In his First Thoughts column last week, SCDigest Editor Dan Gilmore identified the top one or two top supply chain stories by month in 2021 (see Top Supply Chain Stories 2021 by Month).
We had assembled a larger list, but due to the space constraints of the newsletter format, we had to cut some of the entries.
Supply Chain Digest Says...
|
 |
| There were many other important stories so far this year - what did we leave out? |
 |
What do you say? |
| Click here to send us your comments |
|
 |
| Click here to see reader feedback |
|
So below, we provide the full list of the top stores of the year that was. It was an eventful 12 months, to say the least.
January
In surprising news, Rick Blasgen, CEO of the Council of Supply Chain Management Professionals (CSCM), announces his plan to retire in March. Blasgen, a former supply chain executive at Conagra and others, had run CSCMP since 2005. The CSCMP board of directors names Mark Baxa, a previous chairman of the CSCMP board and current CEO of FerniaCreek Global Supply Chain Consulting Group, as interim CEO. There is surely some back story here, but we never pursued it.
UPS announces its plan to exit its LTL business with sale of its UPS Freight unit to Canadian logistics firm TFI International for about $800 million, a seemingly low number that was just one fourth of UPS Freight's estimated 2020 revenue of about $3.15 billion. The move allows UPS to shed itself of a low growth business and concentrate its investments in the parcel market while giving TFI an immediate strong presence in the US.
February
Sports gear maker Under Armour says it will stop selling through as many as 3000 current retail customers by the end of 2021, as the company puts more focus on its direct to consumer business. As such, Under Armour is mirroring rival Nike's strategy, as Nike a couple of years ago announced plans to cut it retail channels globally from some 36,000 to a few dozen. Last June, Nike also announced a Consumer Direct Acceleration program - the term says it all. Under Armour said the retail channel reductions would still leave it with 10,000 retailers by the end of 2022, but the direction is clear.
JB Hunt announce it will jump into digital freight brokerage in deal with Google, leveraging its artificial intelligence technology. Under the deal, Google and JB Hunt say they have agreed to form a "strategic alliance" to improve existing US supply chains and transport networks. JB Hunt will work with Google to develop machine-learning tools to improve matches between shippers and carriers on JB Hunt's existing 360 platform, hoping to enable shippers get an accurate view of freight market supply and demand days in advance.
March
Canadian Pacific Railway and Kansas City Southern Railway announce they will merge as part of a $25 billion deal that will create a rail freight network that spans Canada to Mexico. Or so it seems. Not long after, Canadian National announces a larger $33 billion offer. There is some drama, but Canadian National ultimately prevails, but it is still a question if US regulators will let the deal go through.
News that Amazon is using video cameras to monitor its own delivery driver at all times, even drivers actually employed by independent Amazon Delivery Service Partners. In fact, Amazon delivery drivers in the US now have to sign "biometric consent" forms to continue working for the retailing giant. The data that drivers must consent to have collected includes photographs used to verify their identity; vehicle location and movements (including "miles driven, speed, acceleration, braking, turns, following distance"); "potential traffic violations" (like speeding, failure to stop at stop signs, and undone seatbelts); and "potentially risky driver behavior, such as distracted driving or drowsy driving."
In a crazy mishap, a large container ship from Japan's Evergreen line gets turned almost sideways entering the Suez Canal from the Red Sea and becomes stuck. About a quarter mile long (400 meters) and weighing in at 200,000 tons, the ship's sheer size overwhelms efforts to dig it out. The ship remains stuck for six days, with 400 cargo vessels waiting at sea for the blockage to end. Canal owner Egypt holds the Even Given and its 25 crew members until just last week, due to wrangling over compensation for the accident. It took a $550 million payment in the end from Evergreen and its insurers to free the ship.
April
In an intensely watched action, workers at an Amazon fulfillment center in Bessemer, AL overwhelmingly vote not to join the Retail, Wholesale and Department Store Union. By a margin of 71% to 29%, workers said no to unionization after a mail in voting period of more than a month instead of the usual in-person vote, necessitated by COVID-19 concerns - and keeps Amazon's US facilities free of unions. Many pro-labor forces expected a vote to organize that could serve as a catalyst for union votes at Amazon FCs across the country.
