Warehouse Wisdom. Weekly. 5/3/2024

Happy Friday!

How much do you like your morning commute? For those with a tough drive, it’s easy to understand how you’d like to swap places for a work-from-home opportunity. In fact, it’s hard to imagine anything worse than that early a.m. commute, especially when an accident adds time to the delay. But shoppers said they would rather sit through slow traffic than experience bad customer service from your brand! Wow – now if that doesn’t put things into perspective.

And being stuck in traffic beats being trapped in an Amazon warehouse for a week, right? Well, for one Utah cat, it could have been worse. Galena, a shy indoor cat, somehow ended up in a return box and survived six days without food or water before a warehouse worker in Los Angeles found her.

So, as you wait in traffic or carefully watch your pets, you can catch up on this week’s newsletter. This week, we will catch you up on the Q4 2023 in mobile and desktop sales, eBay and Amazon’s grant programs for small businesses, fuel surcharge increase, manufacturing industry contracts in April, driverless semis coming to Texas, and more!

LOGISTICS VITALS

COMSCORE REPORT REVEALS RECORD-BREAKING Q4 2023 SALES IN MOBILE AND DESKTOP SALES

According to Comscore, consumers went wild with their online shopping in 2023, spending a whopping $1 trillion more than a decade ago. The State of Digital Commerce report reveals that 2023 was the biggest year for digital commerce spending ever, with a record-breaking Q4, hitting $389.2 billion in sales, a 17% year-over-year growth for the quarter. Here’s some of the numbers:

• $141.4 billion: Total mobile sales, representing 10.9% growth

• $247.8 billion: Total desktop sales, representing 21.1% growth

Surprisingly, despite the rise in mobile commerce spending, desktop e-commerce sales outperformed mobile by almost double in Q4 2023. So much for phones taking over the world of online shopping – at least not yet!

ONLINE MARKETPLACES

EBAY AND AMAZON CELEBRATE SMALL BUSINESS MONTH WITH THEIR GRANT PROGRAMS; AMAZON UPS ITS GAME IN DELIVERY

If you sell on eBay, pay close attention! The company is running its fifth year of the Up and Running Grants program to help small businesses grow. eBay is awarding $500,000 to help small businesses with a grant. They're picking 50 eBay sellers in the U.S. and giving each seller $10,000 to make their businesses even bigger. And wait, there's more! they're also tossing in $500 to pay for tools and resources from eBay Refurbished. You have until June 7 to submit your ideas, so don't miss out on this golden opportunity!

Not to be outdone, Amazon is also making its contribution to Small Business Month with its own grant program. Along with its new Small Business Success Studio, an interactive online resource center, Amazon Business has also launched its 2024 Small Business Grants program. Small businesses in the U.S. have a shot at winning over $250,000 in grants, where the winners will also get a free year of Business Prime membership, Amazon devices, and Amazon Basics goodies. So, get those applications in and cross your fingers for some sweet, sweet grant money!

Of course the Amazon news doesn’t stop there – Amazon saved some serious cash in Q1 by increasing the number of product units it delivered per box. By consolidating orders into fewer boxes, they boosted their North American segment's operating income by $4.1 billion compared to last year, bringing it up to $5 billion. Might be an idea for other retailers to bag as well…

The retail giant also set delivery speed records and improved profits with further regionalization of inventory. Amazon has stepped up its shipping game by placing inventory in fulfillment centers near delivery stations. As a result, Amazon just crushed its own records for Prime delivery speeds in the first quarter of 2024. They delivered over two billion items to Prime members worldwide the same or the next day.

FREIGHT & SHIPPING

SHIPPING CONTRACT WARNINGS, FUEL SURCHARGE HIKES, AND LAWMAKERS ATTEMPT TO OVERTURN ELECTRIC TRUCK EMISSION LEGISLATION

You might want to think about locking in some of those shipping contracts soon.

Xeneta’s chief analyst, Peter Sand, warns shippers not to wait too long before signing long-term contracts. Remember Q4 2023 when shippers delayed signing contracts on the Far East to Mediterranean trade due to geopolitical tension? Well, those who hesitated are now stuck with high spot market rates. So, don't be a risk-taker and end up regretting it later!

