Warehouse Wisdom. Weekly. 08/17/2024

Happy Friday!

Looks like we can finally catch a break—sort of. Thankfully, inflation decreased in July. The U.S. inflation dropped to 2.9%, making a strong argument for the Federal Reserve to lower interest rates in September. The consumer price index's yearly increase was only 0.1 percentage points lower than in June, defying economists' predictions of a steady 3% rate. This is the first time CPI has dipped below 3 percent since March 2021.

But, just when we thought we could catch our breath with inflation finally cooling down, the global trade winds shifted up again as the explosion in a China port caused ripples in trans-Pacific container trade. The explosion resulted in the closure of Ningbo Beilun’s Phase III Terminal and is expected to have a big impact on the main trans-Pacific trade lanes from Asia and the entire supply chain during peak shipping season.

As the economic landscape keeps us on our toes, here’s a quick rundown of the major stories shaping the week. Mexico takes the crown as a top trading partner with the U.S., shippers face dual disruptions, the rising costs of getting packages delivered, marketplaces race in AI implementation, Amazon faces the NLRB challenge, Pitney Bowes closes its e-commerce logistics unit, and more.

LOGISTICS VITALS

U.S. MEXICO TRADE HITS ALL-TIME HIGH FOR THE PERIOD

Mexico and the U.S. hit a whopping $415.4 billion in trade from January to June! That's the highest total ever for that time period, according to the Census Bureau. Let’s take a closer look at the numbers of this trade report:

• $382.6 billion - Canada’s trade with the U.S. during the first six months of the year.

• $269.2 billion - U.S. trade with China during the first six months of the year.

• $69.93 billion - Mexico’s trade with the U.S. in June, marking a 2.1% increase from the same month in 2023.

Mexico has once again taken the crown as the top trading partner with the U.S. This marks their sixth consecutive month and 16th out of the past 17 months in the No. 1 spot. Who knew they were such big trading buddies? But, hey, remember from earlier reports - could it be that China is sneaking products into the U.S. through Mexico?

FREIGHT

CANADA RAILWAY STRIKE LOOMS, WALMART EXPANDS OCEAN SHIPPING, AND CHINA BOOSTS EXPORTS BEFORE TARIFFS

Shippers - brace yourselves once again for Canada railway strike! Canada's main railway companies, Canadian National Railway and Canadian Pacific Kansas City, are both about to go on strike at the same time, causing potentially big economic damage. Talks between the rail companies and the Teamsters union are stuck. If a labor deal isn't reached, workers will be locked out on Aug. 22, or there might be a strike instead. Industry groups are pleading with Trudeau's government to prevent this chaos, highlighting the massive economic impact.

Walmart is now letting all Walmart Fulfillment Services sellers use their ocean shipping service! Walmart Marketplace sellers can now send their China-made goods to Walmart's U.S. fulfillment center network. It's called Walmart Cross Border, and it's a port-to-door freight service from China to the U.S. But wait, there's a catch - this service is only for WFS sellers who source or manufacture goods in China, and the cargo must be shipped from specific ports in Yantian, Shanghai, or Ningbo. Once the cargo reaches the U.S., it goes straight to a Walmart fulfillment center. This seller marketplace is just one part of Walmart's grand plan to be more than your average retailer!

China is showing off its manufacturing prowess as companies rush to ship before tariffs hit. The ocean peak season, normally August to October, is seeing a jump in imports from China. Tariffs were supposed to start on August 1 but got delayed, causing shippers to move up their shipments to avoid the charges. Now, China makes up 40.7% of all U.S. imports, with a 4.5% increase in volumes from last year. Looks like they're not slowing down anytime soon!

MARKETPLACES

TRADE TENSIONS, TECH UPGRADES, AND AI SHOWDOWNS

U.S. lawmakers are making life harder for China’s e-commerce giants. U.S. lawmakers are playing hardball with retailers like Temu and Shein by proposing a new law to restrict a trade provision that lets goods flow in from China easily. The bill would stop textiles and apparel from coming in through a provision called ‘de minimis’. It also suggests adding a $2 fee for each shipment that doesn't fall under the banned category for this route. Looks like China’s e-commerce giants might need to rethink their strategies and add a few extra dollars to their shipping budgets!

eBay has decided to jazz up its search experience to make it easier to use and more visually appealing. They've gone all out with larger, high-resolution images and a sleeker layout. After 18 months of research and testing, this new user experience (UX) is finally ready to go. And guess what? eBay plans to use AI and machine learning to make even more improvements soon. So get ready for a more personalized and smooth sailing shopping experience for everyone involved.

