UPS posts good Q4 revenues

United Parcel Service (UPS) has announced its Q4 2016 results. One of the highlights includes an 8.4% jump in international export shipments.

In a statement, David Abney, UPS chairman and CEO, said: “Revenue and volume growth accelerated for UPS during the holiday season and we provided high service levels for our customers.

“The International segment delivered another extraordinary performance, while the U.S. managed through considerable changes in product mix.  Our strategies and initiatives are creating long-term value for both UPS customers and shareowners.”

Revenue for the quarter was $16.931bn, a significant increase from $16.054bn.

The group made a loss of $428m in the quarter, compared to a $2.051bn profit in Q4 2015. However, UPS explained: “Full-year and fourth-quarter 2016 results include a non-cash, after-tax, mark-to-market pension charge of $1.90 per diluted share.  In the prior-year period, the company reported non-cash, after-tax charges of $0.09 per diluted share related to pension mark-to-market charges.” When adjusted to exclude these charges, UPS made a profit of $2.223bn in Q4 2016 – which was better than last year’s final quarter.

 
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Ocado sees profits leap by 22%

Ocado has reported its profits before tax for 2016 were up almost 22% to £14.5 million and revenues were also up 15% to £1.27bn.

In a statement issued today (31 January), Tim Steiner, Chief Executive Officer of Ocado, said the results “reflect robust trading” in the company’s core business and show continued progress against its strategic objectives “in what has been a challenging retail environment”.

Steiner added: “We commenced operations at our new Customer Fulfilment Centre in Andover, which has the first installation of our new proprietary technology. At the same time, we have made good progress in improving the efficiency and throughput of our existing operations, increasing our capacity from existing facilities by over 20,000 weekly orders. These developments position us well for future growth, whilst improving our returns and enhancing the service we can offer our customers.

“In this ever evolving retail environment, we look forward to further developing our capabilities through innovation, creating the next generation eCommerce capabilities that will ensure our offer remains compelling for both retail and OSP customers alike.”

Ocado’s share price was up by almost 7%, reflecting that markets welcomed the news.

Last year Ocado announced that it was in “advanced discussions with multiple potential international partners” for the Ocado Smart Platform. These talks continue one year on, but there have been no confirmed deals with any of those partners. It remains to be seen whether this once promising grocery retailer can make the profits promised when it was founded.  
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Amazon given patent for robotic inventory system

Amazon has been shown to have won a patent for a ‘package packer robot’, which follows the general trajectory of the firm toward removing people from the supply chain.

Last week, the US TV news station NBC News published a story about the new patent, and the mainstream media have taken great interest in the concept, not least because of its potential impact on the workforce.

The patent was granted by the US Patent and Trademark Office on the 26th of January. It describes a system where robots can be used to grasp inventory and help speed up the packaging process in fulfilment centres.

Amazon has introduced a very high degree of automation into its fulfilment centres and is known to be developing a wide range of automation systems through its robotics arm, Kiva.

In addition, there is a plethora of patents for packaging/sortation robotics on the USPTO database. What distinguishes Patent No. 20170021499 and makes it newsworthy, however, is that it bears the name “Amazon”.

With the high profile drone testing and licensing as well as interest in delivery robots, Amazon’s interest in robotics to speed up and add efficiency into the supply chain is well known. Given that it routinely makes the press as asking its fulfilment centre humans to walk a long way every day and meet tight targets, this latest story has sparked a lot of interest in the mainstream media.  
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Austrian Post to launch new online marketplace

Austrian Post is to launch a new online shopping marketplace in April.

Designed to give retailers an alternative to eBay or Amazon, the new website is to be called shopping.at. So far the Austrian Post owned website has drawn support from 65 Austrian retailers to include Salamander, Kastner & Ohler, E-tec and Gigasport.

The retailers that sign up to the Austrian Post website will pay a fee for every sale they make, not unlike the international rivals eBay or Amazon.

The announcement that the new marketplace would be launched was made in early 2016 and so far it has been running in Beta. Once shoppers have made the purchase, they will pay a delivery fee of €3.30 for orders under €33 and will pay nothing for orders over €33.

