Warehouse Wisdom. Weekly. 09/20/2024

Only the most relevant news for SMBs to improve logistics – picked, packed, and delivered without the bias.

Author

Will Schneider
September 20, 2024

In partnership with

Happy Friday!

This week in logistics news, there’s been no shortage of positive numbers – from imported goods prices dropping .3% last month to August retail sales increasing .1%. Even truck and rail freight volumes are increasing slowly (.1% and 1.1% respectively) – and the gains aren’t yet sparking increases in truckload rates. And, of course, the Fed decreased interest rates. While these are all modest improvements, we’ll take it.

The week’s news also includes a strike averted and a strike still impending, pay increases and the end of remote work at Amazon, as well as a 2025 small parcel price increase announcement. Let’s dive in!

Marketplaces

Amazon announces end-to-end “Supply Chain by Amazon” service

It’s mid-September, so you know what time it is…time to get ready for more online sales growth this holiday season. Experts at Deloitte believe this could be a good holiday retail season, with a projected growth of between 2.3-3.3% for retail as a whole, but 7-9% for online sales.

Just in time for the holiday prep, Amazon is now offering a fully managed supply chain solution for those that prefer taking a hands-off approach to logistics. The new program, called “Supply Chain by Amazon”, will pick up product, move it across borders and customs, deal with the port, and prioritize where to ship product and when to move it. It will be interesting to see how this impacts the 3PL warehouse market, and if the company will do anything to streamline Amazon’s required prep services (the company is already shipping 70% more off-Amazon orders). Amazon also announced their Fall Prime Day dates – October 8-9.

Meta also announced some must-see upgrades to help retailers with holiday selling. The new advertising tools will show ads to people most likely to ship in stores, show ads to people interested in a specific location, highlight promo codes in ads, allow advertisers to drive users to their mobile app, and add multiple landing pages to a single image or video ad.

Finally in online retail, a quick update on the ongoing de minimis saga. The White House is calling on Congress to pass legislation quickly. So the big dogs like Temu and Shein are making quick changes to account for the looming legislative updates by expanding and diversifying their supply chains.

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Warehouse and Logistics Jobs

Work-from-home is ending and job cuts are growing

Last week we reported that Amazon was increasing the pay and investment in its contract drivers. This week, they’re spreading the same news among all warehouse workers – up $1.50 per hour to…you guessed it, $22 per hour. The raise will take effect this month for hundreds of thousands of employees. But the icing on the cake is that they will also be gifted a Prime membership to their benefits package.

But it’s not all good news for Amazon workers. To “foster a culture of collaboration,” the company announced it will be ordering employees back to the office and remove its work-from-home perk. Is this a true pursuit of collaboration or a sly way to cut headcount? Time will only tell. But in the meantime, Amazon announced closures of two California warehouses, cutting 300 warehouse jobs.

Speaking of job cuts, corporate layoffs may be an interesting metric to monitor in the short-term. A new report by Challenger, Gray & Christmas, Inc. found that U.S.-based employers announced almost 80,000 job cuts in August – up 193% over the prior month. This represents the highest total since 2009. And not to be the bearer of bad news, but truck job data may be 4% lower than previously reported.

Logistics Vitals

E-comm no longer a choice for B2B

E-commerce is no longer an option for B2B sales. In fact, it has become the leading sales channel in revenue generation, usage, effectiveness, and investment for B2B.

  • 10.2 – the number of channels an average B2B customer travels through in their customer journey

  • 71% - the percentage of B2B companies that offer e-commerce purchase channels

  • 34% - the percentage of B2B sales attributed to e-commerce

Freight and Shipping

Major preparations are taking place in case of an East Coast pork strike

First, the good news in freight and shipping strikes (we know, we didn’t anticipate this being an ongoing category for our newsletter!). The Air Canada strike was averted and the 5,000-pilot union has reached a tentative four-year labor deal.

But a strike is still on the table for the 45,000 dockworkers in container ports on the East and Gulf coasts. A coalition of 177 trade groups has asked the White House to step in on and intervene in the potential strike to avoid significant disruption. But the White House has signaled it will not step in and block the strike. Time is definitely running out.

At least their west coast counterparts are doing some prep work in anticipation of a negative outcome. The Port of Long Beach has announced it is willing to extend gate hours if needed. And terminal operators are prepared to open short-term overflow facilities if needed. Oh, and there’s always the railways if another supply chain disaster strikes, with the CEOs of both CSX Transportation and Norfolk Southern Railway indicating they can help manage disruptions. Meanwhile, retailers are bringing in goods as quickly as possible.

Rounding out the not-so-great freight news - FedEx unveiled a 5.9% rate increase for 2025. Residential deliveries, expedited air shipping, and bulky packages are the services with the largest increases.

Warehouse Real Estate

UK warehouse rate increase 5%

It looks like the U.S. isn’t the only place where warehouse rent increases have been on the rise. New data from Colliers indicated that rent prices for larger distribution warehouses in the UK are up an average of 5%, year-over-year. The company’s Industrial & Logistics Rent Map report also indicated that vacancy rates have dropped to 7.3%.

Warehouse Quick Deliveries

The U.S. sues Dali’s owner, Congress fights retail crime, and more…

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“Companies are using return-to-office mandates when they want to cut headcount, so the easiest way to fire employees is to force them back to the office.”

- Dror Poleg, economic historian.