Supply Chain weekly wrap-up: 4/12/2019 – 4/18/2019

JD Logistics cracks under pressure

It looks like JD.com’s logistics unit is cracking under the pressure of its high internal costs. JD founder and chief executive Richard Liu said that if the company’s logistics losses continue “JD logistics only has two years of runway left with its capital raised.”

Liu sent an internal letter to JD staff on Monday, informing them that the company will be scrapping basic salary for couriers due to a net loss of 2.8 billion yuan ($420 million) last year.“I don’t think any of our logistics brothers want the company to go bankrupt”, stated Liu. JD logistics will continue to pay social insurances for its couriers; however, couriers will now receive payment based on the number of packages handled. Monthly pay used to average at around 7,000 to 8,000 yuan, according to a Shenzhen-based courier, but under the new scheme the courier would earn around 5,000 to 6,000 yuan. JD staff are assigned packages on a regional basis, so, assuming that the number of packages handled in that region remains relatively constant, it would be difficult for couriers to boost their piecework wage.

However, some couriers have already found ways to cheat the system. You can read more about this here.

California to allow light-duty autonomous trucks on public roads

California’s Department of Motor Vehicles has proposed a new set of regulations that will govern how autonomous delivery trucks can be tested and operated on the road. The new proposals would authorize companies to apply for a permit to test light-duty autonomous vehicles (AVs) of up to 10,001 pounds on public roads, as long as they don’t charge a delivery fee.

Although the National Highway Traffic Safety Administration (NHTSA) is responsible for vehicle safety standards at the federal level, regulations concerning the testing and operation of AVs have been left to the discretion of the states. Several states, such as Arizona, Nevada and California, already allow AV testing on public roads, but only a few allow testing for autonomous trucks. California currently has three types of permits for passenger vehicle manufacturers: A permit for testing with a safety driver, driverless testing and deployment. At the moment 62 companies hold safety driver permits-including Bosch, Tesla Motors and Lyft, under the regulations set in September 2014. So far only Waymo has received a permit for driverless testing, under this month’s new regulations. The state has not yet granted any AV permits for commercial use.

Click here for more information.

BP, Nouryon and Port of Rotterdam explore green hydrogen

BP, Nouryon and the Port of Rotterdam have teamed up on a study to explore the opportunity of making “green hydrogen” via water electrolysis for BP’s refinery in Rotterdam, the Netherlands. The hydrogen currently used by the refinery is made from hydrocarbons, to desulfurize products. Replacing this with hydrogen produced from water using renewable energy could potentially lead to a 350,000 ton reduction in CO2 emissions per year.

The 3 parties have signed a memorandum of understanding to study the feasibility of a 250-megawatt water electrolysis facility that would be able to produce up to 45,000 tons of green hydrogen per year. If built, it would be the largest electrolysis facility in Europe. Nouryon would build and operate the facility, while the Port of Rotterdam would facilitate local infrastructure and look into possibilities for the further development of a local green hydrogen hub. A final investment decision on the project is expected to be made in 2022. Knut Schwalenberg, managing director for industrial chemicals at Nouryon, commented that with green hydrogen, Nouryon could provide sustainable solutions “ranging from low-carbon fuels and industrial processes to new forms of circular chemistry.”

You can read more on this here.

Video of the week:

Have a nice weekend.