This Week in Logistics News (April 16 – 22)
This past Monday marked the first normal Boston Marathon since 2019, as the 2020 marathon was canceled due to the Covid pandemic, and the 2021 marathon was shifted to October with a smaller field. And what a race it was. In the professional women’s division, Peres Jepchirchir of Kenya and Ababel Yeshaneh of Ethiopia dropped the majority of the pack during a record-setting 11-mile stretch from mile 6-16. From the 25-mile mark until the finish, there were 7 different lead changes, with Jepchirchir outkicking Yeshaneh over the final 200 yards to capture the crown by a mere 4 seconds. In the men’s race, Kenya’s Evans Chebet crushed the field over the final 5 miles to capture his first World Marathon Major win. And in the most emotional finish of the day, Henry Richard finished the race nine years after his brother, Martin, died during the 2013 Boston Marathon bombings. Richard crossed the finish line at 2:52 pm, which was almost the exact time the bombs went off. A truly inspiring Marathon Monday as always. And now on to this week’s logistics news.
- Apple, others face shipment delays as China Covid curbs squeeze suppliers
- How Walmart and Alphabet jumped ahead of Amazon in drone delivery
- Amazon on path to reach 100% renewable energy by 2025
- USPS slowing first-class package delivery to lower costs
- Hasbro plans to further hike prices of toys, warns of $100 million Russia hit
- South Carolina prohibits importation of some birds due to avian flu
- Supply chain cyberattacks jumped 51% in 2021
- MHS, Fortna merging to provide end-to-end solutions globally
- Ferrero tells suppliers to stop sending it palm oil from Malaysian company
The Covid pandemic continues to slow down global economies and supply chains. Shipments of some Apple products, as well as Dell and Lenovo laptops, are likely to face delays if China’s Covid-19 lockdowns persist. Apple supplier Pegatron Corp said this week it would suspend its plants in Shanghai and Kunshan, where it produces the iPhone 13, the iPhone SE series, and other legacy models. Quanta Computer, which produces nearly three-quarters of Apple’s Macbooks globally, also shut down its operations, which could impact deliveries for the foreseeable future. Apple may consider re-routing production out of Shanghai and Kunshan to factories elsewhere, such as Shenzhen, which currently is not under lockdown. As a worst-case scenario, Pegatron may fall behind on 6 million to 10 million iPhone units if the lockdowns last two months and Apple cannot reroute orders.
As I wrote about a few weeks ago, Google’s sister company Wing launched what it calls the first commercial drone delivery in a major metropolitan area. The company partnered with Walgreens to make deliveries in suburban Dallas. It turns out that Wing is not the only one making deliveries in a large metropolitan area. Walmart has been running its own drone delivery service near its Bentonville, AR headquarters since November. Walmart delivers a range of products to customers within a 1.5-mile radius of two Walmart stores. The service will soon expand to a third Walmart store in the same corner of Arkansas. While the Wing and Walmart services are still pretty limited, with each service initially designed to perform around 100 deliveries per day, they have both moved beyond the research and development phase. And in that way, they are both outpacing Amazon, which has yet to launch a commercial drone delivery service in the US. And this comes nearly 9 years after Jeff Bezos predicted drone deliveries might reach the market in four to five years.
While Amazon may be lagging on drone efforts, it is making headway in its pledge for renewable energy by 2025. Earlier this week, Amazon announced 37 new renewable energy projects around the world, marking significant progress on its path to power 100 percent of its operations with renewable energy by 2025. This is a full five years ahead of the original target of 2030. The projects will supply clean energy for Amazon’s operations, including its corporate offices, fulfillment centers and Amazon Web Services (AWS) data centers that support millions of customers globally. Of these 37 projects, 23 are in the US, which brings Amazon’s total clean energy procurement in the US from 7.2 GW to 10.4 GW. This is 8.5 times more energy than Doc Brown needed to turn the DeLorean into a time machine.
The United States Postal Service will slow delivery times for a third of its first-class packages in an effort to cut costs and its dependency on air transportation amid financial struggles. The move, which goes into effect May 1, is part of the Postal Service’s 10-year plan to reduce more than $100 billion in projected losses. The slower delivery times will allow it to use more trains and trucks as modes of transportation, which is more cost-effective and reliable than air transportation. The Postal Service will also remove the extra day for Priority Mail transported via ground, which was added in April 2020 given global supply chain and transportation issues during the pandemic.
Hasbro said that it would have to raise prices further to cope with soaring costs and warned of a potential revenue hit of about $100 million this year due to its decision to pause toy shipments to Russia. A spike in COVID-19 cases in some countries, which is causing factory shutdowns and port delays, added to corporate woes as soaring freight and transportation costs are pinching profit margins. Hasbro said it would raise prices mid-year and that it was taking steps to mitigate some of the expected supply issues. The company, in a look toward the 2022 holiday season, said it is advancing deliveries of key items to ensure that they are available.
The words “avian flu” often trigger alarm bells for the majority of the population, as was evident with the avian flu outbreaks in the US that led to the culling of hundreds of thousands of chickens and turkeys in 2015 and 2017. This week, South Carolina’s state veterinarian announced that the state is temporarily prohibiting importation of backyard poultry, waterfowl and ratites (such as ostrich and emu) from areas with confirmed infections of highly pathogenic avian influenza, or HPAI, for sales, shows and exhibitions. Interstate importation of the above birds from counties that are free of HPAI infections may continue following normal state regulations. Currently there are 181 counties in the United States where confirmations of avian flu in commercial and backyard flocks are reported.
The global chip shortage is not the only aspect currently affecting supply chains around the world. New research from the NCC Group illustrates that the number of cyberattacks on supply chains increased by 51 percent during the period from July to December of 2021. With the number of attacks increasing during this time frame, it is more important than ever for organizations to reduce the amount of risk their supply chains may be under to avoid being attacked. The study, which surveyed 1,400 cybersecurity decision makers, found that 36 percent said that they are more responsible for preventing, detecting and resolving supply chain attacks than their suppliers. Just over half (53 percent) said that their company and its suppliers are equally responsible for the security of supply chains.
A pair of tech providers within the warehouse automation space, Louisville, Kentucky-based MHS Global and Atlanta-based Fortna, are combining to form a new multinational logistics provider, the companies announced this week. MHS, one of the 10 largest materials-handling systems providers on the planet by worldwide revenue, will merge its automation technology with Fortna’s warehouse and distribution software solutions to form a joint provider of parcel, warehouse and distribution and life-cycle services. The combined venture will be valued at around $4 billion. Thomas H. Lee Partners, a private equity firm with holdings in both companies, will remain the majority owner of the as yet unnamed entity.
More and more companies, and countries, are looking deeper into their trading partner relationships for potential forced labor violations. Ferrero, the maker of Nutella, said it is going to stop sourcing palm oil, which is a key ingredient in the hazelnut spread, from Sime Darby Plantation Bhd in Malaysia after the US government found the company used forced labor. A Ferrero spokeswoman said the company asked its direct suppliers on April 6 to stop supplying Ferrero with palm oil or palm kernel oil that came indirectly from Sime Darby. The spokeswoman said about 0.25 percent of Ferrero’s palm oil comes from the Malaysian company. Ferrero’s decision follows a forced-labor finding from U.S. Customs and Border Protection in January that said Sime Darby used forced labor in its operations.
That’s all for this week. Enjoy the weekend and the song of the week, Pink Floyd’s Run Like Hell.