Logistics Matters with DC VELOCITY

Guest: Aaron Hageman on last-mile deliveries; Imports continue to surge; Supply chain companies celebrate Earth Day by sharing their sustainable initiatives.

April 23, 2021 AGiLE Business Media Season 2 Episode 16
Logistics Matters with DC VELOCITY
Guest: Aaron Hageman on last-mile deliveries; Imports continue to surge; Supply chain companies celebrate Earth Day by sharing their sustainable initiatives.
Chapters
Logistics Matters with DC VELOCITY
Guest: Aaron Hageman on last-mile deliveries; Imports continue to surge; Supply chain companies celebrate Earth Day by sharing their sustainable initiatives.
Apr 23, 2021 Season 2 Episode 16
AGiLE Business Media

In this episode, guest Aaron Hageman, CEO of Delivery Drivers Inc. (DDI), discusses trends in last-mile logistics. The supply chain industry calls that final delivery to a person's home or business "the last mile" of the shipment chain. It is usually the most expensive part of logistics, as each package must be handled separately, in contrast to the aggregate handling of previous steps. Hageman discusses how drivers are found to make such deliveries and what is being done by shippers to assure timely delivery of our orders.

The Covid-19 pandemic is driving a huge surge in imported products, and that is affecting the real estate markets for warehouses in seaport areas. It is also creating huge demand for certain imported products.

This past Thursday was Earth Day, a day the world reflects on our environment and what we can do to be more friendly to the planet we all live on. Many logistics and supply chain companies took time this week to celebrate their own green initiatives and to commit to new sustainable practices.


Articles and resources mentioned in this episode:

Podcast sponsored by Honeywell Intelligrated

Other links

Show Notes Transcript

In this episode, guest Aaron Hageman, CEO of Delivery Drivers Inc. (DDI), discusses trends in last-mile logistics. The supply chain industry calls that final delivery to a person's home or business "the last mile" of the shipment chain. It is usually the most expensive part of logistics, as each package must be handled separately, in contrast to the aggregate handling of previous steps. Hageman discusses how drivers are found to make such deliveries and what is being done by shippers to assure timely delivery of our orders.

The Covid-19 pandemic is driving a huge surge in imported products, and that is affecting the real estate markets for warehouses in seaport areas. It is also creating huge demand for certain imported products.

This past Thursday was Earth Day, a day the world reflects on our environment and what we can do to be more friendly to the planet we all live on. Many logistics and supply chain companies took time this week to celebrate their own green initiatives and to commit to new sustainable practices.


Articles and resources mentioned in this episode:

Podcast sponsored by Honeywell Intelligrated

Other links

David Maloney, Editorial Director, DC Velocity  00:00

How can we reach the last mile of logistics? Imports continue to surge. And, with Earth Day this week, supply chain companies celebrate their contributions to sustainability. Pull up a chair and join us as the editors of DC Velocity discuss these stories, as well as news and supply chain trends, on this week's Logistics Matters podcast. Hi, I'm Dave Maloney. I'm the editorial director at DC Velocity. Welcome. Logistics Matters is sponsored by Honeywell Intelligrated. From system design and emulation to integrated warehouse automation software and technologies to AS/Rs shuttles and robotics, Honeywell Intelligrated's end-to-end solutions address the most pressing e-commerce and labor challenges facing our industry. To learn more, visit sps.honeywell.com. As usual, our DC Velocity senior editors Ben Ames and Victoria Kickham will be along to provide their insight into the top stories of this week. But to begin today, with a huge surge in e-commerce this past year, it puts a strain on home deliveries. The supply chain industry calls that the last mile—that final leg to all of our homes. To find out how companies are coping and reaching the last mile, here is Victoria with today's guest. Victoria.

Victoria Kickham, Senior Editor, DC Velocity  01:22

Thanks, Dave. Our guest today is Aaron Hageman, CEO of Delivery Drivers Inc., which is a provider of HR services for 1099 independent contract drivers specializing in last-mile delivery. Aaron is here to talk to us about trends in last-mile delivery in the past year, and especially as we emerge from the Covid-19 pandemic. Welcome, Aaron.

Aaron Hageman, CEO, Delivery Drivers Inc.  01:44

Hi, Victoria. Thanks for having me on today. 