In its Q1 2021 shareholder deck, the Tesla says that the much anticipated all-electric Tesla Semi is now set to finally be on the road later this year. In January, CEO Elon Musk had said that the Tesla Semi was ready for production, but that the company was having difficulties manufacturing enough 4680 battery cells to power the rigs. However, Tesla's shareholder report says that concerns surrounding the battery for the Model Y car have been resolved, and that Tesla Semi trucks will see deliveries in 2021 to some companies that have pre-ordered them.
UPS announces its plan to acquire delivery drones from a company called BETA Technologies. But these are not small parcel carrying aircraft. Instead, they are capable of carrying as much as 1400 pounds. UPS says the new drones will quickly transport deliveries that would otherwise fly on small fixed wing airplanes. The drones will come with a 250-mile range and cruising speed of up to 170 miles per hour. The UPS significant range of the aircraft will be capable of conducting series of short routes or one long route on a single charge.
May
Gartner releases its top 25 supply chains list for 2021. This year Cisco Systems comes out on top for the second year in a row - sort of. I put it that way because again in 2021, Apple, Procter & Gamble, Amazon, McDonald's and Unilever were left off the formal top 25, as those five companies have been placed in a separate relatively category called "supply chain masters," a sort of supply chain hall of fame. The rest of the top 10 after Cisco were (2) Colgate-Palmolive; (3) Johnson & Johnson; (4) Schneider Electric; and (5) Nestle.
Researchers at North Carolina State claim an RFID chip breakthrough, with a design that will cost under one cent to produce at scale. The key is the small size of each chip. The smaller the chip, the more chips you can get from a single silicon wafer. Realizing more chips from the silicon wafer, the less expensive they are to produce each one. We'll see if it turns into reality, but it could really change the RFID ROI if it does.
The Colonial Pipeline Company reports that it was the victim of a cybersecurity attack that involves ransomware, forcing the company to take some systems offline and disabling its pipeline. The Georgia-based company operates the largest petroleum pipeline in the United States, carrying 2.5 million barrels a day of gasoline, diesel, heating oil, and jet fuel on its 5,500-mile route from Texas to New Jersey. The pipeline closure shuts down many East coast gas stations for days - and leads to questions on the cyber security of US infrastructure systems.
June
Kroger launches its first drone delivery test from a store in Centerville, OH, south of Dayton. Per FAA regulations, the deliveries will be limited to areas within one mile of the store. For the first pilot program, no charge will be levied for these flights, Kroger said. But that's temporary. At some point, there will be delivery charges for the service.
CSCMP and Kearney release the 2021 State of Logistics report. The headline news: what the report several years back started calling US Business Logistics Costs (USBLC) fell sharply on an absolute basis in 2020, down 4.0% to $1.55 trillion. With a smaller decrease in US GDP (-3.5%) than logistics cost fell last year, that took the relative cost of logistics as a share of GDP to 7.44%, down bit from 7.57% in 2019 - versus 8.59% in 2007,
News that FedEx Freight, the company's less-than-truckload segment, had suspended service to approximately 1400 customers due to strains in its network from rising shipment volumes. The move left many shippers in a lurch, with some complaining of little notice of the service suspension. Within a few weeks, FedEx says it had restored service to some of those dropped shippers, but not all.
(See More Below)
|
CATEGORY SPONSOR: SOFTEON |
|
|
| |
|
|
July
German ocean container line Hapag-Lloyd says it is adding a new $5000 surcharge per 40-foot container for moves from China to the US and Canada, according to a letter it sent to customers. The letter said the new fee is a result of “extraordinary demand from China and the resulting operational challenges along the transport chain.” Hapag-Lloyd said the surcharge would be implemented beginning August 15 and would “replace other ad-hoc surcharges like the SGF” (shipment guarantee fee). Hapag-Lloyd is just one of nearly all carriers implementing such fees. In fact, it appears a growing number of carriers, depending on the lane, are now ignoring contracts and forcing shippers to accept sky-high spot market prices and the significant surcharges.
