Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
In today's world of instant gratification, four years is not just a long time. It is an eternity.
The same holds true in the world of physical distribution. Planning one year out is difficult enough. Going out four years, with all the variables that entails, is a crapshoot.
"It is an 'as best as you can' process," says Paul Turek, vice president, supply chain for Caribou Coffee Co. Inc., the nation's second-largest retail coffeehouse operator.
Nevertheless, it is a process that Turek and Caribou felt compelled to undertake. Nearly two decades of growth had put severe strain on the company's distribution operations, and management didn't see things changing anytime soon. It was clear the company would have to build out its distribution network, but Caribou didn't want just a short-term fix. It wanted a long-range strategy that would serve it well into the future. And for that it would need some serious modeling and planning tools.
Identifying the pain points
With 412 owned stores and 97 domestic and international franchise locations, Minneapolis-based Caribou may be best known as a retailer, but it also has a thriving commercial business. In fact, it was growth in the commercial channel that prompted the company to go down this road. Five years ago, the commercial business, which includes sales to grocery stores, office coffee services, and hotel, sports, and entertainment venues, accounted for just 2 percent of Caribou's business. Today, that number has risen to about 10 percent of Caribou's $262 million in annual sales.
The growth, while relatively modest in total dollar terms, has nonetheless stretched the capacity of Caribou's sole distribution center, a 46,000-square-foot facility in Minneapolis. DC space became so tight, in fact, that the company had to rent off-site public warehousing to handle the overflow during peak periods.
In an effort to assess how future expansion in the commercial segment would affect its space needs, Caribou decided to seek outside help. In 2007, the company hired Long Grove, Ill.-based supply chain consultancy TZA to develop a network modeling program that evaluates various sales and inventory scenarios and determines the most efficient and practical distribution network to meet those requirements.
Turek says Caribou needed a way to deliver a "good outside assessment" of the effect that growth in its commercial business, as well as other business units, would have on its inbound and outbound activity. Turek also wanted to know, based on various sales and inventory alternatives, when Caribou would experience capacity crunches so severe they could disrupt its business.
"We wanted a heads-up on when and where our pain points would be," he says.
After conducting its analysis, TZA concluded Caribou would be best served by staying with a single DC in the Minneapolis area, given that most of its vendors were already based in the Midwest. At the same time, it warned the company that based on the various growth scenarios, Caribou's DC would likely reach capacity sometime in the 2009-10 time period.
With that deadline approaching, Caribou went back to TZA in 2009 and asked it to update the modeling tool to reflect new sales growth assumptions for its core business and additional business units. In particular, Caribou wanted the consultant to determine the lifespan of its existing DC and assess the need for a new facility based on projected sales and inventory patterns through 2015.
Getting on the green
As in 2007, TZA's updated assessment indicated that Caribou's best bet would be to stick with a single DC in the Minneapolis area. It also estimated that a 7-percent increase in rack locations would be enough to extend the life of the current facility and meet the company's short-term needs. At the same time, the model showed that to handle its projected growth, Caribou would eventually require a facility of between 150,000 and 200,000 square feet. Turek says the company would likely move its DC operations to a bigger location rather than expand its current facility.
Turek says the modeling tool has been an invaluable and cost-effective support to Caribou's supply chain operations. Most of the cost was sunk on the initial purchase in 2007 at what he calls a "reasonable" price tag. The updating in 2009 was done at very marginal expense, Turek says. Caribou now plans to update the model every two years, he adds.
The TZA tool "allows us to run very accurate business channel scenario simulations," says Turek. "It is very good at analyzing our operations from a macro perspective, as well as from a more granular framework. It is flexible enough to allow us to update the model as things change, so we can take a rolling five-year snapshot and make good judgments based on our projected product mix and product platforms."
Turek acknowledges that no model is infallible when looking five years out. But the TZA tool "will get us on the green," he says.
A better plan
Travis Staley, a TZA project manager who coordinated the Caribou project, says the modeling tool is beneficial for any company trying to understand how the many variables that affect its operations will drive future inventory and distribution requirements.
"The result is that we help build a better plan for a company's future needs," he says. "Without it, a company like Caribou might not know how [various growth scenarios] would affect its inventory requirements."
Most important, Turek says, the model minimizes the risk that Caribou will overspend on any future DC budget allocation. Or, worse yet, underspend.
Without the modeling software, he says, "we might come up short" in estimating Caribou's capacity needs accurately. The TZA tool "keeps us from reacting and panicking, signing leases under duress instead of [following] a planned and methodical process," Turek adds. "It has helped us extend the life of our facility and get better utilization out of it, all the while getting a peek [at] what our next 'pain points' may be."
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
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.”