Warehouse Wisdom. Weekly. 11/22/2024

Happy Friday!

It’s Black Friday and Cyber Monday (BFCM) season, and the numbers are predictably enormous: 73% of consumers plan to shop, and 63% plan to make purchases during the mega event. But here’s the twist—many of them are leaning on AI to sniff out the best deals, because nothing says "holiday cheer" like delegating your bargain hunting to algorithms. Of course, while AI may help find discounts, it’s also working overtime for scammers, with AI-powered fraud and deepfakes threatening to ruin the season faster than a defective string of lights.

And as if navigating deals and dodging scams weren’t enough, there’s the perennial risk of unexpected surprises in your shipments. Because nothing says "Merry Christmas" quite like discovering a snake stowed away with your holiday tree.

Stay tuned as we dive into this week’s logistics highlights, including Walmart’s growing dominance in delivery, Amazon FBA users getting an early holiday gift, suspected sabotage in Baltic Sea communication cables, USPS’s inevitable rate hikes, robots struggling with tough tasks, and more.

Online Marketplaces

Walmart speeds ahead, Target stumbles, and Amazon throws sellers a bone

In a move sure to have Amazon executives adjusting their notoriously complex algorithms, Walmart announced a 20% YOY Q3 growth and a 40% reduction in delivery costs per order, proving that big-box efficiency isn’t just for aisle five. Even more impressive, Walmart has managed to get customers to shell out extra for three-hour delivery on 30% of their orders. Who needs a Prime membership when you can get your dish soap delivered faster than your DoorDash order? With this level of operational efficiency, Walmart is pushing hard to catch up to Amazon.

While Walmart was busy counting its record three-hour-deliveries, Target was, unfortunately, busy reporting a decline. Despite its well-lit stores and reliably trendy home goods, Target didn’t quite deliver (figuratively or literally) this quarter. Their earnings slump suggests that even in retail, you can’t win them all—especially when your competitors are playing logistics chess while you’re still assembling checkers. At least we’ll always have the throw pillows.

If you thought the retail landscape was big enough for everyone, the latest data says otherwise. Walmart, Amazon, and Costco continue to dominate the industry like the Big Three in an NBA playoff game—except instead of scoring buckets, they’re fighting for every consumer dollar. Smaller players and niche retailers? They’re like the extras in the background: necessary for ambiance but unlikely to ever get a speaking role. The message is clear: adapt, partner, or prepare to be steamrolled.

Finally, some actual good news for Amazon FBA sellers: no planned increases to fulfillment and referral fees in 2025. Considering the pace of price hikes in, well, everything else, this announcement feels almost revolutionary. Whether it’s goodwill or a clever way to keep sellers from defecting to Walmart Marketplace is up for debate, but we’ll take it. For now, at least, sellers can breathe easy knowing that Amazon won’t charge them extra, at least for now.

Ocean Freight

Turbulence on the high seas continues

The container shipping industry is riding an uncomfortable wave of profitability, thanks to ongoing tensions in the Red Sea. Geopolitical instability has tightened capacity and driven up freight rates, creating a windfall for carriers that no one asked for. Profits are surging, but it’s hard to celebrate when the gains are tied to disruptions that ripple far beyond the balance sheet. For shippers, it’s just another reminder that in logistics, the ocean is as unpredictable as ever.

In news that sounds ripped from a Cold War spy novel, German authorities suspect sabotage is behind damage to Baltic Sea communication cables. The specifics remain murky, but when essential infrastructure starts failing mysteriously, it doesn’t take a detective to know it’s bad news for supply chains. If you’re looking for someone to blame for delays, try adding "Baltic cable vandals" to your list—it’s a solid conversation starter.

Port traffic is surging as shippers scramble to move goods ahead of potential new tariffs. It’s the logistical equivalent of everyone running to the grocery store before a snowstorm—chaotic, crowded, and somehow inevitable. For ports, it’s a temporary boon, but for everyone else, it’s yet another complication in an already strained supply chain. Tariffs may or may not materialize, but the rush to preempt them is adding stress in all the usual places.

Logistics Vitals

Bigger numbers, fewer days, and slightly fewer elves this holiday season

The National Retail Federation (NRF) anticipates a small increase in holiday sales for 2024 compared to 2023.

Key data points:

• Total holiday spending is projected to increase 2.5% to 3.5%.

• Retailers plan to hire between 400,000 and 500,000 seasonal workers, slightly down from 509,000 in 2023.

• The shopping period between Thanksgiving and Christmas will be five days shorter this year, totaling 27 days.

Freight and Shipping

USPS hikes, Canada Post strikes, and Purolator spells opportunity

In a move that will surprise absolutely no one, the USPS is planning rate increases for 2025. This follows their well-worn strategy of trying to balance financial woes on the backs of customers. Unlike Amazon FBA, which recently announced a pause on fee hikes, USPS seems determined to remind everyone that shipping costs will always find new heights. The rate adjustments are described as “necessary”.

The Canada Post strike has entered its second week, with 55,000 employees walking off the job and businesses and consumers nationwide feeling the pinch. Holiday deliveries are in chaos, with disruptions spanning everything from small business orders to holiday cards that may not arrive until Valentine’s Day. While management and labor sort out their differences, Canadian consumers are left wondering if pigeons might be a viable backup plan.

As Canada Post workers strike, competitors like Purolator are wasting no time stepping into the breach. Purolator is already predicting a surge in volume as businesses look for alternatives to keep their supply chains running. It’s a sharp reminder that in logistics, one carrier’s strike is another’s golden opportunity. For companies pivoting to alternatives, the biggest challenge might just be remembering how to spell Purolator on their shipping labels.

Warehouse Tech

Great at lifting, terrible at thinking

Despite all the hype about warehouse automation, it turns out humans still have the upper hand. Robots, for all their futuristic promise, are struggling with the complexities of certain tasks, particularly those requiring fine motor skills and adaptability. Sure, a robot can lift pallets, but ask it to sort oddly shaped items or handle delicate packages, and you’ll find it reaching its (literal) mechanical limits.

In fact, it’s believed that the hardest jobs in warehouses—like picking individual items or packing irregular products—remain firmly in human hands. Robots are great at repetitive, predictable work, but the nuanced challenges of logistics still favor workers with opposable thumbs. For now, it seems the “rise of the machines” in warehousing has hit a snag, leaving humans plenty of time to enjoy the privilege of tasks too complicated for AI.

Warehouse Quick Deliveries

Mischief and mayhem, but thankfully some holiday cheer as well…

• Seven suspects charged in $10M in thefts in DFW warehouses.

• Houthis confirm strike on Turkish bulker.

• USPS and Toys R Us are delivering holiday cheer to children.