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This Week in Logistics News (January 6 – 12)

This was a very interesting week as we saw a number of long-lasting partnerships come to an end. As a New England Patriots fan, this season was certainly disappointing, as everything seemed to go wrong, except for landing a top-3 draft pick in 2024. In a move that was not surprising, but still seems so wrong, the Patriots and legendary coach Bill Belichick mutually agreed to part ways. This ends Belichick’s 24-year tenure with the team that resulted in 17 division titles, 9 AFC championship titles, and 6 Super Bowl titles. It will certainly be strange to see Belichick don the cutoff hoodie on another sideline, but there will be no shortage of suitors, I’m sure. But this is not the only major split this week. After more than 27 years, Tiger Woods and Nike have officially ended their partnership. It will be interesting to see what logo is on Tiger’s red jersey the next Sunday that he plays. Nick Saban shook the college football world when he announced his retirement from Alabama. In all, Saban led Alabama to 6 national titles in a 17-year coaching career at the university. And finally, after 18 years at ARC Advisory Group, our colleague Clint Reiser is moving on to the next phase of his career. While we are sad to see him go, we wish him nothing the best. And now on to this week’s logistics news.

Walmart unleashes ‘largest drone delivery footprint of any U.S. retailer’
Amazon successfully shipped more last-minute holiday products this year than in 2022
DHL urges companies to tweak inventory plans due to Red Sea disruptions
December imports surprisingly high amid Panama, Suez Canal woes
How supply chain snarls made everyone wrong on inflation
Truck transportation jobs trend higher while warehouses shed workers
Port of Virginia enters 2024 as the first US East Coast port powered by 100% clean energy

Walmart is expanding its drone delivery service, claiming it now has the largest drone delivery footprint of any U.S. retailer thanks to partnerships with Wing and Zipline. Wing and Zipline are drone delivery providers and will allow Walmart to cover 75 percent of the Dallas-Fort Worth population as stores in 30 towns and municipalities will now offer drone delivery service. Wing already handles drone deliveries at Walmart Supercenters in Frisco, Texas, and the Dallas area. Both Wing and Zipline have been approved by the FAA to fly drones Beyond Visual Line of Sight, which means a dedicated observer does not have to always watch the drones. This allows the coverage to be extensive. Walmart has tested its drone delivery service over the last two years and claims to have made over 20,000 safe deliveries. The retailer says snacks and beverages are the most popular items sent by drone. The delivery radius for stores offering the service is up to 10 miles.

In 2023, Amazon experimented with new logistics strategies and technologies to quickly fulfill and deliver orders, and these changes paid off big. Amazon shipped last-minute Christmas gifts faster in 2023 than in 2022, according to data from analyst firm Momentum Commerce. By analyzing two groups of over 500,000 products on Amazon U.S. between December 15th and December 25th, Momentum Commerce found that the share of products with an “Arrives after Christmas” tag in Amazon’s Buy Box in 2023 was 10.2 percent versus in 2022, where 17.6 percent of U.S. products on the platform warned it would ship after Christmas. Amazon has made significant investments to make delivery times faster. The faster delivery times this year specifically may be attributed to changes in Amazon’s logistics strategy. In 2022, the company shifted away from national fulfillment to a regionalized network model.

German logistics giant DHL Group is advising customers to take a close look at how they manage inventories as shippers switch away from the Red Sea, though trade associations said they did not expect any notable disruptions for Europe’s top economy. DHL Group does not operate ships but it uses them to transport containers. The German company offers planes, trains and trucks to move goods globally. This has become trickier since shippers such as Maersk  and Hapag-Lloyd  have recently rerouted ships away from the Red Sea – the shortest route from Asia to Europe via the Suez Canal – after vessels have come under attack from militants. On Monday, both Hapag-Lloyd and Maersk said they had not entered agreements with Iranian-backed Houthi militants to prevent their ships from being attacked in the Red Sea going forward, denying a report in a trade portal.

Given the amount of trade disruption it would seem logical that US import would fall. However, according to data from Descartes, the opposite is true. The U.S. imported 2,107,012 twenty-foot equivalent units of containerized goods in December, up 0.4 percent from November and up 9.2 percent year on year. A drought in Panama significantly reduced transits of larger Neopanamax-class container ships in November and December, with transit constraints intensifying last month. Container vessels that traditionally used the Panama Canal to bring Asian goods to East and Gulf Coast ports switched to the Suez Canal. Those ships then rerouted from the Suez Canal to longer voyages around the Cape of Good Hope, with diversions starting in late November and accelerating in recent weeks. Intuitively, this should have led to some pressure on U.S. import volumes in December, with weakness centered on East and Gulf Coast ports, as had been the case in November. Instead, the data points to continued import strength in December versus November, driven by higher volumes to East and Gulf Coast ports, with these ports sequentially outperforming those on the West Coast.

When it comes to inflation forecasting, pretty everyone had it wrong. New research suggests that a misunderstanding of what was happening with global supply chains might be part of why. When U.S. inflation first began to heat up in 2021, it was written off by many economists as largely a temporary thing. The interaction of reopening economies with the supply-chain snarls the pandemic had set off caused a burst higher in prices that wouldn’t last. Or, as Federal Reserve policymakers put it when they left rates on hold near zero in November 2021, “Inflation is elevated, largely reflecting factors that are expected to be transitory.” As 2022 got under way, the New York Fed’s Global Supply Chain Pressure Index showed the shipping snarls that had beset the economy were getting untangled. By September 2022, it was back to pre-pandemic levels. But inflation kept running hot: That same month, the Commerce Department measure that the Fed prefers showed that prices excluding food and energy were up 5.5 percent from a year earlier, just shy of the 39-year high it hit that February.

Truck transportation jobs continued a slow recovery from the depths of the freight recession and the job losses created when Yellow Corp. went out of business in 2023. The December figures released by the Bureau of Labor Statistics on Friday showed that seasonally adjusted truck transportation jobs rose 3,300 last month, rising to 1,586,300 jobs. That increase also was fueled by upward adjustments in the earlier-reported figures for November and October. As a result, the December figure was 5,700 jobs more than the “final” figure for October of 1,580,600 jobs. The other significant trend this year has been the continued loss of jobs in the warehouse sector. Seasonally adjusted employment in the warehouse sector has declined in 16 of the last 17 months. In the one month it didn’t drop, it was unchanged. Figures in the latest report showed a relatively restrained decline. Jobs in the warehouse sector were down 4,900 jobs. That’s the fourth smallest monthly decline in 2023, but the end result is stark: Warehouse sector jobs in December 2022 stood at 1,933,400 jobs. A year later, they were 1,851,200 jobs, a drop of 82,200 jobs.

The Port of Virginia has become the first US East Coast port powered by 100 percent clean energy, achieving its clean energy goal eight years ahead of schedule. Today, the port is powering all its terminals with electricity from clean resources and accelerating its goal of becoming carbon-neutral by 2040. Using clean electricity helps the port offset its carbon footprint by reducing carbon emissions 45 percent per container. The reduction comes in two target areas, scope 1 and 2 emissions. This milestone demonstrates the port’s commitment to supporting sustainability in Virginia. In addition, the accomplishment puts the port eight years ahead of its original 2032 goal of using clean energy to power operations, an integral step in reaching its net-zero by 2040 commitment.

That’s all for this week. Enjoy the weekend, and the song of the week, It’s So Hard to Say Goodbye by Boyz II Men.

The post This Week in Logistics News (January 6 – 12) appeared first on Logistics Viewpoints.

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