Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.
The next time you glance out an airport window to watch a plane being loaded, take note of what's being stowed aboard the aircraft. Along with the rollerbags, duffels and suitcases, you may well see workers loading something else into the belly of the plane: cartons or containers of freight.
Freight has long been a staple of the passenger airlines. According to the federal Bureau of Transportation Statistics, U.S. airlines will haul some 22.6 million pounds of cargo this year. But unlike checked baggage and carry-on items, all of which undergo screening for explosive devices, much of that freight is loaded without ever being inspected.
That's become a major worry for some regulators and officials since the terrorist attacks of Sept. 11, 2001. So much so that when Congress passed the Aviation and Transportation Security Act in the weeks following the attacks, it directed the Federal Aviation Administration (FAA) and the newly established Transportation Security Administration (TSA) to develop ways to strengthen security for cargo shipped on both passenger and cargo aircraft. In mid-May, the TSA finally issued a rule outlining new measures for tightening security.
To the disappointment of several members of Congress, the new rule does not call for the physical inspection of all air cargo. Instead, it focuses on the workers who handle air shipments. For example, the rule requires freight forwarders to conduct background checks on approximately 51,000 off-airport employees who have access to aircargo shipments. It also extends the requirement for full criminal background checks to 50,000 employees of cargo aircraft operators, as a result of extending the secure areas of airports to include ramps and cargo facilities.
The rule also authorizes the TSA to consolidate some 4,000 private industry "Known Shipper" lists into a centralized government database of known shippers, essentially shippers whose security programs meet TSA requirements. The idea is to give TSA greater visibility into the activities of companies shipping goods on passenger aircraft. "By having one list, we will have a better idea of who the shippers are and be able to vet those shippers through the federal government," says Darrin Kayser, a spokesman for the TSA.
In addition, the TSA says it is hiring 300 more aircargo inspectors (which may well indicate that it intends to step up inspections). Those inspectors will be assigned to 102 airports around the nation.
Still some air in the rule
The final rule approved by the TSA is scheduled to begin taking effect next month if the agency has its way, with full implementation slated for Dec. 1.
But Pete Cheviot, director of global security for freight forwarder BAX Global, is not sure the TSA will meet that deadline. "They tell us Dec. 1 everything is going to be in place," he says. "The only thing I can tell you is that it is still in the development stage [as of mid-July]." One industry insider in Washington, who could not speak on the record, said that industry and the TSA were still engaged in implementation details.
Though Cheviot seems unfazed by the new requirements—he says the new measures basically formalize what carriers with strong security programs are already doing—he did say that the rule still had some ambiguity that needed clarification in the weeks before final implementation, particularly in regard to which employees had to undergo further background checks. How that ambiguity is resolved could have a "tremendous impact on the number of people included," he says. And that, in turn, will affect the cost. "Because cost issues are still being discussed, it is hard to put a true dollar value on the total," he says. "But it is not going to be any easier, no matter what."
Estimates of what those background checks will cost vary all over the map. "There are all kinds of cost numbers put out by various airlines," says Satish Jindel, principal of transportation consulting firm SJ Consulting Group in Pittsburgh. Some say it could run to well over $100 per person. Jindel suspects it will be close to the $145 a person estimated for the separate Transportation Worker Identity Credential program that is being implemented by the Department of Homeland Security.
Tough enough?
Though the new rule was issued by the TSA, it grew out of a joint government-industry effort. Before drafting the new measures, the government solicited recommendations for improving security methods, equipment and procedures from an industry study group, the Aviation Security Advisory Committee. "The issuance of the final rule," says Kayser, "is a good example of securing air cargo and doing it in a way, through working with industry, that balances the needs of security with the needs of commerce."
