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Retail purchases have decreased in three of the past four months, while expenditures on services that had been growing last year stagnated in December, according to SupplyChainBrain. With the COVID-era capacity crises now a distant memory, shippers are searching for ways to adapt to a new reality. For some, like Sendflex and GameStop, this means layoffs. For others, falling consumer demand means unwelcome rate hikes and phasing out long-time delivery perks. Here’s the latest news shaping an industry that’s always moving.
Following Flexport’s December 2022 layoff of 20% of their overall workforce, other leaders in the transportation industry have begun following suit, with C.H. Robison and DSV instituting layoffs of their own. This rightsizing comes as rapidly cooling consumer spending threatens to send volumes plummeting in the coming months, making the recently expanded staffs of many logistics providers appear suddenly redundant.
Despite these layoffs, Supply Chain Dive predicts that recently laid off employees may find themselves at the center of an increasingly competitive bidding war for top industry talent: “As vulnerable companies respond by slashing payrolls, they leave an opening for other businesses to swoop in and add seasoned talent to their ranks.”
FreightWaves Sonar’s Outbound Tender Volume Index (OTVI), shows a demonstrable increase in volume in recent months, a welcome sign for shippers weathering sharp declines in YoY volumes. On Jan 25., the OTVI registered 10,541 load requests, a 12% increase from 2022 and an 11% increase over the same period in 2019.
Despite this increase in volume, however, carriers have yet to see a noticeable uptick in traffic. FreightWaves sums it up this way: “Unfortunately, motor carriers may not see any signs of improvement just yet. One factor that is not currently showing any level of tightening is in the capacity side of the market. SONAR’s Outbound Tender Rejection Index (OTRI) measures the percentage of loads that carriers turn down or reject. OTRI is currently at the lowest point in the history of the index, with the exception of the extreme lockdowns during the earliest days of COVID.”
UPS’s Teamster employees, number 350,000 strong, could strike as soon as Aug. 1. As Teamsters leadership approaches contract negotiations with the mega-carrier, one key area of focus is pay equity between full and part-time employees. Full-time package drivers working for UPS make an annual average wage of $95,000, while their part-time counterparts make an hourly wage of $20. In an interview with Supply Chain Dive, Teamsters spokesperson Kara Deniz derided the difference in pay offered by UPS, describing part-time driver positions as “...the same job for less pay and a slightly different schedule in terms of days on the job.”
Following rate hikes and surcharge increases late in 2022, parcel transportation experts predict increased competition for the parcel delivery giants that typically dominate the last-mile delivery sector. Data from project44 revealed an increase in the number of last-mile carriers per company account in December 2022, up to 5.73 from 4.86 the previous year.
Discussing the outlook for last-mile competitors to UPS and FedEx, Caleb Nelson, Chief Growth Officer and co-founder at logistics software provider Sifted, told Supply Chain Dive, “I think it’s going to pick up pace this year, and it’s mostly because shippers are a little bit behind and the regional carriers that have stepped in to offer competitive solutions to FedEx and UPS are far more advanced this year than they’ve ever been before.”
To bolster the profitability of e-commerce grocery operations amid a downturn in that sector, Amazon is increasing rates for users of its Amazon Fresh Service. The minimum threshold for free delivery, which has been at $35 per order since 2007, will increase to $150.
“We’re introducing a service fee on some Amazon Fresh delivery orders to help keep prices low in our online and physical grocery stores as we better cover grocery delivery costs and continue to enable offering a consistent, fast, and high-quality delivery experience,” an Amazon representative told Grocery Dive, “We will continue to offer convenient two-hour delivery windows for all orders, and customers in some areas will be able to select a longer delivery window for a reduced fee.”
As the supply chain continues to recover from pandemic-era crises, Republicans newly appointed to the House Transportation Committee are preparing to look into how recent Biden-administration efforts at industry oversight might be negatively affecting a recovering industry. Beyond interrogating Biden-backed supply chain policy, Republicans hope to use new committee posts to bolster supply chain resiliency in the wake of a tumultuous few years. Rep. Dusty Johnson (R-SD) told Transportation Topics, “Americans experienced a slew of freight disruptions during and after the COVID-19 pandemic. ... Last year we addressed ocean shipping reform, and it’s clear that updates are needed for other parts of the supply chain.”
As layoffs continue to spread beyond tech and transportation, GameStop will join the dozens of companies culling staff amid softening consumer demand. The gaming retailer plans to shutter its distribution center in Shepherdsville, Ky., according to multiple reports.
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