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This Week in Logistics News (August 26 – September 1)

As Labor Day approaches, I can only think about kids going back to school. And when I think of going back to school, I think of a rite of passage that most kids enjoyed: watching the Price is Right on a sick day. Earlier this week, longtime host of the Price is Right, Bob Barker, passed away at the age of 99. Barker started his career with a radio show before becoming the host of Truth or Consequences in 1956. And when Mark Goodson and Bill Todman began shopping a modernized revival of The Price Is Right, Bob Barker joined on as the host, a role he would hold until his retirement in 2007. In what can only be described as classic moment, and as today’s lead image shows, Bob Barker once welcomed Aaron Paul, the actor who would portray Jesse Pinkman on Breaking Bad, to the stage. Aside from watching him on the show, Bob Barker made one of the greatest movie cameos of all time, playing in a ProAm, and then fighting Adam Sandler in the movie Happy Gilmore. He was an animal rights activist and a member of the Television Hall of Fame as well as the Broadcasting Hall of Fame. And now on to this week’s logistics news:

July cargo volumes decline most ports
Walmart delivery includes new drone partner
FedEx, UPS pull back July cargo flights amid weak volumes
Amazon in the news:

Amazon raises free shipping minimum
Amazon delivery drivers in Denver undergo one-of-a-kind training

Instacart files to go public
Mexico truck driver strike delayed after officials, carriers reach deal

Cargo freight volumes in July remain depressed and well below 2022’s record levels, especially at West Coast ports. The Port of Los Angeles, which is vying with the Port Authority of New York and New Jersey to be the nation’s busiest facility, saw a 25.8% year-over-year decline, processing 684,290 20-foot-equivalent containers. Last July, the port processed 935,423 TEUs. “Global trade has eased as warehouse inventories of retailers and manufacturers remain elevated,” Port of Los Angeles Executive Director Gene Seroka said. “American consumers are continuing to spend and are likely to find more discounted items this year as we move into fall fashion and year-end holiday season.” This year the twin complexes at Los Angeles and Long Beach, Calif., have seen volumes drop dramatically also because of the slow pace of contract talks between the International Longshore and Warehouse Union and Pacific Maritime Association. Those negotiations resulted in a tentative agreement that is now undergoing a ratification vote.

Walmart is expanding its commitment to drone delivery with the addition of Wing, an on-demand provider powered by Google’s parent company Alphabet, as one of its partners. In the coming months, the service will be offered from two stores in the Dallas metro area. Wing’s service from the two Texas locations will enable Walmart to reach 60,000 additional homes that are within a 6-mile range of the select stores. The retailer has an existing network of 11 drone hubs already operating in the Dallas area. Once the service is operational, customers can use the Wing app to determine if their home is within the drone delivery range. They can then order items ranging from frozen treats and household essentials to last-minute meal solutions and even fragile items like eggs.

The number of package flights operated by FedEx Express and UPS significantly declined month over month in July, underscoring how far the overall air cargo market has sunk since the spring of 2022 and the effect of efficiency initiatives the companies have undertaken in response to lower express volumes. FedEx flew 9 percent fewer domestic flights last month than in June following small sequential gains the prior two months, with year-over-year flight activity down 14 percent, according to an analysis by investment bank Morgan Stanley. The year-over-year decline in UPS’ flight activity accelerated to 13 percent from 10 percent in June. UPS reduced July flights by 14 percent from June. Flight activity in May and June, by comparison, was relatively stable. FedEx and UPS have previously declared they are reducing flight activity to match lower volumes in parcel shipments, while FedEx is also streamlining its air infrastructure as part of a multiyear effort to take out structural costs and improve profit margins.

Amazon has started increasing the free shipping minimum to $35 for non-Prime members in some markets, according to notices on its website, as the company looks for more ways to cut costs. Until now, the minimum purchase for free shipping has been $25. Prime subscribers, who pay $139 a year for free shipping and other services, will see no change. Raising the free shipping threshold could push more shoppers to sign up for the Prime membership program, which includes free, two-day delivery; access to streaming services; and other perks. In 2021, Amazon said it had more than 200 million Prime subscribers globally. Subscription services, which include Prime memberships, generated about $9.9 billion in revenue, according to Amazon’s latest quarterly earnings report. Amazon has tweaked the free shipping threshold for non-Prime members in the past. In 2016, it raised the minimum to $49 from $35, then reverted back to the earlier threshold a year later before dropping the minimum down to $25 in an effort to compete with Walmart+.

Before an Amazon delivery driver ever drops a package on someone’s doorstep in metro Denver, they have likely gone through a three-day course developed locally, one that could eventually serve as a model of delivery driver training across the country. The Last Mile Delivery Academy is at 6150 N. Downing St. in unincorporated Adams County in a former distribution center. It has classrooms, virtual reality simulators and an indoor driving course, complete with facades of porches and parking lanes. All of it is designed to help drivers deliver packages more efficiently and safely. Drivers spend the first day at the academy in classrooms and working through virtual reality simulations of scenarios that could come up, including de-escalating confrontations with customers, handling hostile dogs and traversing icy sidewalks. The second day involves driving vans around an indoor track, complete with porch facades, with a trainer sitting nearby. The third day involves going out on the streets with a trainer.

Instacart, the grocery delivery company that slashed its valuation during last year’s market slide, filed its paperwork to go public on Friday in what’s poised to be the first significant venture-backed tech IPO since December 2021. The stock will be listed on the Nasdaq under the ticker symbol “CART.” In its prospectus, the company said net income totaled $114 million, while revenue in the latest quarter hit $716 million, a 15 percent increase from the year-ago period. Instacart has now been profitable for five straight quarters, according to the filing. PepsiCo has agreed to purchase $175 million of the company’s stock in a private placement. Instacart said it will continue to focus on incorporating artificial intelligence and machine learning features into the platform, and that the company expects to “rely on AIML solutions to help drive future growth in our business.” In May, Instacart said it was leaning into the generative AI boom with Ask Instacart, a search tool that aims to answer customers’ grocery shopping questions.

The threat of a nationwide strike and protests by cargo truck drivers in Mexico has been postponed after federal authorities showed a willingness to listen to the truckers’ demands, according to officials from the Mexican Alliance of Carrier Organizations (AMOTAC). AMOTAC had scheduled demonstrations across the country for Tuesday and Wednesday, aiming to spotlight issues affecting truck drivers: cargo theft and violence, higher operating costs, complicated vehicle registration, excessive toll fees, extortion by authorities and more. One of the major agreements includes the country’s National Guard meeting monthly with AMOTAC officials to create enhanced safety measures on the country’s roadways to combat cargo theft. The National Guard oversees protection of Mexico’s highways.

That’s all for this week. Enjoy the weekend and the song of the week, in honor of the sick day, Girl, You Have No Faith in Medicine, by the White Stripes.

The post This Week in Logistics News (August 26 – September 1) appeared first on Logistics Viewpoints.

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