Warehouse Wisdom. Weekly. 1/12/2024

Happy Friday!

Wait, are we about to make it through a week without Red Sea stories stealing all the headlines? That’s precisely what we’re going to do. Not that the ongoing challenges aren’t still prevalent, including U.S.-led strikes on Houthi targets in Yemen, but there aren’t any dramatic changes to report, as the struggles continue, and the container rates keep climbing.

But we do have some other interesting logistics news this week, including drone deliveries, autonomous delivery trucks, exosuits for warehouse workers, and new independent contractor rules that could upend the trucking industry. Let’s jump in on another quick dive through the logistics and warehousing world.

LOGISTICS VITALS

WAREHOUSE VACANCIES FUELING INDUSTRIAL SPACE COOLDOWN

Cushman and Wakefield announced its state-of-the-warehouse industry report for Q4, and it showed that more warehouse space is sitting empty than any time since the pandemic began in 2019. It’s looking like an industrial cooldown:

• 5.2% - the U.S. warehouse vacancy rate in the fourth quarter 2023. 

• 4.6% - the U.S. warehouse vacancy rate in the third quarter 2023.  

• 3.1% - the U.S. warehouse vacancy rate in 2020.

WAREHOUSE TECH - PART I

DRONES ARE DROPPING IN TEXAS

There’s so much tech news in logistics that we must break it up into two parts. First up, tech developments in drone delivery. Sci-fi shipping has arrived in Texas – with Walmart expanding its drone delivery to households in the Dallas-Fort Worth metro plex. And you’ve got to see it to believe it! Thanks to Wing and Zipline, 1.8 million more households are getting light weight products dropped at their doorsteps.

Autonomous trucks without a safety driver are also coming to a highway near you. At CES 2024, Aurora Innovation and Kodiak Robotics showcased the autonomous Class 8 truck designs that they plan to deploy in their first fully driverless commercial operations. The steam is building up so much that even Kodiak’s CEO predicts that 2024 is the year of driverless.

Even Canada is in the mix, with Walmart announcing they are putting their first electric semi-trucks on the road in British Columbia.

WAREHOUSE TECH - PART II

ELECTRIC VEHICLES AND EXOSUITS PRIMED TO POWER LOGISTICS OPS

And the U.S. government just gave an electric power jolt to the EV vehicle push, with the White House announcing investment of $623 million in expanding the wide gaps in the national EV charging network.

Our only question is why is Hertz is unloading big time on its stockpile of EV’s? The company claims the demand isn’t there, but more alarming is the other reason – higher than expected repair bills than their gas-guzzling counterparts. Will the EV push be the new norm? It all remains to be seen.

We couldn’t help but include one last tech update. Exosuits are coming to the rescue for workers’ backs. Verve’s exosuit is customizable to workers and tasks, worn like a regular backpack, and is equipped with sensors that automatically capture “risky” movements. It could help mitigate the risk of injury and boosts productivity!

WAREHOUSE LABOR

INDEPENDENT CONTRACTOR RULE CHANGES COULD UPEND TRUCKING

The U.S. Department of Labor just announced a new rule that implements a multi-step test for companies to follow to see if an employee should be classified as an employee or independent contractor. This is big news for business in general, but even more so for the trucking industry, who relies heavily on independent contractor status. The two biggest challenges: a contractual right to control or supervise will be considered indicative of employee status, and exclusivity of a working relationship is considered indicative of employee status as well. It looks like some major upheaval could be on the horizon, as well as a few lawsuits.

In other warehouse labor news, trucking jobs trended up slightly, and warehouse jobs trend down. The December figures released by the Bureau of Labor Statistics on Friday showed that seasonally adjusted truck transportation jobs rose 3,300 last month, rising to 1,586,300 jobs. On the other side of the coin, jobs in the warehouse sector were down 4,900. That represents a decline in 16 of the last 17 months.

ONLINE MARKETPLACES

AI BRINGS ‘SHOPPING REMOTELY WITH FRIENDS’ TO LIFE

The big news in online marketplaces this week is AI, and particularly the race for market share dominance. Amazon and Walmart are duking it out, implementing new AI tools faster than a same-day delivery. Starting with the #1 U.S. online retailer - Amazon is using AI in innovative ways for apparel shoppers. The retail giant is using machine learning models to recommend which size of a clothing item is most likely to fit a consumer! These recommendations are based on consumers who purchase similar sized items and how they want their clothes to fit. Amazon is also using AI to render appropriate reviews in real-time to shoppers based upon other users that purchased the same items. Does that mean the end to not being able to fit those skinny jeans on? Amazon sure hopes so, to make a dent in those sky-high return rates the retail industry is experiencing.

As for the other U.S. retail behemoth - Walmart is partnering with Microsoft Azure OpenAI to give consumers relevant results across product categories. From “Shopping with Friends” to get feedback on an outfit from friends, to shopping for items by use cases, such as “for a football party” which will render chips, wings, drinks, and even a 90-inch TV for results, Walmart is bringing their “A” game to the AI race.

COMMERCIAL REAL ESTATE

WINTER FREEZE IS HITTING THE CHINESE COMMERCIAL REAL ESTATE MARKET

We learned earlier that the U.S. commercial real estate market is showing signs of cooling, but what is going on globally? Well, the most recent Cushman & Wakefield report brings some alarming news about the Chinese industrial markets as well. Vacancy rates for high-end logistics storage in eastern China jumped in the fourth quarter. Shanghai’s commercial real estate vacany rates soared to 15% from 9.8% in the third quarter. Weak demand and manufacturing shifts to other global markets are beginning to take their toll. This represents a significant turn that we will should doubt keep an eye on.

WAREHOUSE QUICK DELIVERIES

BAD LABOR NEWS SOURS THE MARKETS, AND MORE…

• 25% of Employees Want to Leave Their Jobs

• And 65% of Employees Experience Burnout

• Flexe Lays Off 99 More Workers in Third Round of Layoffs

• Google is Slashing Hundreds of Jobs in AI Push

• 80% of Americans Shop Online, Eager to Support Small Businesses 

• B2B Sales Drop

• Canada Post to sell SCI Group

• eBay to Pay $3M to Couple Over a Harassment Campaign