This Week in Logistics News (September 18 – 24)
Good help is hard to find. And finding good help has become increasingly difficult as the Covid pandemic has caused labor shortages across a number of industries. One industry that has been hit hard is the restaurant industry, where owners and managers are having an incredibly difficult time finding servers. One Connecticut restaurant is taking a unique approach to combatting the labor shortage: robot servers. The operator of the New London location of the Shaking Crab said that the restaurant will use regular waiters and waitresses to explain the menu and take orders, but that the robots will deliver the meals to the tables. The robots, which can be summoned by a bell, serve two purposes. First, they address some of the labor shortages in the market. And second, and equally important, they bring a level of novelty to the restaurant that the owners hope will bring in customers. The restaurant, which has more than 20 locations in the northeast US and China, will open to the public in early October. And now on to this week’s logistics news.
- Amazon now ships more parcels than FedEx
- FedEx earnings reflect labor shortage, supply chain woes
- Ford, Redwood form circular supply chain for EV battery materials
- Smartphone shipments in China in August fall 9.9 percent
- The owner of Burger King vows to cut emissions in half
- McDonald’s pledges to offer more sustainable Happy Meal toys
- Albertsons first grocer to add DoubleDash offering
- US ports come up with plan to ease congestion
Over the last decade, as we have documented here, Amazon has been pushing its logistics arm to be less reliant on UPS, FedEx, and the USPS for delivering orders. In fact, Amazon has even begun shipping orders for outside customers. This first started in 2014 when the company delivered 20 million packages. According to data from Pitney Bowes, that push is paying off. For the calendar year 2020, Amazon delivered 4.2 billion parcel shipments, up from 1.9 billion in 2019. By volume, this means that Amazon makes 21 percent of parcel shipments in the US. While it still trails UPS and the USPS, with 38 percent and 24 percent of parcel shipments respectively, it has surpassed FedEx (16 percent of parcel shipments) for the first time. I think it is safe to say that Amazon will continue to look to capitalize on its delivery network and will be coming after UPS and the Postal Service.
Earlier this week, FedEx posted an 11 percent drop in profit for the quarter ended on August 31. The biggest reason for the drop is a tight labor market. According to FedEx, the tight labor market added $450 million to costs, including increased overtime, higher wages to attract workers, and extra spending on transportation. Across FedEx, about 600,000 packages a day are being rerouted due to staffing shortages. This is adding expenses for new truck routes and additional third-party transportation companies. FedEx is raising wages to try to attract more workers and paying premiums for weekend shifts. FedEx is now forecasting per-share earnings before certain accounting adjustments of between $18.25 and $19.50 for the fiscal year that started in June, down from a prior forecast of $18.90 to $19.90 issued in July.
Circular supply chains are becoming more commonplace as consumers and businesses alike look to reduce their carbon footprint and increase sustainability initiatives. Ford and startup Redwood Materials announced this week that they are partnering to form a “closed loop” or circular supply chain for electric vehicle batteries, from raw materials to recycling. The aim is to lower the cost of EVs by reducing the dependence on imported materials, while also narrowing the environmental impact from mining and refining of battery materials. The companies will work with Korean battery maker SK Innovation to make EV battery cells in the US that will fir the circular supply model. Redwood aims to begin recycling some material from Ford this year, with the goal of supplying the first anode material in 2023-2024.
The global computer chip shortage has hit the automotive industry hard and is taking a toll on the smartphone market as well. According to the China Academy of Information and Communications (CAICT), smartphone shipments within China fell 9.9 percent year on year to 23.1 million handsets in August. This decline follows a large slump in July and a steady decline in the first half of the year. The chip shortage is causing production delays, which is slowing the market. But consumers are also delaying upgrades as well, which is exacerbating the decline.
Restaurant Brands International, which owns Burger King, Popeyes, and Tim Hortons, announced this week that it will cut emissions in half by 2030, and will cut them entirely to become net-zero by the middle of the century. The efforts to do this will include replacing gas-powered vehicles with electric vehicles and making future restaurant prototypes greener. On top of that, the company will begin to work with protein suppliers, including plant-based meat alternatives, on ways to cut emissions from their operations. Convincing suppliers to get on board could pose a challenge, but as the industry as a whole moves in that direction, compliance becomes easier.
Restaurant Brands International is not the only fast-food provider looking at sustainability initiatives this week. McDonald’s has announced that it will offer more sustainable Happy Meal toys worldwide by the end of 2025. What exactly does this mean? McDonald’s is pledging to offer Happy Meal toys made with dramatically less plastic by the end of 2025. The company hopes to cut 90 percent of the amount of virgin fossil fuel-based plastic it used in the toys in 2018. The company said that it has already slashed use of virgin fossil fuel-based plastic in its toys by 30 percent worldwide after starting the process in markets like France, the United Kingdom, and Ireland. Some toys, like board game pieces, will be made with plant-derived or recycled material. Superheroes and movie characters will be 3-D cutouts rather than plastic figurines.
Last month, DoorDash expanded its service menu with the addition of DoubleDash, which allows customers to add their favorite items from nearby stores to their original order for no additional delivery fee or order minimum. Albertsons has announced that it will be the first grocery participant in the new offering, allowing online shoppers to combine their Albertsons purchase with a separate order from a restaurant or other participating merchant in a single delivery. During the announcement, Chris Rupp, EVP and Chief Customer and Digital Officer for Albertsons, cited and example of a customer ordering a delivery meal to eat that evening—along with eggs for breakfast the following morning and an item for their children’s school lunch, both of which could be Albertsons’ sales.
With port congestion continuing to cause supply chain and logistics headaches, west coast ports have together an action plan. The California ports of Los Angeles and Long Beach are extending the hours during which trucks can pick up and return containers as they try to improve freight movement and delays through ports. The Port of Long Beach will take the first step toward a 24-hour, seven days a week supply chain by maximizing nighttime operations. The Port of Los Angeles will expand weekend operating gate hours through a program called “accelerate Cargo LA”, which will operate on a pilot-basis at first to ensure that gate availability meets cargo demands and provides greater transparency to improve efficiency. In addition, both ports have called on marine terminal operators to incentivize the use of all available gate hours, especially night gates, to reduce congestion and maximize cargo throughput capacity.
That’s all for this week. Enjoy the weekend and the song of the week, Help! by the Beatles.