FedEx reported a 10% drop in Q4 revenue as demand remains challenged and cost-cutting initiatives continue in an effort to boost the balance sheet, including idling more planes, while announcing it is folding Ground operations into Express in Canada, the first step in a much broader consolidation outlined in April. It’s a radical departure from the operating model of retired founder Fred Smith.
A Department of Transportation program that aggregates forward-looking supply chain data from various stakeholders to help identify volume and capacity issues, including shippers, carriers, chassis and drayage and port operators, will begin providing insights to participants this summer. The FLOW program uses booking information 60-90 days out, helping improve planning and forecasting.
A tentative contract agreement has been reached between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA), easing concerns about a strike at 29 West Coast ports disrupting incoming freight from the Asia-Pacific region ahead of the fall and Q4. The deal ended 13 months of negotiations, but still requires ratification by both parties.
After a strike authorization vote, the International Brotherhood of Teamsters said it reached agreement on a couple key points with UPS, including increasing the number of grievance arbitrators and the amount due in penalties for errors in pay, according to a report in Scripps News. Meanwhile, a separate 8-1 U.S. Supreme Court ruling against the Teamsters was seen as weakening the right to strike.
Freight volumes are continuing to impact the economics of logistics, with two closely-watched indices showing contraction in the market as demand for goods remain challenged ahead of Q4 restocking. Average daily spot rates from China/East Asia to the West Coast were $1,324 per 40-foot container on June 7, down from $14,000 a year ago, while the Logistics Managers Index is in contraction territory.
West coast ports from Los Angeles to Seattle faced slowdowns on Monday, a continuation of job actions by dockworkers that began Thursday, leaving goods stranded and flows disrupted, as the union and the port owners continue to wrangle over renewing a contract that expired in July.
The California assembly voted in favor of a bill to ban driverless autonomous trucks, which now goes on to the state senate and then to the governor. It seeks a pause that would require a human onboard for at least five years while safety data is compiled, according to The Los Angeles Times and other media.
Postmaster General Louis DeJoy detailed how his team is working to implement an extreme makeover of the U.S. Post Service’s distribution and delivery network, in an effort to “unwind” past mistakes that created inefficiencies and hobbled its ability to execute on its mission.
All signs point to a muted retail peak outlook for 2023, with many shippers booking later sailings than in the past as they continue to burn through inventory, figure out demand signals and determine what new products to introduce for end-of-year holidays, Seko Logistics executives said on a media day call. The company’s CEO still sees “green shoots” of optimism with ordering picking up.
Retailers and CPG companies have had a symbiotic relationship for decades, teaming up to offer customers more choice in convenient in-person and ecommerce storefronts. As both take on each other’s challenges, they must learn from the other’s processes and best practices to sustain new revenue streams in the long term based on evolving consumer behaviors, preferences and spending habits.