After a difficult few years, things are looking up for global logistics providers. Despite ongoing volume issues for powerhouse 3PLs and persistent slowdowns at ports, the global logistics industry is on target to reach a staggering $6.55 trillion by 2027. Much of that growth, of course, will come from new-age solutions to age-old problems. From recent high-tech debuts to high-dollar deals, here are some highlights of news and trends shaping a constantly moving industry.
Facing Low Package Volumes, UPS Introduces Logistics-as-a-Service Offering
To increase faltering revenue streams, UPS has announced plans to introduce a logistics-as-service offering to its customers. This service offering will include improved delivery density, end-to-end visibility, financial solutions, advanced capabilities, and reverse logistics, Supply Chain Dive reports.
As package volumes continue to fall, UPS CEO Carol Tomé hopes UPS can find increased revenue in partnership with larger corporations, such as Amazon. Referring to the initiative in an October earnings call, Tomé said, “It’s also about combining digital solutions with our global integrated network to create more value for our customers and new revenue opportunities for UPS.”
UPS Partners With Overstock to Solve Return Problems
As businesses struggle to find efficient return strategies for the growing e-commerce sector, delivery giant UPS and online furniture retailer Overstock.com are working toward a solution.
In Q4, the companies will launch a pilot program to help customers return bulky items from home without the hassle of repackaging. As Jonathan Johnson, CEO of Overstock.com, said in an October 27th earnings call, “Through this pilot, both of our organizations will have the opportunity to better understand customer preferences and enable us to serve up options that align with their day-to-day lives.”
For UPS, the partnership with Overstock, currently valued at $1.4 Billion, represents a further step into the booming eCommerce marketplace.
2022 Brings Relief from Driver Shortage, but Will it Last?
Despite a slew of supply chain challenges, 2022 had some relief in store for shippers worried about the ongoing truck driver shortage. The American Trucking Association reports, “The number of unfilled driver jobs slid to nearly 78,000, down about 4% from a record 81,258 in 2021.”
However, the ATA’s Chief Economist, Bob Costello, warns of dire consequences if logistics companies fail to recruit new drivers in the coming years. The driver shortage is projected to reach 160,000 drivers by 2031. “If things do not change,” Costello said, “I think that’s where we end up.”
Push for Alternative Energy Requires Lithium-Ion Infrastructure
As the U.S. moves toward a fully electrified future, consumers quickly realize the importance of reliable access to lithium-ion batteries.
Lithium-ion batteries, which power everything from cellphones to electric vehicles, have become a key component of U.S. sustainability strategies. Yet the inability to pivot quickly from fossil fuels has the Biden administration considering innovative ways to build more batteries. Supply Chain Dive reports: “The effort includes funding and resources for domestic lithium mining and the end-to-end supply chain, including the processing and manufacturing of electric vehicle batteries.”
But with only 3.6% of global lithium reserves, it remains to be seen whether domestic production is feasible for the long term.
PepsiCo Capitalizes on Customer Feedback
Across the economy, consumer habits are changing. PepsiCo, the nation’s largest food processor, monitors trends by reaching out to innovation-hungry consumers. Supply Chain Dive reports, “Frito-Lay welcomes consumers into its centers and sends out recipes and food for feedback to people — encompassing at least 1,000 individuals each week — as it innovates new and existing products.”
Aldi Invests in Curbside with New Partnership
In a post-pandemic consumer landscape, U.S. consumers expect options when shopping. The German supermarket chain Aldi has partnered with eCommerce technology company Spryker to offer shoppers improved options for curbside pick-up.
Though the move pulls Aldi away from its ongoing relationship with Instacart, which currently manages all curbside operations for Aldi, the German supermarket giant hopes an in-house approach to curbside will improve efficiency as grocery inflation continues to stress supermarket shoppers.
Scott Patton, VP of National Buying for Aldi, told Supply Chain Dive, “Our partnership with Spryker will allow our shoppers another way to access the incredible value they expect from ALDI.”
FedEx Lowers Volume Expectations for Peak 2022
FedEx is working to lower volume expectations for peak season 2022. In a recent interview with Supply Chain Dive, FedEx Executive Vice President Brie Carere said, “I would not anticipate growth year over year from a peak perspective.” However, as Carere makes clear, this lag in volume gives FedEx the much-needed capacity to onboard new clients.
Maersk Invests in U.S. Air Cargo Capabilities
As Denmark-based carrier Maersk looks to expand air cargo capabilities around the globe, North American airports see increased investment from the multimodal shipping giant. A half-million square foot multimodal distribution hub in Toronto and a second airfreight hub at Chicago O’Hare are examples of significant investment from Maersk Air Cargo, the company’s new airfreight division launched in April.
In October, Maersk Air Cargo announced two weekly flights from Greenville, S.C., to Incheon Airport in South Korea to connect the Southeastern U.S. to far-distant Asian trade hubs.
Freight Rail Labor Action Could Occur by Late November
The prospect of a freight rail strike remains an unwelcome possibility for U.S. shippers and logistics professionals. Supply Chain Dive reported that labor actions could occur as soon as November 19 if labor unions fail to agree. Union leaders warn that Congress could send the already twice rejected tentative agreements (through another round of messy arbitration.
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