From supply chain snafus to the growing threat of history-making strikes, it's been another week of exciting changes within the global logistics industry. Yet, in a time of unprecedented uncertainty, logistics professionals can be sure this will be a peak season like no other.
Spencer Patton, CEO of Patton Logistics, has launched a vote of no confidence in FedEx Ground President and CEO John Smith. Patton, an outspoken critic of Ground's treatment of its contractors, hopes to use the anonymous vote to demonstrate to Ground's shareholders the widespread discontent among Ground's contractor partners. According to reporting from SupplyChainDive, "The vote will allow FedEx's board of directors and shareholders to hear directly from Ground contractors as they grapple with elevated fuel, vehicle and wage costs while FedEx enjoys expanded profit margins [...]" The decision to hold a vote of no confidence comes after FedEx Ground abruptly terminated its relationship with Patton Logistics and sued Route Consulting, a contractor consultancy owned by Patton.
Despite the furor over FedEx's very public conflict with Spencer Patton, UPS has thus far been reluctant to comment publicly on their chief competitor's turmoil. UPS' reluctance to involve themselves in a dispute with FedEx is, some believe, a result of their preoccupation with their labor tensions. With potentially noisy negotiations coming up in the second half of 2023, UPS is focusing on ensuring its 380,000 teamster employees feel cared for by leadership. As FreightWaves reports, "Josh Taylor, senior director of professional services at Shipware LLC, a consultancy, and a longtime UPS executive, said that UPS, facing potentially contentious contract talks with the Teamsters union, wants no part of a battle that pits a rival carrier against its drivers."
In a worrying turn for those fearing the onset of a global recession, global trade market rates have continued to fall. The World Trade Organization's Global Trade Barometer, a vital indicator of the health of the international merchandise trade, recently showed that year-on-year growth slowed by more than two percentage points from 5.7% in the final quarter of 2021 to 3.2% in the first quarter of 2022. "The slowdown in Q1 only partly reflected the impact of the conflict in Ukraine, which broke out in late February. Lockdowns in China also weighed heavily on trade in the first quarter." says the WTO.
Following the lead of their larger competitors, logistics companies OnTrac and DHL recently announced their peak-season surcharges. For West Coast-based carrier OnTrac, these surcharges will be priced relative to the surge in home delivery a shipper sees during peak season. DHL eCommerce solutions, however, "[...] is imposing fees as high as $3.20 per package for its SmartMail products, depending on shipping speed and distance," according to SupplyChainDive. In announcing their peak season surcharges, DHL eCommerce and OnTrac join the ranks of logistics giants like FedEx, Amazon, and UPS, all of which have implemented additional fees in the logistics industry's busiest months.
As negotiations between U.S. Freight Railroads and some of the nation's largest rail unions fail to reach agreements, experts predict that a large-scale freight-rail strike could lead to multibillion-dollar losses in economic output. As FreightWaves reports, "The Association of American Railroads estimates that a nationwide shutdown of rail operations could cost $2 billion in lost economic output each day[...]" Although time is quickly running out for unions and freight railroads to reach a consensus, the groups have until September 16th to reach an agreement, according to additional reporting from FreightWaves: "Per the Railway Labor Act, both sides have until midnight on Sept. 16 to come to a consensus; after that, the "cooling-off" period ends and union members could decide to go on strike."
Although the food supply chain issues related to COVID-19 are now primarily a terrible memory for the food industry, a new problem threatens to roil food and beverage supply chains. In June of this year, the Food and Drug Administration opened investigations into the death of an infant potentially tied to the recall of baby formula from an Abbot Nutrition factory in Michigan; closely following this incident, Family Dollar, a value store chain, halted shipments from a rodent-infested food warehouse. Though these incidents are unrelated, they speak to a worrying trend in the food and beverage industry: a lack of oversight resulting in stunning lapses in consumer safety. According to SupplyChainDive, "systematic failures from management focused more on the bottom line than project and worker safety can lead to calamity." While the shortages of the pandemic are now well in the past, it remains to be seen whether the consumer experience will be broadly affected by recurrent lapses in supply chain safety.
Omnichannel fulfillment software provider Extensiv has partnered with Pitney Bowes, a global shipping and mailing company, to offer third-party logistics (3PL) organizations a leg up in the multi-trillion dollar eCommerce industry. By pairing Extensiv's automated programming interface (API) with logistics services offered by Pitney Bowes, the companies hope to provide freight shippers with improved logistical efficiency in time for peak season. SupplyChainDive reported on September 8th, "The joint offering, available in time for peak 2022, provides faster response times for high-volume label production, guaranteed delivery on qualified expedited shipments, multiple payment options, and easy returns."
Global container shipping giant Maersk has acquired Hong Kong-based LF Logistics. The $3.6 billion transaction comes after much deliberation on the part of Denmark-based Maersk, which initially hoped to acquire LF Logistics in December of 2021. Logistics Management, a global logistics industry publication, reported Soren Skou, CEO of Maersk, as saying, "With the acquisition of LF Logistics, we add critical capabilities in Asia Pacific to support our customers' long-term growth in Asia Pacific as well as capabilities and technology we can scale in our contract logistics business globally."
Nobody can predict what peak season 2022 has in store for the global logistics industry. As growing uncertainty roils the waters of international logistics, shippers need an ally to trust. With Intelligent Audit, shippers can rest easy knowing they have instant access to freight auditing, anomaly detection, and expertise to make it through the roughest waters. Start a conversation with Intelligent Audit today, and see what the future of logistics can do for your business.
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