Victoria Kickham, Senior Editor, DC Velocity  01:47

Our pleasure. So, more people are shopping online than ever before, and home delivery is a regular occurrence in rural, suburban, and urban settings across the country. How are companies keeping up with the growing demand for delivery drivers, and what are you seeing in terms of hiring trends?

Aaron Hageman, CEO, Delivery Drivers Inc.  02:05

Yeah, that's a great question to kick us off today. You know, one thought I have, as we look to this industry overall, especially over the last year, year and a half now, is that if you were already delivering, you have to deliver a lot more than ever before, and if you weren't, you needed to figure out how. So there's such a huge demand for drivers behind all of this, that the world's had to really look at, not just considering, "Oh, I need drivers occasionally," but putting forward a full-time effort. And it really involves two processes: often an in-house effort of recruiting and sourcing and onboarding, and these days, looking outside of our doors on finding more drivers, whether it's hiring a company like mine, at DDI, to help you with just sourcing drivers—and you know, we find thousands of them every week—or whether it's looking to third-party partners to help fulfill those deliveries and kind of meet your staffing needs that way. It's more expensive sometimes to give it to, you know, to give your restaurant food to a Grubhub, for example, but it's a good solution if you don't have enough crew.

Victoria Kickham, Senior Editor, DC Velocity  03:15

What are some of the greatest trends you're seeing in last-mile delivery as we sort of emerge from the pandemic? I'm thinking in terms of, you know, the variety of companies that are adding and managing last-mile delivery, and kind of the newest types of products you're seeing being delivered—that kind of thing.

Aaron Hageman, CEO, Delivery Drivers Inc.  03:33

A couple trends on here, you know, top three conversations with my clients are: Unemployment is at 6%, so how do we strategically shift not just recruiting drivers, but sharing drivers? So, it's a big trend, extending from staffing into not just "Do I have enough drivers for my company and does my competitor have enough drivers for that company?" but we're hitting it at a mathematical tipping point where we have to figure out how to pool our drivers together and share those drivers. That's a big conversation. And the second conversation revolves around delivering new things. And so, suddenly, we were experts—all my clients would be experts at delivering one product, say groceries or boxes. But now, they need to pivot and expand their delivery-support logistics, and those changing needs. When you look at the HR side from DDI's perspective, our company, it changes often all the different pieces of the puzzle when you're talking about, "Okay, how do we get this done, now," when you have to figure out how to deliver something new in addition to the products you're used to.

Victoria Kickham, Senior Editor, DC Velocity  04:42

Now, DDI serves couriers, retailers, grocers, restaurants. How are their needs changing when it comes to managing the last mile?

Aaron Hageman, CEO, Delivery Drivers Inc.  04:50

One size doesn't fit all. And so we often used to see that if we looked at certain pieces—let me take an example like running background checks, we could run background checks on delivery drivers. Well, running background checks on, quote, delivery drivers, is not a one-size-fits-all solution, because the evolution is suddenly, my grocery clients could run a background check for delivered groceries, but the same client, and subsequently the same drivers, are now delivering pharmaceutical products, or alcohol, and the scope changes. And suddenly, one size doesn't fit all, and we need different drivers with different vehicles, or different background checks, and things like that. So really considering the the evolution that we're all experiencing in delivery and logistics, when you look at this, it suddenly is every little change has these ripple effects that, you know, make us have to look at, again, almost every piece of the puzzle when it comes to our HR solutions.

Victoria Kickham, Senior Editor, DC Velocity  05:51

Along those lines, how has your customer base changed in the past year due to the pandemic? Are you serving different types of brands and clients these days? 

Aaron Hageman, CEO, Delivery Drivers Inc.  06:01

What's really interesting—because we've been in business 25 years—I took a step back, and I was thinking about, you know, what's different these days about our customer base—it's talking to us, like our new customers, sales and marketing team. And so in chatting with them, what we've realized is that for years, the delivery needs, the companies that needed HR support for delivery, were the third-party delivery companies because, you know, they just supported the world there. But now, even take, I don't know, take a big retailer example like Best Buy. Best Buy may have had a third party helping deliver their goods when they got it, but the world shifted, so Best Buy does so much delivery and online business, they've had to consider out how to do this themselves. So at DDI, what's really shifted to your question is, we're talking to not just the delivery and logistics providers, but the retailers themselves that are really trying to figure out their omnichannel logistics challenges.

