Warehouse Wisdom. Weekly. 08/02/2024

Happy Friday!

As we all navigate the challenging economic times, freight recessions, and supply chain disruptions that have been prominent this year, we keep looking for a glimmer of hope that things are turning around. And while there are some small rays of sunshine, such as the inflation cooling, we don’t quite seem to be on the other side just yet. The latest sign – McDonald’s. With Americans tightening their belts—and their burger budgets—McDonald’s sales are slipping, with a nearly 1% dip in same-store sales globally.

While McDonald's scrambles to rethink their menu and pricing strategies, let’s update you with this week’s newsletter. We will cover how Walmart+ is closing the gap with Amazon Prime, states considering taxing delivery fees, global shipping surges with expanded Panama Canal and Arctic routes, cyberattacks being the biggest threat in the shipping industry, new technology wins for Walmart and Dallas, and more!

LOGISTICS VITALS

AMAZON PRIME LEADS, BUT WALMART+ GAINS GROUND IN RETAIL SUBSCRIPTION

Amazon Prime membership is soaring, but watch out because Walmart's membership is picking up steam! This year, the PYMNTS Intelligence Amazon Prime Day study included a survey of almost 6,000 US consumers to learn about their subscription and spending habits at Amazon and Walmart. Results show that even though more people are signed up for Amazon's paid membership, Walmart is catching up quickly. Let’s look at the numbers:

• 67.3% - members of Amazon Prime, a 3% increase from last year’s 65.4%,

• 30.2% - members of Walmart, over a 29% increase from last year’s 23.4%.

ONLINE MARKETPLACES

STATES EYE DELIVERY FEES, AMAZON RACES USPS, AND TIKTOK RISES

States and local governments always find ways to make money, even by taxing e-commerce. They've been collecting sales tax on online purchases for a while now. But now, states like Colorado, Minnesota, and Washington are getting creative. They're considering taxing the delivery fees for e-commerce packages to fund road repairs and other projects, they say. But guess what? People and businesses keep spending like crazy online. So, get ready for more deliveries and maybe more taxes.

Amazon is really pushing the delivery envelope and putting pressure on USPS. They're on a mission to speed up package deliveries across the U.S. and reduce their reliance on the postal service in rural areas. They're taking over rural America bit by bit by using super-efficient warehouses, contracted drivers, and local stores. Amazon isn't aiming to reach every U.S. customer just yet, but they've got their eyes set on around 90% for now. If Amazon thinks they can deliver faster than USPS, they're going for it, no questions asked.

And Amazon is feeling pretty proud of itself, boasting about how fast its Prime deliveries are now. They claim to have made over 5 billion same-day or next-day deliveries this year - a staggering 30% increase from last year, setting a record. To achieve this, Amazon expanded its same-day delivery service to over 120 metro areas in the U.S. and made deliveries shorter by regionalizing its fulfillment network.

But…Amazon has also been deemed responsible for hazardous third-party items. The U.S. government agency said Amazon was a "distributor" of faulty and unsafe items sold on its site. This means Amazon must recall over 400,000 products like bad hairdryers and bad carbon monoxide detectors. The agency wants Amazon to notify customers who bought these items and take them out of circulation by offering incentives for their return or destruction. Apparently, Amazon didn't do a good job of telling people about these dangers and not doing enough to get them back, putting people at risk of getting hurt. While they're busy dominating delivery times, they might want to ensure that their next-day service doesn’t come with a side of faulty and unsafe items.

Not selling on TikTok? It may be time to rethink the strategy despite the risks. This new wave of social commerce blends seamless in-app shopping and viral trends, giving brands a fresh income source and creators a fun way to make money through monetization. With Gen Z flocking to TikTok for product discovery and sales, not being on this platform is like missing out on a big slice of the e-commerce pie! Who knew Americans were spending millions daily and creators were raking in cash from affiliate partnerships on TikTok?

INTERNATIONAL FREIGHT

FROM SOARING AIR CARGO AND PANAMA CANAL BOOSTS TO ARCTIC ROUTES AND CYBER THREATS

IATA's June 2024 data reveals the air cargo market is soaring, with a 14.1% rise in demand for cargo ton-kilometers—marking seven months of impressive double-digit growth. While global manufacturing shows expansion and inflation rates play a global game of hide-and-seek, the North American carriers lag a bit with a 9.5% growth. It looks like the air cargo industry is flying high, even if some regions are still catching their breath.

Get ready to see more boats cruising through the Panama Canal! In September, they're upping the daily transit slots from 34 to 36. This good news comes as rain finally ceases their drought troubles. It's a relief that things are returning to normal.