But that still wasn't enough to ensure the rule would meet with universal acceptance. At least one faction apparently sees it as overly restrictive. Responding to a request for comment, the Air Transport Association, which represents most of the nation's airlines, would only issue a formal statement that indicated it had some reservations about the rule. The statement said: "This rule ... reflects many of the 43 cargo security recommendations—developed with our support—that were submitted to the TSA in October 2003. It takes a major step forward by making mandatory many of the security measures ATA members have previously been implementing on a voluntary basis. While we are broadly supportive of the rule, it does, however, reflect some significant misperceptions of unique operational realities for both the all-cargo and combination carriers." It declined a request to expand on the statement.
Others, including several members of Congress, charge that it's not tough enough. Among them are Rep. Christopher Shays, a Connecticut Republican, and Rep. Ed Markey, a Massachusetts Democrat, who had previously introduced measures mandating the physical inspection of all cargo being loaded onto passenger aircraft. They are not likely to let the issue die, especially given last month's terrorist threat in London. In a press release issued after the TSA announced the rule in May, Markey said he would pursue legislation to require inspection of all cargo slated for shipping on passenger aircraft before it is placed on board. He has filed legislation that would phase in that requirement over three years.
Markey can expect resistance to his proposal. "That would choke off commerce and delay air freight," says Dick Macomber, chairman of the National Industrial Transportation League's air transportation committee. Macomber, who was part of the Aviation Security Advisory Committee, defends the current rule as a pragmatic and balanced approach. "There is no silver bullet to prevent a terrorist from trying to put something on an aircraft," he says. "But if you put enough different problems in front of him with a security program and random inspections, he's likely to say it's not worth it."
Impact on shippers
While the rule does not directly address shippers, it could affect them in a number of ways. To begin with, there's cost. Carriers and forwarders facing the added expense of security screenings are likely to pass those costs on to shippers. But not all shippers are perturbed by the prospect. "It's possible as costs go up, rates will go up," Macomber says. "But in the long haul, we will have an added level of security and comfort."
Then there's the possibility of delays. "It is going to mean more cost and possibly slower service in some cases," says Jindel. To minimize the risk of delays, he advises infrequent air shippers to consider using cargo carriers rather than forwarders that make use of passenger airlines and thus, can work only with listed known shippers.
Cheviot, however, expects little direct effect on customers. "From the customer standpoint, there's not much impact except for requiring that we establish identity at the time of a transaction."
The new rule also adds new incentives to ensure that shipping manifests are as accurate as possible to avoid raising questions that could cause freight to be held up. Jindel urges shippers to take a little extra time in preparing air shipments. "Allow time to check out everything and in your paperwork, make sure the contents are exactly what you say they are."
Macomber, who manages logistics for a global high-technology company (he could not use the company's name in the interview without clearance), says that given the increased potential for random inspections, this might be a good time for shippers to review their packaging. He urges his fellow shippers to consider ways to make their packaging easier for inspectors to open and check—for example, by using clear, rather than opaque, internal packaging. "If they can see through the packaging, it is going to make life a lot easier for the TSA and for the shipper," he says.
Jindel looks at it slightly differently, but makes a similar point. "Good packaging is always the first order of business," he says. "If something is not packaged right, it can cause suspicion and result in its being opened, which could cause damage."
Cheviot notes that forwarders share the responsibility for making things go smoothly. "We have to be open with our business partners that we have to scrutinize their freight," he says. Still, he's optimistic that the requirements will lead to greater cooperation between shippers and carriers. "This is where the supply chain mentality comes into play," he says, "not only to uphold what we are told to do, but to do it in ways that keep us both happy."
Throughout the sprawling supply network, everyone must be answerable for his actions, Cheviot adds. "The supply chain starts with the guy [who] fills the box. It does not end until [that box] reaches the final destination and [is taken] off the airplane. Accountability goes all the way through. It has to be there: 9/11 changed the world."
