This Week in Logistics News (June 11 – 17)
This Sunday is Father’s Day, and consumers across the country are apparently ready to celebrate. According to the annual consumer survey released today by the National Retail Federation and Prosper Insights & Analytics, approximately 76 percent of US adults are expected to celebrate Father’s Day. And to celebrate, they will spend. Consumer spending this Father’s Day is expected to total $20 billion, nearly on par with last year’s record-setting figure of $20.1 billion. The most important factors influencing Father’s Day purchases are “finding a gift that is unique or different” (44 percent) and “finding a gift that creates a special memory” (37 percent). One-quarter of consumers plan to give “gifts of experience” such as tickets to a concert or sporting event. Another 37 percent are interested in extending the longevity of the celebration by gifting a subscription box service. For me, I’m hoping for some quality family time, and maybe a little bit of the US Open. And now on this week’s logistics news:
- Amazon says it will launch drone deliveries this year
- UPS tests tiny battery-powered cycles in congested cities
- GM 3D prints 60,000 parts to keep up with deliveries
- Truckers strike in Korea roils shipments from steel to autos
- Container prices jumped in May for first time in 2022
- US House passes ocean shipping bill to allay export backlogs
- Overstock is ready to take advantage of inventory glut
Drone deliveries have continued to gain steam, and a lot of the media attention has been around Amazon losing ground in the US. However, the company announced earlier this week that Amazon Prime customers in Lockeford, CA, will start receiving package deliveries by drone later this year. This would make the Lockeford among the first US locations to enjoy free drone delivery within 30 minutes. Amazon started contacting customers in Lockeford this week to ask them to opt in to drone delivery. Once a customer enrolls, an Amazon employee will visit to make sure their yard has enough clear space to accept drone deliveries. Drone delivery will be free for Prime members, and only Prime members can use the service. There will be “thousands of items available” for drone delivery. Amazon said it was working with the Federal Aviation Administration and local regulators to secure permits for the program.
This week, UPS unveiled a battery-powered, four-wheeled cycle to more efficiently haul cargo in some of the world’s most congested streets and to reduce its carbon footprint. The company is trying to reach carbon neutrality by 2050. The slimmed-down vehicles don the company’s gold-colored logo and accompanying stripe on a dark brown background. But the “eQuad” — as the company calls it — garnered amusement from passersby. The majority of people that saw the vehicle were pleased that it will not block traffic the way the company’s normal delivery vehicles do. UPS said a trial run is focused on New York City and in several cities in Europe. The company, in its quest to achieve carbon neutrality by 2025 has also been investing in electric vehicles as well as other alternative fuel sourced vehicles.
The ongoing chip shortages continue to be the hot button topic when it comes to supply shortages in the automotive industry, but traditional components are also in short supply. When faced with an inability to produce a component needed for delivery of the 2022 Chevrolet Tahoe, General Motors engineers turned to a novel solution: 3D printing. GM made a major investment in the tech in 2020, dedicating 15,000 square feet of space to facility dubbed the Additive Industrialization Center. Chevrolet engineers made a late change to the 2022 Tahoe’s design, necessitating the creation of an additional part. GM partnered with GKN Additive Forecast 3D, to quickly print the components using a flexible material that met GM’s criteria. GM continues to invest in 3D printing, and it should be an ongoing part of its supply chain processes.
An escalating strike by truck drivers in South Korea is adding more disruption to global supply chains, from a slowdown at the country’s ports to production halts at auto factories. Thousands of truckers have stopped work since Tuesday to protest the removal of a minimum wage scheme. Tensions are rising as drivers move to block deliveries of the Asian country’s most critical export items, including materials for semiconductor chips. The daily volume of container boxes transported to and from the nation’s 12 ports dropped 64 percent on Thursday compared with the average for May, according to data from the Ministry of Land, Infrastructure and Transport. Inbound and outbound volumes at Busan, the world’s seventh-busiest port, were less than half their usual amount at 13,035 containers. No goods went in or out of Ulsan port on Thursday, where leading automaker Hyundai Motor Group has its production facilities, the ministry said. Meanwhile, deliveries to Pohang and Daesan port dropped to zero, affecting the transportation of steel and petrochemicals.
Under pressure from congestion at freight ports and depots worldwide, global average container prices increased in May for the first time in 2022, according to logistics technology provider Container xChange. Now current events could amplify that trend, as China begins to reopen after a “massive” two months of covid lockdowns, issuing an expected flood of packed containers into the market, leaving few empty ones to be found, the German firm said in a report titled “Where are all the Containers?” The only region where the average cost of buying a container has dropped is China itself, where the closure of ports, factories, retail stores, and residential areas has completely shuttered production, removing demand for freight services. In reaction, global freight markets are likely to drive a gradual increase in demand for smaller vessels meant for smaller trade networks, as a way to cope with the emergence of increasingly complex networks with more stops and longer turnaround times.
The US House of Representatives approved legislation Monday to improve oversight of ocean shipping, which supporters say will help curb inflation and ease export backlogs. The bill was approved 369-42 and will head to the White House for President Joe Biden’s signature. Biden said in a statement he looked forward to signing it into law. The bill would boost the investigatory authority of the Federal Maritime Commission (FMC), the US agency that oversees ocean shipping, and increase industry transparency. It would allow FMC to launch probes of ocean common carriers’ business practices and to apply enforcement measures, require ocean common carriers to report to the FMC “total import/export tonnage” each calendar quarter and would bar ocean carriers from unreasonably declining opportunities for US exports under new rules to be determined by the FMC.
In case you haven’t heard, there is an inventory glut that is becoming problematic for some retailers. However, for a company like Overstock.com, this is good news. The e-commerce company specializes in helping chains liquidate slow-moving merchandise, and now it will have more opportunities than usual. US retailers racked up excess goods to ensure shelves stayed full during the pandemic. But now shoppers have shifted spending to categories like services and travel, leaving warehouses overflowing. That may help Overstock rebound from a rough stretch. Its shares have fallen 48 percent this year, while sales have declined for three straight quarters. Under Chief Executive Officer Jonathan Johnson, the company also shifted to selling mostly home goods, which traditionally have better margins and been growing faster than other categories. And surging US inflation is likely to push shoppers to the deals found on Overstock.
That’s all for this week. Enjoy the song of the week, Harry Chapin’s Cats in the Cradle.