Amazon’s Shipping Costs Soar Supply Chain Tapestry Trade’s Tight Window

Amazon’s Shipping Costs Soar Supply Chain Tapestry Trade’s Tight Window
October 26, 2019
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Expanding its own shipping services is taking a toll on Amazon.com Inc. ’s bottom line. The e-commerce market leader’s profit fell 26% in the third quarter even as revenue grew 24%, the WSJ’s Dana Mattioli reports, as world-wide shipping costs soared 46%. The $9.6 billion in shipping expenses was even more than Amazon spent in last year’s busy fourth quarter and a sign of the tumultuous changes underway in the company’s logistics operations as it handles more of its own packages. Amazon is taking on those costs as it rolls out one-day shipping for Prime subscribers, promising to bring its best customers faster and cheaper delivery. The results suggest Amazon is struggling like other retailers and parcel carriers to cope with the costs of e-commerce delivery, but it’s not slowing the company down. Amazon expects to spend another $1.5 billion in the fourth quarter to expand one-day shipping.

SUPPLY CHAIN STRATEGIES

Tapestry Inc. is putting the finishing touches on a technology makeover that will overhaul the luxury-goods company’s supply-chain management. The owner of the Coach and Kate Spade brands is centralizing operations under a common technological backbone that includes inventory management, distribution and sales in a bid to cut costs and make the business more nimble. The WSJ’s Agam Shah writes the centerpiece of the effort is an SAP SE enterprise resource planning system that bridges back-office, sales, logistics and other systems. The software replaces seven ERP systems Tapestry had used to integrate systems across brands and geographies. The company is among many consumer-focused businesses turning to technology to get more nimble and handle the growing competitive stresses in retail trade. Tapestry’s ERP system provides a foundation for real-time features including inventory checks and in-store pickup for online purchases.

ECONOMY & TRADE

The window for passing the Trump administration’s renegotiated trade deal with Mexico and Canada may be closing. U.S. lawmakers worry that progress on the U.S.-Mexico-Canada Agreement, or USMCA, could fade against political priorities in the coming election year if negotiations in Washington over the pact don’t conclude soon. The WSJ’s Natalie Andrews reports that Democrats and the administration are at odds over how to ensure that new labor rules in USMCA are enforced, a priority for U.S. unions aiming to deter companies from moving production. There’s little progress so far, although U.S. Trade Representative Robert Lighthizer = met with lawmakers on Wednesday. Trade at North American borders appears to be showing some impact from a wavering industrial economy, meantime. Transborder freight by value fell 1.7% in August, according to the U.S. Bureau of Transportation Statistics, and U.S.-Canada truck trade fell 3.1% in the second straight monthly decline.

QUOTABLE

“We put our future in the hands of Boeing and the MAX, and we’re grounded.”

—Southwest Airlines CEO Gary Kelly.

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