Facing Hard Times, Shippers Find Innovative Solutions

From contractor controversies to rising fuel costs, logistics professionals across the transportation industry are turning to innovative solutions to persistent problems. We've gathered the twelve supply chain headlines you need to know in an industry that's always moving.

FRONTdoor Collective Provides Fresh Thinking Amid Contractor Controversy

As contractors across the logistics industry begin questioning their relationships with carrier networks, the FRONTdoor Collective is taking a new approach. The FRONTdoor Collective, which hopes to launch operations in 50 markets by 2023, is a franchisee-model last-mile carrier. In a recent interview with Supply Chain Dive, Rick Hernandez, senior vice president of sales and business development at the FRONTdoor Collective, said of the initiative, "You've got entrepreneurs who aren't just focused on their patch, [...] they share notes with each other. They give each other guidance because they're stakeholders in The Frontdoor Collective. It's not just, 'I want to run my business.' They want to see it become a huge, scalable model." According to Hernandez, the FRONTdoor Collective has 95 franchisees who have agreed to make deliveries, with another three hundred nearly ready.

Facing Lower-than-Expected Package Volumes, FedEx Raises Rates

Facing a falling net income after lower-than-expected package volumes, FedEx has announced plans to raise rates by 6.9%. The rate increase, which comes after a previous increase of 4.9% in 2021, is sure to place further pressure on inflation-weary shippers. Caleb Sifton, an executive at Sifted, wrote in an email to SupplyChainDive that shippers should " [...] think like the carrier thinks, and ship like they want them to ship [...] They're really punishing long distance shippers, for example...Whether it's zone skipping or considering a new distribution center, shippers should do anything they can to maximize in-region fulfillment." The rate increase is part of FedEx's ambitious plan to save up to $2.3 billion in operational costs in 2023.

Recent Survey Shows Low Confidence in FedEx CEO John Smith

The latest volley in the ongoing battle between Spencer Patton, CEO of Patton Logistics, and FedEx Ground, the overland subsidiary of logistics giant FedEx, saw a rude awakening for FedEx Ground CEO John Smith. According to reporting from Supply Chain Dive, "Ninety-seven percent of FedEx Ground contractors who responded to a survey launched by ousted contractor Spencer Patton said they do not have confidence in Ground CEO John Smith." In an email response to news of the survey results, FedEx Ground said, "We will not speculate on or draw any conclusions about the credibility of an online survey initiated by an individual who has such a vested personal and business interest in the survey's outcome." In August, FedEx Ground filed suit against Patton, who has been campaigning against the logistics provider on behalf of contractors since July.

UPS Reaches a Deal with Aircraft Mechanics, Further Negotiations Loom

In a welcome sign for UPS, the mega-carrier has successfully reached a deal with its aircraft mechanics. Under the purview of Teamsters Local 2727, the mechanics agreed to pay increases and benefit improvements integrated into a three-year contract extension. According to reporting from Transportation Topics, the contract "would give the aircraft mechanics a 3.3% annual raise over the next three years and an increase in pension contributions." Although the deal, subject to ratification by roughly 1,700 UPS Teamsters, is welcome news, UPS faces another, much larger contract negotiation with the teamsters this fall.

Cost Saving Measures Push U.S. Postal Service Toward Consolidation

As the latest step in Postmaster General Louis Dejoy's 10-year plan to reach financial sustainability, the U.S. Postal Service announced intentions to consolidate roughly 21% of delivery units into large-scale shipping centers. According to Supply Chain Dive, "Cost-cutting has become a major focus for the agency, which has posted $87 billion in losses from fiscal years 2007 through 2020." The first of the new shipping and delivery centers will open in Atlanta, GA, in the fall of this year, with more than 100 additional sites under consideration nationwide.

Steep Drop-Off in Spot Container Rates Surprise Industry Experts

Amid consistent predictions of a gradual decrease in spot container rates from industry leaders, the global container shipping industry is experiencing steep drops in spot rates — with the sharpest declines concentrated in trans-Pacific routes between Asian markets and the U.S.

According to FreightWaves, "The Freightos Baltic Daily Index (FBX) China-West Coast assessment has fallen 76% over the past six months, to $3,799 per forty-foot equivalent unit as of Friday. The Drewry Shanghai-Los Angeles assessment is down 57% in the same period." Unfortunately for shippers, there's no telling when the volatile spot rate market might level out.

