Warehouse Wisdom. Weekly. 10/25/2024

Happy Friday!

We’ve almost made it through another week, but it appears there could be more fireworks over the weekend in logistics. Montreal dockworkers are calling for a Sunday strike, escalating the overtime strike already in place. Both parties to the dispute at set meet Canada’s Federal Mediation and Conciliation Service next week. Let’s hope progress can be made and that discussions don’t capsize like this freighter in Senegal.

Up this week in logistics news, we cover aggressive parcel rates, USPS giving works AC, loads of online marketing sales data, the reason for the spike in cargo theft, and more. Let’s dive in.

Online Marketplaces

Online retail data shows growth, possible holiday slowdown, and unique social media behavior

Lots of data-heavy news in online marketplaces this week. First up, the numbers are in for last month and they looked good. In September 2024, online retail sales experienced a significant surge, growing by 15% compared to the same month in the previous year, driven by increased consumer confidence and a shift towards online shopping.

So, you might be asking, where are online consumers shopping? Digital Commerce 360 has the answer, as it released its annual ranking of the top online retailers, highlighting companies leading in e-commerce sales and innovation, with Amazon, Walmart, and Target. Amazon captured 39% and the top 50 retailers garnered an 84.3% market share. That’s good news for big retailers, but is there much room left over for SMBs?

Now, looking forward - UPS anticipates a robust peak holiday season but notes that major shippers are tempering their volume forecasts due to a condensed shipping period and expectations of increased in-store shopping, which may impact home delivery demand. According to retailers that ship 85% of the company’s volume, sales will be softer.

As for social media, Chime’s recent report shows some very interesting data worth exploring. Social media platforms like TikTok and Instagram are increasingly influencing American consumers' spending habits, with users often making purchases based on trends and recommendations seen online. A few nuggets to peak your interest: consumers spend 3 hours per day on these platforms, and 30% said their behavior results in a purchase.

Finally, Wayfair jumped into the membership foray, introducing "Wayfair Rewards," a paid loyalty program providing members with 5% back in rewards, free shipping on all orders, exclusive sales, early access to major events, and priority customer service for a $29 annual fee.

Small Parcel Shipping

Aggressive rates and AC make the headlines in parcel freight

It turns out shippers have been getting some pretty good deals on parcel rates after all. In Q3 2024, UPS and FedEx offered substantial shipping discounts to attract volume, leading to per-package ground parcel rates reaching their lowest level since 2021. The TD Cowen/AFS Freight Index showed these rates were 20.3% above the January 2018 baseline, a notable decrease from previous quarters. This trend indicates that, despite implementing various surcharges, carriers are engaging in aggressive discounting to remain competitive. The index anticipates rates will climb in Q4 due to peak season surcharges, though conditions should still be more favorable for shippers compared to last year.

And the USPS is finally giving its carriers air conditioning. The U.S. Postal Service and approximately 200,000 mail carriers have reached a tentative contract agreement that includes pay raises and plans to provide air-conditioned trucks. The agreement, pending union member ratification, runs through November 2026 and features three annual pay increases of 1.3% by 2025, along with retroactive and future cost-of-living adjustments. This contract supports USPS's "Delivering for America" mission to modernize operations and adapt to changing customer needs. But it will be interesting to see how this impacts profitability.

Logistics Vitals

Industrial real estate data continues to disappoint

The state of the U.S. industrial real estate market didn’t exactly look promising in Q3 2024, with vacancies up, new supply down, and rental rates up as well (according to the latest Colliers report).

Key data highlights include:

• Vacancy Rates: The national vacancy rate increased to 6.6%, up 34 basis points from 6.06% in Q2 2024, reflecting the impact of new construction.

• New Supply: Space under construction dropped to 331 million square feet, a decrease 43% year-over-year.

• Rental Rates: Average asking rental rates increased to $10.26 per square foot, an increase of 8% year over year.

Freight

Reasons for spike in cargo theft unearthed and data on women in trucking revealed

Why has increased cargo theft been littering the news lately? According to a Becker Logistics study, weak security measures significantly increase the risk of cargo theft, costing the logistics sector billions annually. The report highlights that security protocols, such as driver vetting and load tracking, are often insufficient, especially at distribution centers. Improved practices, including better surveillance and driver background checks, are recommended to reduce theft.

But on a more positive note, the trucking industry has seen a rise in female drivers, with women now making up 9.5% of professional drivers, according to the 2024-25 Women In Trucking Index. Despite a slight decline from 2023, smaller companies (under 500 employees) have higher percentages of female drivers (12.5%) compared to larger firms.

And yet another milestone for sustainable shipping. The Pacific Grebe, a 5,000-tonne cargo ship retrofitted with a 20-meter wing sail, has arrived in Southampton for sea trials to assess its wind-powered performance. Developed by Smart Green Shipping and funded by the UK government, the FastRig retractable sail aims to reduce fuel consumption and carbon emissions by up to one-third. Scientists from the University of Southampton are leading the trials to validate the technology's potential in real-world conditions, contributing to efforts to lower the shipping industry's carbon footprint.

Warehouse Operations

E-grocery sales are up and home deliveries leave something to be desired

Last up this week is a few power-packed punches of warehouse operations headlines.

First, in Q3 2024, e-grocery delivery sales surged by 25% year-over-year, marking a significant rebound from a 6% decline in the same period the previous year. This growth outpaced pickup sales, which increased by 5%. The shift is attributed to consumers' renewed interest in delivery services, bolstered by promotions from delivery providers and mass retailers enhancing their digital fulfillment options.

Second, pharma logistics is growing at a good clip. The global pharmaceutical warehousing market is projected to reach $31.1 billion by 2030, up from $25.2 billion in 2023. Growth is driven by increased production of biologics, rising demand for vaccines, and advancements in cold chain storage. Enhanced technologies, such as IoT sensors and automated systems, are improving safety, efficiency, and regulatory compliance.

Third, data on home deliveries is not looking stellar. A recent survey by HubBox revealed that 53% of e-commerce home deliveries in the U.S. encounter issues: 27% arrive late, 15% are delivered to the wrong address, and 11% are damaged. These problems lead to customer dissatisfaction, with many expecting compensation such as discounts or waived delivery fees. To address these challenges, retailers are encouraged to offer flexible delivery options, like pickup points or buy-online-pickup-in-store (BOPIS), to enhance customer experience.

Warehouse Quick Deliveries

Salesforce launches commerce suite, Chick-fil-A releases an entertainment app, Amazon ends same-day delivery from local stores, and more…

• eBay to invest $1.2 million through Its ‘circular fashion fund’.

• Salesforce launches small business integrated commerce suites.

• TikTok Shop expands refurbished electronics business to the U.S.

• Chick-fil-A cooks up an entertainment app.

• Amazon to end same-day delivery service from retailers’ local stores.

• Buybuy Baby closing remaining stores; going completely digital.

• Shipping giants plan to use bigger ships to decrease port delays.