Walmart says it will install robots from a company called Symbotic in 25 of its 42 US regional distribution centers. Wilmington, Massachusetts-based Symbotic first implemented its system in a Walmart DC in Florida in 2017 and the companies have been working to optimize the system ever since. The Symbotic system sorts, stores, retrieves, and packs freight onto pallets, Joe Metzger, executive VP of supply chain operations, Walmart US, said in a blog post. It uses advanced algorithms to store cases with a precision that speeds the intake process and increases the accuracy of freight being stored for future orders. Walmart says the rollout will take “several years” to complete.
Zebra Technologies say it will pay $240 million to acquire the 95% of mobile robot maker Fetch Robotics it doesn’t already own. For Zebra, the move is another step to expand from its long time roots in data collection, focused on bar code scanners, RFID readers and mobile wireless terminals, to more of a true solutions provider. Zebra says part of the appeal of Fetch is the company’s broad product line, with different robots for different types of warehouse applications.
Uber Freight, the rideshare company’s former freight unit before being spun out, announces it is acquiring Transplace, a leading transportation 3PL, in a deal that values Transplace at $2.25 billion. Uber maintains a majority ownership of the new Uber Freight.
August
Amazon officially opens its massive new Prime Air hub at the Cincinnati airport. The facility will have 3 million square feet of logistics space across seven planned buildings. Notable among all that space is an 800,000-square-foot sortation building equipped with robots and many miles of interlinked conveyors. The facility will serve as Amazon’s largest air hub, and is expected to handle as many as 200 cargo flights per day. It will operate across an amazing 600 acres, and soon employ 2000 people. It will include an expansive new tarmac with parking for about 100 planes. When the hub was announced a few years back, Amazon said it would take $1.5 million to develop.
Walmart announced it is going to leverage its home delivery platform, Spark Driver, to make last mile deliveries for other merchants in a program named Walmart GoLocal. Walmart says other retailers can choose to use the service for a variety of delivery types, including scheduled and unscheduled deliveries, and same-day delivery. GoLocal’s last-mile capabilities will be handled by gig workers from the Spark program – the same drivers that support Walmart’s same-day grocery delivery. Also, retailers using GoLocal don’t have to sell on Walmart.com’s marketplace, as this isn’t a fulfillment service where Walmart both stores and delivers third-party inventory - it’s just the last-mile delivery portion.
The California Trucking Association appeals to Supreme Court as it promised when it lost a full Appeals Court decision in June on the legality of California’s so-called AB-5 legislation. That law would in practice eliminate contract truck drivers in the state by defining an onerous to see if a worker qualifies as an independent. If the Court takes the case, the CTA would seem to have a strong argument, given a 1994 US law creating federal pre-emption of transportation law, passed to avoid the impossibility of truckers needing to comply with individual rules state by state. The court has not decided if it will take the case.
Presenting during Tesla’s “AI” day, founder Elon Musk surprised the audience by announcing plans for a humanoid style robot. Details were sparse, but in a short slide presentation, Musk said the robot would stand about 5-foot 8-inches tall, weigh about 125 pounds, and be built from lightweight materials. One interesting note is that Musk said the robot will borrow technology developed for Tesla vehicles, including its artificial intelligence, autopilot cameras, and computer developed for autonomous driving. The robot will have a name, Optimus.
September
FedEx says in recently ended fiscal quarter it incurred $450 million extra costs due to the on-going labor shortage. The company said the lack of labor led to increased overtime, higher wages to attract workers and extra spending on expedited transportation. The company cited the specific example of a sorting hub in Portland, OR, that had 65% of the workers needed to handle the normal number of packages that go through that facility. FedEx also said it is raising pay levels and paying premiums for weekend shifts to try to attract more workers.
FedEx then announces rates for US domestic, export and import services will rise an average of 5.9% starting January 3 - a least a percentage point above usual new year general rate increases. The rate hike applies to shipments using FedEx Express, FedEx Ground and FedEx Freight. Numerous surcharges are also hiked. For example, if shipments are not ready for pick-up when a FedEx driver arrives, it will trigger a “no shipment tendered” surcharge, commencing January 17. Home delivery residential surcharges will rise by 9.2%, while ground delivery surcharges on rural area deliveries will rise by a whopping 61%, according to one estimate.
