I read earlier this week that pressure on the supply of critical materials will continue to mount as road transport electrification expands to meet net-zero ambitions. According to the International Energy Agency (IEA), demand for electric vehicle (EV) batteries will increase from around 340 GWh today to over 3500 GWh by 2030. In a recent report, IEA indicated that global battery and mineral supply chains need to expand ten-fold to meet projected critical minerals needs by 2030. The report concludes the industry needs to build 50 more lithium mines, 60 more nickel mines and 17 more cobalt mines by 2030 to meet global net carbon emissions goals. The projected mineral supply until the end of the 2020s is in line with the demand for EV batteries in the ‘stated policies scenario’ of the IEA’s world energy model. But the supply of some minerals, such as lithium, would need to rise by up to one-third by 2030 to satisfy the pledges and announcements for EV batteries in the ‘announced pledges scenario (APS) of the same energy model. And now on to this week’s logistics news.
UPS continues investments in lucrative healthcare arm
FedEx sets earlier start date for peak delivery surcharges
Japan farm exports in 2022 1st half hit record high as more dine out
7-Eleven acquires Skipcart delivery service
Demand for grocery delivery cools as food costs rise
Warehouses are turning to EV charging
USPS: We would’ve had big loss without postal law change
Trucking firms raise pay, offer bonuses to find new drivers
UPS is continuing to invest in its lucrative healthcare arm. Earlier this week, the company announced that it will acquire Italy’s Bomi Group, which provides global healthcare logistics services. With the acquisition, UPS said it will add 60 temperature-controlled facilities in 14 countries and nearly 3,000 employees. In all, the acquisition will add more than 350 temperature-controlled vehicles and four million square feet to the UPS Healthcare global footprint, offering customers access to faster shipping times, greater production flexibility, and offerings to help them attract new business. According to UPS, the move is part of UPS Healthcare’s continued expansion of its network and services to meet growing demand. Including Bomi, UPS Healthcare has doubled its global footprint since 2020. Terms of the deal were not disclosed.
In past years, FedEx has implemented peak surcharges in October, as it ramps up for the busy holiday season. This year, however, things are starting early. will begin imposing 2022 peak-season surcharges on Labor Day and will apply certain ones based on weekly calculations that begin around mid-October and run until early December. FedEx released a detailed table last Friday on the company’s website, which stated that surcharges for the “additional handling” of domestic express and ground parcels, as well as for international ground service, will kick in on September 5. The first cycle of surcharges ends October 2. FedEx will charge $3.45 per package during the first surcharge cycle. The second round of surcharges, which will be more costly at $6.55 per package, will begin October 3 and run until Jan. 15, FedEx said. The same schedule will apply for surcharges on oversized shipments, those that exceed FedEx’s dimensional requirements, the company said. FedEx will levy a $39.50 per-parcel surcharge during the first cycle, and a $68.75 surcharge during the second cycle. Additional handling charges are imposed when a package does not conform to FedEx’s processing profile and must be handled differently than others.
The value of Japan’s agricultural and seafood exports in the first six months of 2022 expanded 13.1 percent from a year earlier, marking a record high for the period, as waning coronavirus cases encouraged more people to eat out, government data showed Friday. Exports in the January-June period totaled 652.5 billion yen, supported by robust shipments to the United States as well as a weaker yen, according to the data released by the Ministry of Agriculture, Forestry and Fisheries. A range of items also hit record highs, with exports of scallops climbing 67.8 percent to 38.7 billion yen and those of yellowtail rising 64.5 percent to 20.9 billion yen. Both marine products were supported by growing demand from Japanese restaurants in the United States. Japanese sake exports increased 33.7 percent to 23.4 billion yen, lifted by online shopping. Exports of strawberries, immensely popular in Asia, also increased by 29.7 percent.
7-Eleven Inc. has acquired Skipcart, a startup that has developed a major network of drivers for the last-mile delivery of restaurant food, grocery, convenience-store, and other goods in the United States. Founded in 2018 in San Antonio, Skipcart is a delivery platform providing same day and on-demand delivery for a variety of industries including e-commerce, pharmaceutical, retail, food and beverage and more, including convenience-store merchandise, with an average delivery time of 30 minutes, the company says on its website. It covers 37 states and parts of Canada through a fleet of more than 150,000 crowd-sourced drivers, it says. The deal is expected to allow 7-Eleven to compete more directly with third-party delivery services, even as 7-Eleven became Instacart’s first c-store partner in 2020 and added Uber Eats and Grubhub to its delivery roster in 2020. The companies did not disclose the terms of the deal.
Grocery delivery saw tremendous growth during the first year of the pandemic. In August 2019, a typical pre-pandemic month, Americans spent $500 million on grocery delivery. By June 2020, it had ballooned to a $3.4 billion business. More companies looked to implement grocery deliveries, and third party companies looked to build out their rosters of drivers. But as the pandemic eased, demand softened. In June 2022, Americans spent $2.5 billion on grocery delivery, down 26 percent from 2020. For comparison, they spent $3.4 billion on grocery pickup, which saw demand drop 10.5 percent from its pandemic highs. As food costs rise, and the premiums that are required for grocery delivery continue to rise, the market has an uncertain future.
As the push to electrify driving grows, warehouse developers are increasingly focused on charging. The biggest barrier facing a massive uptake of electrical vehicles (EVs) is charging stations. On the shipping side, companies seeking fully electrified fleets will need a place to charge up. The warehouse makes the most sense considering our nation’s highways still have a ways to go in terms of charging stations. As of January 2022, there were approximately 113,600 charging outlets for plug-in EVs in the US. A good chunk of these is found in California, home to 41,300 private and public power outlets. Contrast this with China which has built out 800,000 across the country. From a shipping perspective, time is critical. For truckers accustomed to a quick diesel re-fuel, entry-level chargers today require up to six hours to reload a van, not to mention heavy-duty trucks.
The US Postal Service is pointing to the recent passage of the Postal Service Reform Act (PSRA) for helping to push the agency to improved financial results in its latest quarterly earnings report, although pandemic trends and price inflation still weighed down its bottom line. Passed in April, the act reformed how the money-losing agency pays its employee health and retirement benefits. Specifically, the legislation repealed a requirement that USPS annually prepay future retiree health benefits and canceled all past due prefunding obligations. USPS reflected the impact of PSRA on its books as a one-time, non-cash benefit of $59.6 billion to net income for the period, which was its fiscal third quarter ending June 30. Thanks to that boost, USPS posted net income of $59.7 billion for the quarter, compared to net loss of $3.0 billion for the same quarter last year, due almost exclusively to the impact of the PSRA. But excluding that one-time accounting move, USPS said that its adjusted loss for the quarter was $459 million, compared to an adjusted loss of $41 million for the same quarter last year.
Wages for truck drivers rose at a double-digit pace last year as companies laid out hefty salaries, bonuses and benefits packages to recruit workers in a market marked by tight labor conditions and high freight demand. The American Trucking Associations said in its annual salary survey that average wages for drivers of big rigs, from those working in for-hire commercial long-haul markets to employees at in-house fleets, reached about $69,700 last year, up 11 percent from the previous year. The sharp increase in compensation came as demand to move goods surged across the U.S. economy, with retailers racing to restock inventories that were depleted early in the pandemic and manufacturers rushing to bring in parts and raw materials to restore production that had been idled or cut back.
That’s all for this week. Enjoy the weekend and the song of the week, Loretta Lynn’s Coal Miner’s Daughter.