As Q1 Results Roll In, a Grim Picture Takes Form in the Transportation Industry

So far, 2023 has been anything but easy for the transportation industry. As earnings calls and quarterly reports roll in, it’s clear that low volumes are continuing to tank revenues and force industry leaders to make tough decisions. The news is bleak across the industry, from falling revenues to fleet counts. But it’s not all tanking revenues and plummeting volumes: DHL’s new emissions tool promises to help shippers improve sustainability, and Outrider is making headlines with new tracking technologies after a jaw-dropping fundraising session earlier this year. In an industry that’s always moving, here are the 14 headlines you need to know. 

As Fears of Strike Persist, UPS Sends Executives to Top Customers

With fears of a strike of UPS’ 350,000 Teamsters continuing to send shivers down the backs of transportation professionals, UPS CEO Carol Tomé is growing increasingly desperate to convince top customers not to shift volumes to other carriers, despite what the headlines may say.

“We’ve assigned 127 high-impact executives to over 380 customers representing about one-third of our total volume,” Tomé said during an April 25 earnings call. “The role of the high-impact executive is to meet with our customers, update them on our ongoing negotiations with the Teamsters, and keep them with us.”

During that same call, UPS discussed its Q1 2023 results, which, while better than some industry experts predicted given the difficult freight volume landscape, still reflected a significant revenue loss for the parcel giant. Here are a few highlights:

  • Consolidated Revenue of $22.9B
  • Consolidated Operating Profit of $2.5B
  • Consolidated Operating Margin of 11.1%

“In the first quarter, deceleration in U.S. retail sales resulted in lower volume than we anticipated, and we faced ongoing demand weakness in Asia. ... We will remain focused on driving productivity while investing in efficiency and growth initiatives, enabling us to come out of this demand cycle even stronger,” Tomé said.

Facing Falling Demand, Amazon Plans to Slow Capital Investments

After significant pandemic-era investments in expanding its fulfillment network, e-commerce giant Amazon plans to slow capital investments and refocus on lowering operational spend. Amazon aims to refocus on bolstering efficiency throughout its regional fulfillment operations to combat plummeting demand and a harsh inflationary environment. 

Palmdale, CA Amazon Workers Join with Teamsters

Speaking of Amazon, its employees at the Palmdale, Calif., location have signed on with the International Brotherhood of Teamsters. Members of the DAX8 union agreed to join Teamsters Local 396. This decision represents the first time Amazon workers have joined with the Teamsters, a pivotal moment for the company’s labor relations. 

According to FreightWaves, members will vote on the agreement in the coming weeks as they seek “immediate pay increases, substantial hourly raises in the fall, provisions that hold Amazon accountable on health and safety standards, a grievance procedure, and other benefits.”

It’s Time for the Supply Chain to Go ‘Back to Basics,’ Industry Expert Says

Following a tumultuous few years, some transportation industry experts contend that supply chain professionals need to simplify to amplify. “Going ‘back to basics’ doesn’t mean ditching the newer technologies that streamline procurement processes and allow industry players to make good analytical decisions,” contributor Rich Weissman wrote in a column for Supply Chain Dive., “Instead, I’m talking about embracing the foundational building blocks of procurement and supply chain management, especially in an increasingly volatile economy.”

In Pursuit of Broad Implementation, Delivery Robots Face Significant Hurdles 

Despite the hopes of some in the ever-expanding last-mile delivery sector, sidewalk delivery robots face a complex series of regulatory hurdles before seeing broad-scale implementation. A combination of vague regulations, differences in laws between states, and persistent safety concerns leave delivery robot manufacturers in a precarious position, despite recent advancements in the technology itself. 

“It’s not a technology issue in many ways,” industry expert Karen Lightman told Supply Chain Dive, “It’s often the application, the human side, and the policy side, where it gets complicated and a little messy.”

U.S. Interstate Fleet Count Drops by 9,000 in Q1 2023

For the U.S. trucking industry, spring 2023 is bringing only storms. Significant challenges to the industry, spurred on by inflation and persistently low volumes, have caused many to shutter their operations in recent months, with the number of interstate trucking fleets in the U.S. dropping by roughly 9,000 fleets in Q1 2023 alone, FreightWaves reported, citing federal data analyzed by Motive, a fleet management technology company. 

In Pursuit of Cost Reductions, FedEx to Close Pilot Bases at Home and Abroad

As FedEx CEO Raj Subramaniam continues implementing cost-cutting measures throughout his company’s operational structure, the carrier has recently announced plans to shut down pilot bases in Alaska, California, and Germany. 

