Warehouse Wisdom. Weekly. 12/29/2023

Happy Friday!

If you’re like us, then you’re probably ready for a great New Year’s celebration and a few more days off – so we’re going to keep this week’s edition brief!

Hopefully we can usher in a little smoother 2024. This year taught us that political instability, social unrest, and natural disasters can reap havoc on supply chains. Thankfully, forces are at work to ease the challenges in the Red Sea with shipping giant Maersk preparing to resume operations along the critical sea container route, and the previously shut down Texas-Mexico international rail crossings are reopening. We also learned that supply chain and logistics professionals job descriptions are growing by the minute, and will no doubt soon include using real-time visibility and technology to dodge trade wars, protests, and heat waves. We may also be required to have x-ray vision and superhuman strength.

This week we recap the Amazon’s same-day delivery distinction, the end of the year retail sales race, California’s push for zero emission trucking, and online retails’ giant return problem. Let’s dive in, do a brief catch up on the week’s news, and then kick back and enjoy the end of year celebrations.

LOGISTICS VITALS

AMAZON IS THE SAME DAY CHAMPION BY A MILE

There’s only 1 number for this week’s logistics vitals, and it shows the absolute dominance of the Amazon machine:

• 1,000,000,000 - Yes, that’s right – it’s 1 billion packages delivered from Amazon Same-Day sites in the U.S. 

ONLINE MARKETPLACES

END OF YEAR U.S. RETAIL SALES GREW 3.1%

Preliminary data has rolled in for online and in-store retail sales from November 1 to December 24, and it’s looking like a 3.1% year-over-year increase, according to Mastercard SpendingPulse. Online sales were the real victor, with a 6.3% increase, and in-store notched a modest 2.2% increase.

Even the UK is trying its best to get in on the party – registering a 4% increase in footfall (in-store foot traffic) during Boxing Day (the day after Christmas). This is all reason for some holiday cheer, and perhaps some post-holiday bargain hunting will start the year off in the right direction.

WAREHOUSE OPERATIONS

ONLINE RETURNS ARE GROWING FASTER THAN IN-STORE RETURNS

There is a downside to all the online retail sales growth – returns rates are also growing faster than their in-store counterpart. A new report from the National Retail Federation and Appriss Retail found that while the overall retail return rate was 14.5%, online returns tallied 17.6% whereas in-store returns came in at 10.02% in 2023.

So, what’s a retailer to do? Some of the larger players are doing away with free returns, and others are looking to 3PLs for added support. Logistics companies are happily picking up the slack in handling returns, especially for smaller retailers that cannot shoulder the heavy burden.

SHIPPING AND FREIGHT

FREE SHIPPING & RAIL VOLUMES ARE VICTORIOUS, BUT PORT VOLUMES ARE MIXED

Sweet or salty? Coffee or tea? Some decisions are a bit more difficult, but not when it comes to free shipping. According to a Forrester report, three-fourths of U.S. online consumers said free shipping is among the most important criteria they consider when deciding where to shop online. Almost half of the respondents indicated that same day delivery had no impact at all. Sounds like consumers are lukewarm on fast shipping and want their shipping FREE.

And rounding out freight news for the year:

• Rail carload volumes increased 6.5% annually for the week ending December 16.

• The Trucking Conditions Index (TCI), which measures an adequate trucking environment, showed some signs of improving, with a reading of -6.07. Readings below 1 aren’t great, but it was better than September’s -8.97 and quite a bit improved from August’s -12.54.

• November port cargo volumes were mixed across the country, with the Port of New York and New Jersey showing 7.5% higher results than pre-COVID November 2019 but down 11% year over year and 13.2% from October. Port of Oakland cargo volumes also fell 10% YoY in November. And the lone source of positive momentum was in Long Beach, where the port cargo volumes increased 24% YoY in November.

LOGISTICS SUSTAINABILITY

CALIFORNIA IS GOING ALL-IN ON ELECTRIC TRUCKS

California is making a big push for electric trucks – combining stringent rules with financial support (as much as $288,000 per vehicle) to help spur companies to invest in a carbon-free port truck sector by 2035, when all diesel trucks will be banned from the ports.

But that hasn’t stopped the California Truckers Association to continue to fight against ongoing regulation, including a last-minute victory that will allow truckers to sign up new internal combustion engine (ICE) vehicles in the state’s drayage registry in the new year.

WAREHOUSE QUICK DELIVERIES

SEISMIC GLOBAL SHIFTS CAUSING SHAKEOUTS IN GLOBAL SOURCING, AND MORE…

• Canada’s Trade Outlook Not So Bright Because of War

• U.S. and Mexico are Looking to be Big Winners in the Future of Sourcing

• Alibaba Shuffles Leadership in Attempt to Battle Foes