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In today’s low-volume parcel environment, carriers are used to bad news. However, recent innovations from parcel transportation providers are offering some in the parcel industry a glimpse of sun behind the clouds. Mega-carrier UPS has reached a new milestone in their push to achieve carbon neutrality by 2050, and last-mile delivery provider OnTrac is poised to gain a larger share of the competitive last-mile delivery marketplace with new 7-day delivery. In a struggling industry, innovation offers shippers and carriers alike a glimpse of a brighter future.
But it’s not all good news for the global supply chain, and the need for logistics network optimization is greater than ever. The FedEx Pilot’s Union, the ALPA, is pushing for solidarity following a request to exit mediation with FedEx Express, and U.S. producer price indexes are stoking fears of inflation in key sectors of the U.S. consumer economy. In an industry that’s always moving, here’s what you need to know:
As part of the carrier’s goal to achieve carbon neutrality by 2050, UPS has taken delivery of a new class of alternative fuel vehicles. The delivery of the Kenworth T680 semi-truck, powered by a 15L compressed natural gas engine, marks a major step forward in UPS’ efforts to increase the number of vehicles in their fleet running on alternative fuels.
“We’re thrilled to be the first company to acquire the T680 with the X15N 15-liter natural gas engine,” Anthony Marshall, UPS Vice President of Maintenance and Engineering, said in a Kenworth press release. “This new truck enhances our worldwide fleet of over 18,000 alternative fuel and advanced technology vehicles, which are essential for achieving our target of 40% alternative fuel in our ground operations by 2025 and carbon neutrality by 2050.
Following the Airline Pilots Association’s contentious request to end federal mediation with FedEx, the union is demonstrating a united front. As union leadership coalesces around a unified front, fears of a strike over wages, benefits, and working conditions are forcing some shippers to consider contingency plans if faced with a strike at FedEx Express.
“Whether you are of the opinion that we should have waited longer or that we’ve waited long enough, we MUST embrace the imperative that we all work together. We are ONE TEAM on this side of the table, ready to negotiate a deal that recognizes our value to OUR corporation, and a deal that the corporation can easily afford,” said the MEC, in a note signed by ALPA council members obtained by FreightWaves. “On the other side of the table is the other team, intent on dividing and conquering us. You need to decide if you’re on OUR team or THEIR team. There are no other choices, no neutral sideline or fence to stand or sit on. We stand together, or we all fail.”
OnTrac, a last-mile logistics delivery provider, has announced new weekend shipping services, allowing customers to receive deliveries seven days a week. Beginning on March 16, the service will be available across 75% of OnTrac’s operational footprint.
“By expanding our services to include weekend deliveries, OnTrac will further empower e-commerce retailers and shippers to provide faster delivery that drives more sales and builds brand loyalty,” Josh Dinneen, Chief Commercial Officer of OnTrac, said in a March 14 press release. “Consumers shop online every day and expect to get their orders as quickly as possible, regardless of the day of the week. Restricting the delivery window to business days fails to meet their needs for faster delivery and puts retailers at risk of losing business.”
Lithium Americas, a lithium extraction company, has recently received a $2.26B loan from the Department of Energy to develop domestic lithium production facilities. Much of the companies work will center on Thacker Pass in Nevada, which company sources say contains enough lithium to manufacture batteries for some 800,000 vehicles.
“The United States has an incredible opportunity to lead the next chapter of global electrification in a way that both strengthens our battery supply chains and ensures that the economic benefits are directed toward American workers, companies, and communities,” Jonathan Evans, Lithium Americas President and CEO, said in a statement obtained by Supply Chain Dive.
U.S. producer prices rose in February, a troubling sign for those anxious about the stubborn inflation facing U.S. consumers. The producer price index (PPI), which measures the average change in the selling prices received by domestic producers for their output over a given period, rose by 0.6% throughout February, led primarily by increases in the cost of gasoline and food.
“Wholesale gasoline prices rose 6.8% last month. There were also increases in the prices of diesel and jet fuel,” reports Reuters. “But prices for hay, hayseeds, and oilseeds fell as did those for iron and steel scrap and asphalt. Food prices rose 1.0%, amid increases in the costs of eggs and beef.”
Hapag-Lloyd, the world’s fifth-largest maritime carrier, expects to see a significant drop in earnings in 2024. For FY 2024, the carrier's leadership is advising shareholders to expect an EBITDA between $1.1B and $3B and an EBIT of roughly minus $1.1B. The carrier is largely attributing the drop in earnings forecast to the ongoing crisis in the Red Sea and the volatility of the current geopolitical global landscape.
“We have got the current financial year off to a satisfactory start, but the economic and political environment continues to be volatile and challenging – especially in view of the current situation around the Red Sea,” Rolf Habben Jansen, CEO of Hapag-Lloyd AG, said in a March 13 press release. “We therefore expect to see an overall decrease in earnings in 2024.”
2023 was a difficult year for mergers and acquisitions. As volumes fell, logistics companies were reluctant to make the high-dollar acquisitions that have characterized the transportation industry in recent years. 2024, however, offers a more promising outlook. As the weak freight market persists and logistics companies are forced to burn through cash on hand, 2024 is poised to be a big year for M&A.
“Leading strategic and financial investors are sitting on substantial funds that they are ready to spend once the market picture clears, multiples revert to historic levels, and perspectives on how best to create value sharpen,” reads a recent report from McKinsey. “But today, valuations remain high, in line with economic conditions and optimistic forecasts.”
As the broader parcel sector struggles to contend with stubbornly low volumes, shippers are in greater need than ever of innovative supply chain solutions. With over 25 years at the cutting edge of supply chain innovation, Intelligent Audit offers shippers access to an invaluable range of vital software assets:
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