Warehouse Wisdom. Weekly. 1/19/2024

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

Author

Will Schneider
January 19, 2024

Happy Friday!

It’s been downright cold the last week, and we hope that you’ve been able to dodge the freeze as best as possible. The winter weather has been so bad, in fact, that FedEx reported this week that there were substantial disruptions in delivery services because of the weather. After braving some sub-zero temperatures this week ourselves, we’re lobbying for a fast forward to spring for sure.

At least retail sales haven’t been frigid. The 2023 data is in, and total retail sales in 2023 increased 3.1% year-over-year, and non-store sales (mostly online) grew 7% over the same period. Thankfully, consumer spending was remarkably strong in 2023, which will hopefully usher in some more blue skies for 2024.

In this week’s edition, we cover FedEx’s new commerce marketplace, container freight’s unfortunate pricing rebound, AI-powered truck checkins, warehouse labor gamification, and more. Let’s dive in quick so we can get to booking that vacation at a nice, warm tropical resort!

LOGISTICS VITALS

SHIP-TO-HOME GROCERY SALES NO LONGER SIZZLING

What’s up with grocery sales? According to the recent Brick Meets Click/Mercatus Grocery Shopper Survey, U.S. online grocery sales cooled 1.2% in 2023 to $95.8 Billion. The average number of monthly online grocery orders also fell 6% overall in 2023. No doubt inflation has resulted in more scrupulous shopping habits for online grocery ordering:

  • $44.1 Billion – Total online grocery sales for PICKUP (versus $44.1 Billion in 2022)

  • $35.4 Billion – Total online grocery sales for HOME DELIVERY (versus $35.8 Billion in 2022)

  • $16.3 Billion – Total online grocery sales SHIP-TO-HOME (versus $17.1 Billion in 2022)

MARKETPLACES

FEDEX SHOWERING COMMERCE CUSTOMERS WITH A NEW END-TO-END PLATFORM

The red-hot news in logistics this week comes by way of FedEx, announcing a new end-to-end commerce platform for retailers coming this fall called “fdx”. According to the shipping giant, this new platform will provide sellers with solutions for everything from reaching potential customers to order fulfillment and returns. To start, sellers on fdx will have access to ShopRunner’s existing network of customers (FedEx owns ShopRunner). Furthermore, fdx will give retailers delivery estimates to share with customers on product pages and in the cart for increased conversions, will provide sellers with carbon emission reports, and will include a way of managing returns. Sounds like another company trying to chip away at the market share of Amazon.

With a whopping 60% percent of online shoppers saying they favor online marketplaces due to perceived value, fast delivery, and free shipping according to an Adobe survey, it’s no wonder FedEx is jumping full throttle into the online e-commerce race. But as for you brands out there, don’t give up the fight. 43% of Generation Z shoppers prefer shopping on a brand’s site. That’s welcomed news and a glimmer of hope for higher profits and building out a loyal customer base.

In other marketplace news, Amazon is beefing up its mobile-based artificial intelligence tools for shoppers. The company is now piloting a technology that uses machine learning to help customers obtain product information. The assistant reportedly analyzes product details and reviews to create answers for customer questions. As an example, the tool can assess whether an article of clothing is good for a specific activity. The main things it won’t do? Compare products, recommend alternatives, or add an item to a customer shopping cart.

FREIGHT AND SHIPPING

EXTENDED FORECAST FOR CONTAINER SHIPPING RATES IS CLOUDY

It looks like a return to normalcy isn’t on the horizon for Red Sea container freight shipping. After another commercial ship was hit by Houthi rebels this week, companies are abandoning ship on the popular sea route again. As a result, lengthy detours around the Cape of Good Hope have begun to push container rates to new heights. The Drewry World Container Index (WCI) Global Composite jumped to $3,777 per forty-foot equivalent unit for the week ended Thursday. That’s an increase of 173% year to date! The FBX global average hit $3,220 per FEU on Wednesday, up 131% year to date. Even other routes are being impacted. Far East-West Coast short-term rates are 2.2 times as high at $3,418 per FEU. Overall, Asia-U.S. rates are now around 2.7 times Dec. 1 levels.

It’s no surprise that the U.S. freight sector is projected to rebound in 2024. Good news for shippers’ pocketbooks, but not so good news for retailers.

LOGISTICS TECH

NEW LOGISTICS TECH INNOVATION CLEARS THE PATH FOR TRUCKING APPOINTMENTS

Another week, another wave of tech innovations! Charlotte-based RXO announced the launch of its new AI-powered check-in system for trucks arriving at warehouses and distribution centers. The technology identifies trucks via video and extracts images and data to recording trailer numbers and match these numbers with appointments when a truck arrives on site. Goodbye truck backups at the warehouse docks!

And TrusTrace announced that it has raised $24 million to actualize its platform for supply chain traceability and compliance. Specifically, the platform helps apparel manufacturers comply with sustainability commitments by tracking and verifying the source and journey of textiles used in manufacturing processes. The data can be used for risk management, compliance, product claims and footprint calculations.

This is a welcomed solution, as a recent report indicated that 46% of apparel manufacturers still use forced labor in their supply chains.

WAREHOUSE LABOR

WAREHOUSE WORKERS REPORT MOSTLY SUNNY REVIEWS OF GAMIFICATION

A new study by Lucas Systems showed that almost 84% of warehouse workers said they were more likely to stay with a company that developed workplace competitions around their day-to-day tasks. Examples of gamification in the survey included competitions, rewards, teamwork, and leaderboards. Apparently warehouse workers feel even more comfortable with team-oriented gamification which help workers strengthen relationships, engage with, and learn from teammates.

What was shocking is that 88% of the respondents indicated that they are comfortable with day-to-day performance measures being shown to other employees! What wasn’t so surprising is that 90% of those surveyed said they would participate for a cash reward. If you’re not doing it now, perhaps it’s time to give some thought to putting together your next workplace competition.

COMMERCIAL REAL ESTATE

PROLOGIS PROJECTS PARTLY SUNNY DAYS TOWARDS END OF 2024 FOR WAREHOUSE SECTOR

Could there be some sunshine in the commercial real estate market coming in 2024? Prologis sure thinks so. While the company projects occupancy rates will trend lower throughout the first half of the year, they are also forecasting annual rent growth between 4% and 6% over the next three years, with slightly positive rent increases in 2024.

That’s a welcomed projection for landlords, given the 5.2% industrial vacancy rate reported in Q4 2023, according to Cushman & Wakefield.

WAREHOUSE QUICK DELIVERIES

AMAZON, UBER, WALMART HAVE TURBULENT ANNOUNCEMENTS, AND MORE…

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“You don’t have to load up on cans of tuna and go into your basement. I don’t think a recession is in the cards.”

-Steve Liesman, CNBC