Dynamo Dispatch (03/23/20)

Issue 100 | COVID 19, EasyPost, Huboo

Dynamo Dispatch. Weekly update from Dynamo Ventures covering the latest and greatest in supply chain, mobility, and building venture-scale businesses.

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Weekly Commentary 💭

We are entering week two (week three for some) of rigorous social distancing and work from home arrangements. As supply chains come into focus due to COVID-19, we will be publishing a series of perspectives on our blog in the coming weeks - stay tuned.

We hope everyone stays safe, healthy, and positive. Please reach out if you think we can be helpful during these turbulent times.

We Are Dynamo,

Santosh, Ted, Barry, and Jon

Note: please add “dynamo@substack.com” to your email client so you don’t miss future issues due to aggressive spam filters.

Supply Chain 📦

Coronavirus-Era Food Supply: America Has a Lot. Moving It Is Tricky. Whereas just weeks ago the US meat industry was concerned about oversupply due to halted exports of pork and poultry to China, today processing plants are working overtime to meet demand as shoppers stock up on staple foods. Analysts have seen no shortage of food in the US; however, the surge in demand has led to a spike in prices with boneless chicken breast up 30% per pound since the start of the month. Related: ‘There Is Plenty of Food in the Country’, Disney Donates Excess Food to Local Food Banks, McDonald’s Ready to Stay Open if Government Asks.

One Company’s Hands-On Effort to Ramp Up Sanitizer Production. Bay Area producer of high-end hand sanitizer, EO Products has hired temporary workers, added shifts, and converted factory lines to quadruple its output. Nevertheless, the company’s fill rate of orders placed is expected to drop from 98% to 60% this month as year-over-year sanitizer sales have shot up more than 470% nationwide. Jumping into production, LVMH to Manufacture Disinfectant Gel in French Factories to Help Prevent a Hand-Sanitizer Shortage. Also, Fleet Vendors Ramp to Support Telemedicine, BP Offers Free Delivery of Essentials.

Amazon Suspends Non-Essential Shipments to DCsas it Plans to Hire 100K Workers. While last-mile delivery of products already in its facilities will be unaffected, Amazon moving forward will accept only household staples, medical supplies, and other high-demand products from sellers using Fulfillment by Amazon. The policy is slated to last until April 5 as the e-commerce giant copes with a spike in demand for toilet paper, hand sanitizer, and other home goods. See also: Jeff Bezos’ Letter Regarding COVID-19 and Amazon Manages First COVID-19 Case in NYC Facility.

McKinsey on Supply Chain Recovery in Coronavirus Times. The management consulting group offers recommendations for responding now as well as steps towards building long term supply chain resilience. In the current landscape, managers are encouraged to establish transparency on multi-tier supply chains, assess inventory, and estimate realistic customer demand before seeking to optimize production, secure logistics capacity, and model working capital outlays. Long term, it is recommended that a ‘nerve center’ is formally established to map vulnerabilities, digitize the supply chain, and actively triage during crises. Related: 53% of US Manufacturers Expect Operational Impact From Coronavirus.

📊COVID-19 and Implications for Logistics Real Estate. Given the industry standard for long-term occupancy contracts, the Prologis report finds the logistics real estate sector well-buffered from short-term disruptions. The continued growth of e-commerce volumes coupled with managers seeking to insulate supply chains from future shocks are, in fact, likely to drive up inventory levels. In trucking, Truckload Rates Could Stay Volatile Through Summer.

Coronavirus Could Deliver 17M TEU Blow to Container ShippingSeaIntelligence Consulting expects a 10% drop in overall shipping volumes this year. Although SeaIntelligence anticipates a strong rebound in 2021, they warn that the world is only in the early stages of a global decline in demand as the pandemic begins reaching Europe and North America. Speaking of international logistics, Maersk Pauses Crew Changes and Launches Door-to-Door Insurance Solution with Zurich.

