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This Month in Logistics News (December 30 – January 5)

Later this month the nominees will be announced for the 2024 Oscars. One category that has always been interesting is Best Adapted Screenplay. This is the award for the best screenplay adapted from previously established material, including novels, stage plays, musicals, short stories, and TV series. The list of winners over the years has been very impressive. Some of my favorite winners include Forrest Gump, Sling Blade, Sideways, Brokeback Mountain, The Departed, No Country for Old Men, Slumdog Millionaire, The Social Network, and the Descendants. So it was interesting to learn that this year, Greta Gerwig and Noah Baumbach’s script for their summer blockbuster Barbie will be competing in this category at this year’s Academy Awards. The rationale is that the film was adapted from Barbie – as in the doll. This could be a steep hill to climb for the movie as it will likely be running against Martin Scoresese’s Killers Of The Flower Moon and Christopher Nolan’s Oppenheimer. And now on to this week’s logistics news.

Ocean cargo rates climb after new Red Sea ship attacks
SoCal warehouse emissions rule upheld by judge
Amazon announces plans to produce hydrogen at Its fulfillment centers
Walmart to invest $600m in Flipkart
Humanoid robots are now doing work of humans in Spanx warehouse
Driver pay data highlight earnings gain
Retailers brace for post holiday returns hangover

Ocean freight rates are surging after a missile attack and attempted hijacking of a Maersk ship this past weekend prompted carriers to suspend plans to restart transits through the Red Sea, a key artery to the vital Suez Canal trade route. Yemen-based Houthi militants have been attacking high-value cargo vessels in the Red Sea since November in a show of support for Palestinian Islamist group Hamas fighting Israel in Gaza. It has forced ships to reroute around the southern tip of Africa, driving up the cost for vessels for the longer voyage, though rates are still far below pandemic levels reached in 2021. Asia-to-North Europe rates more than doubled to above $4,000 per 40-foot container this week, with Asia-to-Mediterranean prices climbing to $5,175. Some carriers have announced rates above $6,000 per 40-foot container for Mediterranean shipments starting mid-month, and surcharges of $500 to as much as $2,700 per container could make all-in prices even higher.

A rule regulating emissions at Southern California warehouses, which the state’s trucking industry viewed as akin to a zero-emission vehicle (ZEV) mandate, has been upheld by a federal district court. In a ruling earlier this month, Judge John Kronstadt of the Central District of California rejected claims in a lawsuit filed by the California Trucking Association (CTA) that a warehouse emissions rule approved in May 2021 by the South Coast Air Quality Management District (SCAQMD) was preempted by the Federal Aviation Administration Authorization Act (F4A). The law has been a key point of argument in several legal cases involving the transportation industry on one side and the state of California the other, including litigation surrounding independent contractor law AB5. The CTA was later joined as a plaintiff by airline trade group Airlines for America (A4A). Its arguments were similar to those of CTA, though it cited the Airline Deregulation Act (ADA) as having set federal law that it believes preempted certain state actions. Its interest in the case is that airline cargo operations into Southern California make heavy use of the network of warehouses served by the area’s busy ports and airports.

In a sign of its commitment to hydrogen fuel cell lift trucks, Amazon last week announced that it has started producing its own hydrogen at one of its fulfillment centers. Amazon says it has worked with Plug Power – a company that markets a variety of hydrogen-related products – to install its first electrolyzer, a system that splits water molecules to produce hydrogen, at a fulfillment center in Aurora, Colorado. Plug Power also sells what it calls hydrogen engines that can fit into existing electric fork trucks. The Amazon announcement says the electrolyzer is supporting the needs of about 225 fork lift trucks deployed at the facility, though it actually has the capacity to power as many as 400 hydrogen fuel cell-based lift trucks. This is the first time Amazon has tried to make its own hydrogen on site. The alternative is to have hydrogen trucked into a facility, as has been the case at Amazon until now.

Indian e-commerce firm Flipkart’s biggest shareholder Walmart is set to infuse about $600 million in a new fundraise for the startup, a Flipkart spokesperson said. Flipkart is in talks to raise a total of $1 billion in fresh funds, the Economic Times reported earlier in the day, citing people with knowledge of the matter. New investors are also in talks to join the round and the latest funding is likely to value the Indian firm at a premium of about 5 percent to 10 percent to its current valuation of $33 billion, the ET report said. Walmart has been accelerating its growth in India since 2018, when it bought a 77 percent stake in Flipkart for about $16 billion, its biggest investment. Two years later, it committed to importing $10 billion of goods from India each year by 2027. Flipkart has grown to become one of India’s top online marketplaces, focusing on small towns and cities, unlike rival Amazon, which has more of an urban bend. Even with the new investments, it will still be shy of the near-$38 billion valuation that the company hit in 2021.

Women’s clothing brand Spanx is using a humanoid robot to work in its Georgia warehouse. According to the company behind the robot, GXO Logistics, it’s built to “work in human spaces and can be easily adapted to various warehouse tasks through software updates.” The robot stand 5 feet 9 inches tall, can lift 35 pounds, and features arms and legs that allow it to navigate around a warehouse. According to GXO, Digit works on repetitive tasks. Warehouse employees might notice it moving totes or placing boxes on a conveyor belt. Right now, the robot is just working in Spanx’s facility in Flowery Branch, Georgia, with the goal of reducing strain. GXO is calling it a “proof-of-concept pilot.” Ideally, the robot would complete simple duties for human workers. Instead of moving boxes, a Spanx warehouse employee can have Digit take care of the task. They would then be able to tackle a more advanced task.

The National Transportation Institute (NTI) recently released Q4 2023 driver pay data that shows driver earnings continue to climb in spite of the freight market undergoing a correction. Drivers’ base mileage pay brackets saw a shift, with the 40-to-50-cents-per-mile pay bracket falling 5.2 percent year over year as fleets raised wages to attract and retain drivers. The 50-to-60-cents-per-mile bracket saw a 6.1 percent y/y increase. Fleet wage growth also saw changes with cap pay. The report noted, “From 2020’s Q4 to 2022 Q4, drivers with 1 year and 3 years of experience saw the biggest per-mile wage gains. Since late 2022, however, the trend shifted. Cap earners, those with the most experience and highest base pay have seen the biggest percentage wage gains through 2023.” The report adds that new drivers to the industry with one year of experience are now earning more per mile in Q4 2023 than drivers in 2020 who had the most experience and base pay.

Americans are estimated to buy more than $5 trillion of goods this year, making the retail sector a crucial piece of the economy. Yet shoppers last year returned 16.5 percent of items they purchased online and in stores, valued at nearly $817 billion and double the percentage of goods returned in 2019, according to the National Retail Federation. For many retailers, that is a major problem, and will take over much of their attention after the holidays trigger a costly returns hangover. The returns eat into profit margins and force merchants focused so tightly on selling toasters, sweaters, washing machines and the other mainstays of store showrooms to cope with the unwieldy and unpredictable flow of goods coming back.

That’s all for this week. Enjoy the weekend and the song of the week, Barbie World by Nicki Minaj & Ice Spice.

The post This Month in Logistics News (December 30 – January 5) appeared first on Logistics Viewpoints.

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