I have often written about legal issues and battles in California, as the state has been in the news for its warehouse and trucking emission rules, independent contractor rules for gig workers, and union disagreements at ports. Well, this week, I saw a new story about a bill in California that is turning heads. If a bill introduced by San Francisco-based state Senator Scott Wiener becomes law, California could become the first state to require certain new cars to be equipped with a device capable of limiting speed. The bill mandates that many new vehicles, beginning with the 2027 model year, contain a so-called “intelligent speed limiter.” The device would restrict the speed of the car to 10 mph above the speed limit, with specific exceptions indicated by the bill. Emergency vehicles, for example, would be exempt, and the California Highway Patrol could authorize the system’s disabling in certain other cases. The device prevents vehicles from surpassing a certain speed, by harnessing GPS and on-board camera data to determine limits on a specific roadway. The National Transportation Safety Board has recommended the installation of such technologies in all new passenger vehicles. These devices will also be required in all cars sold in the European Union beginning this July. And now on to this week’s logistics news.
Amazon eyes AI, autonomous vehicles, and Asia
Retailers return to “just-in-time” inventory
Ocean shipping rates surge as Red Sea attacks continue
Panama Canal transits sink to new drought-driven low in December
Cargo theft up 57% in 2023
Mayor Eric Adams proposes Department of Sustainable Delivery
USPS looks to expand EV fleet nationwide
Amazon has spent nearly two years putting an undisclosed portion of its $1 billion industrial innovation fund to work with investments in nearly a dozen U.S. and Israeli startups focused on logistics, the supply chain and customer fulfillment. Now, Amazon is flexing a bit — with an aim to expand geographically and to push into areas like generative AI that support the broader mission. The Amazon Industrial Innovation Fund, which launched in April 2022, is still intent on finding and investing in startups that can help the e-commerce giant deliver goods faster, while improving the experience of customers as well as the employees who work in its warehouses and logistics departments. The fund is also designed to build off of Amazon’s previous investments in AI and robotics that have led to improvements in its operations, including the addition of robotic arms that perform repetitive tasks and automation vehicles that can help transport larger items. The fund had a slow start with reportedly just $110 million invested into startups in its first year. The pace appears to have picked up since spring 2023 with investments in Veo Robotics, computer vision company Flymingo, industrial wireless automation startup CoreTigo, Rightbot and Instock. The fund even recently invested in an undisclosed generative AI startup.
Retailers are reviving an old playbook to manage their inventory levels after four years of struggling to find the sweet spot of holding enough merchandise but not too much. Merchants have worked through the excess inventory that piled up on store shelves and in warehouses over the past 18 months and are now focusing on replenishing items rather than stocking up on goods to have on hand in case of supply-chain disruptions. The shift marks a return to the “just-in-time” inventory management strategy many companies had employed before pandemic-driven product shortages and volatile shifts in consumer demand prompted a switch to a “just-in-case” stockpiling approach. Retailers have been working to get inventories back in line with sales after bringing in too much merchandise that was no longer in demand in 2022 as consumers shifted spending from items such as home decor to office apparel and then toward travel.
Global shipping prices are continuing to rise as Houthi rebels keep up attacks on cargo vessels in and around the Red Sea. The disruptions are at a key point for ships passing through the Suez Canal and are creating ripples across supply chains in Europe and the U.S., delaying shipments and raising transportation costs. Average worldwide costs of shipping a 40-foot container rose 23% in the week through Jan. 18 to $3,777, according to London-based Drewry Shipping Consultants, more than doubling in the past month. The increases are being felt far beyond the disrupted trade routes that link China with Europe and the U.S. East Coast. Spot-market rates to ship a container from China to Los Angeles rose 38% in the week through Jan. 18 to $3,860. A U.S.-led coalition has positioned warships in the region to protect commercial vessels and has launched airstrikes on Houthi targets in Yemen, but that hasn’t put a stop to Houthi attacks on vessels. Several cargo vessels were struck by missiles or drones during the past week.
The Panama Canal has faded from the headlines amid all the focus on the Red Sea. But fallout to global supply chains from Panama’s drought is far from over. The country has entered its dry season, which extends until May. Transits declined yet again in December as reservations were further restricted, according to newly released data from the Panama Canal Authority (ACP). On a positive note, the pace of the decline has slowed and more rain than expected in November allowed the ACP to increase reservation slots this month. There were 746 ship transits in December, including transits through both the older Panamax locks and the larger Neopanamax locks that debuted in 2016. December transits fell 4.7% versus November, a much lower rate of decline than in November, when transits plunged 21.9% versus October. To put the latest numbers in historical perspective, December’s transits were 27.5% below transits in December 2015, before the Neopanamax locks went into service. The Neopanamax locks took almost a decade to build and cost over $5 billion.
Cargo theft incidents were up more than 57 percent in 2023 compared with the year prior, according to CargoNet, a Verisk company. Nearly $130 million worth of goods was stolen in 2023, but since reporting cargo theft is not mandatory, the amount is likely higher than this, according to CargoNet. CargoNet’s analysis of fourth-quarter 2023 data showed a 68% year-over-year increase compared with 2022. CargoNet ranks California, Texas and Florida as the top three hot spots in 2023, but the risk isn’t limited to the coasts. More incidents are being reported at inland logistics hubs.
In his third State of the City address Wednesday, Mayor Eric Adams laid out a new plan to tackle the booming number of online deliveries. “We are in discussion with the City Council to create the Department of Sustainable Delivery,” Adams said. It’s not just vehicles that are taking up space on city streets these days. The bike lanes, where many of the estimated 65,000 delivery workers in New York City earn their living, are more crowded than ever, and City Hall believes it’s a safety issue.The City Council would need to approve the idea before the department is created. It would require delivery companies to monitor their workers, which would require workers to obey street and traffic laws and have city IDs. Adams also believes the department would build on the work being done to get illegal and unsafe lithium-ion batteries off the streets.
The U.S. Post Office is set to make changes to its mail delivery trucks. This week, USPS unveiled its first set of electric vehicle charging stations at its South Atlanta Sorting and Delivery Center. It’s the first of hundreds of new stations that will be installed at delivery centers across the country this year as USPS said it plans to create the nation’s largest fleet of electric vehicles. USPS plans to have more than 66,000 EVs on the road once the conversion is complete. Deployment of the electric delivery trucks will start in Georgia and then expand to other parts of the country. The first battery-powered vehicles were made by Ford Motor Company in the U.S. and include air conditioning and advanced safety technology.
That’s all for this week. Enjoy the weekend and the song of the week, I Can’t Drive 55 by Sammy Hagar.