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Logistics-Package Delivery

Sigma Investment Counselors

June 26, 2019

Wikipedia defines logistics as the detailed organization and implementation of a complex organization.  In a general business sense, logistics is the management of the flow of things between the point of origin and the point of consumption.

We recently discussed the concept of the “last mile”, primarily in the context of the telecommunication industry, (see our blog titled “The Last Mile”).

The issues associated with “last mile” costs and problems in the telecommunication industry are also applicable to the rapidly growing package delivery industry.

Shippers and shipping companies have developed robust long-haul transportation systems with sophisticated warehouses, hubs and modern fleets of dedicated aircraft.

The hard part, “the last mile”, comes into play between the destination airport and the customer’s home or business.  In response, major corporations, like FedEx and UPS, and retailers, particularly Amazon and Walmart, are rapidly expanding their home delivery capacity, such as the recent introduction of seven-day delivery, and developing new concepts, including drones.  In addition, a large number of smaller companies are introducing new home delivery products.

Investors may find interesting opportunities in new technologies and such mundane areas as the shortage of refrigerated warehouses.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA

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