As hard as it is to believe, another year is coming to an end. This was certainly another interesting year from a logistics and supply chain standpoint, as we saw the emergence of generative AI take center stage. We also saw a lot of technological advances in transportation, warehousing, supply chain planning, robotics, and last mile delivery, just to name a few. I have learned so much from our sponsors and readers, both through their commentaries and user conferences, and look forward to more of the same in 2024. Today marks the last news round-up of the year. I always find the news round-up exciting to write, as I end up reading more about supply chain and logistics than I would have thought possible. All of us at Logistics Viewpoints would like to thank our readers for continuing to tune in every week. We’d also like to thank all our sponsors for their continued support. Without our readers and sponsors, Logistics Viewpoints would not be possible. So, a big thank you from all of us, and we hope you all have a wonderful holiday season. And now on to this week’s logistics news.
FedEx Ground hikes fuel surcharge 100 basis points
Target CEO: more shoppers to use same day delivery for holidays
Cold storage giant Americold discloses data breach after April malware attack
Monthly trucking employment report: Steady after lots of volatility
Bankrupt trucker Yellow rejects offer to revive operations
Teamsters Strike at DHL’s Cincinnati Air Cargo Hub
US plans $35 million award to BAE to boost chip supply for F-35
FedEx Ground, the ground-delivery arm of FedEx Corp., has raised its diesel fuel surcharge by 100 basis points to 16%, exceeding the fuel levy assessed earlier this month by rival UPS Inc. The increase takes effect Monday. FedEx’s fuel surcharges apply to its base rates and to any add-on charges known as accessorials. UPS had hiked its levy 50 basis points to 15.25% but will reduce them to 15% effective this Monday. The carriers’ levies are based on the on-highway diesel prices set each week by the Department of Energy’s Energy Information Administration. UPS (NYSE: UPS) and FedEx (NYSE: FDX) index their diesel levies to a band of prices established the week before by the EIA. FedEx Ground adjusts its surcharges for every 9 cents-a-gallon move in the EIA diesel price. For example, FedEx’s upcoming levy is based on an EIA-established price that is at least $4.09 a gallon but less than $4.18 a gallon. As of last Monday, the national price for diesel stood at $4.092 per gallon.
Same-day delivery is at the top of shoppers’ wish lists this holiday season, as Target’s CEO Brian Cornell said more consumers are waiting until the last minute to make purchases. Pressures like higher interest rates, increased credit card debt and reduced savings rates are leaving consumers with less cash for discretionary spending, “forcing them to make trade-offs in their family budgets,” Cornell said. In 2017, Target invested $550 million in the home delivery service Shipt-a modest outlay compared to the billions Amazon and Walmart have spent in the same-day-delivery space. Target’s omnichannel model now lets consumers shop in-store and via the retailer’s app and website for same-day or two-day delivery. Cornell says this investment in sortation centers – or what Target calls its “stores-as-hubs” strategy, where workers prepare same-day local delivery for online orders – has prepared them with the infrastructure to support last minute holiday shopping.
Cold storage and logistics giant Americold has confirmed that over 129,000 employees and their dependents had their personal information stolen in an April attack, later claimed by Cactus ransomware. Americold employs 17,000 people worldwide and operates more than 24 temperature-controlled warehouses across North America, Europe, Asia-Pacific, and South America. The April network breach led to an outage affecting the company’s operations after Americold forced it to shut down its IT network to contain the breach and “rebuild the impacted systems.” Americold also told customers via a private memo issued after the attack to cancel all inbound deliveries and reschedule outbound shipments, except for those deemed critically time-sensitive and nearing expiration. In notification letters sent on December 8 to 129,611 current and former employees (and dependents) affected by the data breach, the company revealed the attackers were able to steal some data from its network on April 26.
After several months of significant swings in truck transportation employment, the Bureau of Labor Statistics reported November jobs numbers that reflected moderate changes. The seasonally adjusted truck transportation jobs total for last month was 1,581,300, an increase of 700 jobs. But it comes after a four-month stretch in which July jobs dropped 6,900; August jobs fell 30,700 (fueled by the closure of Yellow Corp.); September jobs climbed 14,000 positions as some of the Yellow loss reversed itself at other carriers; and October recorded a drop of 3,600 jobs. The 700-job increase reported Friday morning reflected a market of reasonable stability that was also evident in the data for not seasonally adjusted jobs. Labor economists generally look at seasonally adjusted numbers as more indicative of labor market strength or weakness but caution that not seasonally adjusted numbers should not be ignored.
Speaking of Yellow, the trucking company that shut down its operations and filed for bankruptcy protection this summer, rejected a trucking executive’s bid to buy and restructure its business. In a letter sent to the prospective buyer, Yellow’s lawyers contended that the bid was “not viable,” saying they had not gotten any indication that the bid had the support of the company’s creditors, including the Treasury Department, which had made an emergency loan to the company during the pandemic. The letter, a copy of which was reviewed by The New York Times, also said the plan to revive Yellow underestimated the costs and difficulties of such an effort. The bid would not be “confirmable by a bankruptcy court or in the best interests of Yellow’s stakeholders,” the letter said.
More than 1,100 union workers at DHL’s air cargo hub at the Cincinnati/Northern Kentucky International Airport walked off the job, a move that affects one of the parcel carrier’s largest logistics facilities during the busiest shipping season of the year. The International Brotherhood of Teamsters said its members are protesting unfair labor practices at the hub run by DHL Express, a U.S. unit of German logistics giant Deutsche Post that handles express parcel business. DHL Express said the company anticipated the job action and has enacted contingency plans such as bringing on replacement staff and moving flights and volume to other DHL locations across the U.S.
The U.S. Commerce Department said Monday it plans to award $35 million to BAE Systems to quadruple production in New Hampshire for key semiconductor chips used in F-35 fighter jets and commercial satellites. The announcement is the first from the $52.7 billion “Chips for America” semiconductor manufacturing and research subsidy program approved by Congress in August 2022 to ramp up U.S. chips production amid concerns about reliance on Asia. President Joe Biden said in a statement “over the coming year, the Department of Commerce will award billions more to make more semiconductors in America” and boost research and development. The department said it signed a non-binding preliminary memorandum of terms to provide $35 million to BAE Systems Electronic Systems, a unit of BAE Systems, to support modernizing the company’s Nashua, New Hampshire Microelectronics Center.
That’s all for this week and for 2023. Thanks for tuning in for all the logistics news. Enjoy the weekend, the holidays, and a relaxing new year. The song of the week is one of my favorite Christmas classics, and in honor of the late, great Shane McGowan, Fairytale of New York by the Pogues.