In the meantime, some container ships are even taking dangerous Arctic shortcuts to avoid the Red Sea. Two Chinese container ships, are on their way to the Arctic. They are hoping to take a shortcut using Russia's Northern Sea Route to get from China to Europe faster. This route also helps them avoid the waters of the Red Sea and the long way around the Cape of Good Hope. But wait, there's a catch - while some parts of the route are ice-free in the summer, the East Siberian Sea might need an icebreaker escort for the not-so-strong ice-class vessel. A chilly adventure awaits these brave ships.

Power surges and outages at the Port of Los Angeles are making it hard to switch to electric machinery. Imagine trying to phase out diesel when cranes and cargo equipment keep getting knocked out by power surges and lulls! Terminal operators are scratching their heads, wondering how the port plans to meet its goal of phasing out diesel machinery by 2030 mandate with such unreliable power.

And like we need another disruption in supply chains, right? Cyberattacks are now the biggest threat the shipping industry has faced since WWII! According to research from the Netherlands’ NHL Stenden University of Applied Sciences, there were 64 cyber incidents in the industry last year alone, and the numbers are only going up. The study found that over 80% of known attackers since 2001 were from Russia, China, North Korea, or Iran. Shipping experts are sounding the alarm, saying the industry, used to dealing with pirates, isn't quite ready for online threats.

DOMESTIC SHIPPING

E-COMMERCE EXPECTATIONS SOAR AS SHIPPING SERVICES EXPAND AND FREIGHT INDUSTRY STRUGGLES

Consumers these days want their online orders fast and free, thanks to all that online shopping. If retailers can't keep up, consumers will look elsewhere - no mercy! The 2024 U.S. Consumer & Executive Home Delivery Survey found that people now expect their orders in just 3.5 days - two days faster than before. So, better get those packages moving, or else.

FedEx is upping its game with the expansion of its FedEx International Connect Plus (FICP) service. Now, e-tailers can use FICP to send packages to U.S. and European destinations, in addition to Asia-Pacific markets. This expansion aims to fuel the growing e-commerce trend from Asia to the U.S. and Europe. E-commerce sales in Asia are on track to hit $13.209 billion by 2030, growing at a solid 17.6% CAGR from 2023 to 2030. FedEx means business when it comes to making shipping smoother and more accessible for e-tailers around the globe!

And truck company closures are causing stress in the freight industry, which is still reeling from COVID-19. No trucking company is safe in this economy, not even the big giants like Yellow Corporation. With 73% of the nation's freight moving by trucks, businesses relying on them are concerned.

WAREHOUSE TECH

WALMART INVESTS $200M IN ROBOTIC FORKLIFTS AS DALLAS PREPARES FOR DRONE DELIVERIES

How much is it going to cost a retail giant to go big tech in the warehouse? For Walmart, it’s $200M for self-driving forklifts. Big spender Walmart is dropping $25 million on Fox Robotics, an Austin-based startup. They're eyeing up hundreds of autonomous forklifts, aka "FoxBots." This investment in autonomous forklifts is all part of Walmart's plan to use robots to keep their shelves stocked, save money, and offer killer deals to shoppers.

Next month, Dallas residents will witness a cool milestone - drone delivery from multiple companies. Wing Aviation and Zipline International will be flying drones over the suburbs of Dallas and Fort Worth in tandem. The FAA gave them the green light to fly without visual observers, using tech to navigate and avoid collisions. Initial flights are expected to start in August, with more companies getting approval soon. Imagine faster, eco-friendly deliveries straight to your doorstep, beating traditional methods like vans. Get ready for the drones in the sky!

WAREHOUSE AND LOGISTICS JOBS

POST-PANDEMIC STUDENTS TRANSFORM SUPPLY CHAIN MANAGEMENT

The wave of post-pandemic supply chain students are taking their life lessons to school. After surviving the chaos of the pandemic, the students are diving headfirst into supply-chain management studies. They've seen it all, from the Suez Canal blockage to empty store shelves. These soon-to-be graduates have unique and fresh perspectives shaped by pandemic struggles, forcing universities to up their supply-chain game. With the Bureau of Labor Statistics predicting a logistics job boom, these students are ready to shake things up with their focus on risk management and creative solutions.

WAREHOUSE QUICK DELIVERIES

C.H. ROBINSON SELLS EUROPEAN BROKERAGE, CHINESE SUPPLIERS CLASH WITH TEMU, AND MORE…

• C.H. Robinson to Sell its European Brokerage Operations

• Chinese Suppliers Storm Temu Offices For Harsh Policies

• 3PL Revenues See Significant Declines