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This week’s news is serving up a feast of logistics and business shake-ups. We’ve got FedEx hiking its rates yet again and a centuries-old German brand getting a Danish makeover. But that’s just the appetizer. The main course? A potential dock strike that’s got importers scrambling like it’s Black Friday in September. Meanwhile, manufacturers are giving the Fed’s rate cut the side-eye as the DOJ lays down the law demanding more than $100 million in damages from the owner and operator of the ship that brought down Baltimore’s Key Bridge. Oh, and if you’re a serial returner, you might want to rethink that habit. Trust us, you’ll want to stick around for this smorgasbord of stories that are reshaping industries and wallets alike.
We still have a few months left in 2024, but FedEx is already ringing in 2025 with a bang. However, it’s not the kind of bang shippers would hope for. Come Jan. 6, the delivery giant will roll out a 5.9% average rate increase, targeting everything from standard U.S. deliveries to international shipments.
E-commerce businesses and retailers, brace yourselves. FedEx is raising fees for residential deliveries and shipments to certain ZIP codes. Got a package that needs special handling? That’ll cost you more too. This move forces companies to rethink their shipping strategies, especially those dealing with heavier items or rural destinations. The Ground Economy service, popular among online sellers, faces both higher minimum charges and surcharges — a double whammy for budget-conscious shippers.
While the general rate hike might sting, savvy shippers can find silver linings. FedEx’s two-day air services are seeing above-average increases, potentially pushing some businesses toward ground options for longer distances. But here’s the kicker — don't take the first offer as gospel. Industry experts suggest that despite annual increases, the current soft demand gives shippers more bargaining power than you’d think. So roll up your sleeves and negotiate — you might be surprised at what you can pull off if you stand your ground.
The logistics world just witnessed a seismic shift. DSV, a Danish freight giant, swooped in to buy DB Schenker for €14.3 billion ($15.9 billion). The deal could have wide-ranging impacts on the industry while also closing the book on a brand that’s been around since Ulysses S. Grant was president.
Gottfried Schenker kicked things off back in 1872, founding Schenker & Co. in Vienna. Fast-forward to today, and DB Schenker employs 75,000 people worldwide. The company grew into a logistics behemoth, becoming a familiar name on shipping docks and in warehouses across the globe. But now, like UTi, Panalpina, and Agility’s GIL before it, the Schenker name looks set to fade away under DSV’s expanding umbrella.
The merger creates a true logistics titan. We’re talking about a workforce of 150,000 people and combined revenues of $39.3 billion based on 2023 figures. That’s enough to claim the world’s largest forwarder title, edging out DHL Global Forwarding ($33.8 billion) and Kuehne + Nagel ($31.6 billion) — a who’s who in parcel transportation. In the air, the new DSV-DB Schenker combo handled a whopping 2.45 million tons of freight in 2023. Ocean shipping? They’re nipping at Kuehne + Nagel’s heels with 4.30 million TEUs moved.
It’s our weekly update on the looming International Longshoremen's Association (ILA) strike. It’s looking increasingly likely that come Oct. 1, a strike will rip through East and Gulf Coast ports, and President Biden’s hands-off approach only adds more fuel to the fire.
The Biden administration has made it clear that it won’t invoke the Taft-Hartley Act to prevent a strike. This 1947 law allows presidents to force workers back on the job for an 80-day cooling-off period. But a White House official stated plainly, “We’ve never invoked Taft-Hartley to break a strike and are not considering doing so now.” Instead, they’re urging both sides to keep negotiating. This hands-off approach marks a notable change from past administrations and pressures both the ILA and port employers to find common ground.
A coalition of 177 trade groups is sounding the alarm. They’ve penned a letter to Biden, begging him to step in and restart talks between the ILA and the United States Maritime Alliance (USMX). These groups, representing everyone from retailers to farmers, fear a strike could kneecap the economy just as the holiday shopping season gears up. They point to the White House’s past successes in averting rail and UPS strikes. But so far, their pleas haven’t swayed the administration. With 45,000 workers ready to walk off the job at 36 ports from Texas to Maine, the stakes couldn’t be higher.
Lucky for you, our weekly strike update has a part two this week. The focus here? As that Oct. 1 deadline creeps closer, importers are in full-on panic mode, racing to get their goods into the U.S. before East and Gulf Coast ports potentially shut down.
Retailers and manufacturers are betting the farm on beating this strike. They’re cramming holiday shipments in early, causing an out-of-season import boom. August was wild — 2.4 million containers flooded U.S. ports. That’s a whopping 21% more than last year and the biggest monthly haul since things went haywire in May 2022. Take companies like Balsam Hill, which sells artificial Christmas trees. It’s rerouting entire shipments, with CEO Mac Harman diverting tens of thousands of holiday decorations from New York to Oakland, California. He warns, “A strike will have a significant negative impact on both our ability to serve our customers and on our financial performance.”
