Warehouse Wisdom. Weekly. 5/24/2024

Happy Friday!

We hope you have great plans to relax and enjoy your Memorial Day. Unfortunately, part of that plan can’t be going to Red Lobster, since they filed for bankruptcy and have begun closing stores down after a number of wrong business turns, including all-you-can-eat shrimp. So, it's time to find a new spot for your seafood fix.

And celebrations might be milder across the board, as a leading U.S. economic index points to slower growth, dropping 0.6% last month. This decline was caused by a mix of factors, like weaker business orders, fewer permits for new homes, and a drop in stock prices.

So, while you think about your plans for Memorial Day, let us catch you up in this week’s newsletter. This week, we will update you on the Q1 e-commerce total sales, supermarket price cuts, Walmart’s same-day or next-day shipping, NY Fed’s new supply chain pressure metric, new gig worker platform for warehouse jobs, Canadian rail negotiations, and more!

LOGISTICS VITALS

E-COMMERCE SALES REACH Q1 RECORD SHARE OF TOTAL SALES

Who would have thought that U.S. e-commerce penetration hit an all-time high in the first quarter? According to the Digital Commerce 360 analysis of U.S. Department of Commerce data, it's actually the third-highest quarterly penetration ever recorded. In Q1 2024, U.S. e-commerce sales reached $268.12 billion, up 8.5% from Q1 2023. Let’s take a look at those Q1 total e-commerce retail sales in recent years:

• 22.2%: percentage of total sales in Q1 2024

• 21.2%: percentage of total sales in Q1 2023

• 20.7%: percentage of total sales in Q1 2022

• 21.0% percentage of total sales in Q1 2021

• 16.4%: percentage of total sales in Q1 2020

Price-conscious shoppers are buying online to snag the best deals and avoid inflation worries.

WAREHOUSE TECH

TECH TURMOIL AT SEA & AI ADVOCACY ON LAND

Tech is great when it’s working, but when it’s not, it closes down an East Coast port. So, apparently, there was a "software issue" causing all cargo operations at the Port of Charleston and South Carolina inland ports to be suspended. The Ports Authority is blaming it on some glitch and is working with an outside vendor to fix it ASAP. Oh, and don't worry, it's not a cyber attack, just a good old software problem.

Tech is also best when it’s not putting humans completely out of work, and the White House announced additional measures this week to guide the implementation of AI in the workplace. These principles cover ethical AI development, strong governance, and support for workers during job changes, all while safeguarding their rights and data. Big shots like Microsoft and Indeed have already jumped on board, promising to play by the rules. The goal is to ensure businesses thrive and workers reap the benefits of the AI revolution. Now all we need is big tech to join in.

And Roambee just dropped the world's first 5G GPS "peel-and-ship" smart label! It's like a barcode but way cooler. This label uses advanced tech like 5G, GPS, and NIST sensors to track goods throughout the entire supply chain, but also monitors temperature, humidity, shock, and light. They help retailers predict product flow accurately and send alerts for time-sensitive deliveries. They ensure necessary services are ready when products arrive and simplify cross-border logistics with proof of delivery.

ONLINE MARKETPLACES

SUPERMARKETS SLASH PRICES AMID CONSUMER CONFIDENCE DIP & GROWING FINANCIAL CONCERNS FOR CONSUMERS

Consumer confidence took a hit in April, with factors like job market worries and financial struggles contributing to the dip. According to the Numerator Consumer Sentiment Tracker, only 41% of consumers feel comfortable splurging on non-essential purchases. To save money, people are turning to coupons, discount codes, sales, and even dusting off their cooking skills at home.

And speaking of food, major supermarkets are announcing upcoming price cuts on goods, and it’s not just to help consumers - it's also about improving their bottom line. Without lower prices, they'll lose customers. As a result, Target decided to slash prices on 5,000 items, while Aldi is dropping prices on 250 items. Walmart is also pushing a new food line with 300 items at 70% prices under $5, and Kroger is adding over 800 items to their own-brand products. In this battle of brands - who will win the price war?

While it’s a price battle among the major supermarkets, retailers like Under Armour are starting to announce some very cautious expectations for the next year. Under Armour had a rough fourth quarter and fiscal year 2024, so much so that they're planning a restructuring. They expect revenues to keep falling in North America by 15% to 17%.

