Private inventories grew by more than $67 billion in the third quarter. This is the fifth quarter in a row in which inventories have grown. The last estimated decrease in inventories was in the second quarter of 2018. The inventories to sales ratio for retailers, manufacturers and wholesalers was up year-over-year for August, the most recent numbers available from the Census. Amazon saw it's inventory value increase 25% after it announced plans for one-day shipping. Grigg said his customers are currently trying to figure out how to keep up with the promise of one-day shipping and still make money on e-commerce orders.
Dallas-based Mode Transportation and SunteckTTS Inc. have reached an agreement to merge the two transportation and logistics companies under the Mode branding, generating more than $2 billion in annual revenue, according to a release. The two companies believe the merger will allow it to leverage even larger scale and resources to serve the shipping and logistics market. Mode Transportation’s services will include freight services across trucking, rail, air and sea. The company anticipates it will see more than 1.5 million annual customer shipments.
A new inventory control system will help Target better position inventory within its network to enable more streamlined backroom operations and keep store inventory levels low without jeopardizing in-stock status. The benefits of this new system include lower backroom inventory levels, better on-shelf availability of our store inventory and a higher percentage of replenished items that flow straight to the shelf. After years of development, the system is now active for 15% of Target's products, representing a 20% to 30% of total replenishment, Mulligan explained, adding the affected items show less frequent stockouts and lower backroom quantities than those not yet in the system. The fulfillment model reduced costs by 40% and the company is now making technology investments to further enable the store-centered strategy.
The hottest market in logistics right now may be in the cold chain. Sector leader Lineage Logistics LLC just pulled off a $900 million acquisition of two-year-old startup Emergent Cold that brings the company’s total refrigerated capacity to more than 1.7 billion cubic feet, bulking up the its global footprint by about 8%. The buy looks like a competitive response to the rapid growth of Americold Realty Trust, which is the No. 2 provider of refrigerated warehouses and this year paid $1.24 billion to acquire Cloverleaf Cold Storage. The companies are scaling up as shifting consumer tastes toward fresh foods and the rapid growth in online grocery sales have fueled more demand for refrigerated storage. Transportation companies are paying more attention, with several shipping companies adding thousands of temperature-controlled containers to their fleets over the past two years.
Lowe's just announced that it will invest $1.7 billion to transform its supply chain over the next five years. The spending has already begun, including the opening of two new bulk distribution centers and three cross-dock terminals this year. This infrastructure improvement will be key to Lowes’ transitioning from a store-based home delivery model to a market-based model and to build a true omnichannel ecosystem. The new warehouses are taking pressure off stores to make customer deliveries. This is an important shift since Lowe's main challenge is to figure out how to keep in-store items in stock.
Thanks for reading! Don’t forget to check out last week’s news and stay tuned for our next Friday Five roundup!
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