This move is interesting insofar that it goes into direct competition with Amazon and eBay while keeping the deliveries in-house, thereby creating business for the postal operator. Given that Amazon is moving into deliveries and logistics it is somewhat unsurprising that a postal operator such as Austrian Post would go the other way – into online retailing. Should the business model be a success, it could lead the way for smaller postal operators that are dealing with shrinking volumes and are seeking other business opportunities. Those countries without an Amazon marketplace such as Switzerland could particularly benefit from a scheme such as this one.

 
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Hermes integrates with Amazon Alexa

Delivery company Hermes has made the announcement it has become the first parcel delivery company in the UK to fully integrate its end to end tracking solution with the Amazon Echo smart speaker system.

Using voice via the Alexa enabled devices, customers will be able to hear updates on where their parcel is. This works on the Amazon Echo and Echo Dot.

Hermes customers will be able to track their parcels by enabling the specific skill on the Alexa app. They will be able to receive updates on those deliveries being made by Hermes on behalf of retailers as well as parcels sent through the myHermes system. They will also be able to track items that have been returned to sellers as well.

Hermes’ dedicated Innovation Lab in Leeds engineered the system. The Innovation Lab is specifically tasked with developing a range of forward thinking products that will break new ground in the delivery environment and hopefully innovate the company ahead in the delivery ecosystem.

David Turner, Hermes’ Head of Digital Strategy & Technology Innovation, said: “An important part of our remit is to explore new and exciting technologies that will allow us to enrich the delivery experience. Digital assistants such as Siri, Cortana and Alexa have been developed to drive increased convenience, and our research tells us that there will be a future shift away from screen interactions in favour of conversational interface technology. We are thrilled with our initial release, but we are already experimenting with new interactions and functionality that we will be releasing throughout this year.”
 
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First Irish drone delivery by Pony Express

Pony Express Couriers have announced that it has made the first authorised drone parcel delivery with permission from the Irish Aviation Authority (IAA).

The drone delivery was made in Dun Laoghaire, County Dublin last Saturday (28th January), using a DJI Inspire 1 drone. It carried a 250 gramme parcel from the shoreline to a boat that was at sea some 200 mtres offshore. It contained medical supplies including an emergency thermal blanket, an Epi-pen, bandages, plasters, thermometer, first aid leaflet, gloves, wipes and burn dressings. It also contained food and a drink in the form of a high-energy bar and water. The supplies were attached to the underside of the drone in a waterproof container.

Pony Express Couriers said that while it is “not planning on offering a drone parcel delivery service in Dublin or Ireland any time soon”, it is “keen to be at the leading edge of all new developments”.

“We were delighted to be involved in Ireland’s first drone parcel delivery and we’re proud that we, as an Irish company, are trialling the technology,” said Audrey Browne, Operations Manager of Pony Express.

Browne continued: “The delivery of low value, urgent items such as takeaway food, especially to remote rural areas is highly likely but important city deliveries such as the majority of our same-day express services could not be trusted to drones yet, the possibility of interception, loss or damage would be too great.

“When parcel delivery by drone can be proven to work safely in an urban context, then we will revaluate the situation, but for now we will continue offering parcel delivery by our traditional methods of bicycles, motorbike, vans and trucks.”

Ralph James, the IAA’s Director of Safety Regulation, added: “We’re delighted with the success of the first official parcel delivery in Ireland via drone under controlled conditions which met all regulatory requirements. The application of drone technology is vast and the IAA will continue to foster, promote and encourage its use with the emphasis as always on safety.”

 
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Aramex sees good Q4

Asset light logistics and delivery company Aramex has reported that its net profits for Q4 were up 129% on last year at AED131.8 million and revenues increased by 18% to AED 1.158bn.

Aramex stated that for the full year ended 31 December 2016, it recorded revenues of AED4343 million which were up by 16% on 2015 and net profits also saw an increase of 37% to AED426.6 million.

Commenting on the results, Hussein Hachem, Aramex Chief Executive Officer said: “Despite global economic uncertainty and the slowdown in the GCC region, our asset-light business model enabled us to respond quickly to volatility, outperform the market and deliver on our promise.

