We often hear AMS’ CEO, Jay Catlin, attributing the success of the company to AMS being the corporate home of quite a few fulfillment ‘lifers’. John Bevacqua, VP of Logistics at AMS is one of the ‘lifers’ on the Management Team. He describes his area of excellence as, “…creating distribution and fulfillment operations that function as a capable interface between suppliers, retailers, and wholesale distributors.” Considering AMS’ success, and that of their clients, John must be doing a good job.
More than seven years ago he began writing a column, published every other month, called John B. “Freight Freak” in which he speaks to clients and fulfillment professionals about changes that are upcoming or issues of concern in shipping. His first column, in January of 2015, covered some new Fed-Ex and UPS rules. After that he covered dimensional pricing, peak season tips, hybrid delivery, omnichannel retailing, shipping changes due to Brexit, EU VAT changes, and his most recent blog is about being agile in the supply chain.
We’re living in a time where being agile is definitely required. Not just the professionals, but the people on the street are interested in the supply chain nowadays as we realize our dependence on it. For his next blog John has agreed to answer some questions about what has changed over time and what he sees down the road as a logistics expert.
Thanks for speaking with us, John. The first question would be, what in your view is the most significant change in global logistics since your first column in 2015?
This is a great question, so many areas I could cover, as there has been many more changes and advances from when I wrote the first article to now, versus what I experienced from Y2K until 2015. So I’ll be specific concentrating on the small parcel industry advances that has evolved in many ways. I have always referred to the major carriers both UPS and FDX as the duopoly. Those were pretty much the choices, of course other than USPS before 2015. USPS was not thought of much as a parcel delivery system and not able to compete. However, they were able to perform what’s called as of today “final mile delivery. Since they had to do something to compete in this space they did find a way to perform the service at a lower cost than the duopoly could on their own. I called this a hybrid delivery model.
The duopoly first provided an option with service levels utilizing the postal network. Those were typically used for the lighter weight smaller parcel packages and were able to provide a more economical service. This however also created many more delivery service competitors such as DHL eCom, OSM, Newgistics and the list goes on. During this time Amazon was also building a quicker delivery network that would provide a two and even same day delivery to some areas of the country. This caused many merchants to rethink their own delivery strategy. Since the final mile services were more cost effective the longer delivery transit time was being overshadowed by the consumers’ quest for having that Amazon like service level. This has caused even more changes as many are moving away from last mile and looking more toward quicker delivery. The only issue is faster delivery is more costly. Therefore it’s an interesting balance that merchants are struggling with when it comes to delivery services. One that’s not going away, plus I believe you will soon see it evolve toward the same day delivery services.
Secondly, what have you observed happening within the supply chain since the pandemic began?
The pandemic caused a huge influx of online shopping, statistically, as online orders increased by over 30%. As mentioned in my Post Covid blog a few months ago, this pandemic was the catalyst that took it from greater than $602B in 2019 annual sales, now rising in the range of 30+%. This of course caused a huge reverberation across the industry. From the procurement of goods to the delivery of consumable products, thus supply chain services being stressed to the point of breaking down in some instances. It still has not fully recovered. The supply chain infrastructure was just not set up to handle this new mass product surge, from inbound to outbound logistically speaking. Some carriers and freight forwarders would of course take advantage of the new opportunity to increase prices due to actual and perhaps in some cases artificial resource shortages.
Since pricing is dictated by supply and demand, it has now become a sellers’ market. Surcharges were instituted and higher than ever seen within the small package industry. All other services within the logistics industry are increasing and over 300% in some of the transport sectors. I’m not seeing a change in this anytime soon as the shortages in products and services continue to be on the rise.
Third, based on what you have observed with regard to resiliency and creativity, what to you see when looking into the future?
I’m encouraged about what I’ve observed and experienced over the years. It’s exciting to me with all that has been learned, the changes that have taken place over the last 6-7 years plus the forced change from a pandemic. A large segment of the population has adapted to new buying behavior models in a way of more convenience and instant gratification without the bricks and mortar. This has forced the onset of more companies to make investments in digital transformation.
We have now become much more hooked with this new norm, which will drive bottom line for many retailers and merchants. The supply chain infrastructure will eventually catch up and adapt in ways that can better support the tremendous growth. I believe we will also begin to see more efficiencies in the transportation sector, and that includes many more competitors with lower transit times. The evolution of fulfillment companies providing more support services to merchants and with high tech automation systems.
Thank you John B., “Freight Freak” for the insider view!
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About the Freight Freak: John Bevacqua is the VP of Logistics at AMS Fulfillment. His area of excellence is in creating distribution and fulfillment operations that function as a capable interface between suppliers, retailers, and wholesale distributors. His experience includes developing and leading FedEx/ Kinko’s Distribution Services into the FedEx post acquisition, USA Wireless Technologies, and a top Logistics Management company. He has also worked with third party fulfillment companies, preparing him for his current position with AMS Fulfillment.