This Week in Logistics News (January 22 – 28)
Earlier this week, David Ortiz got the call from the Baseball Writers Association of America that he was the lone candidate elected to the Baseball Hall of Fame. I could not be happier for him. Ortiz was a larger-than-life figure in the Boston sports scene for 14 years, with more memorable moments than anyone other baseball player I can think of. He was the hero of the curse-reversing 2004 team that came back from a 3-0 deficit to the Yankees in the ALCS with a walk-off homer and another walk-off single. He changed the course of the 2013 playoffs with his game-tying grand slam against the Tigers that sent Tori Hunter tumbling over the right field wall and into the Red Sox bullpen. And of course, there was his famous speech following the 2013 Boston Marathon bombing, where he declared “this is our f—— city and nobody is going to dictate our freedom.” In his final season, Ortiz lead the league in doubles and RBIs, making his final All-Star appearance. In true David Ortiz fashion, he went out on top. And now, he’s a Hall of Famer. And now on to this week’s logistics news.
- FedEx Express initiates EV trials in India
- GE Appliances pilots autonomous electric vehicle
- Walmart makes an investment in vertical farming start-up Plenty
- Vaccine mandates could hit fresh produce market
- Imports drop at Southern California ports
- Shippers wary of container shortages as China nears Lunar New Year holiday
- Forecast says US drayage rates will continue to rise in Q1
- Gorillas Set to Acquire French Rapid Delivery Startup Frichti
FedEx Express announced that it will initiate electric vehicle trials in India as part of its larger plan to achieve carbon neutral operations by 2040. The trial, which is expected to conclude within a month in Bengaluru, will test the vehicle technology within FedEx Express operations, assessing the vehicles’ operational effectiveness on a standard route fully loaded with packages, the company said in a statement. Following what it assumes will be positive trial results, FedEx Express will extend the trial to Delhi. The company said that with last-mile delivery, each new electric vehicle added to the FedEx delivery fleet in India can reduce fuel consumption and emissions equivalent to five passenger cars. The shift to electric vehicles also aligns with FedEx’s commitment to enhancing its services and solutions in India, offering customers connectivity and access to global markets, while helping safeguard the health of the planet.
GE Appliances is piloting an autonomous electric vehicle for material runs. Built by Swedish freight technology company Einride, the Pod features a tall, glass window behind which the vehicle’s sensors can be placed high for maximum situational awareness and thus safer deployment. The pilot program for the Pod, that features zero emissions and runs entirely on electric power, began in late October 2021 at Appliance Park. At an injection molding plant on the campus, employees load the Pod with agitators (the spindles in the center of washing machines). The Pod then drives to another facility for laundry machine assembly and backs into a loading dock. Employees unload the agitators, and the empty Pod returns to the injection molding plant for reloading. The Pod runs during first shift and on average covers about 70 percent of the daily workload. For all other shifts, or whenever the Pod needs to be taken offline for tweaks or maintenance, the traditional process continues.
Vertical farming is the practice of growing crops in vertically stacked layers while maintaining optimal growing conditions throughout the development of the crop. Vertical farming can assist in achieving maximum yield as it enables more harvests throughout the year by eliminating the wait for produce to be “in season.” And this can mean big money. Walmart is investing in vertical farming company Plenty and plans to carry the start-up’s leafy greens in all California stores later this year. Walmart’s investment is part of a $400 million round of funding for Plenty led by One Madison Group and JS Capital, with participation from SoftBank Vision Fund. With the move, Walmart is looking to bring farm produce closer to customers’ kitchen tables to boost freshness, limit waste, and promote sustainability. So far, lettuce and herbs have been the primary crops grown indoors, but the companies are chasing ways to grow more high-value produce.
Food shortages already seen at grocery stores across the US risk getting worse as the country begins mandating vaccinations from truck drivers coming from Mexico and Canada. The mandate requires truckers and other essential workers who aren’t US citizens crossing into the country to be vaccinated. Canada made a similar move beginning January 15, and it has caused chaos for the country’s fruit and vegetable markets, with less inventory available leading to higher demand and prices. The produce industry is warning that the US could experience similar disruptions based on the sheer volume of food imported from Mexico during the winter months. In 2020 alone, Mexico accounted for 77 percent of US fresh vegetable import volume. This comes at a time when the food supply chain is already seeing massive disruption. The mandate will also affect temporary workers who cross the border to work on farm jobs like harvesting vegetables and picking fruit. Some of these workers come from Mexico daily to jobs in places like Arizona and California for the production of leafy greens at this time of year.
Imports are tumbling at the nation’s busiest container port complex even as the backup of ships waiting to unload breaks records. Combined inbound volume fell about 14 percent at the ports of Los Angeles and Long Beach in December compared with a year ago, according to preliminary data from the ports. It was the fourth straight month of year-over-year declines. That was despite the backlog of container ships off the coast of Southern California, which rose past 100 during December and reached a record 109 ships in early January. Shipping industry officials say the factors that caused bottlenecks earlier in 2021 have continued into 2022. Specifically, ships can’t unload quickly because terminals are full of containers, truckers can’t pick up loads due to a shortage of drivers, and warehouses near the ports and at nearby logistics hubs are short workers and don’t have space for more deliveries. Port congestion will continue to be a problem in the near-term future.
As if the issues mentioned above were not enough to worry global shippers, container shortages are another problem. The upcoming Lunar New Year celebration will only make matters worse. China is already undergoing strict Covid-related lockdowns which is slowing trade, but Lunar New Year celebrations will lock down ports for the week of January 31 to February 6. These additional lockdowns will continue to cause shipping delays. When the ports do re-open, the Beijing Winter Olympics will begin, raising the chance of Covid outbreaks from increased international travel flows which could cause more lockdowns and delays.
High freight volumes and tight capacity are forecast to continue through most modes in 2022, and that trend will also apply to maritime port drayage, according to a report from transportation software provider BookYourCargo (BYC). National drayage rates in 2021 were already 51 percent higher than they were in 2020, and they are now expected to continue that momentum into the first quarter of 2022, due to persistent port bottlenecks, low carrier capacity, and low availability. Reasons for the backups include destructive weather patterns and an increase in consumer spending as a result of the holiday season, leading to port congestion and drayage rate increases across the board, BYC said. BYC found that the December 2021 national drayage spot rate was 9 percent less than the previous month, but 20.4 percent more than the national rate in December 2020.
Grocery delivery continues to get faster and faster, with new entrants to the market pushing for 15-minute service. One of those companies is Berlin-based Gorillas, which lets you order groceries and other household items on-demand with an average delivery time of 10 minutes. The company uses a dark store model with 40 spread across Germany, the UK, and Netherlands. The company is in exclusive talks to buy French delivery firm Frichti, a combination that would speed the German rapid grocery startup’s development of new business lines and mark further consolidation in the burgeoning sector. The deal would move Gorillas to a top position in the competitive French-speaking market. Frichti says it has more than 450,000 customers, serviced by about 25 micro-fulfillment centers across eight cities in France and Belgium. Negotiations are ongoing, according to executives from both companies, who didn’t disclose specifics of a potential deal. A combined company would have the second-biggest market share for same-day grocery delivery in Paris.
That’s all for this week. Enjoy the weekend and the song of the week, David Bowie’s Heroes.