“Our commitment to innovation and technology were two core areas of focus this year, allowing us to enhance our customer experience and expand our business operations. We will continue to leverage this strategy, finding innovative ways to develop our global express solutions to serve the growing demand for our last-mile solutions across all our markets.”

Aramex’s International Express business saw its Q4 revenues growing by 30% to AED 498m. The company said that “strong growth in cross-border e-commerce” continued to be a primary driver of these revenues, especially in Asian, European and the US markets.

Q4 revenues for the Domestic Express business also grow by 30%, to AED 247m in Q4. This was primarily driven by the Fastway Limited acquisition.

Aramex’s Logistics and Supply Chain Management increased by 29% in Q4 to AED 67.3m. The company said that the increase was mainly due to its investment in AMC Logistics’ Joint Venture in Egypt, which became part of Aramex’s financial consolidation starting January 2016.

However, Freight revenues decreased by 9% to AED 272m in Q4. According to Aramex: “Freight continued to be affected by lower selling rates, which was driven by lower oil prices and global currency fluctuations.”
 
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UPS trialling powered bike trailers in Mayfair

US logistics and deliveries giant UPS is to start trials of electric bike and walker trailers in Mayfair, London later this year as part of a multimillion pound low impact logistics project funded by Innovate UK.

The aim of the project in which UPS is participating is to combine speed, mobility and analytics to provide a sustainable delivery system that could signal a new future for urban courier logistics.

The IP protected prototype of the system that UPS will use will be designed and developed by specialist development product development company Fernhay and technology development company Skotkonung who will help the University of Huddersfield.

Initially the project will be tested by the cycle couriers Outspoken in Cambridge before UPS runs live trials in Mayfair later this year.

Fernhay’s technology is net neutral, so the weight of the trailer is not felt by the handler, allowing for increased last mile deliveries by foot or cycling. Fernhay enlisted Prof Rakesh Mishra of Huddersfield University for the development of the sensors and the data analysis system that will create the “net neutral” effect.

“We are delighted to be part of this exciting project that has the potential to provide substantial costs savings to the freight transport sector as well as significant benefits for the environment.  The combination of our expertise in sensor design and analytics along with the expertise and knowledge of the consortium partners will ensure that we deliver an innovative technology that will have a transformative effect,” said Prof Mishra.

The project, entitled Low Impact City Logistics, is part of a £10 million investment by the UK’s innovation agency Innovate UK.

 
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USPS responds to ‘swamp draining’ blog

The United States Postal Service (USPS) has rebutted a blog posted on US blog site Townhall.com that argued that the USPS “should not be left out of the swamp draining”.

The article in question was authored by Brian McNicoll and was published on Sunday 22 January, and argued that the new Trump administration should enact postal reform legislation. McNicoll claimed that the USPS “had wrapped up another dismal financial year” and that it “needs to make better management decisions”.

Last week the USPS responded:

“While the Postal Service always welcomes constructive dialogue regarding its current fiscal challenges, commentary brimming with half-truths and inaccuracies is not helpful.  Regrettably, Brian McNicoll’s blog of the other day falls into the latter category.  Contrary to Mr. McNicoll’s assertions, the Postal Service is an effectively managed and efficient entity that provides the nation with a vital delivery platform that enables American commerce, serves every American business and residential address, and binds the nation together, as it has for more than 240 years.

The USPS continued: “Studies consistently show that the Postal Service is one of the most efficient posts in the world.  Moreover, the Postal Service is self-funded and postal operations are paid for with proceeds from the sale of postal products and services – not tax revenue.  While it is difficult to address each of the many inaccuracies in Mr. McNicoll’s blog, we feel it important to set the record straight on some major issues for the benefit of your readers.

“While Mr. McNicoll laments the current financial state of the Postal Service, he omits from his commentary the real reasons behind the Postal Service’s difficulties.  With a little research Mr. McNicoll would have discovered most of the Postal Services recent financial losses are the direct result of statutory and regulatory constraints that are beyond the control of postal management, and that have made it impossible for the Postal Service to maintain financial stability as mail volumes have declined.

