After a summer of logistics victories, pre-peak 2022 provides logistics professionals with challenge after challenge. Industry leaders grappling with ongoing labor struggles and plummeting volumes are lowering expectations for the supply chain's busiest season. In an industry that's always moving, here are the latest news and trend updates to keep you in the know.
In a troubling turn of events for U.S. logistics, a union representing over 20,000 rail workers rejected the tentative contract agreement reached by negotiators in September. According to reporting from Supply Chain Dive, "Around 56% of members who submitted ballots voted to reject the agreement, which was brokered by the Biden administration and included a 14.1% pay raise effective upon ratification." As the labor union returns to bargaining, the Brotherhood of Maintenance of Way Employees will enter a "status quo" period. "Failed ratification does not present risk of an immediate service disruption," according to a statement released by the National Railway Labor Conference, which is representing railroads in negotiations.
In a move to temper shareholder expectations, FedEx Ground announced last week that they would likely see lower-than-expected peak season volumes. In a late September earnings call, Brie Carere, Chief Customer Officer for FedEx, blamed the lack of volume on the persistent inflation faced by U.S. consumers. "Despite volumes being lower than anticipated, we have held market share in the United States. FedEx Ground has strong service levels, best-in-market transit times, and an exciting new picture proof of delivery capability,"she said. More detailed volume projections should be available soon.
The airfreight market, vital to the health of global supply chains, has seen dramatic drops in spot rates worldwide, highlighted by a 9% YoY drop in September. With the continued lifting of COVID restrictions globally, more airfreight markets are reopening and offering more flight capacity. Despite the promised business of a rapidly approaching holiday shipping season, airfreight shippers should expect the falling rates to persist.
As another sign of the overland logistics industry's recovery from COVID, truckload tender rejections are bottoming out. The national outbound tender rejections, measured as a percentage of tendered shipments rejected by carriers, fell to 5.05%, its lowest level since May 2020. As a potential recession looms and shipping volumes continue to fall, shippers can expect carriers to accept the vast majority of freight.
To address growing concerns surrounding the tradesman of independent contractors, the Biden administration has proposed a rule that could raise costs for gig-economy transportation providers. The 184-page proposed rule, revealed by the U.S. Department of Labor, reinstates guidance from the Obama administration that many consider less favorable to classifying workers as independent contractors. Jessica Looman, Principal Deputy Administrator of the U.S. Department of Labor's Wage and Hour Division, made it clear that the WHD's efforts mainly focus on protecting workers from issues regarding misclassification. "We believe the proposed regulation would better protect workers from misclassification while at the same time providing a consistent approach for those businesses that engage or wish to engage with independent business contractors," she said during an Oct. 11 media briefing.
UPS, among the largest shipping providers in the global logistics industry, plans to announce its Q3 results at 6 a.m. ET on Oct. 25. Afterward, at 8:30 a.m. ET, CEO Carol Tomé and CFO Brian Newman will host a conference call with investors to review the results and consequences for the company. UPS has made the call available to the public through this link. The company, often considered a bellwether for the broader logistics industry, expects the results will generate considerable interest among its shareholders and the public.
Global logistics giant FedEx has made its way onto Fortune's 2022 Best Workplaces list. According to a press release from FedEx, "The annual World's Best Workplaces list … recognizes FedEx as the 21st best workplace overall. This placement demonstrates the essential role FedEx plays in supporting communities and economies worldwide. It also highlights the strength of the FedEx culture, one that knits together an entire network of nearly 550,000 employees under shared values and behaviors." Inclusion in Fortune's prestigious list is fortuitous for FedEx, as the company continues to recover its image following a very public contractor dispute.
The drought plaguing the middle and lower portions of the Mississippi River — a vital shipping route for Midwestern agricultural and mineral products — is frustrating logistics providers. FreightWaves reports: "Water levels on the Mississippi River Basin are at (their) lowest point in more than a decade. The timing for such a drought is pretty bad. Right now is harvest season, so farmers are looking to move their wares. Ongoing labor strife on the nation's railways also renders that backup network uncertain. Halted or slowed barge traffic is worrisome for the world at large, too. American exports of coal are key right now as Europe faces a massive energy crisis heading into winter." As the war in Ukraine continues to place demands on American grain and coal exports, logistics experts warn that continued drought along the nation's largest river could threaten vital industries.
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