This Week in Logistics News (November 27 – December 3)

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logistics newsBlack Friday is in the books, and unsurprisingly, it was a big one. According to the annual survey by the National Retail Federation (NRF) and Prosper Insights & Analytics, nearly 180 million Americans shopped during the five-day holiday shopping period from Thanksgiving Day through Cyber Monday. This exceeded initial estimates by more than 21 million shoppers. This number compares with 186.4 million shoppers in 2020 and is in line with the average of the last four years. The surprising thing is that the number of people who shopped in stores actually increased this year. Retailers saw an increase in foot traffic, with approximately 104.9 million shoppers visiting stores, up from 92.3 million in 2020. The overall number of online shoppers decreased to a total of 127.8 million from 145.4 million last year. Black Friday remained the most popular day for in-store shopping, with 66.5 million shoppers, followed by 51 million shoppers on Small Business Saturday. Top gift purchases over the weekend included clothing and, toys, gift cards / certificates, books / music / movies / video games, and electronics. That is certainly a lot of shopping. I feel left out from having not participated. And now on to this week’s logistics news.

The ever-continuing Covid pandemic has certainly been a boon to e-commerce. As the omicron variant spreads, it seems as though online shopping will only surge again. As a result, the delivery boom has fueled demand for last mile space. Over the last 20-plus months, retailers have continued to pay more to access logistics properties that serve as final stops for packages bound for customers doorsteps. Retailers especially covet space near highly populated areas where online orders can be loaded onto trucks and vans for local delivery to their final destinations. Retailers face a scarcity of final-stage warehouses near major cities; and as more companies promise same-day or even two-hour arrivals, such space is rising in demand and value. According to a report from real estate firm Jones Lang LaSalle, more than half of US industrial leasing in the third quarter involved users looking for space of less than 100,000 square feet, often a mark of a last-mile facility. Overall, industrial rents in the third quarter were up 7.1 percent from a year earlier while vacancy rates dropped to a new low of 4.3 percent.

We have written about Amazon’s move to become an independent delivery service, both reducing its reliance on UPS and FedEx while delivering goods for other retailers quite a bit here. According to the company, that move is paying off. Earlier this week, Dave Clark, CEO of Amazon’s worldwide consumer business, said that the company is poised to become the largest US package delivery service by early 2022, overtaking longstanding shipping rivals UPS and FedEx. Amazon now oversees thousands of last-mile delivery companies that deliver packages exclusively for Amazon, as well as an ever-growing network of planes, trucks, and ships to accommodate its growing network of warehouses and air hubs. This continued growth of its in-house network is certainly helping as capacity constraints affect the holiday season.

The ongoing truck driver shortage is not going away, as more drivers retire, and companies continue to struggle to hire a younger workforce. Just how bad is the driver shortage? According to Chris Spear, president and CEO of the American Trucking Associations (ATA), the trucking industry is currently short 80,000 drivers. The trucking industry moves an estimated 70 percent of the nation’s freight tonnage every year, and over the next decade, ATA projects that trucks will need to move 2.4 billion more tons of freight than they do currently. According to Spear, “without substantial action, by 2030 and at current trends, the driver shortage could grow to 160,000. Overall, nearly 1 million new drivers will need to be trained and hired in the next decade to keep pace with increasing consumer demand and an aging workforce.” That is a sobering thought.

Mexico announced the temporary reinstatement of 15 percent import tariffs on some types of steel to begin in the next year, aimed at boosting the industry after a slump brought on by the Coronavirus pandemic. The tariffs will begin in June 2022 and gradually disappear at the end of 2024, the government said in presidential decree published in the Official Gazette on Monday night. Mexico previously imposed tariffs in 2018 following former U.S. President Donald Trump’s 25 percent “Section 232” national security tariffs on steel imports. That measure, which affected both Canada and Mexico and threatened negotiations on the modernization of the North American Free Trade Agreement, which has been revised and renamed the United States-Mexico-Canada Agreement, was suspended after the United States lifted taxes on its trading partners. The current measure applies to more than 100 steel products.

There has been an abundance of shortages over the last 20-plus months, including toilet paper, vaccine vials, semiconductor chips, ketchup packets, and even test monkeys. There is a new shortage looming, and this one could affect the holiday season. And no, I’m not talking about toys. Wine and liquor makers are facing a glass bottle shortage. The cause is the same for a lot of the recent shortages, including logjams at ports, truck driver shortages, and warehouse labor problems. While many wine and spirits will have a generic bottle, this shortage becomes more problematic for those companies that have a distinguishing bottle design to set it apart from its competition. This relates to an ongoing trend from the Covid pandemic: demand is surging. There has been a switch from on-premise dining to consumption at home which has led to an increase in alcohol sales.

Mexican regulators have approved Canadian Pacific’s $31 billion plan to acquire Kansas City Southern and create a railroad linking Mexico, Canada, and the United States. The deal could close as soon as mid-December if shareholders of both companies approve it. Then Kansas City Southern would be held by a voting trust while the US Surface Transportation Board conducts its lengthy review of the transaction, but its shareholders would be paid right away. The $31 billion deal includes 2.884 CP shares and $90 in cash for each shareholder and Canadian Pacific would assume roughly $3.8 billion of Kansas City Southern’s debt. According to Canadian Pacific CEO Keith Creel, “this historic combination will add capacity to the U.S. rail network, create new competitive transportation options, support North American economic growth, and deliver important benefits to customers, employees and the environment.”

The buzz around autonomous trucks and robots has reached new heights lately. For a truck yard several miles north of Denver, the dream has met reality. Golden, CO-based Outrider operates a truck yard in Brighton, where a fleet of robotic trucks ferry semi-trailers between assigned spots and warehouse doors for 16 hours each day while a few humans keep watch. Here is how the yard works. Human over-the-road truckers drop off semitrailers containing anything from food to electronics to toilet paper at a warehouse yard. Then, an Outrider robotic truck takes over. Using proprietary software, a human queues up a truck to retrieve the specific trailer. The robotic truck then drives through the yard to the location of a specific trailer, relying on a combination of sensors. Once in position, a robotic arm extends from the back of the truck. It scans the face of the trailer before connecting a pressurized air hose, which disengages the trailer’s parking brakes. Then, the arm hitches the trailer onto the truck and the truck pulls the trailer across the yard to a warehouse door. Once connected to the dock, humans take over again, unloading goods and processing them for delivery.

And finally, the Federal Motor Carrier Safety Administration (FMCSA) extended regulatory waivers related to truckers’ allowable work time, citing public health concerns. The waiver associated with commercial drivers’ maximum driving time for property-carrying vehicles was extended through February 28. FMCSA explained, “although the number of COVID-19 cases began to decline in the US following widespread introduction of vaccinations, persistent issues arising out of COVID-19 continue to affect the US including impacts on supply chains and the need to ensure capacity to respond to variants and potential rises in infections.”

That’s all for this week. Enjoy the weekend and the song of the week, Friday I’m in Love by the Cure.

The post This Week in Logistics News (November 27 – December 3) appeared first on Logistics Viewpoints.

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