But of course, eBay is not the only one planning to use AI. Walmart vs. Amazon is also in the race to implement AI. With tools like Rufus and SCOT, Amazon has AI for customer reviews, product discovery, inventory, and last-mile optimization. On the other hand, Walmart uses AI for product comparisons, generative search, and inventory, and they've got autonomous forklifts, too! These giants are battling it out to streamline operations and make customers happy, all with AI leading the charge. Who will come to the top in this AI race?

SHIPPING

HOLIDAY HIKES AND SHIPPING SUPRISES: THE RISING COSTS OF GETTING PACKAGES DELIVERED

The U.S. Postal Service's speedy package delivery services are taking a hit, as shown in the latest quarterly results. Priority Mail Services saw a huge 40.7% drop in volume compared to last year. This includes both Priority Mail and Priority Mail Express. Shippers are now opting for slower parcel delivery services to cut down on shipping costs. It's a smart move, considering they're stocking inventory closer to end consumers, and carriers are stepping up their game in ground transportation.

And, it looks like Amazon and UPS are getting into the holiday spirit by giving rate hikes for the 2024 shopping season. Amazon's holiday peak fulfillment fee will be in place from October 15 to January 14, affecting services like FBA and Buy with Prime, with a new fee for items under $10 in the U.S. UPS is also getting an early start on their surcharges this year, with extra fees for bulky items kicking in on September 29 and demand surcharges for key services peaking between November 24 and December 28. 'Tis the season for fees!’

Get ready to dig a little deeper into your pockets with Air Canada Cargo's new ground handling charges. Starting September 1, you'll be dishing out $120 per shipment for import termination and customs clearance in Canada. And at select U.S. locations like Boston, Chicago, Los Angeles, and San Francisco, get ready to pay $140 per shipment. Oh, and don't forget about those storage charges in Chicago and Los Angeles - they're going up, too. Check out Air Canada Cargo's fees page for current rates before the changes kick in.

WAREHOUSE LABOR

AMAZON FACES NLRB CHALLENGE, TEAMSTERS’ PICKET VICTORY, AND EX-EMPLOYEE CRASHES PLANE INTO OLD WORKPLACE

Amazon is challenging the National Labor Relations Board (NLRB) over a complaint filed by two Georgia employees, claiming the labor watchdog's actions breach constitutional principles. The workers allege retaliation and surveillance after they attempted to organize, leading the NLRB to issue a complaint against Amazon. The company is now arguing that the NLRB's procedures violate constitutional separation of powers and due process, citing a recent Supreme Court ruling that impacts federal agency authority. The NLRB has not commented on Amazon's constitutional claims but has faced similar challenges from other companies.

And in more Amazon labor news, a federal judge said the Teamsters could picket outside Amazon's air cargo hub at Cincinnati/Northern Kentucky International Airport (CVG) freely. This supports their campaign to organize Amazon workers after already getting union recognition for DHL Express workers. The ruling challenges local restrictions, allowing for protest rights on public streets.

Speaking of disgruntled employees, an Argentinian man flies a plane into a warehouse where he worked formerly. Juan Manuel Medina, a former employee, decided to visit his old workplace in a unique way - by crashing his Cessna 152 into it. He posted a mysterious message on WhatsApp and a historical photo of Nagasaki before taking off. Thankfully, there was no big explosion, even though he hit a gas storage column.

WAREHOUSE TECH

ROBOT DELIVERY REVOLUTIONIZES SHAKE SHACK DELIVERY IN L.A.

Serve Robotics Inc., the genius minds behind autonomous sidewalk delivery robots, is teaming up with Shake Shack and Uber Eats. Soon, burgers and fries will be sold to hungry customers in Los Angeles using Serve’s autonomous robots. Get ready, L.A.—your burgers are about to have a side of high-tech delivery!

WAREHOUSE QUICK DELIVERIES

PITNEY BOWES CLOSES ECOM LOGISTICS UNIT AS SHIPHERO SPINS OFF FULFILLMENT BUSINESS

• Pitney Bowes Shuts Down Ecom Logistics Unit

• ShipHero Spins Off Fulfillment Unit, Highlighting Challenges in the Industry