Some would call it a classic case of missed opportunity. A company building a distribution center (or perhaps setting up a new manufacturing line) buys simulation software. Week after week, staffers gather around the small screen to watch boxes whizz down a hypothetical conveyor and analyze the patterns traced by tiny Sims-type workers as they go about their virtual tasks. Overtime hours pile up and other projects languish, casualties of an all-consuming quest to design the perfect layout before a drop of concrete is ever poured.
Yet months later, when a newly introduced product line snarls up the shipping process, nobody gives a thought to the simulation software, now gathering dust on a shelf somewhere. That's a bit like using a couples counselor during the blissful prenuptial period but not to de-escalate the inevitable outbursts of marital strife in the months, weeks or years after the ceremony. It's also unfortunate. Solving problems like shipping bottlenecks is arguably one of the things simulation does best.
In its most basic form, simulation software takes data from your warehouse operations—picking, packing, material handling, racking and so on—and allows you to play around with different scenarios. Want to know what would happen to picking operations if you added a new conveyor belt? Curious whether a change in racking configuration would speed up the packing process? With simulation, you can answer these questions by shuffling around electrons, without including the protons and neutrons.
Indeed, simulation can be used for much more than simply rearranging the DC "furniture." Because computers have a boundless capacity for crunching data, you can model an entire warehouse or manufacturing plant, or both together. Proponents even suggest you could use simulation software to play around with designs of an entire international supply chain.
Yet that won't happen anytime soon. With its inherent complexity, simulation has historically proved a hard sell. "Simulation's … a highly technical subject and it remains that. It's difficult to sell at upper-management levels," says Jan Young, product manager at Catalyst International, a software vendor in Milwaukee, Wis. Another hurdle, says Young, is getting people in the habit of thinking of simulation when there's a problem to solve. "You can do a lot and provide a lot of value with the technology, but you have to understand its capabilities and how it fits in with the other technologies that are available," she says. That means managers have to become familiar enough with its capabilities that they'll recognize it when presented with a problem that lends itself to simulation.
Young notes that acceptance of simulation software in DCs is more widespread in Europe than in the United States. But Matthew Hobson-Rohrer says that's starting to change. Rohrer, who's the director of aerospace and defense at Brooks Automation in Salt Lake City, Utah, says his company's customers are branching out in the ways they use simulation. "There's a lot more activity in controls testing simulation," he says. Automated material handling systems in warehouses and manufacturing plants are usually controlled by one or several software systems—ranging from a programmable logic controller to the more sophisticated warehouse management system. Known collectively as control systems, these help keep track of where product is and help make decisions about how conveyors are used to merge or separate items.
"What we see customers doing is linking a simulation model to their control system, using it to test a control system and check [to make sure] it's robust enough before they actually install it," Rohrer says. "It becomes an emulator of the actual warehouse. They can use it to run all sorts of scenarios and can test control systems before they buy."
Emulation means running a test of a system by hooking it up to a decision-making software system and allowing it to run theoretically, but in real time. You present the decision software with apparently real situations, to test how it responds. "What it's doing for our simulation customers is allowing them to extend the model from design to function and allowing them to go toward [using it for] operations," Rohrer says. "They're looking at simulation as more than a planning tool."
Indirect route
Given the complexity, it's probably no surprise that the companies most adept at using simulation software to solve operations problems are often the ones that act as consultants for end users of warehousing and manufacturing systems, or those who design and install them. One example is E2M Inc. (pronounced ee-squared-em), a systems integration firm in Norcross, Ga. E2M and its sister company Polytron Inc. specialize in helping Fortune 100 companies design and operate bottling and packaging operations for their ever-changing products. "When someone comes up with a design, we're the ones who figure out how to run it and make it," says Geoff Mueller, simulation engineer at E2M's emulation modeling division.
The company started using Brooks' simulation software in 1999 and soon began to see opportunities to use it to debug programmable logic controller systems. As the simulation software became more advanced—using color and 3D displays as well as upgraded graphics—the opportunities for emulation became greater and greater.
For Mueller, emulation equates to an opportunity to debug decision-making software before it's set loose in a real warehouse or bottling plant. "You don't have to spend a lot of money to figure out if it's going to work," he says. He admits that emulation isn't perfect—it allows you to get perhaps a 90-percent accurate picture of what would happen if you plugged the software into a real facility's operations. "There's always going to be real world stuff that hits you," Mueller says. "But it's better than before, where you would go in cold, maybe 60-percent ready."
The main benefit of being able to emulate and debug systems is that they can be brought online in the real-world scenario much quicker than before,Mueller says. And emulation can be used for highly complex scenarios. "When a company is adding new software, often there's a distribution center that's hooked straight to the manufacturing plant, and changing something in manufacturing means they need to change the system in the DC and do it fast because it affects the whole plant," Mueller says. Testing new systems in this way has become so popular, Mueller says, E2M now includes it in its standard pricing.
Ongoing testing is one of the main benefits, says Mueller. "Once it's operational, throughout the lifecycle of the system, you can check changes offline."Most companies have a spare programmable logic controller, in case of emergency, and this can be used to run models, which is particularly useful for training and gathering continuous feedback on possible system changes. "Training is a huge benefit here, because you are literally working with the real system. It's like a flight simulator where you have all the controls of a 747, hooked to a computer that shows you what you'd actually see out the window. We've found it to be of great benefit,"Mueller says. In fact, he adds, it's considered one of E2M's leading competitive advantages.
Slow to warm up
All the chest-pounding aside, the acceptance rate of emulation technology remains low among U.S. companies— Mueller estimates it at around 10 to 15 percent. Though both users like E2M and vendors (like Brooks, Catalyst, CACI Products Co., Flexsim Products Co. and Rockwell Software) talk a good game, acceptance has been spotty. "The companies applying it are consulting firms, because the initial investment in time and money for a company to get up to speed is still significantly high,"Mueller says. "So it's used by people with multiple customers. Once you do one facility, the skill set is sufficiently valuable that you have to do another one and another one."
Then there's the matter of simulation's track record. Catalyst's Young says some reluctance to use simulation can be traced to the software's "checkered history in the U.S." "There have been instances where it's been grossly misused," says Young. "It's easy to create a simulation and have the simulation produce a result. But it's partially based on random numbers. You need to run the simulation with 20 different [sets of random numbers], but sometimes that isn't done. They run it once and say: 'Hey, we should do this,' and it turns out not to be the right thing."
It's important to remember that a system's only as good as the data fed into it—or as the saying goes, garbage in, garbage out. In the end, creating virtual scenarios in order to test another software system's responses requires that the fake warehouse be eerily close to the real one. By the same token, it's necessary to separate the factors that make a difference from those that don't. For example, it doesn't matter whether a lift truck is yellow or red, but the speed at which it accelerates does.
"Before you do this," warns Young, "you have to understand what your objectives are and how you're going to measure the simulated world. It's the user's responsibility to figure out what the simulation means. All the data crunching and math just leaves you with a bunch of numbers. The interpretation of that is art."
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."