Warehouse Wisdom. Weekly. 6/7/2024

Happy Friday!

As we get into June, the temperatures are starting to rise with summer just around the corner, the NBA Finals and French Open are in full swing, and the world of logistics continues to heat up with breaking news. As we push this newsletter out, a railway strike could be underway today in Canada if a last minute resolution isn’t agreed upon.

Also, fresh off the presses, job openings in the U.S. have fallen to a new 3-year low, and sales have grown modestly for small businesses by 4.3% year-over-year and edged up 0.2% from last month. The U.S. economy and logistics in particular continue to struggle through challenges.

And even logistics tech is running into some roadblocks, with drone delivery costs still sky high (the cost of delivering a single package by drone is around $13.50, whereas it only costs $1.90 a package via traditional delivery), making full scale adoption a questionable endeavor.

And that’s just the start of the news for the week. We will catch you up on the improved delivery time of U.S. carriers, big changes in the retail industry, container rate surges, cargo theft on the rise, 3PLs struggling amid economic challenges, Walmart offering new perks for hourly U.S. workers, and more!

LOGISTICS VITALS

U.S. CARRIERS SHOW IMPROVED DELIVERY TIMES IN Q1 2024

Parcel Monitor's data shows that U.S. shipping carriers are stepping up their game in delivering packages on time. The secret? A fierce competition between UPS and FedEx to rule the e-commerce logistics world. Parcel Monitor shows both carriers have improved their delivery times significantly in the first quarter of 2024. Let’s take a look at their transit time for Q1 2024:

• 2.08 days - FedEx

• 2.22 days - UPS

• 2.55 days - USPS

The carriers in the U.S. are getting good at handling packages and avoiding issues that can make customers wary. They're basically like package ninjas, making sure everything goes smoothly.

MARKETPLACES

RETAIL SHAKE-UP AND BIG CHANGES AFOOT IN THE INDUSTRY

Dollar Tree is shaking things up again, this time with its Family Dollar stores. The discount giant is considering selling Family Dollar, spinning it off, or doing something else with the chain. Earlier this year, Dollar Tree said it would close nearly 1,000 underperforming Family Dollar stores. Now, Dollar Tree is hinting that it might say goodbye to Family Dollar for good. But Dollar Tree has yet to commit to anything. They're just exploring their options, and there's no set timeline for making any decisions.

eBay is breaking up with American Express (Amex) as eBay won't be accepting Amex as a payment option starting August 17, 2024 due to high fees. In a statement, eBay expressed frustration with constantly rising credit card transaction fees despite advancements in technology and fraud protection, where processing costs should decline. So, if you’re an Amex lover, you’ll need to find a new card to swipe on eBay. Don’t worry, it’s not you, it’s the fees.

On the other hand, Amazon and AI’s relationship is stronger than ever as Amazon uses AI technology to ensure your products arrive in perfect condition. They have a detective-like AI model named "Project P.I." scanning items for defects in imaging tunnels. This AI can spot issues like damaged products and wrong colors or sizes before you even see them. It's like having a private investigator checking your order! Project P.I. can also figure out why these issues happened so that Amazon can prevent them in the future.

Do you know who also cares for their customers? Walmart! Walmart is on a mission to bring its InHome delivery service to more customers, adding 10 million potential shoppers in cities like Southern California, Boston, Detroit, Minneapolis, and Philadelphia! Their delivery personnel are like secret agents, using smart locks and body cameras to ensure safe and secure drop-offs. Walmart says this expansion is all about making life easier and providing a seamless shopping experience for all consumers! Because, let's face it, who has time to deal with crowded stores these days?

And Europeans prefer e-commerce deliveries to lockers instead of their doorsteps. According to Geopost, a French parcel locker provider, 44% of regular e-shoppers in Europe prefer this option, up 5% from last year. Why? Because they want flexibility and affordability! Lockers and parcel shops are becoming the new norm, accounting for 23% and 24% of delivery locations. This is all thanks to international shippers like China. Looks like the future of delivery is out-of-home!

Finally, Costco's e-commerce sales are on fire, growing three times faster than total sales in Q2. The company is crushing it, beating Wall Street's expectations with net sales of $57.39 billion. Costco credited its success to increased deliveries (28% y.o.y), site visits, and app downloads (32%). In addition, their e-commerce sales increased by 20.7%. And let's not forget about Costco Next, with 75 vendors now on board.

INTERNATIONAL SHIPPING

E-COMMERCE CRACKDOWN AND CONTAINER RATES SURGE

U.S. Customs and Border Protection (CBP) is cracking down on customs brokers exploiting a loophole in low-value e-commerce shipments. They've now suspended some brokers from a program meant to speed up entry, but the real issue is the flood of e-commerce imports from China and India that they're struggling to regulate. CBP isn't giving specifics, but it seems like these brokers weren't playing by the rules when it came to classifying and valuing goods and filing data on time. It's time to tighten those reins in the e-commerce loophole!

