American Eagle Outfitters Got Caught Up: when everything is going up and to the right faster than it ever has before, everyone thinks it's going to continue going up and to the right.

In 2021, the company bought Quiet Logistics, a venerable automated 3PL network for apparel merchants, started by Bruce Welty. This same year, the company acquired a 10 month old startup AirTerra, when it was convinced this startup could help democratize shipping rates and capabilities for small to medium shippers.

In 2022, the company launched a nationwide shipping network.

In 2023, just one year later, AEO had second thoughts about its logistics ambitions and forced out the head of its logistics unit due to profitability concerns. Sound like another well-known logistics company Flexport whose founder gave a new executive even less runway than a year?

Now American Eagle is "refocusing" away from being a general purpose carrier, and instead focusing more on its own brands and a few key customers. It's tough to fight the king.

Apparently logistics is more difficult and lower margin than people thought? 🤣

The list of retailers who should be logistics companies is very small, and dwindling. The list in the United States may be down to two: Walmart and Amazon.

Either way, the trends are clear in North America. Space is abundant, and consolidation is on the horizon as 3PL providers can't fill their spaces with declining volumes. Mostly because those bigger, bulky items were moving quickly during the pandemic. Now, smaller items are moving and most of the growth is due to parcels being injected into the US network from overseas like Temu and Shein.

Hard lines and big purchases are down, general merchandise is barely predicted to recover year over year.

It's not that supply chain is becoming less interesting or sexy, it's more than supply chain is becoming less interesting or sexy to those who shouldn't be attempting to be suppy chain players. Which leaves more innovation and interesting work for the dedicated folks who understood from the beginning --

No matter how sexy it might sound, logistics is low margin and efficiency gains are hard won. Invest accordingly.