Warehouse Wisdom. Weekly. 10/11/2024

Happy Friday!

What’s more annoying than going to the DMV or getting called in for jury duty? Apparently, return shipping. 30% of consumers said paying for return shipping was more annoying than jury duty and going to the Department of Motor Vehicles. We’re not quite sure we would rather go to the DMV than return a package, but we can certainly appreciate the sentiment.

This week, we cover Hurricane Milton, online holiday spending and shipping schedules, a spike in subleases, and AI that helps drivers find packages faster. Let’s dive right in…

Freight and Shipping

Hurricane Milton hits Florida ports

As if the southeast U.S. needed any more troubles, Hurricane Milton has struck Florida, affecting freight markets and closing ports. Two of Florida’s key commercial ports along the Gulf Coast, Port Tampa Bay and Sea Port Manatee, remained closed as of the writing of this newsletter. While there has been no significant damage to docks so far, the ports remain without power. Damage is still being accessed. For the Port of Tampa Bay in particular, that could mean a prolonged period of closure. As the 24th largest port in the country, impacts to fertilizer, food, and sulfur products, among others could be significant.

We reported last week that the Montreal dockworker’s strike was averted, but the story is long from over. This week, dockworkers committed to an “overtime” strike for an unlimited period, vowing not to work any extra hours.

And speaking of strikes, despite the U.S. dockworker’s strike being over, the battle over automation rages on. In particular, the ILA is holding a hard line against the implementation of semiautomated equipment, such as automated guided vehicles, until both parties agree to workforce protections and staffing levels. Shipping executives note with frustration that U.S. ports lag behind facilities in Europe and Asia in automation, and in assessments of productivity. They say they need automated stacking cranes and other machines to squeeze ever-growing volumes of cargo through ports hemmed in by sprawling metropolitan areas.

All the while, U.S. container import volumes are up. This marks the second month this year that volumes have been over 2.5 million TEUs (a 14.4% increase compared to a year ago and a 23.5% increase over pre-pandemic September 2019).

Marketplaces

Holiday budgets are taking a hit and UPS is delivering a Christmas rate increase

As we inch closer to the end of the year, thoughts are drifting more and more to the upcoming holiday season. But despite holiday budgets increasing overall, inflation will impact holiday spending negatively for nearly half of consumers. While 61% of consumers said they would spend more than $600 this year (compared to 48% last year), 47% of those who said they would reduce spending are doing so because of high prices on everyday items.

And speaking of holiday planning, U.S. freight carriers have announced their holiday shipping schedules. E-sellers now know the drop-dead date to ship to get those packages to consumers before it’s too late. Plus - UPS squeezed in a 5.9% rate increase announcement to take effect December 23rd. Not exactly the present businesses were looking for as a stocking stuffer.

In the meantime, Fall Prime Day was the biggest ever, saving consumers a whopping $1 billion throughout the course of its two-day sale. And Amazon is launching AI shopping and buying guides to help make consumers’ lives easier. The guides provide explanations of key features to consider for a specific product type, must-know terminology, and trusted brands alongside product recommendations based on a customer’s needs. For example, when shopping for a new face moisturizer, customers can select what type of skin they have—oily, dry, combination—and learn what type of moisturizer is right for their needs.

As for other e-commerce and tech giants, Google is in flux with the DOJ monopoly case. It’s beginning to look more and more like the company will see some sort of breakup of its core service – but the extent of the breakup remains to be seen.

Lastly, do you sell apparel products? Government entities are increasingly calling for producers to be more responsible when it comes to collecting, repairing, and recycling their products. California is the most recent to pass a new law, the Responsible Textile Recovery Act of 2024.

Logistics Vitals

Growing concerns over warehouse worker safety

Online sales have grown nearly significantly over the last few years, and along with the increase has come heightened concerns over warehouse worker’s safety. According to a new report by the U.S. Government Accountability Office, last mile delivery and warehouse workers had the highest estimated rate of serious injuries among private sector industries:

• 3.8 – the number of estimated serious injuries per 100 workers.

• 23% - the increase in serious injuries between 2018 and 2022.

• 85% - the percentage of all injuries which resulted from overexertion, contact with objects and equipment, and falls, slips, and trips.

Warehouse Tech

New AI will help drivers find packages faster

Amazon continues to lead the charge in implementing tech in logistics. Not only will the company be employing 10X the number of robots in its distribution warehouses, but it will also be adding a new AI tool to help Amazon drivers find packages faster. The technology projects a green circle on packages to be delivered at each stop and red “Xs” on those to be delivered later.

Commercial Warehouse Space

Warehouse vacancies rise and sublease listings reach new heights

Warehouse construction is plummeting, and vacancy rates are rising, signaling the end of the pandemic-era boom. Cushman & Wakefield reports a 43% drop in industrial space under construction in the third quarter, the sharpest decline since 2008. U.S. vacancy rates have risen to 6.4%, the highest since 2014.

Furthermore, real-estate services firm Savills says the amount of U.S. warehouse space listed for sublease reached a record high of nearly 199 million square feet in the third quarter, up 45% from the previous year.

Warehouse Quick Deliveries

A new e-commerce shipping platform emerges, Amazon starts its holiday hiring spree, and more…

• Pitney Bowes announces the launch of an e-commerce shipping platform

• Amazon looking to hire 250,000 seasonal employees

• Dave Clark, a former Amazon executive, secures $100M in funding for his new supply chain startup, Auger

• Important correction from last last week’s newsletter: Lastly, thank you to one of our readers for pointing out a correction to one of our stories last week where we incorrectly reported that the ILA negotiated deal saw a $4 per hour wage increase for dockworkers (a 61% increase). The 61% increase was over time, with the $4 hour wage increase being the an incremental bump for recently hired staff