Warehouse Wisdom. Weekly.

Happy Friday!

E-commerce retail remains the lone beacon of hope as both the broader freight industry and commercial real estate markets trend downward from the non-stop attacks of inflation. With all of these cost pressures and warehouse labor costs at a high, it certainly feels like something has to give.

In this week’s newsletter, we cover a unique way to increase holiday sales, USPS’ attempt to gain back your confidence, lessons learned from Amazon’s amazing pace of injuries, and whether the logistics industry is embracing tech. Take a deep breath - here we go…

LOGISTICS VITALS

WAREHOUSE WORKER PAY IS ON THE RISE

Average Warehouse Labor Rates:

Average Warehouse Hours Worked Per Week:

MARKETPLACES

E-COMMERCE IS PREDICTED TO WIN THE HOLIDAYS

Consumer Growth Partners (CGP) added to the list of holiday sales forecasts by projecting that e-commerce online retailer sales will outpace in-store sales. More specifically, their report predicted an upbeat 5.1% increase in sales this holiday season (versus 2.1% for in-store sales).

But who will benefit the most? Health and beauty and alcohol products are predicted to grow 5.2% and 3.1% respectively. On the other end of the spectrum, home furnishings (6% decrease) and home improvements (4% decrease) will take the biggest hits. Sounds like inflation and a significant blow in the housing market have caused consumers to sour on home spending. Even Home Goods agrees, as they are throwing in the towel on their online shopping channels to focus on physical stores.

On top of online retail’s projected stronger growth over traditional in-store retail spending, the internet segment has racked up another notch in its belt. Online spending made up a bigger share of total retail spending over the past 12 months compared to 2019 (pre-COVID). This is more proof that retailers should rev up the engines of their online marketing channels!

Speaking of which - want to boost your e-commerce sales this holiday season? Make sure you’re using personalized promotional emails and personalized brand recommendations to motivate shoppers. In a recent report by The Harris Poll, 20% said these types of highly personalized motivators serve as a compelling motivator for making a purchase!

SHIPPING

USPS IS TRYING TO EARN YOUR CONFIDENCE

USPS often gets a bad rap for performance. But the government shipping giant is trying to improve its performance numbers for on-time deliveries. In the most recent report of performance for the first two weeks of October, USPS indicated that they delivered mail and packages in an average of 2.8 days, with 90.4% of all first-class mail being delivered on time. The agency is trying to improve even further to an end goal of the agency of 95%, which is still a noticeable tick lower than UPS’s 97.5% average on time performance. I guess you get what you pay for.

If you do use USPS to offer cost-effective shipping solutions to your customers, make sure you clearly define how much insurance coverage is needed for shipments. Seems that the postal giant is catching some slack for underdelivering on expected insurance coverages when packages are lost or damaged - which will put a frown on your customers’ faces.

COMMERCIAL REAL ESTATE

THE FED IS SOUNDING THE ALARM ON BUSINESS PROPERTIES

The Fed is worried about commercial real estate. In its October 2023 Financial Stability Report, the central bank identified this sector as having the potential to see large loses. Why, you ask? The estimates of how much properties are ‘worth’ are consistently overstated even though prices continue to decline. In other words, it’s entirely possible that properties aren’t worth what people are claiming.

The other culprit? The very toxic mixture of high interest rates and low vacancy rates. In fact, some reports indicate that commercial vacancy rates have been holding steady at an alarmingly high 18%. Perhaps the growth in work-from-home employment is at play here as well?

WAREHOUSE OPERATIONS

WAREHOUSE INJURIES ARE OFF THE CHARTS AT AMAZON

Nearly half of Amazon warehouse workers suffer injuries and burnout, according to a recent survey by the University of Illinois. This national survey showed that 41% of the e-commerce giant’s workers have gotten hurt on the job. Of those hurt, a whopping 69% had to take unpaid time off to recover. Ouch.

The survey may also suggest that many OSHA statistics go unreported, as the latest OSHA data indicate a mere 6.9 injuries for every 100 workers.

What’s causing this glut of injuries? The survey indicated that extensive performance monitoring and the rapid pace of Amazon’s warehouse work environment both contribute to significant physical and mental tolls.

The moral of this story? While many companies focus on reducing the basic risk of job related injuries, such as getting struck by forklifts, tripping over pallets, or lifting heavy boxes, thought needs to be given to worker demands and performance metrics. It sounds like finding a healthy balance between measuring productivity and putting too much pressure on warehouse staff is imperative. So, keep trying to address those repetitive tasks, but don’t forget about your workers’ minds.

WAREHOUSE TECH

WILL WAREHOUSE AUTOMATION LIVE UP TO THE HYPE?

Amazon gave a glimpse into a fully automated warehouse this week. The previously secret robotic system has now seen the light of day, when representatives gave a guided tour this week. What does it look like exactly? Totes in storage structures transported by autonomous mobile platforms, to be exact. Want to see it in action? Click here!

Does warehouse automation, and specifically WMS software help retain employees? That is the hypothesis of the Forbes Technology Council. Making life easier for warehouse staff is extremely important, especially given the challenge with finding enough human labor. Time will only tell if humans will play nicely with robots and software programs, but it seems logical that making challenging work more palatable is a priority to retain good staff.

Which bring us to the elephant in the room…is all the automation hype in the logistics function true? According to research from ProGlove, only 45.6% of all warehouse and logistics leaders see automation as necessary over the next five years. That doesn’t sound conclusive to say the least…

At least a lowly pallet won’t be a threat to take over a warehouse job, right? But the age-old warehouse staple is beginning to have a makeover by tech as well.

WAREHOUSE QUICK DELIVERIES

SMALL BUSINESS VICTORIES AND AN L.A. COMEBACK

• Consumers can now search for small businesses on Amazon

• Etsy just released its top holiday search trends

• Global container shipping trades are predicted to decline for the next few years

• It’s looking like warehouse managers are balancing peak inventory in North America

• UPS is getting happy about returns, buys Reverse Logistics software company to expand its digital solutions

• Strikers shut down a vital Great Lakes shipping artery

• And Los Angeles is making a comeback, at least in container freight, that is