Warehouse Wisdom. Weekly. 3/15/2024

Happy Friday!

We hope that you are snuggling up and keeping warm or dodging hailstorms and tornadoes – depending upon where you’re located in the country. For us, we’re doing high level mathematics to calculate the feet of snow being dumped on our state.

But guess what's not getting cold? The super-hot rise of online shopping this February! That's right, while we were all wrapped up in blankets, online sales and total retail sales were heating up the market! The online sales growth in February outpaced the total retail growth, and even offline sales has found its second wind. Nothing, not even cold weather, can slow down the hustle and bustle of online shopping.

Online retail sales soared by an impressive 18.08% year-over-year, dwarfing January's 25.47% growth. Total retail sales weren't far behind with a 6.3% increase, showing a significant recovery from January's 2.34% growth. This is a breath of fresh air, proving that consumer momentum is still strong, buoyed by a robust job market and real wage increases.

Now, as we brew our hot chocolates and hope we don’t run out of food before the snow stops falling, what else is on the menu for this week's newsletter? We're looking at an EV charging station road map, Amazon’s FTC scrutiny and zen booth mental health initiative, and video games training warehouse robots.

Bundle up and stay warm because it looks like the storm of shopping deals and retail sales is just getting started.

LOGISTICS VITALS

ST. PATRICK’S DAY SPENDING SURGE EXPECTED

St. Patrick's Day is not just a day to wear green and enjoy a pint of Guinness; it's also a significant event for businesses, particularly in the retail and hospitality sectors. Here's a snapshot of how big St. Patrick's Day is for spending:

• $7.2 billion – The expected consumer spending for St. Patrick’s Day 2024, averaging $44.40 per person.

• 62% - The record percentage of U.S. residents (162 million Americans) that plan to celebrate the holiday, making it not just a holiday for those with Irish heritage.

• Food and beverages are the top categories for St. Patrick’s Day spending.

With the holiday falling on a weekend, participation and spending are at record levels, continuing a trend observed since the National Retail Foundation began tracking in 2007.

LOGISTICS SUSTAINABILITY

ROADMAP LAUNCHED TO ELECTRIFY LONG-HAUL TRUCKING ROUTES

The big news in logistics this week comes in the form of freight and shipping sustainability. The U.S. Energy and Transportation and the Environmental Protection Agency are implementing a 16-year plan to deploy battery-charging and hydrogen-refueling stations across 12,000 miles of busy roads and near big ship docks. This National Zero-Emission Freight Corridor Strategy begins with local and regional trucking operations, with an ambition to cover long-haul trucking.

Their goal is to promote at least 30% zero-emission truck sales by 2030 and 100% by 2040 to reduce greenhouse gas emissions in the transportation sector. This is a huge step towards cleaner air and fighting climate change, making sure our planet stays healthy for everyone.

MARKETPLACES

AMAZON UNDER FTC SCRUTINY & WALMART AND TARGET TAG TEAM TO TAKE ON THE ONLINE RETAIL GIANT

Remember last week when we talked about Amazon's Fulfillment by Amazon (FBA) fees being really complicated? Now, these fees have caught the attention of the FTC (Federal Trade Commission). Sellers must either distribute their goods across multiple warehouses or face additional fees. Plus, there's a penalty for keeping inventory too low. These fees can really add up, making things pricier for sellers and, ultimately, buyers. The FTC is now poking around, trying to understand the impact of these fees, which have been criticized for being overly complicated and costly.

Sounds like an opening for another retailer to swoop in and pick up market share, right? Well this is exactly what Walmart is trying to do, and e-commerce really needs Walmart to step up. Amazon has about 40% of the U.S. online shopping market, while Walmart has less than 10%. But Walmart is growing fast, especially with its online grocery sales. Walmart is getting more aggressive at delivery and logistics strategies, now offering new options like early morning deliveries starting at 6 a.m. for various products and even live bait from more than 3,000 stores. These services, along with curbside pickup and late-night delivery, show Walmart is working hard to compete with Amazon and others.

And then there's Target, also doing its best to join the big leagues. Target plans to open 10 more supply chain facilities in the next ten years to make things more efficient and save money. They're using new tech and AI to manage stock better and respond to what people want to buy. Just how many blows will Amazon be able to absorb?

