Once again Walmart is flexing its logistics muscle by instituting a new policy that could hit carriers with extra fees for late deliveries as well as early or improperly packaged deliveries.
The new policy named “On-time, In-full,” could bolster the companies revenue by one billion dollars, but many in the logistics industry are viewing it as bullying the carriers and compromising safety.
The extra revenue will not be the result of the new fees but by providing availability of products at the Walmart stores.
“A year ago we shared these same on-time and in-full delivery goals with suppliers and asked them to begin preparing,” said Ryan Curell a Walmart spokesperson. “We will phase these changes in over the course of this year, working closely with our vendors to help reach these targets. We know that when products we’ve ordered arrive on time, it results in happier customers.”
Both carriers and shippers, who fall below the established thresholds of the new Walmart program, will be affected. Products with a one-day delivery window, such as food, consumables and health products, must be within that time frame 75 percent of the time. If not, Walmart will deduct 3 percent of the invoice value of the improperly delivered loads. That is 3 percent of the actual value of the contents of the loads, not the shipping costs. The same policy applies to general merchandise, which has a three-day delivery window.
Determining if the late, early or improperly packaged load was the fault of the carrier or the shipper will be the deciding factor in who gets hit with the fee. In some cases the a problem will be Walmart’s fault, so the retail giant has refined a scoring system that determines reasons for non-compliant deliveries and will levy fines only to carriers or shippers found to be responsible.
In an interview with Bloomberg, Kendall Trainor, a senior director of operations support at Walmart said, “variability is the No.1 killer of the supply chain.”
The program was scheduled to go into effect by the end of August 2017.
The Adverse Effects on Public Highway Safety
The new program implemented by Walmart could send a ripple effect throughout the supply chain, given the size and scope of Walmart’s logistics operations coupled with the changes that will likely be needed by the carriers and shippers to combat being hit with the retailers new fees. This is according to Matt Elenjickal, CEO of fleet management software provider Four Kites.
“There’s a cascading effect that is created,” Elenjickal says. “Getting drivers and trucks on time to move the products, and make sure the product is available on the shelf without delay, will cause a big upstream impact.”
The Federal Motor Carrier Safety Administration (FMCSA) and other U.S. regulators should closely monitor the effects of Walmart’s new policy on commercial carrier and highway safety. The pressure could coerce drivers to exceed the allowable number of hours worked without a proper break, resulting in fatigue and compromising the safety of the public. Walmart and it’s executives should be held legally accountable for any adverse affects created as a result of the intense pressure it is placing on it’s suppliers and carriers.
Vititoe Law Group is a personal injury law firm dedicated to making our roads and highways safer. Trucker fatigue is a leading cause of highway fatalities and serious injuries. It was only one year ago that actor Tracey Morgan settled a claim against Walmart, for an undisclosed amount, involving a sleep deprived trucker that slammed into his bus, killing comedian James McNair and severely injuring Mr. Morgan. Was no lesson learned from that tragedy?
If you or a loved one have been injured or you lost a loved one in a accident involving a commercial vehicle, contact Vititoe Law today for a free consultation. You may be entitled to a significant cash award. Call 818-991-8900 today.
