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This Week in Logistics News (June 15 – 21)

By June 21, 2024Uncategorized

The boys are back! Sixteen years to the day, the Boston Celtics are once again NBA champions after dismantling the Dallas Mavericks in five games. The Celtics have been on the cusp of a championship the last few years, but the naysayers continued to say that Jayson Tatum and Jaylen Brown could not coexist. But this season, and post-season in particular, the two of them proved their critics wrong, showing the NBA and the rest of the world just what the dynamic could do. Celtics President of Basketball Operations Brad Stevens put together one of the best trade classes in recent years, swapping Malcolm Brogdon and Robert Williams for Jrue Holiday, and Marcus Smart for Kristaps Porzingis and two first round draft picks. The addition of Holiday and Porzingis seemed to put the Celtics over the top as the team now had an All-NBA defensive guard who did whatever the team needed, and a 7’2” rim protector that could shoot. Derek White came up huge on both the offensive and defensive ends in the finals. Al Horford did all the things Al Horford has done for the last 16 years, and finally got himself an NBA championship. Cue the duck boats, as the parade kicks off in a few hours. And now on to this week’s logistics news.

General Motors drives sustainability across supply chain
FMCSA approves 25% fee increase for carriers, brokers
U.S. bans exports by Oregon freight-forwarder in warning shot to industry
Container losses fall to record low
Warehouse wages rise to average of $18.99
May air cargo volumes rise amid global disruption
Freight market pressured again in May, Cass data shows

General Motors (GM) is accelerating sustainability efforts in its supply chain, focusing on logistics, materials, packaging, and supplier engagement. The cross-functional GPSC Sustainability Team is dedicated to building strong supplier relationships, pushing for emission reductions with clear goals and timelines. A core element of this initiative is encouraging Tier I suppliers to sign GM’s Supplier Pledge. This pledge commits suppliers to achieving carbon neutrality for Scope 1 and Scope 2 emissions related to products or services provided to GM, and to attaining an EcoVadis score of at least 50 by 2025 in the areas of Labor and Human Rights, Ethics, and Sustainable Procurement. By the end of 2023, 71 percent of GM’s direct and logistics suppliers had committed to the pledge. GM introduced the Supplier Sustainability Goals Framework to enhance sustainability within its Tier I suppliers, including key indirect and logistic suppliers. This framework is central to GM’s strategy, encouraging suppliers to make progressive steps towards sustainability. This outlines GM’s supply chain goals, priorities and processes for its Tier I suppliers.

Federal regulators have approved a 25 percent increase in fees collected by states from motor carriers, brokers and leasing companies that are used to pay for state highway safety programs. The fee increase in the Unified Carrier Registration (UCR) Plan for the 2025 registration year, announced on Friday by the Federal Motor Carrier Safety Administration (FMCSA), amounts to approximately $9 to $9,000 more per year that carriers will pay, depending on the size of their fleet. The fee per entity for a broker or leasing company is $46. The UCR, and the 41 states that participate in the agreement, establish and collect fees that can be used at the discretion of the individual states, but are typically used for truck safety programs, enforcement, and administering the UCR. After FMCSA proposed the fee increase in January – based on a recommendation from UCR Plan administrators – it received 66 comments, many of whom considered the fees to be unwarranted and believed the UCR Plan should be adjusting its own budget and spending instead.

An Oregon freight-forwarder was hit with an export ban in what officials said was a warning to companies to heed restrictions on the shipment of sensitive technologies to countries the U.S. considers threats to national security. The U.S. Commerce Department said on Monday it was imposing a three-year export ban on USGoBuy after the Portland-based company failed to improve its compliance with U.S. export-controls laws following a 2021 settlement. Under that agreement, the department had agreed to forgo any immediate ban—pending compliance improvements at the company. That pact came to an end last week. The Commerce Department went forward with a so-called denial order, a rare step that could effectively shut down USGoBuy’s operations given the nature of the company’s business.

The container shipping industry continues to make strong progress in reducing the number of boxes lost overboard. The World Shipping Council, an industry group made up of the major carriers, reports for the second year in a row that the number of containers lost at sea has fallen to record-low levels as they make progress on managing parametric rolling and other dangers from loading to properly securing boxes. Under the auspices of the Netherlands’ marine institute Marin, a multi-year project launched in May 2021 to improve the safety of the transportation of containers and cargo after a series of disastrous, high-profile casualties. The work has produced extensive data and helped to educate mariners, especially on the dangers of parametric rolling and how to manage it. They also developed a calculator to help determine the risk based on sea and weather conditions as well as a vessel’s specification. As the study prepares to publish its final paper, the World Shipping Council is citing the continuing decrease in the overboard losses. In 2023, they reported just 221 containers were lost at sea out of 250 million transported. That is a decrease of two-thirds over the 661 containers reported lost overboard in 2023. The three-year average however remains higher at 1,061 due to the large losses in 2021.

Rising warehouse wages are driving up demand for technology and automation to reduce labor costs, according to a study from the Nevada-based third-party logistics provider (3PL) ITS Logistics. Wages have increased to a regional average of $18.99, which is around a 40-50 percent increase in the last five years. It was not long ago that a starting warehouse employee made $12 to $14 per hour on the high end. But at the same time that wages are rising in response to historically low unemployment rates, the tight market for industrial real estate has been loosening up in recent months. The National Industrial Real Estate Vacancy Rate for the second quarter of 2024 eclipsed 6.2 percent, which is up from 5.7 percent in Q1. There is also more warehouse space available on the market right now than at any time since the 2020 onset of the pandemic.

May air cargo volumes continue to rise amid global disruptions. Regardless of last year’s low growth forecasts and a potential shift in consumer demand, expectations continue to rise among shippers ahead of peak season and several months of consecutive growth. In addition, industry optimism is being fueled by e-commerce coming out of China, which has had a dramatic impact on the air cargo market since 2023. Air cargo volumes are also being supported by port congestion and the Red Sea conflict, which has pushed ocean container shipping spot rates from the Far East to the U.S. West Coast and North Europe. In May, the global air cargo spot rate stood at $2.58 per kilogram, up 9 percent year over year and 5 percent month over month.

Freight shipments and total freight spend remained under pressure again in May, according to data from Cass Information Systems. Shipments in May were flat with April but down 5.8 percent year over year (y/y). The y/y decline was 1.8 percentage points more pronounced than in April, and when adjusting for seasonal trends, the shipments index was off 3.1 percent sequentially to a 46-month low. The Monday report noted “ongoing softness in for-hire demand” as loads normally pegged for the for-hire market are being insourced by private carriers. It also said shippers consolidating less-than-truckload shipments into single truckload moves is weighing on the index.

That’s all for this week. Enjoy the weekend, the parade, and the song of the week, The Boys Are Back by the Dropkick Murphys.

The post This Week in Logistics News (June 15 – 21) appeared first on Logistics Viewpoints.

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