MIT: Is It Time to Rethink Global Supply Chains? With remote production and subcontracting becoming increasingly popular, many companies have limited visibility over their suppliers. To obviate supply chain vulnerabilities, responsible managers are encouraged to consider co-locating their production sites with supplier facilities and handling a broader mix of products within a single facility to ensure optionality in case of crisis. Also weighing in on the effects of outsourcing and just-in-time inventory: The Modern Supply Chain is Snapping

DHL Declares Force Majeure. The forwarding giant has found it difficult to deliver on its ocean and air contracts due to the disruptions related to COVID-19. This clause exists for unforeseen circumstances such as the ongoing pandemic. Also, DHL Hurt by Amazon Insourcing Efforts, DHL Places 10K Order with Locus Robotics whom we had on Episode 45 of the Future of Supply Chain podcast.

Mobility 🚗

Detroit Car Makers to Temporarily Close U.S. Plants Over Virus Concerns. Executives from General Motors, Ford, and Fiat Chrysler suspend factory operations across the US, Mexico, and Canada until the end of March following talks with union leaders concerned about the virus’ potential to spread among autoworkers. The halt should not have an immediate effect on dealers, who on average have two months worth of vehicles on their lots; however, industry analysts still anticipate a drop in car sales by as much as 20% for March. Meanwhile, US automakers study medical manufacturing as coronavirus squeezes capacity. Yet there remains skepticism of crossover production: SpaceX and Tesla Might Make Ventilators. But Is It Really That Easy?

Airline Execs Seeking $58B Warn Congress 'Time Is Running Out'. Chief executives from US airlines including Oscar Munoz of United and Ed Bastian of Delta warned House and Senate leadership this weekend that without cash grants thousands of workers will need to be laid off. However, if the industry can receive at least $29B, the airlines have promised they will not let go of employees, eliminate stock buybacks and dividends, and accept limits on executive compensation. For a look into how air traffic controllers have also been affected by the outbreak: Understanding ‘ATC Zero’ in the Face of Coronavirus.

COVID-19 Is Bad for the Auto Industry—and Even Worse for EVs. Given plummeting oil prices and dependence on global sourcing for critical parts like batteries, industry analysts expect a rough year ahead for EV sales. EV manufacturers not only face immediate disruptions in light of COVID-19 but also diminished consumer demand if the economic downturn continues and tight-fisted customers opt for cheaper internal combustion engine alternatives. Case-in-point, Rivian Shutters Facilities Over COVID-19

How Coronavirus Is Disrupting Public Transit. Offering real-time estimates of public transportation ridership, Transit has shown a 60% drop off compared to normal demand. Likewise, transportation data provider TomTom NV finds: Road and Transit Use Falls, Hinting at Declining Commercial Activity. Transit agencies themselves have already taken notice. Anticipating $6 billion in lost fares over the next six months, Hard-Hit Transit Asks Congress for $12.9B in Emergency Funds

A Surge in Biking to Avoid Crowded Trains in NYC.New York City’s bike share program, Citi Bike, sees demand spike 67 percent in year-over-year growth as commuters avoid contact on public transit. Meanwhile, bike share programs in other major metros like San Francisco and Seattle have seen declines in ridership. Some uncertainty over the future of commuting is likewise evident among investors in reports that US Mobility Startups Feel the Chill From COVID-19.

Lime Pauses Scooter Operations in Select Markets amid COVID-19. In divergent responses to the coronavirus outbreak, Lime suspends operations in hotspots Italy, Spain, California, and Washington while competitor Spin instead chooses to remain operational in affected areas. Believing that e-scooters provide a safe option for essential transportation, Spin management has stated its desire to remain active unless municipalities explicitly command a halt. Meanwhile, in a win for all micromobility startups, Electric Scooters to Get Green Light to Go on Britain's Public Roads

Anthony Levandowski Pleads Guilty to Stealing Waymo Secrets. Ending a multi-year legal saga between Uber and Alphabet's autonomous vehicle unit Waymo, the self-driving car engineer has pleaded guilty to stealing trade secrets from Google. Admitting he downloaded one Waymo spreadsheet file, Levandowski now faces up to 30 months in prison. Speaking of AVs, Ford Releases a Data Set to Accelerate AV Development

Uber Says Rides Down by as Much as 70% in Cities Hardest Hit by Coronavirus, Looks at Delivering Meds. With assurances that the company has “ample liquidity,” Uber CEO Dara Khosrowshahi acknowledges this week that ridership has plummeted by as much as two-thirds in cities like Seattle. To support business, the company has actively pushed drivers to its Eats unit, which has remained a strong performer through the outbreak. Related: Lyft Offering Delivery Jobs to Drivers and autonomous development is on pause as Argo AI, Aurora, Cruise, Pony.ai, Uber Halt Self-Driving Tests and Waymo Quickly Followed As Well.

