As parcel giants UPS and FedEx play their annual follow-the-leader game with peak season rate hikes (sorry, FedEx, we meant annual surcharges), the USPS has opted out of rate hikes altogether, a move that aligns with Postmaster General Louis DeJoy’s Delivering for America plan. Will this strategy bring more holiday business to the nation’s postal service in a peak season that many experts predict will have a lower volume than in past years?
Elsewhere in industry news, the United Auto Workers strike is shuttering operations at auto manufacturing hubs across the country, and Amazon is backing down from previous commitments as experts cite anti-trust concerns. Read this weekly roundup of news, trends, and analysis for the details.
Rather than implementing rate hikes to maintain a competitive pricing structure with UPS and FedEx, DeJoy is counting on his organization’s recent investments in Delivering for America — namely in the Postal Service’s workforce, package processing, and delivery operations — to build off last year’s momentum and remain competitive in the upcoming peak season.
"Our 2022 peak season was a tremendous success," DeJoy said in a Sept. 19 press release. “We are ready to deliver for the holidays in a superior and routine manner. We have been planning early and leveraging investments in our people, infrastructure, transportation, and technology made possible by the Delivering for America plan. And with no holiday surcharges, we are strongly positioned to be America’s most affordable delivery provider this holiday season.”
The UAW strike, which began Sept. 15, continues to expand under a ‘stand up’ strike model, in which workers across various facilities strike at different times rather than a workforce-wide stoppage. The strike has spread to 28 locations across 30 states, exacting a heavy toll upon a range of automakers, including Ford, General Motors, and Stellantis.
Prominent figures in U.S. politics, including President Biden, are weighing in. “Tuesday, I’ll go to Michigan to join the picket line and stand in solidarity with the men and women of UAW as they fight for a fair share of the value they helped create,” Biden wrote on X, formerly known as Twitter, on Sept. 22. “It’s time for a win-win agreement that keeps American auto manufacturing thriving with well-paid UAW jobs.”
For those carriers hoping against hope for something resembling a peak season, last week’s container shipping rates brought only bad news. The Freightos Baltic Daily Index (FBX) showed a 16% drop in the busy Asia-North America West Coast lane, with the FBX Asia-North America East Coast following close behind at a 13% drop. In Asia-Europe lanes, the freight news is even worse: Shanghai-Rotterdam suffered a staggering 34% drop from an Aug. 17 peak, and Shanghai-Genoa was down 27%.
“For North Europe, we have not seen the spot rate this low since early 2018, when the level was lower for a brief two weeks,” Lars Jensen, CEO of Vespucci Maritime, said in a quote obtained by FreightWaves. “To see a more sustained period of spot rates this low or lower, we have to go back to the depths of the price war in late 2015 and early 2016.”
DC Velocity, citing a report from Cushman & Wakefield, highlights that despite the help of recent nearshoring trends, U.S. manufacturers face significant challenges as they strive for recovery.
“The U.S. has a long way to go before larger reshoring and nearshoring trends take hold,” said David Smith, Head of Americas Insights for Cushman & Wakefield. “Manufacturers need to decide if it makes sense to relocate parts or the entirety of an operation and if the U.S. is the right place. As it becomes more possible to diversify supply chains and bring manufacturing back to the U.S., it will be important to consider the state of manufacturing real estate. Working strategically on location, understanding labor needs, and the cost of operations and materials will be more important than ever, and the planning should start now.”
After announcing that sellers abstaining from using its shipping services would incur a 2% fee, e-commerce giant Amazon appears to be changing course, per Bloomberg. The news comes amidst increasing theorizing that Amazon could face regulatory scrutiny as it expands further into the freight market and fulfillment sector, with experts citing anti-trust laws as one possible source of regulatory tension.
“The 2% Seller Fulfilled Prime fee was intended to cover our costs, but after careful consideration, we’ve made the decision not to implement this program fee to ensure seller sentiment related to the fee does not impact program participation,” an Amazon spokesperson told Bloomberg.
Following the Pandemic-era e-commerce boom, retailers have increasingly relied on omnichannel fulfillment strategies, including store-based fulfillment. For example, Target delivered 95% of online orders through store-based fulfillment in 2021.
But Target is far from alone. Across the retail sector, businesses are embracing omnichannel to mitigate supply chain bottlenecks.
“In-store fulfillment has resulted in shorter delivery times and a pronounced expansion of exclusive brand sales online, which further contributes to the profitability of the business,” Boot Barn CEO Jim Conroy said in a quote obtained by Modern Retail.
As California logistics service providers prepare for the state’s strict new environmental regulations to take effect, many carriers are stocking up on Diesel trucks. All vehicles serving the state's ports must be zero-emissions vehicles under California’s new regulations, backed by the California Air Resources Board (CARB). While many logistics service providers are purchasing electric vehicles, others are predicting a run on new diesel trucks.
“Trucking companies typically buy vehicles ahead of new environmental mandates because older trucks purchased before mandates generally are allowed to keep operating once new rules take effect, according to The Wall Street Journal. “Buying the trucks beforehand allows companies to push back the expense of buying cleaner, more expensive rigs.”
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