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 2002, the average hourly wage for a warehouse and distribution center worker in the U.S. was $10.31, according to Atlanta-based staffing firm ProLogistix, which on a weekly basis employs about 12,000 people in industrial facilities nationwide. By 2012, that same hourly wage had risen, on average, by a measly 15 cents. During the same period, the Consumer Price Index (CPI), the federal government's broad measure of the direction of consumer prices, had climbed about 22 percent.
Since the 2012 peak shipping season, however, wage growth has accelerated. Today, the typical warehouse worker pulls down $11.46 an hour, according to ProLogistix data. The increases are expected to keep coming at least for the next 18 months to two years, plateauing about the time the next recession kicks in, according to Brian Devine, the firm's president.
That's because even with the gains over the past four years, average wages have risen only 11 percent in total since 2002, while the CPI has increased 31 percent during that time, according to ProLogistix data. It will take another $2-an-hour increase, to levels approaching $13.50 an hour, for wages to be considered competitive and finally pull workers even with 2002 levels on an inflation-adjusted basis, Devine said.
Wages in that range should also attract a large number of new entrants, and end whatever labor-market tightness currently exists, Devine said. (ProLogistix could not quantify the extent of a labor shortage.) In addition, a worker earning wages in that range would be less prone to jump ship to a rival for more money, Devine added.
But the prospect of labor stability will come at a price for warehouse owners, operators, and associated executives, Devine said. For example, the $1-per-hour wage increase since 2012 has increased the compensation costs—wages, benefits, and government compliance expenses like FICA and unemployment tax—by $500,000 for a 200-employee facility, according to Devine's calculations. Consultancy CBRE Inc. said in a March report that a $1 increase in average hourly wages amounts to a $1 million rise in total annual labor spend for a 500-employee facility.
Labor is not the only warehouse line item that's going up. The cost of buying lift trucks will rise by 3.4 percent a year over the next three years, according to recent data from consultancy IBISWorld Inc. Pallet jack costs will increase 3.7 percent a year over that time, the firm projects. The cost of a wood pallet will increase by 2.9 percent a year over the next three years, while the cost of services like building and maintaining heating and air conditioning systems will climb 2.7 percent a year during the same period, IBISWorld said.
The good news for warehouse executives is that costs are rising in concert with increased demand. According to real estate advisory firm Colliers International, which represents mostly "big box" owners and tenants, the U.S. industrial-vacancy rate declined in the first quarter to 6.3 percent, the 22nd consecutive quarter of declines and the lowest vacancy rate in more than a decade. More than 63.8 million square feet was absorbed in the first quarter, a 9.6-percent increase from year-earlier levels and a signal that demand continues to outpace supply, Colliers said.
Frederick Regnery, a principal at the firm, said he sees nothing in to alter the trend in the near term. Corporate users are now approving large projects that had been postponed during the downturn, Regnery said in an e-mail. Supply has been constrained for years by disciplined developers who didn't overbuild leading into the recession, Regnery said. As a result, the market has yet to catch up to the virtual absence of speculative, or "spec," projects that got the residential and commercial real estate markets in trouble nearly a decade ago, he added.
Perhaps most profound is what Regnery called a "structural shift" in the way consumers purchase products, and the manner in which companies fulfill and distribute them. The phenomenon of e-commerce is "creating demand for new types of modern DC facilities."
"This is the most landlord-favorable market in my career," he said.
The massive fulfillment centers being developed for, and occupied by, e-tailers, traditional retailers, and distributors are driving up costs ranging from hourly labor to equipment and technology to a multifold increase in the number of parking spaces to accommodate a bigger workforce.
Demand for workers will rise as fulfillment moves away from building pallet-sized shipments that move in a business-to-business network to the more labor-intensive work of handling individual items, known as "eaches," which are picked, packed, and shipped to a residence, Devine said.
Online merchants should consider seven key factors about American consumers in order to optimize their sales and operations this holiday season, according to a report from DHL eCommerce.
First, many of the most powerful sales platforms are marketplaces. With nearly universal appeal, 99% of U.S. shoppers buy from marketplaces, ranked in popularity from Amazon (92%) to Walmart (68%), eBay (47%), Temu (32%), Etsy (28%), and Shein (21%).
Second, they use them often, with 61% of American shoppers buying online at least once a week. Among the most popular items are online clothing and footwear (63%), followed by consumer electronics (33%) and health supplements (30%).
Third, delivery is a crucial aspect of making the sale. Fully 94% of U.S. shoppers say delivery options influence where they shop online, and 45% of consumers abandon their baskets if their preferred delivery option is not offered.
That finding meshes with another report released this week, as a white paper from FedEx Corp. and Morning Consult said that 75% of consumers prioritize free shipping over fast shipping. Over half of those surveyed (57%) prioritize free shipping when making an online purchase, even more than finding the best prices (54%). In fact, 81% of shoppers are willing to increase their spending to meet a retailer’s free shipping threshold, FedEx said.
