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Despite officially removing the word “peak” from the company vocabulary, FedEx is eager to prepare shippers for the busiest time of the year. One thing remains clear in the company’s Aug. 29 release of annual surcharges: Whether we get a peak season or not in 2023, shippers can expect to pay more for their parcels.
But it’s not all surcharges and rate hikes. Big changes are taking place across the transportation industry. The persistent drought in the Panama Canal creates disruptions in high-stakes trade lanes, and supply chain leaders are pointing to procurement as a critical player in lowering Scope 3 emissions. Meanwhile, Chinese drone manufacturer DJI is stepping into the delivery game, and parcel leaders are looking to cut flights as volumes remain stubbornly low. From GRI to DJI, we’ve highlighted some key trends making news in the transportation industry.
FedEx says the additional fees levied on packages shipped between October and January will help bolster services during the busy holiday shipping season. According to a Supply Chain Dive article, some of the surcharges include:
This is the first general rate increase (GRI) announced for this peak season. UPS will soon follow suit, having reached a labor accord with the Teamsters.
As the latest climate-related disruption takes a toll on the global transportation industry, the drought at the Panama Canal is now causing significant delays to international maritime transportation. Driven by an especially dry spring and exacerbated by the worsening effects of El Nino, the drought has forced officials at the canal to limit the number of vessels to 32 per day, according to the Canal authority.
In an email to Supply Chain Dive, Worldwide Logistics CEO Joe Monaghan had dire predictions for the state of operations at the canal: “Delays at the Panama Canal are now up to 15 days or more and likely to increase,” Monaghan said. “The full impact of this hasn’t been felt by the importer/exporter community yet since these longer delays have just manifested themselves.”
Following a turbulent period of negotiations between the Pacific Maritime Association and the International Longshoremen and Warehouse Union, prominent West Coast ports continue to struggle with the consequences of diverted volumes. The Port of Los Angeles saw a steep decline of 25.8% in processed TEU. At the Port of Long Beach, the YoY decline was 26.4%. Despite these significant declines due to union negotiations and continued inventory problems within the American retail sector, port leadership remains optimistic in the long term.
“I am confident we will see our numbers improve as we work with industry partners to rebuild our market share,” Port of Long Beach CEO Mario Cordero told Transport Topics. “Looking ahead in the near term, however, we anticipate a modest ‘peak season’ for shipping as consumers spend a little less this year on back-to-school supplies and gifts through the holiday season.”
To reduce Scope 3 emissions, supply chain leaders should focus on the procurement process, says Robert Williams, AstraZeneca’s Director of Procurement Sustainability. In a recent webinar with Science Based Targets, Williams pointed to the procurement process as a critical choke point for logistics stakeholders and one with a vast reach.
“I’ve spoken to maybe a thousand suppliers on the different webinars and conferences we’ve held over the last 12 to 18 months,” said Williams, according to reporting from Supply Chain Dive. “If I speak to a thousand suppliers, and they speak to a thousand of their suppliers, that’s a million suppliers in two conversations. And that’s the pace we need to move at.”
As retailers globally work to offload excess stock, blank sailings are on the rise in prominent trade routes. The normally busy Asia-Europe route saw 13 blank sailings in July alone. These blank sailings come as carriers face a challenging economic outlook, with Hapag Lloyd reporting a first-half EBITDA of $3.8B, down from $10.9B in 2022, and CMA CGM reporting a Q1 EBITDA decrease of 73% YoY.
“Carriers will be doing … ‘capacity management,’ which means laying up ships,” Sanne Manders said in an interview with CNBC. “If you fly to Singapore, you’ll see all these ships outside the port … A lot of ships are parked there waiting till there are better yields.”
FedEx and UPS are cutting parcel flights. According to reporting from FreightWaves, FedEx flew 9% fewer domestic flights in July than in the previous month. For chief rival UPS, that number was 14%. The decline in parcel flights comes amidst a continued slowdown in parcel volumes for both companies and is likely to accelerate as a typical peak-season uptick in the parcel market fails to appear.
Chinese drone manufacturer DJI recently unveiled FlyCart30, the company’s first drone designed for delivery purposes. DJI has long been the industry leader in consumer drones, with a claim to 70% of the sector, but has yet to branch into delivery. While the FlyCart30 will initially be available only in China, DJI said it may expand to other markets.
“FlyCart 30 uses a four-axis, eight-propeller multirotor design powered by a pair of proprietary Intelligent Flight Batteries,” reports Flying Magazine. “With both batteries installed, it can carry up to 66 pounds of cargo at close to 45 mph over a range of about 10 sm (8.7 nm), staying airborne for as long as 18 minutes. That range extends to about 12 sm (10.8 nm) with an empty load.”
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