Warehouse Wisdom. Weekly. 09/13/2024

Happy Friday!

Sometimes when you see a staggering number or statistic, you can’t help but just stop and think it over. We had one of those moments when we say a report by Stand.earth, which detailed the approximate growth of Amazon deliveries has resulted in a 2.5-million-ton increase in CO2 equivalents. That is the equivalent of putting 595,000 additional gas-powered cars on the road for a year. Yes, this is estimated, and largely attributed to airplane emissions, but it begs the question – are e-commerce growth and sustainability compatible?

But that’s just the tip of the iceberg this week – there’s no shortage of supply chain disruptions and significant challenges facing logistics professionals. From not one, but two looming strikes and unlikely alliances to battle the Red Sea, to massive USPS changes and upcoming legislative battles, the logistics industry is under fire. Let’s jump right in.

International Freight

More strikes threaten shipping and professionals tackle supply chain disruptions

U.S. container ports are anticipating a surge in volumes this month as retailers prepare for the holiday season amid concerns of a possible strike at East Coast and Gulf Coast ports. The outcome of these negotiations is worth tracking, with far-reaching potential consequences for the holidays. September 30th is the contract expiration date.

What’s worse, is that work stoppages could spread to the West coast as well, with labor representatives committed to standing in solidarity to achieve dockworker protections.

As if the looming US dockworkers strike isn’t enough, Air Cargo Canada is in a similar situation, with pilots threatening to shut down without a new labor deal by next week.

On the other side of the coin, shipping giants are joining forces to tackle the Red Sea issues. Maersk and Hapag Lloyd announced an alliance to add more container vessels if shipping disruptions in the area continue.

And the U.S. Department of Commerce launched its SCALE Tool designed to diagnose potential disruptions before they occur.

Small Parcel Shipping

USPS and Amazon make big freight moves

The US Postal Service announced it will end discounts offered to consolidators. The move is an attempt to reduce the organization’s financial losses, but the real loser will likely be the end consumer, who will be forced to absorb the higher costs.

The USPS is also planning to make further network changes that will expedite transportation for some mail near its major processing facilities while slowing it down for volume coming from rural post offices. The change could add an entire day of transit time to some deliveries.

On a much-needed positive note, however, USPS starts the rollout of their new fleet of vehicles, which are getting rave reviews for more head room and air conditioning.

Not to be outdone, Amazon is investing $2.1 billion in its Delivery Service Partner program – it’s biggest investment in the program to date.

And Amazon is boosting its contract driver pay to $22 per hour.

Logistics Vitals

Temu is now #2

After just two years, Temu has overtaken eBay as the world’s 2nd most visited e-commerce website (note: not #2 in sales, but website visits). How in the world did they do it? Mostly paid traffic, which has translated into being the most downloaded app in the 80 countries it operates in. It will be interesting to see how the company transitions from the ultra-cheap direct-from-China marketplace into a sustainable model. Here are a few numbers to help understand it’s meteoric website traffic:

• 700 million – the number of monthly visits Temu gets worldwide

• 25% - the percentage of visitors from the U.S.

• $60 billion – Temu’s sales goal for the year

Logistics Operations

U.S. House is fighting e-commerce loopholes and port security threats

The U.S. House of representatives is urging the president to close the De Minimis loophole.

And the House’s Select Committee investigation found that there are potential threats to the U.S. port infrastructure from China since it dominates the global market share of ship-to-shore (STS) port cranes.

Foreign companies are holding back approximately US $35 billion in investment in Mexico due to uncertainty related to the federal government’s judicial reform proposal. The proposed judicial reform seeks to allow citizens to directly elect thousands of judges, which could affect business operations in Mexico.

And the cost of warehousing and labor have been on the rise this year, according to our latest study.

Online Marketplaces

Alibaba and Amazon continue warp speed tech updates

Alibaba is doubling down on AI. The company announced the rollout of a new sourcing tool, AI Sourcing Agent, which will provide more accurate search results for global suppliers and product searches. The new AI tool also gives users the chance to use natural language queries in their searches on Alibaba.com, making the query seem more like a regular conversation.

And Amazon now allows retailers with brick-and-mortar locations to sell their in-store inventory on Amazon.

Warehouse Quick Deliveries

Bankruptcies and warehouse closures dominate the news

• Big Lots files for bankruptcy

• Business bankruptcies were up in August

• Amazon to close 2 warehouses in California, affecting 300+ jobs