Sent Items #163: Monday, August 12, 2024

Happy Monday! Hope everyone’s week is off to a great start.

Now that the Olympics are over what are we all going to watch??

This is the busiest news cycle I can remember for this time of year. Many juicy headlines impacting the world of logistics and e-commerce, in advance of this year’s peak season.

Three big stories I’m noodling on: Crackdown on de minimus shipments; Pitney Bowes failing; Shopify crushing it (who’s surprised? Not I.)

Let’s get into them…

FedEx’s Logistics Test: Getting Rid of Duplicate Trucks (link)

• For decades the company operated almost indistinguishable Ground and Express networks, their trucks sometimes delivering packages to the same doorstep within minutes of each other. The parcel giant has embarked on a years-long overhaul that will combine two networks with more than 500,000 workers that have operated side by side for decades.

• Behind the scenes it has proven disruptive to some Ground contractors, who hire their own drivers and buy their own trucks to deliver packages in designated areas. Those independent contractors, which number around 6,000, use different technology systems, scanners and route-planning tools.

• In some markets, including Hawaii, Alaska and Canada, the Express operations took over Ground deliveries because shipments in these regions rely more on the use of planes. In the Lower 48 U.S. states, Ground contractors are more frequently taking over Express volume.

• In June, FedEx said it was assessing options for its third business unit, Freight, which investors expect to be spun off as a publicly traded company. Freight is the largest operator in the less-than-truckload sector, with about $9 billion in annual revenue.

Pitney Bowes Sells Global Ecommerce Business to Streamline Enterprise (link)

• In Issue #162 of Sent Items I reported on Stord acquiring Pitney Bowes’ fulfillment business (link). This week I’m sharing news that, after much speculation, Pitney Bowes has sold a controlling interest in most of its Global e-commerce segment to an affiliate of Hilco Global as it plans to wind down the business. The deal will allow the shipping and logistics company to eliminate about $136 million in annual losses and focus on its core, cash-generating businesses.

• Pitney appears to be left with their SendTech business (mailing and multi-carrier shipping technology), Presort (provides businesses with mail sortation services), and Global Financial Services (helps businesses reduce financial complexities of mailing and shipping.) No more fulfillment. No more parcel delivery. No more parcel returns.

• This all came to a head very quickly. Only two weeks ago, Pitney sent a notice to all customers that they would be hiking rates by 25%, without exception - no room for negotiation or concessions. Something that literally no shipper would be able to absorb.

• It once again demonstrates that having redundancy in your supply chain is key. While situations like this pose significant challenges for shippers and 3PLs, it also presents opportunity to rethink your partners. Change is inevitable, it’s how one stays sustainable. It’s an innate trait of capitalism. But ensure you are working with money making logistics companies (and their divisions). Their margin isn’t all your opportunity 😉 

U.S. Lawmakers Move to Restrict Trade Provision Favored by China’s E-Commerce Giants (link)

• Hard not to kick things off with what is becoming one of the most impactful stories in e-commerce. Mark my words: This will be the story of 2025.

• A bipartisan group wants to make it harder for companies such as Shein and Temu to ship their products stateside. There is a new law being proposed that cracks down on goods currently flowing in from China with little scrutiny and no duties.

• The bill, released last Thursday, would block textiles and apparel from being imported through what is known as the de minimis provision. It also would establish a fee of $2 per shipment for goods that aren’t banned from entering via this route.

• Temu and Shein alone likely account for nearly one-third of de minimis shipments, according to a report published in 2023 by the House Select Committee.

• How this will impact companies taking advantage of Section 321 is unknown. How it impacts those doing so in Mexico may be different than in Canada, which may differ from those drop-shipping directly from China.

• My friend Aaron Rubin, CEO and founder of ShipHero posted a great video (link) summarizing what he sees as potential paths forward

Shopify Tops Views in Quarter and Sees Growth Accelerating (link)

• I am still amazed by last week's Shopify earnings. It was a thing of beauty. To understand how much they are actually killing it, check out the chart below showing the ratio of Shopify GMV growth to US e-commerce growth over the last few quarters. As revenue is accelerating, they are lapping the overall growth of the market.

• GMV, revenue, and profitability were all ahead of expectations. Seeing a report like this should make everyone feel better about the state of the consumer. Shopify’s will likely continue to outpace overall e-commerce growth by 2.5-3x, in part due to its diversification and continued merchant growth (they have recently signed several very large enterprise clients). Shopify generated over $67 Billion in GMV in the quarter alone, an increase of 22% year over year.

USPS Text Scammers Duped His Wife, So He Hacked Their Operation (link)

• If you receive a text purporting to be from USPS that says it's trying to deliver a parcel but needs more details, including your credit card number, know that it's a scam. Like thousands of others, security researcher Grant Smith got a USPS package message. Many of his friends had received similar texts. A couple of days earlier, he says, his wife called him and said she’d inadvertently entered her credit card details.

• With little going on after the holidays, Grant Smith began a mission: Hunt down the scammers. Smith is a security researcher who infiltrated the scammers' systems and exposed them to US authorities. The scale of the fraud is massive, and the article shows how many people fall victim to smishing (SMS phishing).

• Over the course of a few weeks, Smith tracked down the Chinese-language group behind the mass-smishing campaign, hacked into their systems, collected evidence of their activities, and started a months-long process of gathering victim data and handing it to USPS investigators and a US bank, allowing people’s cards to be protected from fraudulent activity. In total, people entered 438,669 unique credit cards into 1,133 domains used by the scammers.

Have a great week!

- Matt

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