James Cooke is a principal analyst with Nucleus Research in Boston, covering supply chain planning software. He was previously the editor of CSCMP?s Supply Chain Quarterly and a staff writer for DC Velocity.
Over the past few decades, logistics professionals have overwhelmingly turned to software when they wanted to give their warehouse and transportation operations a boost. But what types of software tools are they using? Are they sticking to such traditional applications as warehouse management systems (WMS), transportation management systems (TMS), and labor management systems (LMS)? Or are they venturing into new territory, embracing the powerful new tools developed for big data analysis?
To get a better sense of software's role in distribution today, DC Velocity conducted a survey of its readers earlier this year on their use of supply chain applications. Two hundred and thirty readers took part in on our research, which centered on the types of software deployed in distribution centers. When it came to the type of business they worked for, survey respondents covered the gamut, with 32 percent hailing from wholesale distribution, 29 percent from manufacturing, and 14 percent from the third-party logistics side. Another 11 percent worked in retail and 6 percent in transportation.
So what applications are readers using? Not surprisingly, warehouse management software (WMS) topped the list, with 65 percent of respondents using this type of solution. For the most part, these users are opting for the traditional approach to WMS deployment, installing the software on the company servers; only 8 percent of respondents deployed their WMS in the cloud.
The respondents were no newcomers to the WMS world. Of those survey participants using a WMS in their DCs, 59 percent had been using that type of software for more than 10 years. Another 25 percent had used a WMS between five and nine years, while 16 percent had used the software for one to four years. Only one respondent said his/her company had been using a WMS for less than a year.
Exhibit 1
What functions do readers use WMS for?
Overseeing warehouse inventory
91%
Directing receiving, putaway, and picking
82%
Cycle counting
78%
Label printing
73%
Managing business rules for task/inventory customization
46%
Serving as an interface with automated equipment
44%
Analytics
41%
Managing warehouse labor
36%
Error handling
35%
Dynamic slotting
28%
Dock scheduling
27%
When asked what they used their WMS for, 91 percent said it was to oversee warehouse inventory—no surprise, given that this was what the application was originally designed to do. Eighty-two percent said their WMS directed receiving, putaway, and picking, another predictable response. What was interesting was the extent to which logistics managers are starting to use their WMS for more than basic activities. Forty-one percent said that the application did analytics, enabling the company to glean insights into ways to improve throughput. (See Exhibit 1.)
The survey responses provided a strong indication that many readers are operating automated warehouses. When asked if their WMS worked in conjunction with a warehouse control system, 48 percent said yes. Warehouse control systems serve as a type of "information bridge" between a WMS and the facility's automated material handling equipment, transmitting instructions from the WMS to the automated devices.
STICKING TO THE TMS KNITTING
Despite the widespread availability of transportation management systems (including low-cost cloud-based versions), only 38 percent of respondents reported that they were currently using this type of software. As was the case with WMS, most of those deploying TMS were long-time users. Thirty-eight percent had used a TMS for more than 10 years. Twenty-six percent had used a TMS between five and nine years, and 31 percent had used this type of software for one to four years. Only 5 percent had used a TMS for less than a year.
When asked what they used their TMS for, 84 percent of respondents said it was to schedule domestic shipments, which is precisely what the software was originally designed to do. Another 79 percent said they used it for tendering loads to carriers, while 57 percent used it for freight bill audit/payment and 46 percent for tracking carrier performance. Only 31 percent used their TMS to schedule international shipments. Although some industry pundits predicted that shippers would use their transportation management systems to help carriers comply with the new truck driver hours-of-service rule, only 33 percent indicated they planned to use the software for that purpose.
Despite talk of more companies using software solutions to improve workforce efficiency, the survey found that only 39 percent of respondents are using labor management systems—either on a standalone basis or as part of their WMS. The results also showed that just 12 percent of respondents had deployed a yard management system, which is used to coordinate the movement of trailers and trucks at a DC site.
GROWING INTEREST IN BIG DATA
In the past year, there's been considerable talk about the use of big data analysis to fine-tune supply chain operations. As the name implies, big data analysis involves sifting through millions of bits and bytes of information for new insights into their business practices. Typically, the information comes from diverse sources—anything from telematics and sensors on carriers' equipment to radio-frequency identification (RFID) tags affixed to cases or items to social media chatter. The idea is that by analyzing these disparate sets of information, the software might detect hidden connections or patterns that could ultimately be parlayed into supply chain operational improvements.
Exhibit 2
Why companies use big data analysis ...
To better understand our supply chain
13%
To recommend solutions to problems
17%
To examine hypothetical situations
3%
All of the above
68%
Exhibit 3
... and why they don't
No perceived value
40%
No time for additional work
19%
Lack of IT support
14%
Too expensive
7%
Other
19%
Despite all the hype, only 43 percent of survey respondents said they were engaging in big data analysis right now. When asked about their reasons for doing so, respondents indicated it was to better understand their supply chain, examine hypothetical situations, and to obtain recommendations for solving operational problems. (See Exhibit 2.)
The flip side, of course, is that 57 percent of respondents are not engaging in big data analysis at this time. When asked why, 40 percent said they perceived no value from it. Another 19 percent said they didn't have the time for additional work, and 14 percent said they lacked IT support, generally seen as critical for this undertaking. Another 7 percent said this type of analysis was too expensive. (See Exhibit 3.)
Yet despite the relatively slow uptake, many experts still believe that supply chain and logistics operations are good candidates for big data analysis. Based on reader responses, it appears software vendors may have to develop more low-cost, intuition-based products and then demonstrate their value before logistics managers will be persuaded to take the plunge.
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."