Sent Items #167: Sunday, October 13, 2024

Congrats to my New York Yankees for making the American League Championship Series. They play the Cleveland Indians (sic: Guardians) starting tomorrow, and the winner of that series goes to the World Series. In the National League Championship Series, it will be the LA Dodgers v. New York Mets. Here’s hoping (as is MLB and cable networks) that the Yankees advance and play the Dodgers. While they have faced off against each other 11 times, they haven’t done so since 1981. A second best outcome is a subway series against the Mets (they last played each other in the WS in 2000…which the Yankees won)

If the Yankees advance, expect to find me in New York in late October!

Now onto some news, let’s talk about Warehousing capacity, GXO, fentanyl, porch piracy and Dave Clark’s new venture.

XPO-Spinoff GXO Logistics Is Said to Explore Potential Sale (link)

• Appears that GXO Logistics, a $6 Billion publicly traded 3PL is up for sale. GXO is the largest pure-play contract logistics provider in the world, with 970 facilities and 27 countries of operation.

• Interesting development as it only spun off from parent company XPO in 2021, so it has only been 3 years as an independent company. I'm curious what ends up happening. There are other mega-deals that are pending including DSV about to close on the acquisition of DB Schenker for over $15 Billion (link) as I wrote about in Sent Items last month (link).

• This leaves very few fellow 3PL suitors besides private equity. Only DHL, Kuehne + Nagel, CEVA Logistics and A.P. Moller - Maersk come to mind.

Dave Clark, formerly of Amazon and Flexport, just landed $100M for new supply chain venture (link)

• Clark has raised $100 million for a startup, Auger, which will build software to optimize supply chains. Their website looks more like a hedge fund’s than a tech company’s, here’s what you see when you land on it:

• They shares that “traditional supply chain management is fragmented, relying on incompatible systems and inefficient workarounds. Many companies are stuck with “Franken-software”—patched-together solutions that fail to communicate effectively. Auger is different. We integrate deeply with existing systems, use AI to automate routine processes, and deliver a cohesive user experience that feels intuitive and natural, letting your team focus on what matters: driving growth, innovation, and sustainability.”

• Clark was vague about what precisely Auger is building, save that it “unifies” supply chain data for various types of aggregation. There seems to a chatbot component, too: Clark says users will be able to “just ask” questions like “Give me inventory information for next week’s shipment,” and Auger will serve up that data “instantly” in a “consumer-grade” portal.

• Clark says that Auger, which has yet to secure customers or generate any revenue, will release more information about its product roadmap and milestones in the coming months. “Our founding team is made up of relentless problem-solvers with a proven track record of delivering transformative supply chain solutions at scale,” he added. “This is just the beginning.”

Home Depot Is Dropping Warehouses in a Shifting Retail Market (link)

• Some of the warehouse space that entered logistics operations during the pandemic is coming back on the market. Home Depot is putting four big distribution centers totaling 4.7 million square feet out for subleasing. Now is great time to be looking for warehouse space!

• Real-estate services firm Savills says the amount of U.S. warehouse space listed for sublease reached a record high of nearly 200 million square feet in Q3, up 45% from the previous year. The vacancy rate for industrial real estate climbed to 6.4% in Q3, up from 4.6% a year earlier, the highest level since the end of 2014!

• It’s a sign of the rapid turnabout in retail, particularly at businesses like Home Depot that are closely tied to the wavering U.S. housing sector. Now, weakening demand and changing consumer spending patterns are rippling across the logistics sector.

Porch Pirates Are Stealing AT&T iPhones Delivered by FedEx (link)

• If it’s peak season, expect to read many articles like this. Porch piracy! An age old problem that continues to get worse at scale! Heck, I’d say the top alert type I receive on my neighborhood NextDoor App is porch piracy (or maybe it’s lost cats?) Anyway, it’s a problem wherever you live - high density urban markets, or suburban neighborhoods.

• This article discussed how thieves have been snatching FedEx packages that contain AT&T iPhones—within minutes or even seconds of delivery. The key to these swift crimes is that thieves are armed with tracking numbers. Another factor that makes packages from AT&T particularly vulnerable is that AT&T typically doesn’t require signature on delivery (C’mon guys!)

• These thieves are so sneaky that they often walk up to a door where a package has just been left, sometimes wearing an Amazon delivery vest, and grab the package off the front step. The heist can be so quick that in some videos, the FedEx driver and thief cross paths.

• On Sept. 20—the same day Apple released the iPhone 16—a pair of teenagers from Detroit were arrested in Texas after police say they flew in and went on a porch-thieving spree around Houston. The two teens rented a car and spent hours circling neighborhoods around Houston, police said.

• Signatures are legally required for shipments of alcohol, dangerous goods, hazardous materials and pharmaceuticals. For other types of goods, the shipper typically decides whether to offer a signature option, which costs the shipper around $7.15 extra per delivery.

How fentanyl traffickers are exploiting a U.S. trade law to kill Americans (link)

(h/t to my friend Joe Kaziukėnas for sending this article - subscribe to his newsletter here (link)

• Hundreds of millions of small packages pour into the U.S. each year from China – some with fentanyl ingredients stashed inside.

• In January 2023, U.S. federal agents raided the home of a Tucson maintenance worker who had a side hustle hauling packages across the border to Mexico. They estimate that over the previous two years, the gray-bearded courier had ferried about 7,000 kilos of fentanyl-making chemicals to an operative of the Sinaloa Cartel. That’s 15,432 pounds, sufficient to produce 5.3 billion pills – enough to kill every living soul in the United States several times over. The chemicals had traveled by air from China to Los Angeles, were flown or ground-shipped to Tucson, then driven the last miles to Mexico by the freelance delivery driver.

• Even more astonishing is what fed this circuitous route: a few paragraphs buried in a 2016 U.S. trade law supported by major parcel carriers and e-commerce platforms that made it easier for imported goods, including those fentanyl ingredients, to enter the United States.

• U.S. lawmakers inadvertently turbocharged this problem as part of the 2016 legislation by loosening a regulation known as de minimis. Individual parcels of clothing, gadgets and other merchandise valued at up to $800 – one of the highest such limits in the world – now enter the country duty-free and with minimal paperwork and inspections. Fully 90% of all shipments now enter the country this way, and most arrive by air, according to U.S. Customs and Border Protection. America’s ports of entry are now so jammed with these packages, most of them from China, that just a tiny fraction of the nearly 4 million de minimis parcels arriving on U.S. shores daily are inspected by U.S. Customs.

• The U.S. received 1 billion de minimis packages in fiscal 2023 with a declared value of $54.5 billion. That’s twice the number of parcels from four years earlier, government figures show. Mounds of sneakers, tools and toasters crowding customs warehouses are the perfect cover for random boxes of fentanyl ingredients to hide.

• Back in fiscal 2015, before the de minimis limit was raised to $800, some 134 million packages entered the U.S. via this streamlined entry system. In 2023, the total was just over 1 billion packages. In 2024, that figure is even higher: nearly 1.4 billion for the fiscal year. Various factors have driven this growth, including an explosion in online shopping.

• Finally, check out an article I contributed to for Parabola (link), titled Peak season prep: How 10 ops leaders across ecomm and supply chain get it done. Hear from friends of mine at companies like Coterie, Primary, Brooklinen, Seed Health, Chubbies, LEGO, Tecovas and others!

Have a great week (and go Yankees!)

- Matt

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