Most of the apparel sold in North America is manufactured in Asia, meaning the finished goods travel long distances to reach end markets, with all the associated greenhouse gas emissions. On top of that, apparel manufacturing itself requires a significant amount of energy, water, and raw materials like cotton. Overall, the production of apparel is responsible for about 2% of the world’s total greenhouse gas emissions, according to a report titled
Taking Stock of Progress Against the Roadmap to Net Zeroby the Apparel Impact Institute. Founded in 2017, the Apparel Impact Institute is an organization dedicated to identifying, funding, and then scaling solutions aimed at reducing the carbon emissions and other environmental impacts of the apparel and textile industries.
The author of this annual study is researcher and consultant Michael Sadowski. He wrote the first report in 2021 as well as the latest edition, which was released earlier this year. Sadowski, who is also executive director of the environmental nonprofit
The Circulate Initiative, recently joined DC Velocity Group Editorial Director David Maloney on an episode of the “Logistics Matters” podcast to discuss the key findings of the research, what companies are doing to reduce emissions, and the progress they’ve made since the first report was issued.
A: While companies in the apparel industry can set their own sustainability targets, we realized there was a need to give them a blueprint for actually reducing emissions. And so, we produced the first report back in 2021, where we laid out the emissions from the sector, based on the best estimates [we could make using] data from various sources. It gives companies and the sector a blueprint for what we collectively need to do to drive toward the ambitious reduction [target] of staying within a 1.5 degrees Celsius pathway. That was the first report, and then we committed to refresh the analysis on an annual basis. The second report was published last year, and the third report came out in May of this year.
Q: What were some of the key findings of your research?
A: We found that about half of the emissions in the sector come from Tier Two, which is essentially textile production. That includes the knitting, weaving, dyeing, and finishing of fabric, which together account for over half of the total emissions. That was a really important finding, and it allows us to focus our attention on the interventions that can drive those emissions down.
Raw material production accounts for another quarter of emissions. That includes cotton farming, extracting gas and oil from the ground to make synthetics, and things like that. So we now have a really keen understanding of the source of our industry’s emissions.
Q: Your report mentions that the apparel industry is responsible for about 2% of global emissions. Is that an accurate statistic?
A: That’s our best estimate of the total emissions [generated by] the apparel sector. Some other reports on the industry have apparel at up to 8% of global emissions. And there is a commonly misquoted number in the media that it’s 10%. From my perspective, I think the best estimate is somewhere under 2%.
We know that globally, humankind needs to reduce emissions by roughly half by 2030 and reach net zero by 2050 to hit international goals. [Reaching that target will require the involvement of] every facet of the global economy and every aspect of the apparel sector—transportation, material production, manufacturing, cotton farming. Through our work and that of others, I think the apparel sector understands what has to happen. We have highlighted examples of how companies are taking action to reduce emissions in the roadmap reports.
Q: What are some of those actions the industry can take to reduce emissions?
A: I think one of the positive developments since we wrote the first report is that we’re seeing companies really focus on the most impactful areas. We see companies diving deep on thermal energy, for example. With respect to Tier Two, we [focus] a lot of attention on things like ocean freight versus air. There’s a rule of thumb I’ve heard that indicates air freight is about 10 times the cost [of ocean] and also produces 10 times more greenhouse gas emissions.
There is money available to invest in sustainability efforts. It’s really exciting to see the funding that’s coming through for AI [artificial intelligence] and to see that individual companies, such as H&M and Lululemon, are investing in real solutions in their supply chains. I think a lot of concrete actions are being taken.
And yet we know that reducing emissions by half on an absolute basis by 2030 is a monumental undertaking. So I don’t want to be overly optimistic, because I think we have a lot of work to do. But I do think we’ve got some amazing progress happening.
Q: You mentioned several companies that are starting to address their emissions. Is that a result of their being more aware of the emissions they generate? Have you seen progress made since the first report came out in 2021?
