This Week in Logistics News (July 16 – 22)
The future is here. Literally. And I’m not talking about the future of home delivery with drones or robots (more on that later). Today, July 22, 2022, is George Jetson’s birthday. As in the actual day he was born. The futuristic cartoon is set in the year 2062, where 40-year-old George Jetson lives with his boy Elroy, Daughter Judy, Jane his wife, the family dog Astro, and the loveable robot maid Rosie. One of the more interesting aspects of the show is the fact that George’s work week consists of an hour a day, two days a week. Talk about flexibility. George Jetson commutes to work in an aerocar with a transparent bubble top and sends his kids to school in autonomous transparent bubbles which deploy from the aerocar. As drones and other advanced technologies become more commonplace, the question becomes, will we enter the world of the Jetsons? In the next 40 years, the answer is (most likely) a definitive no. But are the Jetsons just a few centuries before their time? We will have to wait and see. And now on to this week’s logistics news.
- Alphabet’s Wing develops new fleet of drones
- FedEx Express introduces new routes between Asia and Europe
- Körber acquires enVista’s omni-channel and global freight audit and payment services
- US initiates trade fight with Mexico over energy policy
- US container imports keep record pace in June, start strong in July
- Demand drives 3PLs to the best growth and M&A year on record
- Trucker protests shut down Port of Oakland terminals
The market for drone deliveries continues to heat up, as more and more drone operators, and more and more retailers, look to make deliveries from the sky. Alphabet Inc.’s Wing subsidiary has developed a fleet of new drone prototypes designed to more efficiently deliver packages ranging from small pill bottles to items weighing as much as 7 pounds. The two designs, one that looks more like a small plane used by hobbyists and another with a big belly used for additional cargo space, were recently unveiled in a company blog post. For now, the company is still focusing on its original drone design, the Hummingbird W-B aircraft, which is a hybrid that can take off like a helicopter and fly horizontally like a plane. The two new prototypes are both based on the Hummingbird, which Wing says can carry about 2 pounds and has made hundreds of thousands of deliveries in Dallas suburbs, Virginia, Australia, and Finland. They use many of the same components, such as motors and guidance systems, and follow similar designs.
FedEx Express has announced the launch of a new route between Asia and Europe. Customers in North Asia, including China and Japan, will benefit from increased connection and service dependability as a result of the route. Customers in Singapore will also benefit from increased European inbound capacity. For the first time, the new flight route connects China’s capital Beijing to the FedEx Charles de Gaulle Hub in Paris, France, with ten weekly connections through Osaka, Japan. This new route will assist businesses by extending the cut-off time for same-day outbound shipments from Beijing to Europe, giving consumers more time to plan their shipments. In addition, Japanese companies shipping time-sensitive packages or items that require strict temperature control and monitoring, such as those in the healthcare sector, as well as heavy-weight packages, will benefit from the direct connection between Kansai International Airport, FedEx North Pacific Regional Hub, and the Charles de Gaulle Hub in Paris, France.
Körber, an international technology group, has signed an agreement to purchase enVista’s platform of Enspire Commerce omnichannel solutions, including its order management system (OMS), and its freight audit and payment (FAP) service. enVista’s capabilities expand Körber’s portfolio to enable businesses to deliver upon ever-increasing consumer expectations in today’s highly competitive omnichannel landscape. According to Stephan Seifert, Chief Executive Officer at Körber Group, “this acquisition is a great extension of our existing product portfolio and another important milestone towards our ambition to become a global supply chain software champion! At the same time, with more than 400 new colleagues and experts around the world, we are also substantially strengthening our footprint to further support our customers globally.” The transaction is subject to customary closing conditions and regulatory approvals.
Here is an interesting quote from Mexican President Andrés Manuel López Obrador as the US launched a trade fight against Mexico accusing the government of favoring its state-owned utility and oil company at the expense of American businesses.
“Ooooh, I’m so scared…,”
The US is seeking dispute settlement consultations under the US-Mexico-Canada Agreement, the first step in what could lead to tariffs on a range of Mexican products. It also represents a challenge by the Biden administration to Mr. López Obrador’s effort to regain government control over the country’s oil and electricity markets. Mr. López Obrador was dismissive of the U.S. action, chalking it up to intense lobbying by what he called corrupt right-wing rivals in Mexico. In launching the dispute, US Trade Representative Katherine Tai said an array of Mexican policies undermine American companies and U.S.-produced energy in favor of Mexico’s state-owned power company Comision Federal de Electricidad, or CFE, and oil company Petróleos Mexicanos, or Pemex.
Recession fears abound, yet America’s ports keep racking up historically high numbers. Last month was the country’s best June ever for containerized imports. This month looks like it will be the best or second-best July. According to The McCown Report, imports to the top 10 US ports rose 5.9 percent year on year to 2.16 million twenty-foot equivalent units in June, exceeding the 3 percent year on year gain in May and 5.1 percent gain in April. Volumes continued to shift eastward. Imports to the top East/Gulf Coast ports rose 9.7 percent year on year in June, driven by double-digit surges in New York/New Jersey, Houston, and Savannah, Georgia. Imports to West Coast ports rose 2.3 percent. Compared to June 2019, pre-COVID, import volumes to the top 10 US ports were up 26.9 percent last month, said McCown. East/Gulf Coast ports were up 40.3 percent, and West Coast ports 15.8 percent.
According to an Armstrong & Associates report, strong consumer demand, continued supply chain bottlenecks, and tight carrier capacity sent air, ground, and ocean transportation rates soaring to historic levels in 2021 as shippers leaned on third-party logistics providers (3PLs) to bolster inventories and avoid product stock outs. After a volatile 2020, the US Covid-driven 3PL market created growth opportunities, in particular for 3PLs with strong carrier management, e-commerce, and air freight forwarding capabilities. Year-over-year 2021 saw the fastest 3PL growth since Armstrong began estimating the market size in 1995. However, 3PL market segment growth was uneven. To meet demand, 3PLs increasingly tapped the spot market to source carriers to cover shipments. While strong demand drove growth across the 3PL market, the true leaders were those companies with strong carrier management skills that have technologically innovated. That allows them to efficiently tap long-standing carrier relationships to cover shipper demand versus being over reliant on using load boards or traditional means to buy capacity at spot market rates.
The Oakland International Container Terminal (OICT) management closed operations on Wednesday at the Port of Oakland due to the independent trucker protests over California’s gig worker law, known as AB5. The Port’s other three marine terminals are effectively shut down for trucks as well, the Port of Oakland told CNBC, while there are some vessel labor operations underway. This is the third-day truckers have protested California’s gig worker labor law, which was sparked by the rise of gig economy platforms like Uber, Lyft and DoorDash. A two-year legal stay was recently lifted when the Supreme Court decided not to hear a case which would have protected truckers from the impact of the law. AB5 requires companies that hire independent contractors to reclassify them as employees, but there are some exceptions in the law across industries. The majority of truck drivers in California are owner-operator and many in this job category are concerned about their future. An estimated 70,000 truckers who own and drive their own trucks would fall under this law and they do not want to become an employee or part of a union in order to work.
That’s all for this week. Enjoy the weekend and the song of the week, Paramore’s Future.