Happy Friday!

This week, we've got a mix of ups and downs across the globe! Starting off on a high note, the U.S. has some great news to share! It's officially taken the top spot as the world's largest economy in 2023, outshining China with a whopping 6.3% rise in GDP. It's a big win, showing the strength and resilience of the U.S. economy, especially after overcoming the challenges thrown its way by the pandemic. On the flip side, not only has China lost its number one status, but its share of ocean-going containerized imports to the U.S. from China dropped below 40% for the first time last year. It's a significant shift, signaling changes in global trade dynamics and how countries are diversifying their import sources.

Adding a cherry on top, consumer confidence in the U.S. has soared to its highest in two years, hitting 114.8 in January. It's a clear sign that people are feeling good about the economy, with hopes of inflation cooling down and job markets staying strong.

But wait, there's more! We're diving into the heart of February with stories that'll make you fall in love with the news all over again, such as Valentine's Day just around the corner, exploring the heated battle among online marketplaces, checking out what's up with UPS's recent challenges, and getting to know the world of robot wranglers and much more. Stay tuned because we're just getting started!

LOGISTICS VITALS

VALENTINE’S DAY 2024 COULD BREAK SPENDING RECORDS

This Valentine's Day, love is not just in the air but also online, where spending is set to break records, reaching an expected $25.8 billion to be spent on meaningful gifts that create lasting memories. Surprise, surprise…Leading the charge, online shopping emerges as the expected “go-to” choice for 40% of lovebirds, outpacing department stores, discount outlets, and traditional florists. Here's a snapshot of what to expect:

• Sweet treats lead the way: Candy is the top choice for 57% of celebrants, making it the most popular gift option.

• Jewelry shines bright: Expected spending on jewelry is a dazzling $6.4 billion, followed by greeting cards, flowers, and nights out.

• Luxury and affordability: High-end gifts like Venus et Fleur's roses at $2,200 also show a trend of accessible luxury with payment plans.

• Average spending per person: Shoppers are set to spend an average of $185.81 to celebrate their loved ones.

ONLINE MARKETPLACES

SPEEDY DELIVERIES, LIVE SHOPPING, AND AI GIFTING

In a whirlwind of logistics innovation, Amazon has set a new benchmark for speed, delivering 7 billion units to Prime members with same-day or next-day service in 2023. With its innovative mix of local fulfillment centers, cutting-edge AI, robots, and even drones, Amazon is redefining what fast delivery means. How fast is “Amazon fast”? 15 minutes and 29 seconds, to be exact. That what it took to deliver a box of cookies by an Amazon drone in College Station, Texas.

But it's not just Amazon playing the innovation game. TikTok is making moves to conquer the U.S. e-commerce scene by opening live shopping studios in Los Angeles. This move mirrors a proven strategy in China, showcasing TikTok's ambition to reshape the U.S. e-commerce landscape. TikTok aims to blend entertainment with instant purchasing by offering a professional backdrop for product promotion, making shopping a seamless part of the social experience. Watch out Amazon!

Not one to be left behind, Etsy is jumping on the AI bandwagon with its new “Gift Mode” feature. This AI-driven feature promises to take the headache out of finding the perfect gift by suggesting personalized options based on the recipient's persona. So, if you dread the thought of gift shopping, Etsy's got your back—now you can find the perfect present without thinking too hard about it, which means husbands everywhere are rejoicing!

SHIPPING AND FREIGHT

UPS’S NOT SO GREAT WEEK

In the world of shipping, UPS has been making headlines, but the reasons might not bring smiles to everyone's faces. The company has announced a significant job cut of 12,000 positions, leaving many small and medium-sized businesses (SMBs) grappling with what the future holds for their shipping needs. This decision comes on the heels of a disappointing year for UPS, marked by declining volumes, revenues, and operating profits across all its business segments. The cuts are part of a broader strategy to slash costs by $1 billion as UPS braces for continued economic headwinds, not expecting an uptick in business until the latter half of 2024.

Adding to the company's challenges, UPS's fourth-quarter earnings report revealed a significant downturn, with revenue dropping by 7.8% to $24.9 billion and adjusted earnings per share decreasing by 31.8%. These figures underscore the tough year UPS has faced, with the company now taking steps to right-size itself for the future. These steps include potentially selling its Coyote Logistics truckload brokerage, a business acquired in 2015 but now considered for divestiture due to its cyclical nature and the current market's excess capacity pressures.

However, it's not all gloomy news for UPS. The company has announced relaunching its second-day air morning service, guaranteeing delivery by 10:30 A.M. in most locations. This service allows UPS to reach over 620,000 US businesses earlier than competitors, offering reliability and efficiency for various operations. The relaunch aims to support customers with early production cycles and those requiring early shipment arrivals for their processes. Additionally, UPS announced a rate increase for 2024 to support ongoing expansion and maintain high service levels.