Speaking of shipping rates, UPS rolled out fuel surcharge increases, effective April 29th. We're looking at jumps ranging from 14.75% to 17.75% for UPS Ground Domestic and UPS SurePost and from 16.25% to 19.25% for UPS Domestic Air. These changes are based on fuel price data, so get ready for some major adjustments that will impact the bottom line in a not so good way.

And hold up just a moment on the White House’s electric truck emission legislation changes – the House and Senate might just overturn it. Lawmakers are starting to tackle the administration's plan to electrify the trucking industry, but they're not all fully on board. At a hearing on Capitol Hill, they discussed the challenges of upgrading the electric grid to meet the zero-emission deadline set by regulators. For the moment, it looks like they're trying to put the brakes on this electrifying idea!

INDUSTRIAL REAL ESTATE

REAL ESTATE AND WAREHOUSE CONSTRUCTION IN NJ CONTINUES ITS COOLDOWN

In 2023, retailers stole the spotlight from 3PLs as the top leasers of big-box warehouses. They snagged 36% of all transactions, leaving 3PLs in the dust. According to CBRE, other categories like automobiles and building materials also upped their leasing game. The demand for warehouse space was driven by a mix of factors, from boosting supply chain resilience to accommodating more automation. Looks like retailers are taking back over the warehouse world!

And both rents and vacancies grow again in industrial real estate this past month. Industrial rents increased 7.3% year-over-year in March to $7.85 per square foot. Vacancy rates also increased due to a flood of new supply, hitting 5.2% by the end of March. Industrial transactions in Q1 2024 totaled $10 billion, with an average sale price of $147 per square foot.

And it looks like the warehouse construction boom in New Jersey hit a major speed bump! Building permits are down, vacancies are up, and rents are decreasing slower than before. Developers got a little too excited and built more space than customers needed. With high interest rates scaring off investors and economic uncertainty in the air, it's hard to say when we'll see any more growth in the warehouse industry. Looks like it's time for the warehouse market to take a little breather.

WAREHOUSE OPERATIONS

MANUFACTURING INDUSTRY CONTRACTS AGAIN IN APRIL

Speaking of declines, it seems like the manufacturing sector took a bit of a hit in April. That makes for contraction in 17 of the last 18 months. In April, the Manufacturing PMI® took a slight dip to 49.2% from 50.3% in March, signaling a contraction in the manufacturing sector.

Sadly, the New Orders Index slipped back into contraction territory at 49.1%, 2.3% lower than what was recorded in March. Production Index also took a hit at 51.3%, down 3.3% points from March. But don't worry—the overall economy is still chugging along with 48 months of expansion under its belt (even after a little hiccup last April).

WAREHOUSE TECH

BODY CAMS TO THE RESCUE AND DRIVERLESS SEMIS ARE COMING TO TEXAS

Retail theft is on the rise, and things are getting dangerous. But don't worry, retail workers have a new secret weapon - body cameras. These nifty devices not only record everything in the store but also double as a lifeline for employees in trouble. With live capabilities, workers can call for backup in real-time. Plus, the footage can be shared with the authorities to catch criminals in the act. It's like having your own personal security team.

And in other tech news, tractor-trailers will be cruising down Texas highways with no driver in short order! Aurora Innovation Inc., an autonomous transportation company, is gearing up to launch up to 20 self-driving trucks on Texas roads. Partners like FedEx, Uber Freight, and Werner are all on board for this futuristic journey. In just a few years, thousands of these autonomous trucks could be zipping around America's freeways, working tirelessly to deliver goods faster and cheaper. Who needs brakes when you have self-driving trucks that can run almost non-stop? They'll even tackle shorter routes on smaller roads. The future of freight is here.

WAREHOUSE QUICK DELIVERIES

RAILWAY WORKERS SET TO STRIKE IN CANADA, WALMART LAUNCHES ULTRA LATE-NIGHT DELIVERIES, AND MORE…

• Thousands of Railway Workers Set to Strike in Canada

• Walmart Launches Ultra Late-Night Deliveries

• Dollar Tree Warehouse in Oklahoma Decimated by Tornado Outbreak

• Online Grocery Shopping to Reach 12.7% of Total U.S Grocery Sales by 2028