Warehouse Wisdom. Weekly. 5/31/2024

Happy Friday!

This short but sweet holiday week, we're hitting you with a condensed yet impactful round-up of the latest news.

To start, we've got a story that's sure to rev your engines and maybe even make you reconsider what it means to truly love your job. Well, let's face it—not everyone can say they love what they do. And it's a rare breed who can still say that at the age of 90. But then again, not everyone is Doyle Archer. At 90 years old, Archer has driven his way into the Guinness Book of World Records as the oldest male truck driver. Despite the challenges he faces on the road, Archer has no plans of retiring anytime soon!

So, when those Monday mornings are tough, remember Doyle. If he can still enjoy the open road after nine decades, we can surely find a bit of joy in our own daily grind. With that, let’s catch you up on this week’s newsletter. We will update you on TikTok’s bold moves regarding their influencers and platform ban, a ship in the Red Sea attacked twice by Houthi rebels, demand for air cargo soars in second quarter, trucking freight recession continues to loom, Amazon ramps up DCs expansion, largest EV charging port in SoCal, Port of Baltimore opening delayed, and more!

LOGISTICS VITALS

SURVEY: DO YOU THINK SALES IN 2024 ARE GOING TO BE UP OR DOWN FOR YOUR BUSINESS?

For this week’s logistics vitals, we’re changing things up a little bit, and we would love your help creating some news! With all the inflation, political upheaval, and other disruptions affecting supply chains and logistics, we’re curious about your take on the future. Do you think sales in 2024 will be up or down for your business? We’d love to hear your thoughts, so let us know your quick take below:

We’ll let you know the results in one of our next newsletters.

FREIGHT AND SHIPPING

RED SEA TENSIONS ESCALATE AND GLOBAL SHIPPING WOES CONTINUES

Another week, and unfortunately another attack on the Red Sea. A ship in the Red Sea off Yemen was attacked and took on water - twice! Missile attacks damaged a Greek-owned ship, the Laax, which is Greek-owned and Marshall Islands-flagged. No one claimed responsibility, but fingers are pointing at Yemen's Houthi rebels as they've been known to target ships in the area. The first attack happened near Hodeida, causing damage and water to flood the ship, while the second missile attack near Mokha caused even more damage to the poor Laax.

And the Houthi rebels decided to target this Greek bulker with not just one, not two, but five missiles. They seemed to want to make a statement in their "fourth phase" of aggression against commercial vessels. The Laax was hit hard, but luckily it's still afloat. Maritime security firm LSS-SAPU is keeping a close eye on it to make sure it stays that way.

And do they now have ballistic missile capabilities? The Houthis have reportedly increased their attacks on shipping, citing Israeli actions in Rafah as the reason. They boasted about attacking six ships in the Red Sea, Indian Ocean, and Mediterranean. According to Iran's Tasmin News Agency, the Houthis now have a new missile based on an Iranian design, claiming it's more accurate with an "optical seeker" to target ships. Rumor has it that this missile can also be fired from sea, advancing the Thunder 69 missile.

With rebels wreaking havoc in the Red Sea, Maersk estimates a 15 to 20% ocean capacity crunch on trade lanes to Europe—making air freight a tempting alternative for shippers. As a result, the demand for air cargo is soaring in the second quarter, with a double-digit increase for the fifth consecutive month. According to the International Air Transport Association (IATA), airlines worldwide recorded 21.7 billion cargo tonne-kilometers (CTKs) in April, up 11.1% from last year. Despite a slight decrease from March, the demand is still going strong. Looks like the friendly skies are the place to be for shipping these days.

But, on the other hand, the trucking freight recession continues. Too many trucks and not enough freight mean rates are at rock bottom. We're in a freight recession that just won't quit! Dean Croke from DAT IQ says that this freight recession has been going on for so long that it's breaking records, and who knows how long it'll last? Some say rates could start crawling back up in the second half of 2024, while others say not until next year.

COMMERCIAL REAL ESTATE

AMAZON RAMPS UP WAREHOUSE EXPANSION WHILE COMMERCIAL LOAN CRISIS LOOMS LARGE

Amazon is looking to expand DCs to speed up deliveries and beat the competition. Amazon is continuing to expand its’ warehouse footprint in 2024, leasing 16 million square feet of new warehouse space. Apparently, they're planning for a staggering 170 new distribution facilities in the U.S. alone. That's a lot of packages! Amazon is also trying to get super regional with its delivery network, using machine learning to predict where customers will want specific items and stash those products in those exact spots. They're getting good at it, too - 76% of orders are now shipped from nearby warehouses. And get this: almost 60% of Prime customers in big metro areas get their orders the same day or the next day.

