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This Week in Logistics News (March 16 – 22)

By March 22, 2024Uncategorized

As Steve Banker wrote earlier this week, robots are everywhere. At MODEX this year, 33 exhibitors had the word “robot” or “robotics” in their title, and almost all the large material handling vendors and systems integrators that don’t include that word in their title were also displaying bots. But it’s not just at shows like MODEX where robots are showing up. This week, I read two other articles that were fascinating about robots. First, Chinese robotic company Unitree has built a humanoid robot (H1) that has managed to break the speed record held by its mechanical counterparts. Standing at 5 feet 11 inches and weighing approximately 110 pounds, the H1 robot reached an impressive velocity of 3.3 m/s, equivalent to about 7.4 mph. It easily surpassed the previous record holder, Boston Dynamics’ Atlas, which lagged behind at a steady 5.59 mph. I also saw a robot that was straight out of Terminator 2. The video released by researchers sees a tiny little robot akin to a T-1000 Terminator by escaping a minuscule jail cell. The robot can be seen melting down into a liquid form to move through bars, before it returns to a solid state once free. It will be interesting to see what the appliable use cases are for these robots. And now on to this week’s logistics news.

Intel wins $19.5 billion in CHIPS Act funding
New report pegs cost of electrifying U.S. commercial truck fleet at $1 trillion
Shippers and carriers far apart on ocean freight rates
Walmart looks to 3D printing for sustainability
Panama Canal adds transit slots
Macy’s eyes $100M in savings from streamlined supply chain
Mars taps simulation tech in innovative packaging effort
Truck tonnage showed signs of life in February but remains in recession

The Commerce Department is taking its biggest step yet toward onshoring semiconductor manufacturing with a historic $19.5 billion funding deal with Intel, which the semiconductor giant plans to use for four new production facilities across the country. President Biden signed the $53 billion CHIPS and Science Act into law in August 2022, committing to ensure that the U.S. could design and manufacture the advanced computer chips that power everything from lawnmowers to supercomputers on its own soil, instead of having to outsource production to Asia. That was a little over a year and a half ago, but the first grant—a meager $35 million to New Hampshire-based BAE Systems—wasn’t announced until last December. If Intel meets performance targets in the deal, it’ll be eligible for $8.5 billion in federal grants, an additional $11 billion in CHIPS Act loans and a 25 percent Treasury tax credit. A senior administration official said that the Intel grant was expected to be the largest single grant administered through the CHIPS Act, and once the Commerce Department and Intel agree on final terms, the government expects to start delivering funds by the end of the year.

Full electrification of the U.S. commercial truck fleet would require nearly $1 trillion in infrastructure investment alone, according to a new report from Roland Berger released today by the Clean Freight Coalition. The study forecasts a realistic infrastructure buildout for the electrification of medium- and heavy-duty commercial vehicles, exposing what the CFC calls a massive investment gap as state and federal policymakers mandate increased adoption rates of battery-electric commercial vehicles. The CFC, which consists of transportation stakeholders across the trucking and motorcoach industries, says that policymakers must address these cost concerns and infrastructure hurdles to make an electrified supply chain function smoothly for the American economy. The study found that while medium-duty vehicles will face fewer roadblocks, economic and operational constraints make electrification very challenging for the heavy-duty segment. Furthermore, the study outlined the significant improvements in battery range and charging infrastructure capabilities that would be needed to support a path for the electrification of longhaul vehicles.

March and April are critical months for ocean carriers looking to ink annual freight contracts with shippers, including the world’s biggest retailers, but this year contract season is turning into a waiting game. The $2,500 spread between spot market rates and long-term freight contract rates for Asia to U.S. West Coast containers has reached its highest level since September 2021, when the spread between short-term rates and the long-term rates was $2,900. This has caused shippers to hit pause before signing on the dotted line, with ocean carriers looking to sign at the higher spot rates fueled by the Red Sea diversions, and shippers holding out for a steeper decline. Ocean spot freight rates have tumbled for a sixth-consecutive week as the Shanghai Containerized Freight Index dropped by 6 percent. Ocean carriers were unable to push through a mid-March rate increase, and expectations of an April rate hike are fading amid soft demand.

