Ah, Mother’s Day, when those in the transportation industry and beyond think of those who first inspired us, comforted us, and brought us joy. Despite the holiday, however, Mother’s Day 2023 brings little comfort or joy to those involved in the global supply chain. Key indexes are promising bleak tidings, and furloughs, service cuts, and revenue losses are popping up like flowers in a Mother’s Day bouquet. Here's what you need to know in the industry that’s always moving.
In another sign of the difficult times for the transportation industry, FedEx Freight recently announced plans to close 29 locations and furlough a significant number of employees. This follows substantial declines in volume seen in the company’s Q1 2023 results, mirroring a trend seen throughout the trucking sector.
“We continuously review our network to ensure we have the right design to address changing market dynamics,” according to a FedEx Freight statement emailed to Supply Chain Dive, “Through that process, we identified opportunities to consolidate operations in several locations to improve customer service levels and improve efficiencies with fewer touchpoints, while lowering our cost to serve.”
Yet more bleak news for the global transportation industry: The Logistics Managers’ Index (LMI) hit an all-time low in April. The index, which reached 50.9 in April, has provided a comprehensive transportation industry rating for the past 5.5 years. The unprecedented rating marks a new low in a three-month streak of consecutively falling growth rates.
Despite its size, LTL carrier Yellow Corp. is not immune to the industry-wide difficulties plaguing the trucking sector. According to reporting from FreightWaves, “the carrier reported a first-quarter net loss of $54.6 million, or $1.06 per share.”
Analysts pointed to recent operational changes included in the carrier’s “One Yellow” strategy, as well as ongoing labor difficulties and a challenging volume landscape, for the significant losses.
On an April 25 earnings call, UPS CEO Carol Tomé announced new investments in healthcare logistics, a growing segment of the broader transportation industry. “Our goal is to become the number one complex healthcare logistics provider in the world to help us get there who plan to open a total of seven dedicated healthcare facilities this year,” said Tomé, “In the first quarter, revenue from our healthcare portfolio reached $2.4 billion, and we expect to generate over $10 billion in healthcare revenue in 2023.”
As the grim news continues to plague freight markets, UPS’ investment in healthcare logistics shows the carrier's continued attempts to diversify revenue streams in a hyper-competitive transportation industry.
During the same earnings call, Tomé announced further cuts to air service, aiming to reduce operating costs as shippers move volume toward more affordable ground transportation options. According to Supply Chain Dive, this decision comes after UPS saw average daily air volume fall by 16.7% YoY in Q1 2023.
“We see customers moving out of air to ground,” Tomé said. “Why? Well, we’ve really worked to improve our time in transit. So we’ve got the fastest time in transit now, so you can get your package where it needs to go quicker than before, and people are looking for value.”
Flexport, a leading supply chain management company, has recently decided to purchase the logistics portion of the e-commerce platform Shopify. Expected to close in the second quarter, Flexport’s deal to buy Shopfy’s logistics business will allow the company to branch out into the growing last-mile delivery and e-commerce fulfillment sectors.
Cargill, the world’s largest grain trader, is facing unprecedented regulatory scrutiny and legal challenges in the U.S. due to its failure to stop deforestation and human rights abuses from its supply chain. The lawsuit, filed by environmental law organization Client Earth, alleges that Cargill’s “shoddy due diligence raises the risk that the meat sold in supermarkets across the world is raised on so-called ‘dirty’ soy,” according to reporting from The Guardian.
To meet customer demand for on-demand delivery logistics, grocery chain Kroger is bringing sushi and floral bouquets to the Uber Eats marketplace. In early May, Kroger began delivering sushi and flowers from more than 1,400 stores.
"Finding the freshest, highest-value treats – even for delivery – can be time-consuming. This new curated collaboration with Kroger across floral and sushi makes it easier than ever for people to treat themselves and others on-demand," Christian Freese, Uber's Head of Grocery and Retail across the US & Canada, said in a May 2 press release, "Uber Eats helps to make life a little more effortless, and we're happy to be working with the Kroger Family of Stores across the country to save time for what matters most – friends, family, and loved ones."
As the e-commerce industry struggles with low volumes, Amazon is turning to automation to bolster efficiency within its fulfillment centers. The e-commerce giant has announced plans to open a 3.8 million-square-foot automated fulfillment facility in Windsor, Conn., where human workers will work alongside robots to fulfill orders.
In a statement obtained by Supply Chain Dive, an Amazon spokesperson said that the new facility will employ “thousands of robotic systems such as mobile robots and robotic handling systems that help employees deliver for customers every day.”
U.S. Lawmakers have requested details regarding the supply chains of top clothing manufacturers Adidas, Nike, and Shein over concerns around forced labor. Many of the worries stem from the companies’ sourcing of cotton products, which lawmakers suspect originate in China’s Xinjiang region. Sourcing cotton from Xinjiang would violate the 2021 Uyghur Forced Labor Prevention Act, which bans all products from the area.
To address ongoing issues within the supply chain, the Biden administration is investing in efforts to streamline data sharing between shippers, truckers, retailers, wholesalers, and other transportation parties. Launched in March 2022, the Freight Logistics Optimization Works (FLOW) program now includes 53 companies, including Nike, Walmart, Union Pacific Corp., FedEx, and Maersk.
Leading consultancy Boston Consulting Group has released its 2022 Sustainability Report. The report, which focuses on several sectors, includes important information on the most pressing challenges facing the global transportation industry, including the decarbonization of the supply chain.
According to the report, the consultancy aims “To better understand supplier concerns and to manage risk in our supply chain to identify opportunities to collaborate on ESG topics.”
With no end to hard times in sight, those in the global transportation industry might be tempted to seek the solace of motherly advice. While that might get you a warm chocolate chip cookie and a sympathetic shoulder to lean on, the smarter, more effective option would be turning to Intelligent Audit for unprecedented insight into your transportation operations. With a robust toolkit of transportation innovations, Intelligent Audit is a leading provider of solutions to transportation professionals.
Contact Intelligent Audit today to learn how 25 years of industry experience can help you optimize your transportation operations on Mother’s Day and beyond.
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