And it’s not just retailers that are feeling the pinch - You know it’s getting worse when the amount of ‘side-hustling’ increases. According to the latest PYMNTS Intelligence report, 30% of U.S. consumers rely on side hustles to pay their bills. Even high-income earners are feeling the squeeze, with 26% of those making over $100,000 a year seeking out extra income. It seems like everyone is feeling some financial uneasiness.

FREIGHT AND SHIPPING

WALMART ACCELERATES DELIVERY RACE, BALTIMORE CLEARS KEY BRIDGE CHAOS, & CONTAINER SHIPPING RATES SURGE

Walmart is not here to play games with Amazon in the speedy delivery race. In the past year, they delivered 4.4 billion items with either same-day or next-day shipping. And get this - about 20% of those were delivered in under three hours! Customers love the faster delivery times, which has helped Walmart increase efficiency and improve delivery costs by almost 40%. Watch out, Amazon.

And more good news in the Baltimore Key Bridge. The MV Dali container ship was finally removed and towed to port after causing chaos in Baltimore nearly two months ago, revealing a new opening in the city’s skyline.

Speaking of containers, looks like rates are at the highest level since COVID. The Shanghai Containerized Freight Index hit over 2,520 on May 17, proving that the shipping industry is not taking it easy anyone. Everyone is scratching their heads at this sudden surge - even those who just signed long-term contracts in May. The gap between spot and contract rates is causing shippers to fear a repeat of pandemic problems.

SUPPLY CHAIN OPERATIONS

NEW YORK FEDERAL RESERVE BANK LAUNCHES SUPPLY CHAIN PRESSURE METRIC

There have been so many supply chain disruptions recently that the NY Fed has announced the launch of a “supply chain pressure” metric, which it is calling the “Supply Availability Indexes.” This new tool will track supply chain status and its impact on local businesses. These indexes will be part of the regular surveys of regional business activity, giving us a better picture of what's happening. We can even compare U.S. trends to international supply availability with these new gauges. Not that we’re anxiously awaiting the next disruption, but it’s good to know that forethought is being given to minimize the negative impacts.

WAREHOUSE AND LOGISTICS LABOR

WAREHOUSE STAFFING INNOVATES AS SUPPLY CHAIN SALARIES SOAR; RAIL NEGOTIATIONS EASE TENSIONS

As the warehouse industry struggles to find good talent, one of the largest industrial staffing companies is rolling out a “gig worker” platform for warehouse jobs. GXO Logistics Inc. is planning to expand its gig worker hiring plan to more locations after successfully testing it out in eight warehouses. This comes as the logistics industry struggles to find and keep enough workers due to low unemployment rates. The pilot program with Employbridge allowed them to offer flexible arrangements for over 1,100 gig workers, supplementing their regular workforce. So, stay tuned as gig workers may be able to help solve some of the wide-ranging logistics employment issues.

On a more positive note, according to the ASCM, supply chain salaries increased by 8% this year. Their report showed that supply chain pros are making bank, with a median salary of $103,000. Those with degrees are raking in even more, with a $25,000 premium. And if you've got a supply chain credential, you're earning 10% more than your non-credentialed buddies. But it's not just about the money - supply chain professionals are loving their jobs, with 85% reporting high job satisfaction.

And could there be a stop to the potential Canadian rail strike? Canadian National Railway (CN) tried to make things right with the Teamsters Canada Rail Conference (TCRC) on May 16, hoping to avoid chaos for North American shippers, carriers, and logistics experts. CN's new offer ditches hourly rates and scheduling ideas. Meanwhile, the Canadian Pacific Kansas City Railway also got back to negotiating with the TCRC on May 17. CN wasn't going to be left out of the fun and planned to have their own talks on May 17 as well. Let's see if they can smooth things over and get back on track.

Finally, could the female workforce be the answer to the truck driver shortage? There are going to be a lot of jobs to fill within the next 10+ years.

WAREHOUSE QUICK DELIVERIES

CARGO THEFT INCREASES, WHILE APRIL ONLINE GROCERY SALES SOARS

• Surge of Cargo Theft Strikes Like Lightning, With 925 Incidents in Q1 2024

• April Online Grocery Sales Increased Y.o.Y in the U.S.