I can't believe I am saying this, but 2023 was relatively calm from a supply chain perspective: inflation slowing, disruptions receding, West Cost port and UPS strikes averted, economy decent, shipping costs falling, etc.
Here, my choices for the top or most interesting chain stories by month in 2023:
Gilmore Says.... |
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There were many other important stories last 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.
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.
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.
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.
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.
July
UPS and Teamster leaders come to an agreement on a new contract without any strike or walkout. The deal is widely seen as a win for the union, with UPS drivers set to make $170,000 at the end of the five-year contract (wages and benefits, such as healthcare and pension contributions). The deal also ends a lower tier of wages and mandatory overtime. UPS will also add 7,500 full-time jobs and fill 22,500 other open full-time positions, and buy air conditioned delivery vans starting next year, with mitigation features added to the existing fleet of 95,000 vans
Amazon announces that it has delivered 1.8 billion orders thus far in 2023 to US Prime members either same or the next day, about four times the number it had delivered that quickly at this point in 2019. On its web post, Amazon says it achieved its “fastest Prime speeds ever” in Q2.
August
Major LTL carrier Yellow Corp. declares bankruptcy after years of financial struggles and growing debt. The move puts some 30,000 employees – mostly drivers – out of work. Yellow’s large network of freight terminals is later auctioned off in pieces to a number of former rivals.
Amazon restarts its Amazon Shipping service. The program offers its third-party Marketplace sellers an alternative to other major parcel carriers. Amazon was testing the service four years ago, but scuttled the strategy in 2020, when the pandemic sent ecommerce volumes soaring, straining Amazon resources.
September
Dave Clark, CEO of new-age freight broker Flexport and a former top executive at Amazon.com, announced he was resigning his role a year after joining the company to transform it into a full-service logistics provider. Clark cites over differences with company founder Ryan Petersen. Other execs later let go by Flexport.
A Tesla Semi electric truck owned by PepsiCo travelled 377 miles on a single battery charge as part the North American Council for Freight Efficiency’s (NACFE) Run On Less program. This represented the first independent real-world test of the Tesla Semi. This particular truck was one of three PepsiCo Teslas being tested. At the end of its 377-mile journey, there was just 2% battery power left. NACFE says the etruck drove at highway speeds for about 90% of the total route, and that range was achieved with the truck loaded most of the time.
October
The Panama Canal Authority reduces the maximum number of passages per day to 25, down from 36. This move is due to a long running drought that has significantly reduced water levels in the fresh water reservoir system. The reservoirs not only supply the canal’s locks but also provide drinking water for almost half the country’s population. Auctions for the scarce crossing later emerge.
Convoy, the much-ballyhooed digital freight broker that attracted large investments from several famous investors, has closed its doors. Seattle-based Convoy told employees in an October 19 memo it was shutting its doors after no viable options to continue operations emerged. All told, Convoy had raised more than $1 billion from investors
November
President Biden announces that the federal government will take 30 steps to improve US supply chains. The actions include steps to encourage US manufacturing, especially for products deemed strategic, such as pharmaceuticals and semiconductors. At least 11 of the steps deal specifically with the domestic supply of renewable energy.
UPS announces opening of new $79 million distribution center near Louisville, KY that by next year will have an incredible 3000 mobile and other robots – 15 times the human workers that are running the facility now, in what is certainly a glimpse of the future of distribution.
December
The United Nations COP28 conference is held in Dubai and ends with an agreement across nations that for the first time calls for “transitioning away from fossil fuels in energy systems.” This is significantly stronger than language used in past years’ agreements, which simply called for reducing the use of coal and did not call for reductions in oil and gas at all. Some, however, say the language is too vague and could mean just a reduction in fossil use.
A number of ocean freight carriers and oil transporters stop their routes through the Red Sea – and thus to or from the Suez Canal – as a result of increasing attacks on commercial shipping from Iran-backed Houthi militants operating out of Yemen. For example, the crew of the Maersk Hangzhou had to take evasive action and opened fire on Houthi boats that were aggressively swarming the ship, after it had been hit by an anti-ship missile just hours before.
So there you go. There were many other important stories last year - what did I leave out?
Any other top supply chain stories in 2023? Let us know your thoughts at the Feedback section below.
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