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Following a decision to lay off roughly 12,000 workers across their operational base, UPS has recently announced shift cuts and layoffs at strategic sortation facilities in Connecticut, Maryland, and Oregon. These difficult decisions underscore the pressure on UPS leadership as they struggle amid an increasingly volume-starved parcel landscape.
Despite the historic challenges faced by stakeholders across the global supply chain, U.S. import levels for January revealed a silver lining in an otherwise stormy supply chain forecast. The U.S. imported 2,273,125 TEU in January, up 7.9% from December 2023.
Whether it’s good or bad news, we’re once again diving into the headlines shaping the global transportation industry. Here's what you need to know in an industry that’s always moving.
Facing stubborn parcel volumes, UPS is cutting shifts at strategic package sortation facilities in Connecticut, Maryland, and Oregon. The layoffs are due mainly to continued volume declines over recent quarters. With little respite from low volumes in sight, these layoffs are part of a broader strategy at UPS to adapt operations to a challenging volume environment. In addition to the upcoming layoffs in Connecticut, Maryland, and Oregon, the carrier has already implemented shift cuts and layoffs at facilities in Kentucky and Indiana. In total, UPS plans to cut 12,000 jobs in 2024.
“We often evaluate our operations and flex our network to meet volume demands,” Jim Mayer, spokesperson of the Portland, OR sortation facility, said in a statement to Supply Chain Dive. “This allows us to continue delivering industry-leading service while maintaining competitive prices.”
FedEx announced a new offering to provide online merchants with an end-to-end solution. The platform, called fdx, pairs new offerings, such as machine-learning capabilities, with FedEx’s existing services. With enhanced visibility over shipment status, location, and arrival date, fdx aims to help online merchants scale and optimize their e-commerce operations simultaneously.
“FedEx is transforming into a digitally-led business powered by our extensive physical transportation network, leveraging our scale and insights from moving 15 million packages per day,” FedEx Corp. President and CEO Raj Subramaniam said in a Jan. 14 press release. “Through fdx, we will enhance our longstanding relationships with merchants of all sizes to help them optimize and grow their businesses through digital intelligence.”
Despite the hopes of the global maritime industry, the Panama Canal continues to see low water levels, leading canal authorities to implement strict limits on the number of vessels allowed to transit the vital global trade route between the Atlantic and Pacific oceans. As of Tuesday, Feb. 6, water levels at Gatun Lake had reached 81.2ft, the lowest on record dating to 1965. Projections show that water levels are likely to continue to fall in the coming months and will likely be under 80ft by April 2024.
“Three of the largest five ports in the U.S. rely on shipments that navigate through the Panama Canal: the Port of New York and New Jersey, the Port of Savannah, Georgia, and Port Houston,” wrote FreightWaves in a Feb. 8 article. “Over the past month, these three ports combined to handle 30% of total twenty-foot equivalent unit throughput. For reference, the two largest ports in the country, the Port of Los Angeles and the Port of Long Beach, accounted for 32% of the total U.S. throughput.”
Despite significant challenges from historic supply chain disruptions in the Middle East and Panama Canal, U.S. imports rose during January—the U.S. imported 2,273,125 TEU, up 7.9% from December 2023, the single largest month-over-month import growth in January since 2017.
“This growth was enough to secure the lead for market share among major West Coast ports,” FreightWaves reported. “[...]the top five saw their share of containerized imports rise to 43% (up from 39.7% in December), while the top East and Gulf Coast ports’ share fell to 42.4% (versus 44.9% in December).”
During an informal hearing between the Federal Maritime Commission (FMC) and ocean shipping stakeholders, the FMC expressed its intent to ensure that maritime laws and regulations are obeyed amid the Red Sea's historic disruption. In large part, the hearing focused on the increased shipping rates facing shippers and maritime stakeholders. As of Feb. 7, Asia to U.S. West Coast rates have risen to $4,367, and Asia to U.S. East Coast rates have increased to $6,373 per FEU.
“The FMC should look at the transparency of these surcharges as questions still persist about their correlation with actual costs and their emergency surcharges are reaching over $3,000 per container coupled with other fees,” said Sarah Gilmore, director of supply chain policy at the Retail Industry Leaders Association, according to reporting from Supply Chain Dive.
Following an earnings outlook warning of “high uncertainty,” Danish maritime carrier Maersk saw a notable drop in share prices. According to a Feb. 8 report from CNBC, the carrier’s shares dropped 16.25% soon after the release of the earnings report. The carrier expects EBITDA for 2024 to fall between $1B and $6B, down from $9.6B in 2024, and attributes blame mainly to the historic disruptions in the Red Sea.
“The impact of this situation is causing new uncertainty for how this is going to play out from an earnings perspective throughout the year,” said CEO Vincent Clerc. “We have very little visibility as to whether this is a situation that will resolve in a matter of weeks or months, or whether this is something that is going to be with us for the full year.”
The London Company, a leading investment management company, recently released its Q4 2023 investor letter. In the letter, the investment experts at the London Company advised investors to be cautiously optimistic about the future of FedEx shares (NYSE: FDX), despite ongoing challenges.
“After a very positive start to the year, FDX lagged during 4Q after a weak earnings report and lowered guidance,” read The London Company’s report, according to reporting from Yahoo Finance, “Fundamentals improved throughout the year as FDX enacted major cost cuts, but a decline in volumes in the quarter was too much for the new cost structure to overcome. Longer term, FDX has the potential to be a strong player in the transportation industry, but it will have to continue adjusting its fleet and network to an evolving marketplace.”
Whether it be U.S. parcel volumes or the disruption in the Red Sea, today’s supply chain leaders are tasked with operating in an increasingly volatile global logistics landscape. With over 25 years of experience at the cutting edge of supply chain innovation, Intelligent Audit offers supply chain professionals an invaluable suite of logistics technology to build resilience and efficiency:
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