who serves as research manager for North American solutions design at DHL Supply Chain, as he noted that a shipper might pay $60 to send an item in a too-large carton when it could be shipped for as little as $15 when better fit in a smaller box.

Dr. Manjeet Singh, research manager for North American solutions design at DHL Supply Chain, espouses cost-saving methods for shipping less air. (Photo by Paul Scott Abbott,
Dr. Manjeet Singh, research manager for North American solutions design at DHL Supply Chain, espouses cost-saving methods for shipping less air. (Photo by Paul Scott Abbott, AJOT)

DHL Supply Chain colleague Alex Jackson interjected, “Applied math and science can add tremendous value to the supply chain.”

In yet another session, Timothy Leonard, executive vice president and chief technology officer at transportation management software company TMW Systems, said strategies for the blockchain-enabled supply chain must balance data visibility and security for retailers and wholesalers.

With trust, transparency, integrity and respect as pillars, TMW’s objective, Leonard said, is “to create a complete, end-to-end supply chain visibility platform that is entirely secure and fully traceable by any participating party member.”

Timothy Leonard, executive vice president and chief technology officer at TMW Systems, emphasizes the balance between supply chain visibility and security. (Photo by Paul Scott Abbott, AJOT)
Timothy Leonard, executive vice president and chief technology officer at TMW Systems, emphasizes the balance between supply chain visibility and security. (Photo by Paul Scott Abbott, AJOT)

When it comes to accountability, no recent development has been more significant than the federal mandate for truck driver logs to be maintained electronically, and government and industry speakers in another Connections general session concurred that, while an extremely tight truckload capacity environment exists today, the electronic-logging device, or ELD, mandate has not led to the rampant driver workforce reductions initially projected.

Larry Minor, associate administrator for policy at the Federal Motor Carrier Safety Administration, and Dan Horvath, director of safety policy at the American Trucking Associations, also were in agreement that putting ELDs in place, while saving industry well more than $1 billion a year in paperwork, has not caused financial hardships for truckers.

Larry Minor, associate administrator for policy at the Federal Motor Carrier Safety Administration, left, looks on in agreement as Dan Horvath, director of safety policy at the American Trucking Associations, says the electronic logging mandate has not led to rampant driver workforce reductions. (Photo by Paul Scott Abbott, AJOT)
Larry Minor, associate administrator for policy at the Federal Motor Carrier Safety Administration, left, looks on in agreement as Dan Horvath, director of safety policy at the American Trucking Associations, says the electronic logging mandate has not led to rampant driver workforce reductions. (Photo by Paul Scott Abbott, AJOT)

“You can achieve compliance and it’s not going to bankrupt you,” Minor said.

Horvath, who said ATA efforts are now centered on fine-tuning of hours-of-service regulations, noted that the baseline cost for a no-frills ELD unit that provides mandate compliance is as little as $35.

Cost also is not an obstacle these days when it comes to data, according to presenters on a strategic analytics panel.

“The cost has come down, so the expense of data is no longer the hurdle it once was,” said Jason Dillavou, director of pricing and yield management at LTL provider YRC Freight.

Chris Gordon, vice president of product management at software platform firm AIMMS, noted that automation frees up the time of planners to work on such remunerative activities as price optimization.

And a third panelist, Suzanne Grimes, senior strategic consultant for cloud software company PROS, was in agreement, saying, “Having things automated makes your life so much easier.”

Discussing strategic analytics are, from left, Suzanne Grimes, senior strategic consultant for PROS; Chris Gordon, vice president of product management at AIMMS; and Jason Dillavou, director of pricing and yield management at YRC Freight. (Photo by Paul Scott Abbott, AJOT)
Discussing strategic analytics are, from left, Suzanne Grimes, senior strategic consultant for PROS; Chris Gordon, vice president of product management at AIMMS; and Jason Dillavou, director of pricing and yield management at YRC Freight. (Photo by Paul Scott Abbott, AJOT)

That said, Grimes pointed out that not all data is truly intuitive, warning, “The biggest issue with data is it’s data.”

Additional coverage of Connections 2018 appeared earlier this week at ajot.com and is slated for the July 16 edition of the American Journal of Transportation.

Author Photo
For more than a quarter of a century, Paul Scott Abbott has been writing and shooting images for the American Journal of Transportation, applying four decades of experience as an award-winning journalist. A graduate of Northwestern University’s Medill School of Journalism, with a master’s magna cum laude from Trinity Evangelical Divinity School, Abbott has served as president of chapters of the Propeller Club of the United States, Florida Public Relations Association and Society of Professional Journalists. Abbott honed his skills on several daily newspapers, including [em]The Cincinnati Enquirer, The Richmond (Va.) News Leader, Albuquerque Journal and (South Florida) Sun-Sentinel, and was editor and publisher of The County Line, a weekly newspaper he founded in suburban Richmond, Va.[/em] A native Chicagoan, he is a member of American Mensa and an ever-optimistic fan of the Chicago Cubs.