U.S. Logistics business costs jumped to $1.85 trillion in 2021
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Good morning. Happy National Chocolate Eclair Day. Make sure to enjoy a special treat tonight (after dinner, of course) to make it worth it. 🍫
Supply chains are being required to pivot. U.S. business logistics costs have sky-rocketed as challenges continue to rise, jumping to $1.85 trillion last year. This represents and dizzying 22.4% increase and a total of 8% of the United States’ $23 trillion GDP. Phew!
Check out today’s featured article from Logistics Management for all the statistics released by the 2022 State of Logistics (SoL) report and what such a leap could mean for American supply chains. ☕️
Economy GIF/New York Times via GIPHY
Featured Article:
“American supply chains are out of sync while adjusting to short-term changes in demands.”
Water Cooler Topics
🗃 FedEx has a new executive in the corner office. FedEx Corp.’s new chief executive officer, Raj Subramaniam, is preparing for June 29th’s investor meeting. Investors have been voicing concerns over China’s Covid-related lockdowns and growing labor costs for the company. The company’s capital spending has already been severely cut down by Subramaniam and FedEx shares have risen about 4.1% in the month of June.
🏢 Amazon fulfillment centers are burning through workers at an alarming rate. Early May Q1 earnings reports signaled a rough patch for the company, but also the report of too many hires is surprising. The company put too much effort into hiring over the past two years and has now found itself in a situation of high turnover. Experts from a leaked internal research estimate from mid-2021 are assuming that Amazon will run dangerously low on workers for its fulfillment centers by 2024.
🚢 Shipping firms are recognizing that there’s money on the table, and they aren’t afraid to grab it. There is a shortage of new cargo vessels and aging container ships are locking in long-term leases with sky-high freight rates. A major slowdown in new shipbuilding has hindered a positive result regarding the surge in demand for consumer goods during the pandemic. Ship owners that exist in this once-in-a-generation bull market aren’t rushing to make new ships… they want to capitalize on what already exists in their inventory.
A federal “gas tax holiday” may be around the corner for Americans - but how much will it help?
A federal gasoline tax holiday may be decided on by the Biden Administration at some point this week. An action of this type could save U.S. consumers as much as 18.4 cents a gallon. The federal gas tax is usually allocated to maintaining U.S. roads. Oil refineries are working at nearly a maximum capacity, and many refineries have been shut down in order to place more focus on renewable fuel production.
Sparing the public from the continuous rise in gas prices may be on the Administration’s mind, but how much will this really help? And what are the consequences of this type of action?
Task management tools (TMT’s) increases fleet maintenance teams’ effectiveness
Fleet maintenance teams are learning about planning ahead. Task management tools offer multiple software options to collect and organize data to ensure a cohesive workplace for maintenance workers.
Sometimes it’s as simple as keeping a spreadsheet. Manual work and calculations can be minimized by using free or inexpensive software rather than relying on file cabinets.
Industry Forecast 📊
Mixed Numbers on Trucking Conditions - Fleet Management - Trucking Info
“April's trucking conditions bounced back from a dismal March, but are still well below last year.”
Are supply chain woes being exaggerated? | The Hill
“It began with cleaning supplies and toilet paper in early 2020.”
“Volatility, inflation, and surging demand caused U.S. business logistics costs to increase by 22.4% in 2021.”
“In 2021, U.S. business inventories dropped to near historic lows, and the costs associated with storing, transporting and financing goods rose considerably.”
The End Of The World Is Just Beginning For Shipping (gcaptain.com)
“There is a large shipping company that’s made record profits in recent years after changing its operational model to bet against the US Navy.”
Out-of-sync supply chains are changing trucking | FleetOwner
“The pandemic forced shippers to reassess how they moved goods in 2021.”
Safety 🦺
Tech Execs Not Confident in Supply Chain Security | Material Handling and Logistics (mhlnews.com)
“A new report reveals that 53% of tech execs say supply chain issues will stay the same or worsen over the next six months.”
Semiconductor Dependency Imperils American Security - WSJ
“The U.S. Innovation and Competition Act is only the first step in preventing Chinese dominance.”
Trucking safety is a year-round effort | Commercial Carrier Journal (ccjdigital.com)
“Safety means different things in different industries, but in trucking safety is keeping trucks running at optimal levels while drivers adhere to health and well-being standards.”
Leadership 🏆
In Person: Mike Pilgrim of Systems LLC | DC Velocity
“In our continuing series of discussions with top supply-chain company executives, Mike Pilgrim discusses problems equipment manufacturers have securing production materials, the effects of urbanization on dock designs, and new dock technologies.”
Covid-19 😷
Companies Are Rethinking Their Supplier Networks After Covid | SupplyChainBrain
“The pandemic has changed the nature of global supply chains with companies seeking to source goods from multiple places in order to minimize shipment and production disruptions.”
Trade & Border Issues 🗺
US sanctions helped China supercharge its chipmaking industry | AJOT.COM
“China’s chip industry is growing faster than anywhere else in the world, after US sanctions on local champions from Huawei Technologies Co. to Hikvision spurred appetite for home-grown components.”
How much for gas? Around the world, pain is felt at the pump | AP News
“At a gas station near the Cologne, Germany, airport, Bernd Mueller watches the digits quickly climb on the pump: 22 euros ($23), 23 euros, 24 euros.”
Business Strategy 💡
Supply chain collaboration may be key to meeting carbon-reduction targets | DC Velocity
“Survey shows food and beverage companies are set to fall short of the industry’s 2030 carbon-reduction goals, with many saying they lack confidence in meeting value-chain related emissions targets.”
“The Traton Group is looking to its acquisition last year of Navistar, and to the Chinese market, to help it meet what it called ‘an ambitious margin target for 2024.’”
Preventing strategy scope creep - SmartBrief
“My daughter encountered scope creep recently after spotting a cockroach in her old, Queens, N.Y., apartment building.”
“Anytime you have a chance to talk to an executive vice president in charge of the global supply chain of a nearly $12 billion corporation, you know you will learn some things. Cameron Bailey, EVP of Global Supply Chain at VF Corporation, did not disappoint. Mr. Bailey has worked most of his career at VF – as an industrial engineer in facilities, in strategic sourcing, running offshore operations, and now as the person in charge of the company’s entire supply chain.”
Inflation 💸
The Real Problem Isn't Inflation. It's the Price Level. | RealClearPolicy
“The May Consumer Price Index (CPI) inflation rate came in hotter than expected, and the ripple effects are spreading far and wide.”
Ports 🚢
The Ports Receiving Most Russian Oil And Gas | OilPrice.com
“An estimated 93% of Russian oil sales to the EU are due to be eliminated by the end of the year.”
“This follows previous joint announcements by POLA and POLB, whom collectively account for roughly 40% of United States-bound import volumes, indicating that consideration of the fee would be pushed back each week going back to the week of November 22, 2021.”
Network Association 🤝
Retailers Need 'Frenemy' Delivery Networks, American Eagle CSCO Says | SupplyChainBrain
“Keep your friends close; keep your enemies closer.”
Tech 📟
How to Minimize Disruptions in the Supply Chain When Upgrading Technology (allthingssupplychain.com)
“Technology upgrades can provide various benefits and may be necessary to stay ahead of the competition.”
Regulations ⚖️
FMCSA Could Look to Ontario on Speed Limiters | Transport Topics (ttnews.com)
“Challenges in Ontario, Canada, to enforce a truck speed limiter law could portend those that U.S. trucking regulators may face if they implement a speed limiter supplemental proposed rule next year.”
