I can't believe I am saying this, but the first six months of 2023 were relatively calm from a supply chain perspective: inflation slowing, disruptions receding, West Cost port strike averted, economy decent, shipping costs falling, etc.
Here, my choices for the top or most interesting chain stories by month in the first half of the 2023:
Gilmore Says.... |
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There were many other important stories so far this year - what did I leave out?
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January
Maersk and Mediterranean Shipping Company - the two largest container shipping lines in the world by active fleet capacity - announced an end to their 2M alliance, a vessel-sharing agreement signed in 2015 that led to two other major alliances among other carriers. The two carriers were simply headed in different directions.
Union Pacific delivers five rail cars full of corn feed to chicken and beef processing giant Foster Farms, after the rail carrier was ordered to do so by the Surface Transportation Board. In a strange dispute, Foster Farms said millions of chickens could die without the feed, and that it was already giving corn bought for cows to its chickens, as cows can last longer without it. Union Pacific said weather problems across the country have affected its service.
February
A Norfolk Southern train carrying toxic chemicals derails in East Palestine, OH, igniting a fire and setting off fears of an explosion. Authorities carried out a controlled release and burn-off of some of the train’s hazardous cargo. Many say the accident shows more regulations on rail carriers are needed.
Gap stores announces it is entering the fulfillment market as a 3PL, in partnership with Ware2Go, a unit of UPS focused on flexibly leasing space to shippers. The move by Gap is similar to the strategy of rival American Eagle, which in Q1 2022 announced it was building out what amounts to third-party logistics capabilities even other retailers can use.
Report from Amazon watcher MWPVL International says that Amazon has canceled, closed or delayed 99 fulfillment centers in the fairly recent past, impacting nearly 32.3 million square feet of active or planned ground-level space. Those numbers are a jump from September, when Amazon had closed or cancelled 66 facilities totaling 24.6 million square feet of space. Local communities are affected by the delays in planned opening.
March
The US Environmental Protection Agency issues California environmental waivers that allow the California Air Resources Board (CARB) to advance its new and aggressive plans to transition diesel trucks to electric vehicles- perhaps forcing the rest of the country to soon follow the same path. The new rules were fought furiously by the American Trucking Associations and other trucking interests. Under the rules, by 2035, zero-emission truck/chassis sales must account for 75% of Class 4–8 straight truck sales in the Golden state, among other rules.
Home Depot says it has partnered with certain vendors to forgo use pallets, and so it can stack products to the top of trailers, resulting in a reduction in the number of truckloads needed to transport some goods, reducing fuel use and CO2 emissions.
Walmart says drone delivery is available for customers living in the Hampton Roads, VA, area. Customers within a 0.8-mile radius of the store there can request drone delivery for a $3.99 fee. The drones are part of a system developed by DroneUp, a Virginia Beach-based start-up. There are, however, limits to the service. Currently, the drones can only carry items that fit in a box about the size of a large fried chicken takeout container. The drones can carry up to 10 pounds, but for now, the flights are limited to 4 pounds in weight.
April
The World Bank releases its 2023 Logistics Performance Index report, a measure of countries’ ability to move goods across borders with speed and reliability. Singapore tops the list, followed by (2) Finland; (3) Denmark, (4) Germany; and (5) Netherlands. The US comes in a poor 18th, while China is ranked 20th. The results come from scores from freight forwarders around the globe, ranking countries across multiple attributes such as infrastructur and track and trace capabilities.
A small group of Amazon contract delivery drivers says they have all joined the Teamsters union, gaining a lot of press coverage, but the story gets complicated. The 84 drivers actually work for Amazon Delivery Service Partner (DSP) Battle-Tested Strategies, not Amazon itself. The move makes no sense from the DSP’s perspective, and Amazon later says it recently ended its relationship with Battle-Tested Strategies.
Amazon says returns to brought to UPS stores will in some circumstances be assessed a fee, modestly up from no charge previously. But the new fee is only assessed when a customer makes an Amazon returns at UPS locations that are equally far or farther than a no-charge option available to them, such as a Kohl’s store.
May
Gartner releases its top 25 supply chains list for 2023. This year Schneider Electric comes out on top for the first time - sort of. I put it that way because again in 2021, Apple, Procter & Gamble, Amazon, and Unilever were left off the formal top 25, as those four companies have been placed in a separate relatively new category called "supply chain masters," a sort of supply chain hall of fame. The rest of the top 10 after Schneider was (2) Cisco; (3) Colgate-Palmolive; (4) Johnson & Johnson; (5) PepsiCo; (6) Pfizer; (7) Microsoft; (8) Lenova; (9) Walmart; and (10) L'Oreal.
eCommerce front end software giant Shopify abruptly announced it was ending its plans to build out an Amazon-like fulfillment network. The goal was to provide its web merchants a one stop shop for web ecommerce enablement and order pick, pack and ship, akin to Amazon’s Fulfilled by Amazon 3PL service. Shopify decided it wasn’t going to work, with news it was selling its acquired fulfillment inventory planning software Deliverr to freight services provider Flexport, and its mobile robot maker 6 River Systems to UK-based Ocado Group, a provider of automated order picking systems.
June
After 13 months that resulted in numerous delays and a decline in the movement of cargo at ports along the West Coast, union dockworkers and port operators reached a tentative deal set to last for six years. The apparent pact should end shipper concerns over a strike that would bring cargo movements to a halt. The agreement is said to give the 22,000 West Coast dockworkers in the union a 32% increase in wages over six years. In addition to that, workers will split a $70 million bonus for working through the pandemic.
News that Amazon wants to use small businesses in yet another fulfillment channel. Under a program called Amazon Hub Delivery, small businesses such as coffee and IT shops, florists and more can become delivery partners. Amazon would pay a small fee for each package a partner delivers, expected to average around 30 per day. Amazon is already taking applications for the program.
CSCMP and Kearney release the 2023 State of Logistics report. The headline news: what the report several years back started calling US Business Logistics Costs (USBLC) rose sharply on an absolute basis in 2022 to $2.3 trillion. That was an increase of 19.6% from 2020. With a smaller increase in US nominal GDP (9%) than logistics cost rose last year (19.6%), that took the relative cost of logistics as a share of GDP to a record 9.1%, up significantly from 8.0% in 2021.
So there you go. There were many other important stories so far this year - what did I leave out?
Any other top supply chain stories in the first half of 2023? Let us know your thoughts at the Feedback section below.
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