Victoria Kickham, Senior Editor, DC Velocity  06:59

With the rise in violent crime in many cities across the country, I'm wondering if driver safety has become more of a concern than it has in the past? Specifically, what are companies and drivers themselves, looking for when it comes to services that will keep drivers safe?

Aaron Hageman, CEO, Delivery Drivers Inc.  07:15

Yeah, that again, a front-of-brain topic that, you know, our risk-management team tends to discuss, you know, almost every day. And there's a few things on here. One of the things we pay a lot of attention to at DDI is the evolving laws supporting independent contractors. You know, privacy laws had to be amended to allow rideshare drivers freely to include cameras, and you know, their vehicles now, for their safety, for example. And so, seeing an evolution in the last year to allow for contacts, deliveries, non-contact deliveries with Covid concerns, or literally leaning into making sure that 1099 workers have rights to refuse jobs—"Oh, I don't want to go to that part of town. I don't feel safe," or "It's too late," or, "Oh, I can only work alone at this time instead of having, you know, a partner with me, and I don't want to do that." So, these are some of the quick considerations we talk about a DDI, because we really deal with the 1099 networks a lot. But this is a conversation, quite candidly, I think, we need to continue to have, as an industry.

Victoria Kickham, Senior Editor, DC Velocity  08:20

That's for sure. Aaron, thank you so much for being with us today. We appreciate your insight. 

Aaron Hageman, CEO, Delivery Drivers Inc.  08:27

Thanks again. It was great to talk to you again.

Victoria Kickham, Senior Editor, DC Velocity  08:29

We have been talking to Aaron Hageman, CEO of Delivery Drivers Inc. Back to you, Dave.

David Maloney, Editorial Director, DC Velocity  08:35

Thank you, Aaron and Victoria. Now let's take a look at some of the other supply chain news from the week. Ben, you wrote a couple of stories about how the pandemic is driving a surge in imports. Can you tell us more?

Ben Ames, Senior News Editor, DC Velocity  08:49

That's right, Dave. We saw this week that pandemic conditions are finally starting to ease in many markets, and that's leading to the continuation of a surge of imports into the U.S. The latest proof of that trend can be seen in the warehouse real estate market, where vacancy rates are sinking and rates—rent rates—are soaring—excuse me. That's according to CBRE, the real estate company. Specifically, retailers are competing to claim industrial space near seaports, and that's to mitigate future supply chain disruptions, following the pandemic, of course, over the long term, and also more recent events, like the Suez Canal blockage that we were all reading about last month. That demand has pushed the average vacancy rate on the warehouse space at seaport markets down to just 3.6% at the end of 2020, and that's a full percentage point lower than the national average. So there's a big gap there. CBRE executive John Morris said about that. "With all of the volatility and consumer changes of the past year, retailers and manufacturers have learned to build up a healthy safety stock of inventory to limit supply chain disruptions."

David Maloney, Editorial Director, DC Velocity  09:59

Right. And did the study say what kind of inventory was most in demand?

Ben Ames, Senior News Editor, DC Velocity  10:05

The CBRE study did not, but I also reported on a report from the sourcing-platform provider Thomas, which said that during the first quarter, it saw what it called "a cautious decline" in PPE type of materials—that's personal protective equipment—and corresponding rise in manufacturing materials, like steel and lumber. Thomas also shared its forecast for the second quarter—second quarter of 2021, which of course runs roughly from March to June—when it said that we'll likely see double-digit percentage rises in orders for four categories. First is printed circuit boards. Those are computer chips that we've all been reading about that are in sharp shortage right now, and even stopping some automotive assembly lines. We could also see a sharp demand for aerospace engineering services. That's as vaccinated travelers begin to return to planes. A rise in manufacturing is the third one, as businesses resume their operations. And finally, Thomas said that we'll probably see an increase in food-service equipment, as restaurants nationwide start to reopen for full capacity with more vaccinated clientele.

David Maloney, Editorial Director, DC Velocity  11:18

Yeah, it will be interesting to see how all that plays out. Thanks, Ben. 

Ben Ames, Senior News Editor, DC Velocity  11:23

Of course

David Maloney, Editorial Director, DC Velocity  11:24

Yesterday, of course, was Earth Day, and many companies in our space have been highlighting their green initiatives, and, Victoria, you wrote about one material handling company that has committed to renewable energy to drive its manufacturing processes. What can you tell us?