FREIGHT AND SHIPPING

SLIGHT SIGNS OF IMPROVEMENTS FOR GLOBAL FREIGHT MARKETS

We are seeing signs that things might be getting a bit easier for shipping goods across the world.

First, there’s some good news brewing in Panama. The Panama Canal has announced an increase in the number of daily slots available at the Panamax Locks. This adjustment, effective in late March, aims to accommodate growing transit demands. Two additional slots will be introduced through auction on March 18 and another on March 25. This change means ships won't have to wait as long to pass through, making moving goods around the globe easier and quicker.

Next, US container import volumes in February showed a better-than-expected performance despite entering the slow season, with a 6% decrease from January but a 23.3% year-over-year increase.

Finally, it seems like shipping companies are feeling more and more optimistic. In fact, they’re feeling so good about their financials that experts in the trucking field are advising businesses to lock in their shipping rates now. As the shipping industry improves and things start to balance out, the cost of sending goods by truck will likely increase – and soon! So, locking in a rate now could save money later.

WAREHOUSE AND LOGISTICS LABOR

WORKER WELLBEING, STRIKES, AND UNION DISPUTES

Imagine working in a place where you're told to "close your eyes and think happy thoughts" to feel better. Amazon has introduced "ZenBooths" in its warehouses. These are special spots where workers can take a moment to meditate and do wellness exercises. It's part of Amazon's "Working Well" program, aiming to make workers happier and reduce injuries. However, not everyone is convinced. Some workers think these efforts don't really solve the big problems like the stress and high injury rates they face daily. Even though Amazon says things are getting better and their programs are based on science, the debate continues.

Meanwhile, Amazon delivery drivers, represented by Teamsters Local 396, have extended their strike to the LAX5 warehouse in California, marking the largest Amazon strike in U.S. history. The strike, which began in June in Palmdale, aims to force Amazon to honor a previously agreed contract and address worker grievances, including job terminations and union recognition. The company, of course, maintains that the drivers are employed by a third-party service partner, not Amazon directly. Maybe even just needs a ZenBooth?

Things are tense at FedEx, too. A division within the FedEx pilots union has stalled contract negotiations, with a faction demanding mediation release before FedEx responded to the latest counteroffer. This internal conflict raises questions about the union's negotiation credibility and the future of its leadership. In July, FedEx pilots rejected a tentative agreement, and current talks have been further complicated by these internal disputes. The discord has delayed progress toward a new agreement, affecting pilots' compensation and working conditions.

WAREHOUSE TECH

ZEBRA’S TECH INNOVATIONS, WALMART’S DRONE EXPANSION, AND ROBOTS LEARNING FROM VIDEO GAMES

In the world of warehouses, new technologies are making big waves. At MODEX 2024, Zebra Technologies leads the way with groundbreaking tools for a more connected and efficient workforce. They've introduced the smallest back-of-hand scanner, the RS2100, and new wearable computers, the WT6400 and WT5400. These devices are designed to make jobs faster and easier, with scanners that fit on the back of a worker's hand for more freedom and wearable computers that help with sorting and tracking items efficiently.

Meanwhile, Walmart continues to transform delivery with drones, reaching over 20,000 deliveries in two years. Walmart's drone delivery expansion aims to reach up to 1.8 million additional households, facilitated by FAA-approved drone providers Wing and Zipline. This service promises delivery times as fast as 10 to 30 minutes for a wide range of products, including groceries and over-the-counter medicines.

Surprisingly, video games are now being used to train warehouse robots. Researchers at Google DeepMind are advancing robotics with techniques that enable robots to learn tasks by watching video game tutorials. This method could make automation more accessible and cost-effective. It is viewed as a strategy to integrate advanced robotics into warehouses without significant changes to the existing infrastructure. Can you hear the collective “sighs” of all the parents with little gamers?

WAREHOUSE QUICK DELIVERIES

1-CLICK PRODUCT PAGES, WALMART SELLING ITS SOFTWARE, AND MORE…

• Capacity Strain: Surge in January Volumes Pressures Mexican Ports

• Family Dollar and Dollar Tree to Close Several Locations Amid Financial Pressures

• Amazon Offers 1-Click Product Pages for Direct-to-Consumer Sellers

• Top Three Commercial Warehouse Markets to Watch

• Walmart Offers Commercial Version of its Route Optimization Software

• Ontrac Expands Shipping Offering to Weekend Deliveries