Deja Vu All Over Again: Will Peak Season 2023 Be a Repeat of Last Year?

“It’s like deja vu all over again.” That colloquialism, attributed to baseball Hall of Famer Yogi Berra, seems apt as peak season 2023 is beginning to look like an unwelcome repeat of a year ago. Stubbornly low demand, coupled with returning volume in the form of passenger flights, are causing air cargo experts to worry that the long-awaited Q4 demand uptick was just a result of misplaced optimism.

Here is what else is making news in an industry that’s always moving: Tough talk from the Teamsters following a strike authorization has UPS shareholders anxious. On the brighter side of the transportation industry, President Biden praised the tentative agreement between the ILWU and the PMA on the West Coast, and inflation is finally showing signs of abating. Read on to learn more about the news and trends shaping the logistics transportation industry. 

Despite Industry Hopes, Peak Season Fails to Appear for Air Cargo

While many in the air cargo industry had been hoping for a Q4 uptick in air cargo demand, industry experts realize that an increase in demand is unlikely. The International Air Transport Association (IATA) predicts the 3.8% slowdown in air cargo demand will result in a 33% drop in revenues. Per FreightWaves, the stark decline in demand is primarily due to lower overland rates as carriers attempt to spur demand and increased passenger airline travel. 

‘UPS will be striking itself,’ Teamsters Boss Warns

In a show of support for union leadership during ongoing contract negotiations, 97% of UPS workers represented by the International Brotherhood of Teamsters have voted to authorize a strike if an agreement with the parcel giant isn’t reached by July 31.

“This vote shows that hundreds of thousands of Teamsters are united and determined to get the best contract in our history at UPS. If this multibillion-dollar corporation fails to deliver on the contract our hard-working members deserve, UPS will be striking itself,” Teamsters General President Sean O’Brien said in a June 16 press release.

That same day, a UPS press release aimed to ease shareholder fears: “Authorization votes and approvals are normal steps in labor union negotiations. We continue to make progress on key issues and remain confident that we will reach an agreement that provides wins for our employees, the Teamsters, our company, and our customers.”

Following the Pandemic, Businesses Get Serious About Supplier Diversification

During the pandemic, businesses learned the importance of a diversified supplier base to meet fluctuating customer demand. A 2022 study by business management consultancy Ernst & Young revealed that 62% of industrial companies changed their supplier base significantly between 2021 and 2022. These steps toward diversification have been mainly driven by the desire to move from a just-in-time supply chain management strategy to a more resilient just-in-case approach. 

Wholesale Prices Indicate Easing Inflation

In an encouraging sign for the Federal Reserve and investors alike, U.S. wholesale prices dropped 0.3% from April to May. The decrease in wholesale prices signals that repeated interest rate hikes have successfully decreased inflationary pressures. The Fed has raised its benchmark interest rate 10 times in the past 15 months. 

President Biden Praises West Coast Labor Deal

President Biden congratulated everyone involved in brokering a tentative agreement between the Pacific Maritime Association, representing carriers working on the West Coast, and the International Longshore and Warehouse Union (ILWU). The deal, once ratified, would increase wages by 33% for the 22,000 West Coast port workers represented by the ILWU.

“As I have always said, collective bargaining works, and I congratulate both parties at the ports for reaching an agreement,“ Biden said in a June 14 statement. I want to thank Acting Labor Secretary Julie Su, who used her deep experience and judgment to keep the parties talking, working with them to reach an agreement after a long and sometimes acrimonious negotiation.”

“Above all, I congratulate the port workers, who have served heroically through the pandemic and the countless challenges it brought, and will finally get the pay, benefits, and quality of life they deserve,” he added. 

Retailers Invest in Technology to Bolster Inventory Management

Leading retailers are investing in technology to bolster inventory management processes in the aftermath of the COVID-19 pandemic. For example, companies like Macy’s and Dr. Martens have been implementing data-driven software to improve visibility over spending habits, enabling them to reallocate inventory to the most profitable areas within their service range. 

“What the pandemic taught you is you have to move faster,” Kristin Howell, global vice president of the retail industry business unit at SAP, told The Wall Street Journal. “Your data snapshot is only as good [as it is] at the point of time you take it, and as soon as you take that snapshot, it’s changed.”

Teamsters’ Leadership Endorses Tentative Agreement with ABF

Teamsters leaders unanimously support the tentative agreement recently brokered between the union and ABF Freight Systems. The tentative deal covers some 8,500 Teamsters employees at ABF and includes key benefits for union members.

  • $6.50 in hourly wage increases (over the life of the agreement)
  • MLK Day is now a paid holiday
  • Increased contributions to health, welfare, and pension plans
  • Prohibitions on cab cameras, body sensors, audio recorders, and biometric performance monitoring tools

“With this new agreement, we have reset the standard and charted a new course for the entire freight industry,” Teamsters General President Sean M. O’Brien said in a June 15 press release, “The gains made at the table are a testament to our strength and commitment to revamp and rebuild the Freight Division.”

With Peak Season 2023 Shaping Up to Place Pressure on Businesses, Smart Shippers Turn to Intelligent Audit

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