David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
Water, water everywhere, but no place to put it all.
With apologies to Samuel Taylor Coleridge, that was the situation Hassia found itself in.
Hassia, the fourth-largest beverage manufacturer in Germany, was experiencing some of the symptoms common to fast-growing businesses. As a result of an increase in both its stock-keeping unit (SKU) base and its sales volume, the company, which distributes premium bottled water as well as juice and soft drinks, found itself dealing with a serious space crunch at its Bad Vilbel distribution center, a 323,000-square-foot facility near Frankfurt.
Adding to the problem was a surge in consumer demand for one-way bottles, which require more storage space than returnables. "One-way bottles are made from thinner plastic and do not stack well compared to the crates that are used for returnable bottles," explains Stefan Marhold, warehouse manager at the Bad Vilbel site. "That requires us to move to racking instead of floor stacking." One of the company's chief concerns was that conventional racking wouldn't allow for the same storage density that could be achieved with floor stacking, he adds.
At the same time, the company was feeling pressure on another front—rising transportation costs. In addition to the Bad Vilbel facility, Hassia was operating a second warehouse and production facility about 12 miles away in Rosbach, where it has a spring water source. Because neither warehouse was big enough to accommodate output from both production plants, the company was constantly shuttling products from one building to the other—a practice that was growing increasingly expensive.
With the pressure mounting, Hassia had limited options for addressing its capacity crunch. The company wanted to remain in its current distribution facility in Bad Vilbel, which is located just half a block from one of its bottling sites. Though separate, the two buildings are ingeniously connected via an underground tunnel that runs beneath an adjacent apartment building. Inside the tunnel is a 360-foot-long monorail that carries goods from the plant to the DC.
While expansion might seem the logical solution, that wasn't workable in this case. The facility is surrounded by other properties, making outward expansion impractical. Options for expanding upward were pretty limited as well. Because the facility is located in a residential area, the height of the building could not exceed 20 meters (about 66 feet).
In short, Hassia's only alternative was to find a way to make the most of the space it did have—that is, by creating denser storage. Knowing the solution would likely involve automated equipment, Hassia turned to Krones, a Neutraubling, Germany-based systems designer and integrator that specializes in the unique demands of beverage and food distribution. Krones had supplied much of the company's bottle filling equipment, so Hassia felt confident in contracting with the company for the new project.
System overhaul
The solution Krones came up with went far beyond just a retool of the storage area. It also involved a complete redesign of the facility's work flow and included a new high-bay warehouse, a new case-picking area, and software that runs in tandem with the company's existing ERP system to coordinate the activity. It also incorporated a new truck loading area, with docks that would allow trucks to back in for rear loading. The latter move was a response to increasing requests from Hassia's customers to load trucks from the rear rather than the side, as is more commonly done in Europe.
Designed to maximize storage density, the high-bay automated warehouse features storage lanes capable of holding 39,000 pallets in a footprint of only 8,600 square meters (92,500 square feet). The system is eight levels high and consists of four aisles. But unlike traditional automated storage and retrieval systems (AS/RS), where cranes operate the entire height of the aisles, the system designed by Krones stacks four cranes within the eight levels of each aisle. Each crane serves just two levels and runs the length of the aisle, for a total of 16 cranes overall. The use of the additional cranes allows for faster input and retrieval from the system than could be achieved in a traditional AS/RS.
To minimize disruption to operations—several sections of the warehouse had to be demolished to make way for the high-bay addition—the project was conducted in four phases, beginning in the fall of 2008 and completed in April 2009. About 80 percent of product was diverted temporarily to Rosbach during construction, while the remaining 20 percent was processed within the sections of the warehouse that were still intact.
"The [project required] a lot of coordination between everyone involved, as we could not shut down the warehouse operations completely," says Marhold.
Smooth flow
Today, beverages bottled at the nearby plant are placed on pallets and transported via monorail to the warehouse. Once they arrive, a lift raises them to a pallet conveyor for transport to the AS/RS. Additional lifts hoist the pallets to transfer stations served by one of the cranes. The crane then moves front to back down the aisle until it comes to a channel. Unlike conventional AS/RS racks, which are one pallet deep, these channels hold 10 pallets apiece.
A transfer shuttle attached to the crane next moves beneath the load and lifts it off the crane carrier. It then travels down the desired channel perpendicular to the aisle until it reaches the last available space, where it deposits the pallet. The transfer shuttle then returns to the crane. Typically, only one SKU resides in each lane to avoid the need to move pallets to get to a trapped SKU.
The crane then either collects another inbound load or gathers a pallet needed to fill orders. In total, the system handles 350 pallets an hour—typically, 250 an hour from the nearby production plant and another 100 or so that arrive by truck from other production facilities.
Products that will ship as full pallets are brought to the lifts and lowered to pallet conveyors for transport to outbound dispatch areas. Pallets needed to replenish case picking are sent to the new picking area designed by Krones. The picking area consists of three lanes, each serviced by a shuttle crane. Each crane can serve two levels of racking, running between the two rows of racks.
Most products are placed into the pick faces on the bottom levels of the lanes (there are six pick faces in total). Each lane has gravity conveyor to move items to the front of the rack for easy picking. Fast-moving products designated for reserve storage are deposited in the top layer of the rack by the shuttle crane. When a pick slot below empties out, the crane moves a pallet from the top level to the bottom level to replenish that slot.
At any given time, five to 10 associates are working in the picking area, selecting cases according to preprinted labels. They place the cases onto mixed-SKU pallets maneuvered with pallet jacks. As each pallet is completed, it is taken to a drop-off point for the conveyor system.
The pallet is next transported to either the side-loading dispatch area or the newly built rear loading area, although on occasion, goods slated for later transport may be returned to the AS/RS for temporary storage. In the side loading area, pallets are diverted to pickup lanes, where they await loading onto a truck. Pallets are retrieved as needed by lift truck drivers, who load them into trucks according to instructions displayed on a diagram on their vehicle-mounted computers.
Clear direction
As for the results of the project, the retrofit has allowed Hassia to achieve its objective of consolidating products from both Bad Vilbel and Rosbach into the new AS/RS. Coincidentally, the company was also able to close the production facility in Rosbach and instead pipe the water from the Rosbach spring to the Bad Vilbel production plant.
Labor has also been reduced, and productivity is up. Customer service has also improved. A truck can pull into the dock, drop off its load of returnable bottles, pick up a new load, and be on its way within 45 minutes.
"We achieved our goals, including the speed of loading and reliability to [meet] our customers' needs," says Marhold. "It was a very tight relationship working together. Krones had very smart ideas that they brought in, and we also had ideas. It was a very interactive approach. We would never have met the timeline we had without that coordination."
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."