The threat of an East Coast strike has become an unexpected boon for West Coast ports. Los Angeles and Long Beach saw their combined inbound container volume skyrocket by 47.4% in July compared to last year. August brought another 3.1% increase, pushing the total to 966,231 containers — levels not seen since May 2021. That said, this sudden popularity contest might backfire. Ken O’Brien from Gemini Shippers Association lays it out: “If we all go and try to use the other door, the other door gets clogged up.” The signs are already there. IMC Logistics says container yards in California, Memphis, Tennessee, and Chicago are filling up like clown cars, leading to shortages of crucial equipment like steel trailers. And if this strike goes through, this could serve as an ominous preview of things to come.
The Federal Reserve’s recent half-point interest rate cut to 4.75%-5% has manufacturers breathing a small sigh of relief. But don’t expect a quick turnaround. Industry experts warn that the manufacturing sector might not feel the full effects until 2025, with the looming presidential election casting a long shadow of uncertainty.
Manufacturing has been on a downward spiral for three months, hitting a four-year production low in August. Timothy Fiore, chair of ISM’s Manufacturing Business Survey Committee, doesn’t foresee a recovery until January, and the reason is straightforward: bloated inventory levels from months of falling demand. Manufacturers can’t simply flip a switch and ramp up production overnight. They’re stuck in a holding pattern, focusing on liquidity rather than investing in workers, equipment, or capacity.
While lower interest rates should boost consumer confidence and spending after the Fed’s hiking rampage, manufacturers remain wary of making big moves before the presidential election. And it makes sense why — there’s the fear of the unknown. For instance, will we see a push for clean energy or a return to oil drilling? That’s why Ted Stank, co-executive director of the Global Supply Chain Institute at the University of Tennessee Knoxville, advises, “Let’s wait and see what happens through November.”
Months after the Key Bridge collapsed in Baltimore, the U.S. Justice Department isn’t messing around. It has slapped the owner and operator of the Dali ship that crashed into the bridge with a hefty lawsuit, seeking more than $100 million in damages. After the March disaster that claimed six lives, cut off a major highway, and brought Baltimore’s port to a grinding halt, one could say that’s a discount.
Meet the Dali, a containership with a rap sheet longer than its hull. The Justice Department claims its Singaporean owner, Grace Ocean, and operator, Synergy Marine, played fast and loose with safety. They allegedly configured the ship’s systems in a way that made it impossible to quickly regain control after a power outage. We saw it firsthand when the lights went out back in March; the Dali essentially became a 95,000-ton battering ram headed straight for the Key Bridge.
The government isn’t pulling any punches and accuses these companies of reckless corner cutting that put lives and the nation’s economic well-being at risk. The lawsuit aims to recover the massive costs incurred in the aftermath — weeks of emergency response, clearing 50,000 tons of debris, and getting the port back up and running. But it doesn’t stop there. The Justice Department wants punitive damages too, sending a clear message: Launch an unsafe ship and you’ll pay dearly.
You might think twice before tapping “buy” on your next online purchase. A new survey from Blue Yonder reveals a startling trend: Shoppers are tightening their purse strings in response to stricter return policies. Whether you’re a consumer or a retailer, this matters.
Imagine walking into a store where every purchase feels like a gamble. That’s the reality for many shoppers today. An overwhelming 91% of consumers say lenient return policies influence their buying decisions. But here’s the kicker: 69% of shoppers are now actively cutting back on purchases due to tighter return rules. That’s a significant jump from 59% just last year. For younger generations, the impact is even more pronounced, with three out of four Gen Z and Millennial shoppers hesitating to buy when faced with strict return policies.
While shoppers balk at stricter policies, retailers have their own problems. The cost of processing returns is skyrocketing, forcing many stores to take drastic measures. A whopping 72% of people say stores told them to keep unwanted stuff instead of returning it — a last-ditch effort to dodge shipping and restocking headaches. But there’s hope on the horizon. Third-party return services are gaining traction, with 62% of shoppers saying lower fees would entice them to use these options. Smart retailers that can balance customer happiness and costs might just solve this returns puzzle.
Between shipping giants playing price tag and labor rumblings at the docks, it’s clear the supply chain world never sleeps. So, if you’re feeling a bit concerned, we get it. Step one is nailing your freight audit and parcel invoice audit to operate smarter and weather any storm. Here’s how Intelligent Audit and its solutions can help you stay sane:
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