Victoria Kickham, Senior Editor, DC Velocity  11:39

Yes, that's right. So, industrial battery manufacturer Crown Battery celebrated Earth Day with the commitment to use 100% renewable energy for its manufacturing operations, beginning this year. The Ohio-based company is best known for its recyclable lead-acid batteries, and also its chargers and charging systems, and those are used in a wide range of industrial applications, including for powering forklifts and other material handling equipment. Essentially, they signed a contract with a company called AEP Energy to source clean energy through a AEP's Integrated Renewable Energy solution, which in that energy will power its manufacturing operations. It's a long-term, fixed-price retail energy program that will support new, locally sourced wind and solar power over a period of about 12 years, beginning in January 2023. So, although that's a couple of years away from development, Crown said in the meantime it will purchase renewable energy credits, or RECs, from AEP to pilot—I'm sorry, to power its operations until the new supply begins. RECs are proof that energy has been generated from renewable sources, so that's how they're able to start this program right away. This is one of those—a long line of sustainability initiatives we've been reporting on in the past year. Sustainability and environmental awareness in logistics and transportation is something that really has been steadily gaining traction, but has really come to the fore recently. And, as you said, Dave, you know, we received many reports of initiatives and programs this week, in honor of Earth Day yesterday. Those initiatives include everything from the manufacturing program I just talked about to sustainable packaging, greener DCs, energy-efficient battery technologies, and also just general efforts from companies up and down the supply chain to reduce their carbon footprint and try and contribute, really, to an overall greener supply chain.

David Maloney, Editorial Director, DC Velocity  13:34

Yeah, that's all good progress being made there. So, the Crown Battery initiative you just spoke about is aimed at manufacturing operations. How does it align with their other green goals and to the lead-acid battery product itself?

Victoria Kickham, Senior Editor, DC Velocity  13:49

Yeah, well, to date, Crown says it has invested more than $8 million in energy efficiency, and that includes the use of on-site solar panels, ultra-efficient lighting and geothermal cooling, which is a cooling technique that utilizes the heat below the Earth's surface to produce cool air in an environment. It also recently introduced a new ultra-efficient charging system, which company leaders there say will drastically reduce energy consumption. So, this latest project falls in line with several other of their initiatives. And lead-acid batteries, that chemistry itself has been around for a long time, as our listeners know, and manufacturers and dealers often point out that these products are 99% recyclable, and also that about 80% of the material for new lead-acid batteries comes from previously recycled batteries. And that's all according to government data. In talking about this with Crown, they noted that its batteries are more recyclable than an aluminum can, according to the U.S. Environmental Protection Agency. So, to me, this story, and the others we kind of touched on, are a nice reminder that there are really many ways to pursue a business strategy that is environmentally conscious and really aims to protect and preserve our natural resources.

David Maloney, Editorial Director, DC Velocity  15:02

Yeah, that's great. Thanks, Victoria. 

Victoria Kickham, Senior Editor, DC Velocity  15:04

You welcome. 

David Maloney, Editorial Director, DC Velocity  15:05

We encourage listeners to go to DCVelocity.com for more on these and other supply chain stories. And check out the podcast Notes section for some direct links on the topics that we discussed today. Thanks, Ben and Victoria, for sharing Highlights of the news this week.

Ben Ames, Senior News Editor, DC Velocity  15:21

Glad to be here.

Victoria Kickham, Senior Editor, DC Velocity  15:22

Yeah, you're welcome. 

David Maloney, Editorial Director, DC Velocity  15:24

And again, our thanks to Aaron Hageman of Delivery Drivers for being with us today. We encourage your comments on this topic and our other stories. You can email us at [email protected] comm We also encourage you to subscribe to Logistics Matters at your favorite podcast platform, and to give us a rating. We appreciate your feedback, and it really does help people to find us. The new episodes of Logistics Matters are uploaded each Friday. And speaking of podcasts, Logistics Matters is sponsored by Honeywell Intelligrated. Be sure to check out the Honeywell intelligrated On the Move podcast on Apple, Spotify, or Google. All episodes of their podcast series are also posted at sps.honeywell.com/onthemovepodcasts. You can also find Honeywell Intelligrated on LinkedIn and Twitter using the hashtag @Intelligrated. And we'll be back again next week with another edition of Logistics Matters, so be sure to join us. Until then, please stay safe and have a great week.