And is a commercial loan crisis hiding in plain sight? In his May 15 Congress testimony, Federal Reserve Vice Chairman for Supervision Michael Barr reassured everyone that the banking system is sound and resilient. However, there are concerns that a wave of commercial real estate loan defaults could lead to bank failures. The data shows that there's insufficient cushion to absorb these potential losses, setting the stage for a possible sequel to the 1980s Savings and Loan Crisis. With $2.1 trillion in capital for over $23.7 trillion in assets, things might get spicy if those fixed-interest rate loans start acting up. After all, many assets were purchased before interest rates climbed. Let's hope those banks can keep their heads above water.

WAREHOUSE AND LOGISTICS LABOR

WHAT SUPPLY CHAIN PROFESSIONALS ARE DOING TO MITIGATE THE LABOR SHORTAGES

Descartes surveyed 1,000 supply chain and logistics decision-makers in North America and Europe. The survey found that 76% of respondents are facing workforce shortages. So, what are these companies doing about it?

Companies are changing their hiring strategies to attract workers! Some offer flexible working hours (35%), and others embrace new technology (34%), such as delivery route optimization. Both approaches play a favorable role in the millennial and Gen Z demographics. Some are even considering paying higher wages (31%). On the retention side, investing in workforce skills is key to keeping those valuable employees around. On-the-job training and education (35%), plus good compensation, are the top tactics (34%).

With all these tactics and strategies, the winners in this talent war will be those who keep investing and evolving to stay ahead of the game!

WAREHOUSE TECH

SOCAL'S LARGEST EV CHARGING DEPOT ROLLS OUT, WHILE CARGOKITE REVOLUTIONIZES SHORT SEA SHIPPING WITH HYDROFOIL VESSELS

Prologis and Performance Team, a subsidiary of Maersk, teamed up to create the largest heavy-duty EV charging depot in SoCal. This depot, located near the Ports of LA and Long Beach, is energized by the biggest EV microgrid in the US. It can charge up to 96 EV trucks at once. Performance Team's Volvo VNR Electric Trucks, with a 240-mile range, will charge up 80% in just 90 minutes.

While we’re on the topic of efficiency, CargoKite, a German tech start-up, is planning to shake up short sea shipping with 16 containers at a time using small, hydro foiled, autonomous vessels with 200-square-meter kites, calling it micro-shipping. Forget about those big feeder ships, CargoKite says a fleet of their vessels can do the job better. And don't worry, they've got diesel-electric power for when the winds aren't cooperating. The goal? To eventually go fully electric or use zero-emission fuels. Sounds like they're thinking outside the box, or should we say, outside the shipping container.

ONLINE MARKETPLACES

TIKTOK'S BOLD MOVES: EMPOWERING INFLUENCERS AND FACING U.S. LEGAL CHALLENGES

TikTok, the land of dances and trends, is on a mission to turn its billion users into influencers! Now, if you have over 1,000 followers, you can start earning money by promoting products on TikTok Shop. TikTok even has a fancy marketplace for creators and brands to connect, negotiate rates, and track sales. Becoming an influencer involves a lot of hassle, from finding brands to creating top-notch content and getting enough followers. But with TikTok's new system, it's like the floodgates have opened, and there's a whole new world for influencers out there!

And speaking of TikTok, the White House rejected the option of overseeing the social media app, so on to the legal battle. The administration said no thanks to TikTok's parent company ByteDance when they offered to let federal officials choose TikTok's board members, look at its source code, and even have a "kill switch" if needed. Apparently, the offer was rejected because the administration felt it didn't do enough to address the national security risks posed by TikTok. Instead of taking this "Project Texas" deal, US officials are pushing for a bill in Congress that would force TikTok to be sold to an American owner. What now?

WAREHOUSE QUICK DELIVERIES

PORT OF BALTIMORE OPENING DELAYED AND RUSSIAN CARGO SHIP HITS TRAIN BRIDGE

• Port of Baltimore Opening Delayed as Clean Up Took Longer than Anticipated

• Russian Cargo Vessel Collides with Train Bridge Delivering Supplies to Crimea