This Week in Logistics News (August 28 – September 3)
This weekend is Labor Day, which is usually the final week of summer vacation. However, given the late nature of the holiday, my kids went back to school this week. It’s amazing how quickly the summer came to an end. I almost feel like we didn’t even have enough time for back-to-school shopping. But apparently, we might have been the only ones. According to the National Retail Federation’s (NRF) annual back-to-school shopping survey, consumers plan to spend record amounts for both school and college supplies as families and students plan to return to in-person classrooms this fall. Families with children in elementary through high school plan to spend an average of $848.90 on school items, which is $59 more than last year. Total back-to-school spending is expected to reach a record $37.1 billion, up from $33.9 billion last year and an all-time high in the survey’s history. College students and their families plan to spend an average of $1,200.32 on college or university items, an increase of $141 over last year. Over half of this increase is due to increased spending on electronics and dorm furnishings. Total back-to-college spending is expected to reach a record $71 billion, up from $67.7 billion in 2020. And now on to this week’s logistics news.
The global shipping crisis and labor shortages have put the industry on edge over the last few months, especially as the holiday shopping season approaches. This week, top toy makers sounded the alarm that the most popular toys will be harder to find and more expensive this year. Backlogs at ports have left containers sitting for weeks, as the driver shortage has made it harder to move goods around the country. On top of that, the price of containers has skyrocketed. MGA Entertainment CEO Isaac Larian told CNN Business that the “container that cost $3,200 last year is now $22,000.” This will continue to drive up the prices for toys. Toy makers fear that although the demand for toys will be there this holiday season, the physical inventory will not. This will certainly be an interesting story to keep an eye on.
Speaking of the holiday season, Walmart is planning to add 20,000 supply chain employees ahead of the anticipated holiday rush. The jobs, which will be a mix of full-time and part-time, will all be permanent positions. They will range from order fillers to freight handlers at the company’s more than 250 distribution centers, fulfillment centers, and transportation offices. The average wage for a supply chain associate is $20.37 per hour. Walmart has not indicated whether it will hire additional seasonal employees for the holiday rush, although last year the company did add approximately 20,000 workers, which was the first time in five years it had done so.
Nuro, the autonomous home delivery start-up, has continued to make news with its partnerships with FedEx, CVS, Domino’s, and Kroger. Now the company has announced that it is expanding its physical footprint. The company said it will spend $40 million on the construction of a manufacturing facility and test track for its fleet of self-driving robot vehicles. Both facilities will be located in Southern Nevada. The new 125,000-square-foot factory will have the capacity to build “tens of thousands” of delivery vehicles. Once the company’s manufacturing facility is up and running, Nuro will need a closed course to test and validate its vehicles safely. Nuro said it is “taking over” 74 acres of the Las Vegas Motor Speedway to build a “world-class, closed-course testing facility that will allow sophisticated development and validation of its autonomous on-road vehicles.”
FedEx has also been testing autonomous robotic deliveries, with the expansion of pilots for its Roxo robot. The company is now running more tests in Richardson, TX, a city in Dallas and Collin counties. Roxo weighs about 450 pounds and stands 5.5 feet tall. The wheeled vehicle can hold up to 100 pounds and is designed to travel along the side of roads or sidewalks. Sensors on Roxo allow it to detect objects and movement from up to 150 feet away. FedEx worked with the Richardson police and fire departments, city engineers and the Marlborough Square Home Owners Association to ensure the testing ran smoothly.
Food delivery has soared since the beginning of the Covid pandemic. And while this has been beneficial for a large percentage of the population, rising delivery fees have also made it economically unviable for some. This week, New York City lawmakers passed a measure that will make temporary caps on third-party delivery fees permanent. The bill, proposed by Councilman Francisco Moya, a Queens Democrat, will prohibit food delivery companies from charging more than 15 percent per delivery order and more than 5 percent for marketing and other fees. The measure is part of a package of bills aimed at regulating the food-delivery industry. Another piece of legislation the council passed will require delivery companies to be licensed by the Department of Consumer and Worker Protection every two years.
“By limiting, without expiration, the fees charged to restaurants by third-party food delivery services, we are ensuring that mom-and-pop shops have a real opportunity to recover and thrive.”
A number of grocery chains have piloted programs to roll out robots in the stores for a variety of tasks, from inventory management to aisle clean-up. And while some of these programs have been successful, others have been scrapped due to public safety concerns. This week, Schnuck Markets became the first grocer in the world to employ AI-powered inventory management technology at scale. The grocer has partnered with Simbe Robotics for a roll-out at its 111 locations. The Tally robots roam store aisles up to three times a day and autonomously capture on-shelf data, including inventory position, price accuracy, and promotional execution, for about 35,000 products per store with each trip. According to Schnucks, associates and customers have seen improved inventory and productivity in these stores, with many employees experiencing the “Tally effect,” the ability to spend time on other, more fulfilling tasks such as helping customers.
Earlier this year, IKEA launched a program to buy back used furniture to refurbish and resell in Europe. This was all part of the company’s plan toward making its business more sustainable and “climate positive” by 2030. Now, IKEA is launching the program in the US. Loyalty customers will be able to sell their gently used Ikea furniture in exchange for store credit. The items will then be available for resale in the retailer’s “as-is” section at discounted prices. Any customer can join the loyalty program for free. Fully assembled furniture will be assessed based on its condition, age and functionality, but some categories of products like dressers will not be eligible for the program. The pilot program will be available at its store in the Philadelphia suburb of Conshohocken through September 19 and will eventually roll out to additional markets.
That’s all for this week. Enjoy the weekend and the song of the week, Chuck Berry’s School Days.