Bio-Based Materials Present Solution to Plastic Pollution

In an August 25th Webinar hosted by the California-based Plastic Pollution Coalition, representatives from sustainable packaging companies Ecovactive, Loliware, and Sway discussed how recent innovations in bio-based packaging could help major brands avoid plastic throughout their operations. Using unconventional, organic materials such as seaweed and mushrooms, forward-thinking companies are bringing sustainable solutions to a wasteful supply chain. However, as SupplyChainDive reports, "The products are still gaining momentum in mainstream packaging markets as they work to scale up their innovations and convince brands that their products perform to the same standards as plastic."

Intelligent Audit CEO Attributes Supply Chain Success to Tech-Forward Thinking

At the Council of Supply Chain Management Professionals (CSCMP) 2023 conference in Nashville, industry leaders shared their solutions to the supply chain turmoil in recent years.

Panelist Hannah Testani, Intelligent Audit CEO and freight-auditing technology expert, noted that COVID brought 2030 volumes to 2020. "If you think about what we would have all invested with those 10 years, it would have been a big emphasis on technology to be able to collaborate better and innovate better," she said. Supply Chain Dive noted that "companies like Intelligent Audit used technology as a way to improve communication and allow for faster collaboration across the company to fulfill orders."

After Reluctance from Ports, White House Shifts Away From 24/7 Port Operations

Despite significant investments in the early days of the Biden administration, the White House is shifting away from its encouragement of 24/7 port operations. White House Port and Supply Chain Envoy Gen. Stephen Llyods, speaking at the Association for Supply Chain Management's annual conference, said, "It's a free market economy ... People are driven by their incentive structures and will respond to what will provide them the greatest return on their investment." Supply Chain Dive, reporting on continued White House initiatives, said, "efforts will remain focused on data collection and identifying potential incentives to encourage shippers and carriers to move cargo faster."

Gas Prices Rise in Parts of U.S., Defying Falling Futures

Despite falling futures markets, parts of the U.S. are seeing steep price hikes in gasoline. In the Midwest, recent supply issues in the Chicago area are increasing costs at the pump, and West Coast cities like Los Angeles, San Francisco, and Portland are suffering the consequences of unexpected refinery shutdowns. According to Transportation Topics, "Soaring fuel prices on the ground are in sharp contrast to what's playing out in the futures markets for both oil and gasoline, where traders are focused on a worsening global economic outlook." With West Coast fuel shipments still weeks away, prices will likely remain high in the coming days.

Leading Food Corporation Allocates $50 Million Toward Sustainable Corn Syrup Plant

In a step forward for sustainable food production, Cargill, a leading global food corporation, is allocating more than $50 million toward building a sustainably-designed corn syrup refinery in Fort Dodge, Iowa. Supply Chain Dive reports, "The facility, about 95 miles northwest of Des Moines, will be located on property where Cargill already has an operation. It will use energy-efficient technologies and processing methods. The refinery also will be powered by the MidAmerican Energy electrical grid, which is made up of more than 88% renewable sources." According to Cargill, these innovations will reduce emissions at the new refinery by 50% of those of a typical refinery.

Major Companies Partner to Promote Regenerative Agriculture

Food-industry mega-companies PepsiCo and Archer Daniels Midland recently announced a collaborative effort toward improving regenerative agriculture practices throughout the central United States. According to recent reporting from Food Dive, a prominent industry publication, "The 7.5-year agreement will initially enroll corn, soy, and wheat farmers in Kansas, Minnesota, Iowa, Illinois, Indiana, and Nebraska. The growers will receive financial incentives, plus technical and agronomic support for using practices like cover crops, reducing tillage, and engaging in responsible pesticide use." Though the plan has yet to start, the companies believe their efforts could cut greenhouse gas production by 1.4 million metric tons.

For Easy Visibility in Hard Times, Partner with Intelligent Audit

As the logistics industry prepares to face a difficult peak season, transportation professionals need a reliable ally. With Intelligent Audit, shippers can easily access the freight auditing, anomaly detection, and on-hand expertise they need to navigate a complex supply chain. Start a conversation with Intelligent Audit today, and see how best-in-class technology and service can help your business thrive.

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