In collaboration with San Francisco-based Unspun, a technology fashion company, Walmart is deploying a goal of 500 machines across the United States and aims to produce upwards of 10 million Walmart fashion garments entirely with Unspun’s proprietary 3-D sewing machine, Vega. A line of chino pants will be the partnership’s first application but the benefits Walmart is about to reap go beyond steeze, and small businesses would be smart to follow suit. Unspun’s Vega machine makes clothes on-demand, eliminating the traditional cut-and-sew process of textile manufacturing altogether. It also reduces water consumption from textile manufacturing by almost 40 percent, and energy demand by nearly 50 percent. But the real cherry on top is that Unspun’s technology will allow Walmart to localize its textile supply chains and reduce or eliminate the need for importing clothes from far-flung factories.

The Panama Canal is adding transit slots as restrictions in the corridor begin to ease. According to the Panama Canal Authority (ACP), a pair of slots are up for auction for transit dates starting on March 18, with an additional slot for dates beginning on March 25. The ACP could add more slots if rainfall raises levels at the lakes servicing the Panama Canal. This is after historically low water levels brought on by a lack of rainfall reduced daily traffic by almost 40 percent in late 2023 and early 2024. Over that period, many ships have been forced to take longer, more costly routes, all while the ongoing crisis in the Red Sea has complicated a crucial alternative to the Panama Canal. Even so, with the ACP adding transit slots on top of better-than expected rains in late 2023, conditions appear to be improving, at least for now, in the critical shipping lane.

Macy’s three-point transformation plan to combat sliding market share — dubbed the “Bold New Chapter” — will rely heavily on its supply chain. The retailer plans to close distribution centers, increase automation, and implement other tactics that help the corporation improve inventory, productivity, and, ultimately, sales, the corporation’s CFO and COO, Adrian Mitchell, said in a Q4 earnings call. Altogether, supply chain efforts should result in $100 million in cost savings in the current fiscal year, eventually rising to annual run-rate savings of some $235 million by 2026, Mitchell added in the late February call. The initiatives come after Macy’s reported a $71 million net loss in the most recent quarter. In addition to supply chain efforts, its three-point plan also involves closing Macy’s stores and investing in the company’s luxury offerings.

Mars., Inc., parent company to brands like M&M’s, Royal Canin, and Snickers, is taking a new approach to packaging, leveraging simulation technology that will allow it to perform virtual testing and prototyping. The initiative is being launched first across the company’s snacking business, leveraging multi-physics, computer modeling tech from Ansys to reduce the need for significant physical testing during the packaging process. This will allow Mars to access insights related to production, such as how wrapping affects fulfillment, how items respond when dropped, and how the company can minimize instances of packaging failure. Mars researchers are already reporting success in expediting packaging processes as a result, reducing development time by up to 40 percent and slashing the plastic materials needed for testing by about 246 tons.

A measure of truck tonnage increased 4.3% in February after decreasing 3.2% in January, although the final number still fell 1.4% short of its level a year ago, according to the American Trucking Associations (ATA). The data comes from ATA’s advanced seasonally adjusted For-Hire Truck Tonnage Index, which rose to 116.0 (2015=100) compared with 111.3 in January. The index is dominated by contract freight as opposed to spot market freight. Compared with February 2023, the index fell 1.4%, which was the twelfth straight year-over-year decline for the monthly measure. In January, the index was down 4.5% from a year earlier.

That’s all for this week. Enjoy the weekend and the song of the week, Paranoid Android by Radiohead.

The post This Week in Logistics News (March 16 – 22) appeared first on Logistics Viewpoints.

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