WAREHOUSE LABOR

FROM LAYOFFS TO ROBOT WRANGLERS: THE WILD RIDE OF WAREHOUSE JOBS

The landscape of warehouse employment is shifting and not entirely in a positive direction. As of December, the number of workers in the warehouse and storage sector dropped to 1.85 million, the lowest it's been since November 2021. This downturn is part of a broader trend as companies tighten their belts and announce layoffs in response to changing business needs post-COVID-19 and aiming for greater efficiency.

Yet, new roles like 'robot wranglers' are emerging amidst these challenges. These individuals are responsible for troubleshooting and guiding robots when they deviate from their tasks or paths. Despite advancements, these robots occasionally require human intervention to correct errors or guide them back on track, highlighting the interdependence between humans and machines in automated environments.

For those finding themselves edged out of the warehouse sector, there's an enticing alternative. Walmart is significantly increasing the compensation for its store managers, with potential earnings of up to $400,000 annually, including stock grants. This initiative is part of Walmart's effort to retain staff and incentivize managerial positions within its stores.

WAREHOUSE TECH

AMAZON’S $1 BILLION FUND AND EV INFRASTRUCTURE CHALLENGES

Amazon is taking a giant leap forward with its $1 billion Industrial Innovation Fund, expanding its focus to include startups in last-mile technology and autonomous vehicles. This move aims to enhance Amazon's logistics network's performance, emphasizing the importance of technology in streamlining operations and improving delivery speeds.

Parallel to this, a coalition named Powering America’s Commercial Transportation (PACT), formed by major truck manufacturers like Daimler Truck North America, Navistar Inc., and Volvo Group North America, aims to accelerate the construction of charging and refueling infrastructure for zero-emission vehicles. According to the International Council on Clean Transportation, nearly 700,000 chargers will be needed nationwide to accommodate the 1 million Classes 4-8 medium- and heavy-duty ZEVs expected to be on the road by 2030, which will consume 140,000 megawatts of electricity every day. PACT said that’s equivalent to the monthly energy needs of over 100 million American homes.

However, this ambitious drive towards electrification faces significant resistance. Governors from 16 states have requested President Joe Biden to reconsider his electric vehicle (EV) mandates, arguing for market-driven adoption rather than government mandates. They cite concerns over the practicality and infrastructure readiness for EVs, the dominance of China in EV battery production, and national security risks. The governors emphasize consumer choice and the need for a more sustainable and strategic approach to EV adoption.

WAREHOUSE OPERATIONS

ONSHORING, INVENTORY RIGHT-SIZING, AND OUTSOURCING CONTINUES IN 2024

2024 is shaping up to be a transformative year for warehouse operations, as supply chain managers are taking decisive steps to revamp their strategies. Cal Marks Advisors reveals a compelling shift towards technology and automation, with 44% and 43% of supply chain managers planning increased investments in these areas respectively. What stands out even more is that nearly half, 46%, are looking to increase onshoring, aiming to bring operations closer to home for better control and efficiency.

In response to the high expectations set by giants like Amazon, retailers are increasingly leaning on third-party logistics providers to streamline their fulfillment operations. This trend sees 54% of retailers using their physical stores as final inventory stops before delivery, while 53% are using third-party services like Instacart and DoorDash for the finer details of fulfillment. This move towards external partners aims to mitigate last-mile delivery challenges, balancing cost, and customer satisfaction effectively.

Furthermore, the battle with inventory levels seems to be making a positive turn. After a challenging period, retailers have got their inventories under control, with a 7.8% decrease in Q3 and sales finally outpacing inventory growth for the first time post-pandemic. This achievement signals a move towards more strategic inventory management and planning, contributing to improved operational efficiencies and margins.

WAREHOUSE QUICK DELIVERIES

WORKFORCE REDUCTIONS, VOLUME FLUCTUATIONS, LEASING TRENDS, AND MORE…

• Levi's Announces Cuts of 10-15% in Workforce as Part of New Productivity Drive

• Fruit of the Loom Proceeds with Job Cuts at Distribution Centers Amid Operational Adjustments

• Flexport to Further Reduce Workforce by Hundreds in Ongoing Job Cuts

• U.S. Rail Industry Faces Downturn as Carload Volumes Witness Decline

• Port of Oakland Achieves 8% Growth in Cargo Volumes Despite Industry Challenges 

• Significant Drop in Mega Warehouse Leases Over 1 Million Sq Ft Recorded in 2023