Fundraises, M&A, Talent 💸

Gojek Raises $1.2B in Fresh Capital. As the second close of the ride hail giant’s Series F, the new funds push the total round size to just under $3 billion. Investor names have yet to be disclosed. Following rumors last month of a possible merger with rival Grab, some industry analysts now speculate the two companies might instead be headed for a regional truce: A Grab-Gojek Union? Hope Wrapped in a Tangled Mess of Issues.

James and James Fulfilment Raises £11 million in Development Capital from LDC. The Northampton-based startup enables multi-channel order fulfillment and order tracking through its cloud-based platform, ControlPort. The new funds will support a larger UK fulfillment center and further product development.

Jumingo Raises €1M Angel Round Led by TS Ventures. The digital shipping marketplace connects merchants with service providers including TNT, DHL, and UPS. The new funding will support international expansion and a roll out of more direct-to-consumer and same day delivery options.

Huboo Receives Investment from Maersk Growth. The venture arm of Maersk lead the bridge round for Huboo, a UK-based multi-channel fulfillment startup. Founded in November 2017, the startup stores, picks, packs, and delivers customers orders, allowing merchants to focus on more impactful areas of value add. The investment amount has yet to be disclosed.

Costco Buys Logistics Firm From Sears Owner for $1B. Costco pays cash for Innovel Solutions in the company’s largest acquisition since its merger with Price Club in 1993. The Illinois-based Innovel expands Costco’s last mile capabilities with its 11 distribution centers and more than 100 last mile cross-dock stations specializing in bulky deliveries. 

EasyPost Acquired by Ruby Has. Ruby Has, leading fulfillment company for direct-to-consumer brands, expands its capacity 25% with the acquisition of EasyPost Fulfillment Services. Based in New York, Ruby Has gained national coverage, adding the Midwest to its bi-coastal footprint. 

Shen Takes Reins as Transfix’s New CEO; McElroy to Be Chairman. Founder of the digital freight brokerage, Drew McElroy steps aside as Lily Shen, former chief operating officer, takes the reins as new CEO. “For a while now it’s been in the back of my mind that I’m not the right tip of the spear if we’re going to go as fast as we possibly can,” McElroy said. “With the complexity of the business, to maximize efficiency and velocity is the role of a true operating badass, and that’s absolutely what Lily is.”

Company Building 🛠️

The Matrix for COIVD-19. Sequoia put together this matrix that lays out the possible scenarios of the ongoing coronavirus epidemic. This reflects a lot of the fundamentals we’ve discussed with startups on an on-going basis. 

Eight Steps for Startups to Survive the Coronavirus Crisis. Drive Capital shares its recommendations for the current environment. The most controversial is pulling down on all bank debt lines - this could create a “run on the bank” if all clients called on their liquidity. Speak to your investors if you are weighing a drawdown to provide more liquidity.

Holloway Guide to Remote Work. This will cost $25 but the team at Holloway accelerated the release of their guide to help managers wrangle a remote workforce. There are pros and cons to remote work that we’re all discovering - this guide is a great resource to remain productive during this prolonged WFH period.

Who's Hiring? 👩‍💻

Operations Specialist at Stord in Atlanta, GA.

Customer Success Lead at Backbone in New York, NY.

Systems Integration Lead at Plus One Robotics in San Antonio, TX.

Check out other jobs at Dynamo portfolio companies.

💥 Seen any interesting startups or have any tips for the Dispatch? Introduce us.
❤️ We would love your support. Please forward to friends and share on social media.
🗞️ If you were forwarded this and found it interesting, please sign up.
🎙 Check out Dynamo's podcast series, The Future of Supply Chain.