October
The twin ports of Los Angeles and Long Beach announce plan to charge for shipping containers not picked up in a timely fashion. For example, In the case of containers scheduled to move by truck, ocean carriers will be charged $100 for every container “dwelling” nine days or more, while for containers moving by rail, carriers will be charged if the container has dwelled for three days or more. Additional $100 per container per day will be charged if the boxes remain at the port. The charges were to begin November 1, but mostly have postponed, as the threat of the fees is having an impact.
The Labor Department reports that the US consumer price index (CPI) rose 5.4% in September versus the same month a year ago. The year-over-year gain in prices was the highest for any month since 1991, as supply chain driven-inflation threatens the overall economy, and continues in the remaining months of the year.
A significant test of commercial drone deliveries commences in Israel, another step towards its goal of creating a national drone network. Five companies are participating in the test, each focusing on different applications. In total, there will be about 300 deliveries per days, with the drones from all participating companies managed by a single centralized control system. What’s more, some of the drones will make their deliveries by flying over heavily populated urban areas, so far a no go in the US. Could the drone era perhaps not be that far away at last?
The two largest so-called regional parcel carriers announced they are combining in deal that will give the merged company a network that can deliver to most of the US. Virginia-based LaserShip agreed to buy OnTrac Logistics, out of Arizona, for some $1.3 billion. LaserShip a short time later announces Mark Holifield, chief supply chain officer at Home Depot, will become its CEO.
November
President Biden the long awaited “Infrastructure Bill” into law with generally bi-partisan support. The bill will provide $1.2 trillion in spending across many areas, but really a smaller $550 million over 5 years in funds above what has already been committed. Roads, bridges, and other “major projects” get $110 billion, while port infrastructure receives $17 billion. Will it really have an impact, and is it really “paid for?” Who knows.
American Trucking Associations CEO Chris Spear says in interview that that the new ATA estimate of the US truck driver shortage is 80,000, a 30% increase from its last estimate before the pandemic, when the industry was said to have a driver shortage of 61,500 drivers. The driver shortage is one of the key factors in the on-going back-up at US ports, as there are not enough trucks to move containers from terminals to warehouses or train hubs.
News that Amazon is adding a new layer of facilities that will feed its fulfillment centers that in turn increasingly support delivery stations for its own parcel delivery network. Amazon has started tests of the concepts with users of its Fulfilment by Amazon (FBA) service, which acts as a third party for fulfillment and shipping services for its Marketplace platform. The planned facilities will be positioned as staging locations for its fulfillment centers, adding an extra touch versus vendor shipments to FCs – but will crucially take out time for that replenishment.
A National Labor Relations Board (NLRB) regional office orders Amazon to hold another union election at one of its fulfillment centers in Bessemer, Ala., following Amazon's resounding victory against unionization in the first election there in March. The Retail, Wholesale and Department Store Union had appealed the results of the vote, alleging a series a labor law violation by Amazon during the process.
December
Reports that Amazon is taking direct control of a number of global logistics service in the face of soaring costs and delays in the commercial markets. Those services include chartering its own container ships, using small US ports, and contracting with Chinese manufacturers to make its own shipping containers. While Target, Walmart, Costco, Home Depot and others have also chartered container ships, Amazon is taking it to a whole new level, moving some 10,000 containers per month, filled with goods from small- and medium-sized Chinese exporters, and also working with the ship owners to modify bulk cargo ships built to move commodities to handle containers cargo instead. Internally, Amazon calls this project “Dragon Boat.”
The number of ships in the water awaiting a berth at the ports of Los Angeles and Long Beach reaches a record 111, as shipping delays continue to grow. Prior to the pandemic, the ports' highest record had been 17 ships waiting to anchor. Opening some terminals for 24 x 7 container moves, proves a false hope, as for a variety of reasons there are few takers. The ports also vastly spread out waiting ships in the water over fears of winter winds and tides causing collisions.
So there you go. There were many other important stories in the year - what did we leave out?
Any other top supply chain stories of 2021? Let us know your thoughts at the Feedback section below.
|
l
