Amazon.com won approval from the FAA to test a delivery drone outdoors, as the e-commerce company pursues its goal of sending packages to customers by small, self-piloted aircraft.

Fulfillment via drone is a realistic – and exciting-- scenario for some package deliveries in the future -- though the use of drones is fraught with issues involving safety and privacy.

Key components and restrictions of the program are below:

• Amazon prototype drone will be allowed to perform test flights over private, rural land in Washington state.
• The experimental certificate applies to a particular drone and Amazon must obtain a new certification if it modifies the aircraft in any way.   This makes is it difficult to adapt the model quickly in the field.
• Amazon must keep flights below 400 feet and keep the drone in sight.  (Amazon asked to fly up to altitudes of 500 feet).
• Drone operators must have a private pilot licenses and current medical certification.

Industry updates, like these, are part of the Kelly Direct experience.   Our goal is to make you look good.  Keeping you up on top of developments in the fulfillment industry -- and mostly recently LA port operations -- is just part of the value we bring to the table.

As know, West Coast dockside labor and management negotiations and significant infrastructure issues have resulted in the worst West Coast port crisis in decades.

Negotiations between the Pacific Maritime Association (PMA) -- which represents employers at 29 ports -- and the International Longshore and Warehouse Union (ILWU), which represents 20,000 dockworkers – have significantly impacted merchandise supply chain.  As a result, for the past two months, all of us in the industry have had extreme challenges getting containers off the vessel, into the warehouse and out to end users on time  (and without OT labor).

To give you an Executive Summary of what is going on – and to help plan for the next few months.

The Port of Long Beach opened a 30-acre depot for the temporary storage of empty containers.  The facility on Pier S will run to at least March 31 2015.  The idea is to provide more space to place empty cargo containers, remove their chassis and use them to pick up new loads of incoming cargo containers.

The four companies that control 95% of the chassis at Los Angeles-Long Beach (over 100,000 chassis)  agreed to develop a neutral chassis pool.  Phased roll-out began on February 1, 2015.  The assets of the four chassis pools will be interoperable, which means that a trucker pulling a container and chassis can pick up or deliver the equipment at any of the 13 terminals in the harbor without regard to which pool serves a particular shipping line or terminal.

The negotiations appear to be easing into a final agreement.  Spokesmen for both factions (PMA and ILWU) disclosed that the issue of maintaining cargo chassis has been addressed, thereby easing the way toward a final agreement.

When an agreement is reached, however, there will be an additional 30-day period to allow time for the ILWU to ratify.

The bottom line:

Overall, we feel that the situation is getting better and we should see a quicker – 5 to 7 day -- turn of containers at West Coast ports in the coming months.

We will continue to keep you updated on this evolving issue and its potential impact to your programs.

Given our "brief, brilliant and gone" approach to keeping our clients up to date, here is an EXECUTIVE SUMMARY of what is REALLY going on at the ports in Los Angeles:

BOTTOM LINE:

Ships are being held at the Ports of Los Angeles and Long Beach for up to one week due to overloaded of infrastructure and shortage of trailers. Inbound merchandise may take 7-10 days longer to arrive during October and early November.

IMPACT:

Since 40% of all US imports arrive into these ports, the delays could undermine retailers' ability to receive and stock product and promotional materials in time for the crucial holiday season. Manufacturers, retailers and logistics experts may also divert freight to other ports, resulting in lost revenue to Los Angeles and the Port Authority, now and in the future.

THE BAD NEWS:

According to port officials, the current congestion is the worst crisis in a decade at the ports. "We have a melt-down on the harbor. Every day it gets worse," says Robert Curry, president of a LA-based trucking firm that serves both ports.

THE GOOD NEWS IS:

The delays will wind down by the second week in November. Port officials are clearing space by moving empty containers and broken chassis to off-site locations. In the immediate future, they plan to purchase and supply additional chassis given peak periods. Finally, we're not the only ones: other ports are facing similar issues.

THE BETTER NEWS IS:

If Kelly Direct finds that the delivery deadline of your inbound product is impacted – or even potentially impacted -- we will notify you immediately, present a solution and get into action.