“Our operations in these markets continue to play an important role in the global FedEx network, and the flexibility of this network enables us to make adjustments that best meet the needs of our customers throughout the world,” according to a FedEx statement emailed to FreightWaves. “As with any base closure, the process is a gradual one and this relocation will occur without any disruption to our operations.”

Amid Mounting Supply Chain Tensions, Apple Supplier Recommits to Chinese Market

Foxconn Technology Group, a Taiwanese company currently running the world’s largest manufacturing plant for iPhones, has recently opened a global business base in central China. Located in Henan Province,  this facility will focus on “applying new technologies in Foxconn’s business, formulating development plans, researching core technologies, and incubating new projects,” according to the South China Morning Post

The opening of the Henan facility marks a push toward China, as many in Apple’s leadership argue that the company should work to gain independence from Chinese supply chains as tensions rise between China and the U.S.

Outrider Adds to Suite of Capabilities 

Following an impressive $73M capital raise early this year, autonomous distribution yard technology provider Outrider is adding new capabilities to its suite of features. With new trailer tracking capabilities made possible through computer vision and deep learning, personnel in crowded distribution yards can forgo time-consuming manual data entry. Instead, it will rely on Outrider’s automated trailer tracking system.

“This new technology will be celebrated by logistics center operators and North America's 3.5 million over-the-road semi-truck drivers who waste hours each week looking for trailers. Our trailer inventory solution brings much-needed visibility and insight to maximize productivity and yard throughput,” Andrew Smith, Founder and CEO of Outrider, said in an April 27 press release.

Key Benchmarks Reveal Tough Times at C.H. Robinson

For C.H. Robinson, Q1 2023 brought bad news: falling volumes led to significant losses at the brokerage. This shift can be clearly seen in some of the company’s key benchmarks:

  • Gross Profits fell 24.7%
  • Income from Operations fell 53.4%
  • Diluted Earnings per Share fell 53.2%
  • Adjusted EPS fell 52.2%

“Our Q1 financial results reflect the softening market conditions that have transpired in the freight transportation market over the past 12 months,” interim CEO Scott Anderson in an April 26 earnings call, “With shippers continuing to manage through elevated inventories amid slowing economic growth, the balance of supply and demand has shifted from a tight market a year ago to one that is now oversupplied.”

Following High-Profile Derailments, Norfolk Southern CEO Reassures Shareholders

Following a series of high-profile derailments, Norfolk Southern is taking strides to reassure shareholders amid increased scrutiny. The most notable of these derailments occurred in East Palestine, OH; this derailment has caused significant delays on important routes in the middle of the country, and has caused significant unease among Norfolk Southern’s shareholders.

 Addressing the derailment, as well as the plan to improve service, Norfolk Southern’s CEO Alan H. Shaw said in an April 26 earnings call, “We are going to learn from this accident to become a safer company.”

Little Relief From Low Volumes in Sight for Old Dominion

For carrier Old Dominion, the low volumes plaguing the transportation industry have resulted in grim Q1 statistics. 

  • Tonnage Per Day was down 11.9% YoY
  • Shipments Per Day was down 9.6%
  • Revenue Per Shipment was down 5.9%.

Unfortunately for Old Dominion, little relief from low volumes is in sight for the rest of 2023. “As we look forward to the remaining quarters of this year, we currently anticipate the softer demand environment will continue,” said Chief Operating Officer Marty Freeman, per reporting from FreightWaves, “The second quarter is generally the period when volumes begin to accelerate, but we have yet to see an inflection toward growth.”

Amid Calls for Improved Sustainability, DHL Announces New Emissions Tracking Tool

Amid calls for sustainability throughout the transportation industry, global  logistics provider DHL has announced a new software tool to help shippers more accurately track and reduce their carbon output. The DHL GoGreen Dashboard helps DHL’s large cross-divisional customers track emissions seamlessly within a streamlined interface and in accordance with recent industry standards.

“As we face the challenges of the climate emergency, it is clear that sustainability must be at the forefront of our efforts,” said Katja Busch, CCO at DHL and Head of Customer Solutions and Innovation, “By prioritizing cleaner, greener logistics and working together, I truly believe that we can drive meaningful progress towards achieving sustainable supply chains.”

In Good Times and Bad, Intelligent Audit Provides Unprecedented Insight into High-Stakes Supply Chains 

With the results in for Q1, it’s clear that 2023 is shaping up to be yet another difficult year for the global transportation industry. Luckily, Intelligent Audit is here to help. With a cutting-edge suite of innovative solutions, Intelligent Audit is ready to help shippers navigate the turbulent waters of the transportation industry in 2023. 

Get started with Intelligent Audit, and see what 25 years on the cutting-edge can do for your business today.

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