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This Week in Logistics News (December 2 – 8)

I saw an article recently about a cargo flight headed to Belgium from New York that had to turn around mid-flight. Now, these types of things happen for a variety of reasons, but in this instance, it was something I had never heard of before. A horse escaped from its stall and was loose in the hold. The pilot called air traffic control in Boston and reported: “We don’t have a problem as of flying-wise but we need to return, return back to New York. We cannot get the horse back secured.” The pilot said that due to the plane’s weight, he had to dump 20 tons of fuel before going back to New York. The controller gave the OK and alerted nearby pilots about a “fuel dumping in progress approximately 10 miles west of Martha’s Vineyard.” The 747 pilot had one more request. “I do believe we need a vet — veterinarian, I guess you call it, for the horse upon landing,” he said. “Is that something you can speak to New York about?” The flight landed at Kennedy, took off a short time later and successfully arrived at Liege Airport the next morning. And now on to this week’s logistics news.

FedEx, UPS snag Black Friday volume share from regional carriers
Amazon revises numerous seller fees
Tariffs on aluminum have cost US beverage industry $2b
Zero emission cargo ships are getting closer
Faced with high returns, retailers are telling shoppers: “Just keep it.”
US to limit Chinese firms, battery parts from winning EV tax credits
US finalizes rule targeting oil, gas methane emissions

When the pandemic hit, e-commerce growth soared, and national carriers struggled with capacity issues. In turn, many shippers turned to smaller regional carriers to help overcome this issue. But delivery demand has cooled off this year, and FedEx and UPS are offering up rate discounts to draw more volume into their networks. National carriers like FedEx and UPS grabbed a larger share of volume from regional delivery providers on the busy shipping week of Black Friday than last year, according to emailed data from Shipium. From November 20 to November 26, 49 percent of volume on the multi-carrier shipping platform went to national carriers, with the remainder being handled by regionals. National carriers’ share jumped from the same period in 2022, when they handled just 31 percent of volume on the platform.

Amazon is sharply cutting fees for merchants selling clothing priced below $20, a sign it’s hunkering down for a price war with Chinese fast-fashion upstart Shein. On Tuesday, Amazon announced it would reduce seller fees on clothing products priced below $15 to 5% beginning in January. The rates on clothing priced from $15 to $20 will drop to 10 percent. The commissions on both categories had previously been 17 percent. It’s rare for Amazon to reduce the so-called referral fees it charges merchants on its online store, and no other changes of that nature were announced. That signals Amazon is specifically looking to entice merchants offering low-cost clothes — an area where Shein has excelled with its $9 hoodies and other bargain-basement apparel. Amazon dominates US e-commerce by capturing more than $1 of every $3 spent online, making it about six times bigger than closest online competitor Walmart Inc., according to Insider Intelligence. But it faces new threats from companies with ties to China.

New research reveals that aluminum tariffs continue to drive up costs for American businesses and American families. In the nearly six years since Section 232 tariffs on aluminum were imposed, the American beverage industry has paid more than $2.175 billion in fees. The research conducted by HARBOR Aluminum on behalf of the Beer Institute found that the U.S. beverage industry paid $2.175 billion in Section 232 tariffs on 10.295 million metric tons of aluminum since their implementation. Of that amount, only $135 million (6 percent) went to the U.S. Treasury. HARBOR Aluminum estimates U.S. rolling mills, U.S. smelters and Canadian smelters received $2.04 billion (94 percent) of the total by charging end-users – such as U.S. brewers – a tariff-burdened price regardless of whether the metal was meant to be tariffed based on its content or origin. Imported primary aluminum and cansheet are critical to the U.S. beer industry as more than 74 percent of all beer produced in the United States is packaged in aluminum cans and bottles. In 2020, brewers bought more than 41 billion aluminum cans and bottles, making aluminum the single most significant input cost in American beer manufacturing.

The world’s first cargo ship that produces nearly zero planet-heating pollution is on track to set sail in 2026, according to one of the firms behind the project. Fertilizer producer Yara International and its partners plan to power the Yara Eyde — which is yet to be built — mostly with clean ammonia, meaning it should emit 95 percent less carbon dioxide (CO2) than the average fossil fuel-powered vessel, the Norwegian company said. The production of ammonia typically involves heavy use of fossil fuels, such as coal and natural gas, and emits vast quantities of CO2. The process releases nearly twice as much CO2 per metric ton (1.1 short ton) of ammonia as the manufacturing of crude steel, and four times when compared with cement, according to the International Energy Agency. However, Yara Clean Ammonia plans to provide a mix of “blue” and “green” ammonia for the Yara Eyde. In “blue” ammonia production, CO2 emissions are captured at the source and stored underground, while “green” ammonia is made using renewable electricity.

A lot of that shopping is happening online. And with online shopping often comes the expectation of free returns if the item you ordered isn’t quite right. But there’s now a decent chance that if you want to return an item, the place you bought it from might just say, “keep it.” As Reuters first reported this week, “return-less refunds” or “keep it” return policies have now been adopted by 59 percent of major retailers. That data’s from a survey by the return logistics company goTRG. These policies make economic sense for retailers, but they might not want to tell you about them. The reason behind this shift in thinking is the burdensome and costly nature of processing returns. First, it is expensive to pay for returns shipping. On top of that, unpacking and reviewing the item to see if it can be resold, and then if it can be resold, going in and restocking it on their shelf takes time and money. For now, some retailers are better off just letting you keep the item.

The Biden administration has issued-long awaited guidance that will limit Chinese content in batteries eligible for electric vehicle tax credits starting next year. In a win for automakers, the U.S. Treasury will temporarily exempt some trace critical minerals from new strict rules barring materials from China and other countries deemed a “Foreign Entity of Concern” (FEOC).  The new rules, required under an August 2022 law, are designed to wean the U.S. electric vehicle battery chain away from China and are being closely watched by automakers as they make investment decisions on producing batteries for their transition to electric vehicles. The FEOC rules come into effect in 2024 for completed batteries and 2025 for critical minerals used to produce them. The Alliance for Automotive Innovation, a group representing nearly all major automakers, said the decision to exempt trace materials for two years “was significant and well-advised” and without it could have made nearly all vehicles ineligible. Treasury said the few materials being exempted each account for less than 2 percent of the value of battery critical minerals.

In other Biden administration news, a final ruling was issued aimed at reducing methane emissions, targeting the U.S. oil and natural gas industry for its role in global warming as President Joe Biden seeks to advance his climate legacy. The Environmental Protection Agency said the rule will sharply reduce methane and other harmful air pollutants generated by the oil and gas industry, promote use of cutting-edge methane detection technologies and deliver significant public health benefits in the form of reduced hospital visits, lost school days and even deaths. Air pollution from oil and gas operations can cause cancer, harm the nervous and respiratory systems and contribute to birth defects.

That’s all for this week. Enjoy the weekend and the song of the week, Wild Horses by the Rolling Stones.

The post This Week in Logistics News (December 2 – 8) appeared first on Logistics Viewpoints.

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