A: Yes. When we published the first roadmap back in 2021, our statistics showed that only about 12 companies had met the criteria [for setting] science-based targets. In 2024, the number of apparel, textile, and footwear companies that have set targets or have commitments to set targets is close to 500. It’s an enormous increase. I think they see the urgency more than other sectors do.
We have companies that have been working at sustainability for quite a long time. I think the apparel sector has developed a keen understanding of the impacts of climate change. You can see the impacts of flooding, drought, heat, and other things happening in places like Bangladesh and Pakistan and India. If you’re a brand or a manufacturer and you have operations and supply chains in these places, I think you understand what the future will look like if we don’t significantly reduce emissions.
Q: There are different categories of emission levels, depending on the role within the supply chain. Scope 1 are “direct” emissions under the reporting company’s control. For apparel, this might be the production of raw materials or the manufacturing of the finished product. Scope 2 covers “indirect” emissions from purchased energy, such as electricity used in these processes. Scope 3 emissions are harder to track, as they include emissions from supply chain partners both upstream and downstream.
Now companies are finding there are legislative efforts around the world that could soon require them to track and report on all these emissions, including emissions produced by their partners’ supply chains. Does this mean that companies now need to be more aware of not only what greenhouse gas emissions they produce, but also what their partners produce?
A: That’s right. Just to put this into context, if you’re a brand like an Adidas or a Gap, you still have to consider the Scope 3 emissions. In particular, there are the so-called “purchased goods and services,” which refers to all of the embedded emissions in your products, from farming cotton to knitting yarn to making fabric. Those “purchased goods and services” generally account for well above 80% of the total emissions associated with a product. It’s by far the most significant portion of your emissions.
Leading companies have begun measuring and taking action on Scope 3 emissions because of regulatory developments in Europe and, to some extent now, in California. I do think this is just a further tailwind for the work that the industry is doing.
I also think it will definitely ratchet up the quality requirements of Scope 3 data, which is not yet where we’d all like it to be. Companies are working to improve that data, but I think the regulatory push will make the quality side increasingly important.
Q: Overall, do you think the work being done by the Apparel Impact Institute will help reduce greenhouse gas emissions within the industry?
A: When we started this back in 2020, we were at a place where companies were setting targets and knew their intended destination, but what they needed was a blueprint for how to get there. And so, the roadmap [provided] this blueprint and identified six key things that the sector needed to do—from using more sustainable materials to deploying renewable electricity in the supply chain.
Decarbonizing any sector, whether it’s transportation, chemicals, or automotive, requires investment. The Apparel Impact Institute is bringing collective investment, which is so critical. I’m really optimistic about what they’re doing. They have taken a data-driven, evidence-based approach, so they know where the emissions are and they know what the needed interventions are. And they’ve got the industry behind them in doing that.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”
That result showed that driver wages across the industry continue to increase post-pandemic, despite a challenging freight market for motor carriers. The data comes from ATA’s “Driver Compensation Study,” which asked 120 fleets, more than 150,000 employee drivers, and 14,000 independent contractors about their wage and benefit information.
Drilling into specific categories, linehaul less-than-truckload (LTL) drivers earned a median annual amount of $94,525 in 2023, while local LTL drivers earned a median of $80,680. The median annual compensation for drivers at private carriers has risen 12% since 2021, reaching $95,114 in 2023. And leased-on independent contractors for truckload carriers were paid an annual median amount of $186,016 in 2023.
The results also showed how the demographics of the industry are changing, as carriers offered smaller referral and fewer sign-on bonuses for new drivers in 2023 compared to 2021 but more frequently offered tenure bonuses to their current drivers and with a greater median value.
"While our last study, conducted in 2021, illustrated how drivers benefitted from the strongest freight environment in a generation, this latest report shows professional drivers' earnings are still rising—even in a weaker freight economy," ATA Chief Economist Bob Costello said in a release. "By offering greater tenure bonuses to their current driver force, many fleets appear to be shifting their workforce priorities from recruitment to retention."