“For instance, the Postal Service’s ability to adjust prices of products that produce over 70 percent of its revenue is restrained by an austere price cap that does not allow prices to increase more than the rate of inflation.  Not many other businesses (if any) operate under a similar constraint.  And, by the way, the cap applies to the “underwater” products about which Mr. McNicoll is so very concerned.  As one might surmise, the rigid price cap makes it very difficult to attain cost coverage for those products – a reality conveniently omitted from Mr. McNicoll’s commentary.  Moreover, it would have been nice if Mr. McNicoll mentioned the fact that the inflation based cap system is currently being reviewed by the Postal Regulatory Commission (the Postal Service’s regulator) which has the power to change or eliminate it.  A more informed article might have emphasized the importance of this review given the negative impact that cap has had on the Postal Service’s ability to address its financial issues.

“Mr. McNicoll’s discussion of the Postal Service’s obligation to prefund retiree health benefits is ill informed and incomplete.  It is true that Congress imposed a unique burden on the Postal Service to prefund retirement health benefits and that the Postal Service has recently missed several payments due to financial constraints.  Conveniently omitted (again), however, is the fact that more than $50 billion has already been set aside to finance those benefits, a prefunding level that far exceeds that of businesses that offer retiree health benefits.  Moreover, the Postal Service is not shirking its responsibilities in this regard nor does it seek any kind of bailout.   What the Postal Service requires is real and lasting reform that ensures its retiree health benefits program is affordable, to protect against any risk that those benefits cannot be funded going forward.

“This is why Mr. McNicoll’s focus on the prefunding requirement is entirely misplaced and suggests a complete lack of understanding of the Postal Service’s current challenges.  The fact is that current law requires the Postal Service to participate in and self-fund an unaffordable retiree health benefits system that is not fully integrated with Medicare.  Indeed, among the commercial and governmental entities that offer and fund health benefits for their retired employees (an ever-shrinking pool), virtually every one fully integrates with Medicare.   The substantial cost savings associated with this simple reform would put the Postal Service on sound financial footing going forward.  A legislative proposal to do just that received unanimous bipartisan approval from our House oversight committee last year and we remain hopeful that reform will be enacted in the near future.

“In that regard and in conclusion, [the USPS] do agree with one point made in Mr. McNicoll’s otherwise unfortunate blog.  Postal reform can’t come soon enough.  Our financial situation is serious, but solvable. The Postal Service can overcome its systemic financial challenges with legislative reform and changes to our pricing system. By combining our ongoing management efforts with legislative and regulatory changes that provide financial stability and greater flexibility, we will be well-positioned to adapt to a rapidly changing marketplace and better serve the American public – that’s the art of the deal that’s required.”
 
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Ant Financial acquires MoneyGram

Chinese online giant Alibaba is to buy the money transfer services provider MoneyGram through its subsidiary Ant Financial.

According to Ant Financial the transaction will be worth US $880 million.

The company released a statement last week that said, “The transaction will connect MoneyGram’s money transfer network of 2.4bn bank and mobile accounts and 350,000 physical locations with Ant Financial ’s users, who enjoy a broad suite of technology-based financial services, including payments, credit and insurance products.

“The combination will provide consumers in over 200 countries and territories with convenient and accessible financial services, which furthers Ant Financial’s mission to promote equal access to financial services globally.”

After the acquisition is complete, MoneyGram will remain headquartered in Dallas and will continue to operate under its existing brand.

“The acquisition of MoneyGram is a significant milestone in our mission to bring inclusive financial services to users around the world,” said Eric Jing, Chief Executive Officer of Ant Financial. “We believe financial services should be simple, low-cost and accessible to the many, not the few. The combination of Ant Financial and MoneyGram will provide greater access, security and simplicity for people around the world to remit funds, especially in major economies such as the United States, China, India, Mexico and the Philippines.”

Alibaba is known to be cash rich and the acquisition is not unusual for Chinese companies. Its move into the US may raise hackles in the new Presidential administration though its reaction has yet to appear.  
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