Container rates surge, but the bubble is expected to burst in 2024. Reports show that China saw a huge 45% spike in container prices in May, while prices in the US and Europe stayed put. However, thankfully, Container xChange is predicting a market correction! They're saying this price surge is like a bubble just waiting to pop in the second half of 2024. They're pointing fingers at capacity shortages and a sudden jump in demand for driving up prices. They're not convinced this spike is here to stay. In fact, they think high interest rates and worries about the job market might make people tighten their spending, which could mean less shipping in the future.

In fact, ocean freight rates are expected to hit the Red Sea peak. From the Far East to the U.S. West Coast, rates are expected to hit $5,170 per FEU, a 57% increase in May. And that's not all - rates to the U.S. East Coast are set to reach $6,250 per FEU, just shy of the Red Sea crisis peak of $6,260 last February. And on the Far East to North Europe trade, rates will skyrocket to $5,280 per FEU. Prepare for some serious sticker shock in the ocean freight container shipping world!

TRUCK FREIGHT

APL CARGO INC. OF WOLCOTT, INDIANA FILES FOR BANKRUPTCY WHILE CARGO THEFT PLAGUES INDUSTRY

An Indiana-based trucking company with 122 drivers and 142 power units decided to hit the pause button and filed for Chapter 11 bankruptcy protection. APL Cargo Inc. of Wolcott, Indiana, made this move recently in the U.S. District Court for the Northern District of Indiana. As for why they filed for bankruptcy, well, that's a mystery. However, the petition does mention that they're looking to reorganize. Add this to the list of bankruptcies the last year…

And truckers are struggling big time with cargo theft. Cargo thefts are on the rise, with no signs of slowing down in 2024. During the first quarter, CargoNet reported 925 incidents, a 46% increase from 2023. California took the lead with a 72% spike in thefts - yikes! Thieves are also getting crafty, hacking into systems or pretending to be employees to steal freight. It's not just trucks at risk; warehouses and distribution centers are hotspots, too. Keep an eye out for stolen small appliances, liquor, energy drinks, and copper - they're top targets for these sneaky bandits!

WAREHOUSE OPERATIONS

3PLS STRUGGLE AMID ECONOMIC CHALLENGES, WHILE SMALL BUSINESSES NAVIGATE SUPPLY CHAIN STRATEGIES

Global and domestic 3PLs had a rough go of it last year. Shippers were dealing with inventory issues and geopolitical risks, leaving 3PLs scrambling. For instance, transportation rates dropped, fuel prices soared, finding good people was tough, warehouses were packed, rules multiplied, and competition was fierce. Shippers were all about slimming down their inventories and saving on logistics. According to Transport Intelligence Ltd.’s survey, the biggest challenges for 3PLs right now are the economy, rising costs, and tons of competition. To keep up, the top 3PLs are teaming up with carriers and using automation to impress customers. But will it be enough?

So, what can small businesses do to manage all of the logistics and supply chain challenges? Well, first things first: don’t put all your eggs in one supplier basket! Diversify your local and global suppliers to keep the wheels turning even when disruptions strike. Strengthening supplier relationships is also crucial; after all, a little buddy system never hurts anyone. Next, leveraging inventory management technology is a must to avoid stockouts and resource wastages. And for the cherry on top, partner with logistics pros who can track and troubleshoot like a boss so you can have a plan B ready. Plus, if tech and consulting firms throw in some pro bono love, it’s a win-win for everyone!

WAREHOUSE JOBS

WALMART OFFERS NEW PERKS FOR HOURLY U.S. WORKERS

Walmart is spoiling its hourly U.S. workers with some cool new perks. They're offering bonuses and even opportunities to move into skilled trade jobs within the company. This isn't their first rodeo - they've already had a program for turning employees into certified truck drivers. They're doing this because, believe it or not, they've noticed fewer people leaving their jobs at Walmart. But hey, it's still tough out there in the job market, so they're pulling out all the stops. In addition, they've got a new bonus plan for part-time and full-time store workers based on store performance and years of experience. So, get ready to reap those rewards, Walmart employees!

WAREHOUSE QUICK DELIVERIES

CHINA’S LOGISTICS INDEX INCREASES IN MAY, AND OMNIPOINT LAUNCHES ONE RAIL SOLUTION

• China’s Logistics Index was Up at 113.9 Points in May

• OmniPoint Releases One Rail Solution to Track Inventory and Avoid Shrinkage