This Week in Logistics News (July 30 – August 5)
Supply chain disruptions continue to lead to product shortages around the world. Somehow, Halloween is (sort of) right around the corner, and a lack of raw ingredients for candy are making things more scary than a haunted house. I read earlier this week that Hershey said it would fall short of meeting demand for the Halloween and Christmas holiday seasons this year, blaming a scarcity of raw ingredients and difficulties in securing suppliers. The ongoing pandemic-induced supply chain disruptions, along with the Russia-Ukraine war, limited available supplies of cocoa, edible oil, and other food ingredients. Hershey Chief Executive Officer Michele Buck said those issues, along with the company’s focus on meeting demand during non-holiday periods, would lead to a likely shortage during Halloween, but added that sales will still top last year. The company is relying on price increases to boost growth. So I guess we better start stocking up for Halloween now. And now on to this week’s logistics news:
- Amazon launches same-day delivery from brick-and-mortar retail brands
- FedEx agrees to buy 10% stake in Berkshire Grey
- US considers crackdown on memory chip makers in China
- Port of New York and New Jersey sets container fee
- Cargo begins clogging Port of Los Angeles amid railroad worker shortage
- Walmart launches new restored goods program
- 17 states stand by plan to electrify 30% of trucks and buses by 2030
As same-day delivery becomes more important to consumers, retailers are looking at innovative ways to deliver on this expectation. Amazon has announced that it is adding a handful of brick-and-mortar retail brands to its same-day delivery offering for Prime members. To start, Amazon is offering same-day delivery from apparel stores PacSun, Diesel and Superdry, as well as vitamin retailer GNC, in 10 cities across the US The service is free for Prime members when they spend $25 or more, or $2.99 if they spend less than $25. Some of the participating retailers also give shoppers the option to order items online and pick them up at the store. With the new partnership, retailers will fulfill orders from inventory in their stores, and a Flex delivery driver will pick them up from the retailer.
FedEx has agreed to buy an ownership stake in the logistics technology vendor Berkshire Grey as part of a multi-year deal to stock its fulfillment centers with the tech firm’s robotic order fulfillment systems. Under terms of the deal, FedEx could buy 25 million shares of Berkshire Grey stock after it orders or pays for at least $200 million of Berkshire Grey’s artificial intelligence (AI)-enabled robotic automation goods and services. Based on the stock’s value after the announcement, that would represent a $61 million purchase worth about 10 percent of the company. According to a FedEx spokesperson, adding more robotics to its operations could help improve the safety and efficiency of FedEx package handling operations globally. The deal extends an existing relationship between the two companies, as in 2021, FedEx began to deploy Berkshire Grey’s Robotic Product Sortation and Identification (RPSi) systems to robotically sort small packages that arrive daily and require distribution.
The United States is considering limiting shipments of American chipmaking equipment to memory chip makers in China including Yangtze Memory Technologies Co Ltd, according to four people familiar with the matter, part of a bid to halt China’s semiconductor sector advances and protect US companies. If President Joe Biden’s administration proceeds with the move, it could also hurt South Korean memory chip juggernauts Samsung Electronics Co Ltd and SK Hynix Inc, the sources said, speaking on condition of anonymity. Samsung has two big factories in China while SK Hynix Inc is buying Intel Corp’s NAND flash memory chips manufacturing business in China. he crackdown, if approved, would involve barring the shipment of U.S. chipmaking equipment to factories in China that manufacture advanced NAND chips. It would mark the first US bid through export controls to target Chinese production of memory chips without specialized military applications, representing a more expansive view of American national security.
Ahead of the expected busy peak season, the Port of New York and New Jersey will implement a container fee on any long-dwelling import or export containers. The goal of the tariff is to reduce an excess of empty containers dwelling at the port and free up space for container pickup. It includes both loaded and empty containers. The quarterly container imbalance fee, announced Tuesday morning, will be effective as of September, pending a mandatory 30-day federal notice. In addition to the tariff, the port is setting mandatory container export levels. Under the new rules, ocean carriers’ total outgoing container volume must equal or exceed 110 percent of their incoming container volume during the same period. If they fail to achieve this, the ocean carriers will be charged $100 per container of imbalance. Rail volume is not included. According to Port Director Bethann Rooney,
“The Port of New York and New Jersey are facing record import volumes, leading to empty containers accumulating in and around the port complex that are now affecting the regional supply chain that is already under stress from various sources across the country. We emphatically encourage ocean carriers to step up their efforts to evacuate empty containers quicker and at higher volumes to free up much-needed capacity for arriving imports in order to keep commerce moving through the port and the region.”
Apparently, warehouses are full. As a result, cargo is clogging the ports of Los Angeles amid a railroad worker shortage. A shortage of rail workers, not enough rail cars, and importers failing to pick up their goods are causing cargo to pile up once again at the Port of Los Angeles, a key link in the US supply chain. According to port director Gene Seroka, containers are already piling up and clogging the docks. He said “there are about 35,000 containers that are designated for rail on our docks right now; a normal day looks more like 9,000 units.” To make matters worse, dockworkers at the port have said they’ve been without a contract for a month, and rail workers said they’re at the “dead end” after two years of negotiations. The White House recently assembled an emergency team to help railroads avoid a strike.
One push for a more sustainable supply chain has been the sale of refurbished goods over the last few years. Walmart is jumping on the bandwagon. The company is using refurbished goods as a new sales pitch to combat soaring prices. A new “Walmart Restored” program will make it easier to shop for refurbished items from the likes of Apple, Samsung Electronics, and Whirlpool Corp.’s KitchenAid. The restored merchandise will be available online and in some stores this fall. While Walmart.com already has sellers of refurbished goods, the new branding will help spotlight the restored merchandise as shoppers look to save money amid the highest US inflation in four decades. The refurbished products have been inspected, tested, and cleaned, Walmart said.
A coalition of 17 states, as well as the District of Columbia and Canadian province of Quebec, plan to electrify 30 percent of new trucks and buses in their jurisdictions by 2030. That’s the initial goal of an action plan drafted and adopted by those jurisdictions, which also sets the goal of making 100 percent of new truck and bus sales zero-emission no later than 2050. Vehicles covered by the plan include medium-duty and heavy-duty commercial vehicles, ranging from pickup trucks and vans to long-haul trucks, along with school buses and transit buses. These vehicles account for a large share of transportation-related emissions, but have not received as much regulatory attention as passenger cars. The full list of states that have signed onto the plan includes: California, Colorado, Connecticut, Hawaii, Maine, Maryland, Massachusetts, Nevada, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, and Washington.
That’s all for this week. Enjoy the weekend and the song of the week, I Want Candy by the Strangeloves.