In additional findings from DHL, the Weston, Florida-based company found:
43% of Americans have an online shopping subscription, with pet food subscriptions being particularly popular (44% compared to 25% globally). Social Media Influence:
61% of shoppers use social media for shopping inspiration, and 26% have made a purchase directly on a social platform.
37% of Americans buy from online retailers in other countries, with 70% doing so at least once a month. Of the 49% of Americans who buy from abroad, most shop from China (64%), followed by the U.K. (29%), France (23%), Canada (15%), and Germany (13%).
While 58% of shoppers say sustainability is important, they are not necessarily willing to pay more for sustainable delivery options.
Schneider says its FreightPower platform now offers owner-operators significantly more access to Schneider’s range of freight options. That can help drivers to generate revenue and strengthen their business through: increased access to freight, high drop and hook rates of over 95% of loads, and a trip planning feature that calculates road miles.
“Collaborating with owner-operators is an important component in the success of our business and the reliable service we can provide customers, which is why the network has grown tremendously in the last 25 years,” Schneider Senior Vice President and General Manager of Truckload and Mexico John Bozec said in a release. "We want to invest in tools that support owner-operators in running and growing their businesses. With Schneider FreightPower, they gain access to better load management, increasing their productivity and revenue potential.”
Economic activity in the logistics industry continued its expansion streak in October, growing for the 11th straight month and reaching its highest level in two years, according to the most recent Logistics Managers’ Index report (LMI), released this week.
The LMI registered 58.9, up from 58.6 in September, and continued a run of moderate growth that began late in 2023. The LMI is a monthly measure of business activity across warehousing and transportation markets. A reading above 50 indicates expansion, and a reading below 50 indicates contraction.
October’s reading showed the fastest rate of expansion in the overall index since September of 2022, when the index hit 61.4. The results show that the industry is continuing its steady recovery from the volatility and sluggish freight market conditions that plagued the sector just after the Covid-19 pandemic, according to the LMI researchers.
“The big takeaway is that we’re continuing the slow, steady recovery,” said LMI researcher Zac Rogers, associate professor of supply chain management at Colorado State University. “I think, ultimately, it’s better to have the slow and steady recovery because it is more sustainable.”
All eight of the LMI’s indices grew during the month, with the Transportation Prices index showing the most growth, at nearly 6 points higher than September, reflecting increased activity across transportation markets. Transportation capacity expanded slightly during the month, remaining just above the 50-point threshold. Rogers said more capacity will enter the market if prices continue to rise, citing idle capacity across the market due to overbuilding during the pandemic years.
“Normally we don’t have this much slack in the market,” he said. “We overbuilt in 2021, so there’s more slack available to soak up this additional demand.”
The LMI is a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
The port worker strike that began yesterday on Canada’s west coast could cost that country $765 million a day in lost trade, according to the ALPS Marine analysis by Russell Group, a British data and analytics company.
Specifically, the labor strike at the ports of Vancouver, Prince Rupert, and Fraser-Surrey will hurt the commodities of furniture, metal products, meat products, aluminum, and clothing. But since the strike action is focused on stopping containers and general cargo, it will not slow operations in grain vessels or cruise ships, the firm said.
“The Canadian port strike is a microcosm of many of the issues that are impacting Western economies today; protection against automation, better work-life balance, and a cost-of-living crisis,” Russell Group Managing Director Suki Basi said in a release. “Taken together, these pressures are creating a cocktail of connected risk for countries, business, individuals and entire sectors such as marine insurance, which help to mitigate cargo exposures.”
The strike is also sending ripples through neighboring U.S. ports, which are hustling to absorb the diverted cargo, according to David Kamran, assistant vice president for Moody’s Ratings.
“The recurrence of strikes at Canadian seaports is positive for U.S. ports that may gain cargo throughput, depending on the strike duration,” Kamran said in a statement. “The current dispute at Vancouver is another example of the resistance of port unions to automation and the social risk involved with implementing these technologies. Persistent disruption in Canadian port access would strengthen the competitive position of US West Coast ports over the medium-term, as shippers seek to diversify cargo away from unreliable gateways.”
The strike is also affected rail movements, according to ocean cargo carrier Maersk. CN has stopped all international intermodal shipments bound for the west coast ports of Prince Rupert, Robbank, Centerm, Vanterm, and Fraser Surrey Docks. And CPKC has stopped acceptance of all export loads and pre-billed empties destined for Vancouver ports.
Connected with the turmoil, Maersk has suspended its import and export carrier demurrage and detention clock for most affected operations. The ultimate duration of the strike is unknown, but the situation is “rapidly evolving” as talks continue between the Longshore Workers Union (ILWU 514) and the British Columbia Maritime Employers Association (BCMEA), Maersk said.
Terms of the acquisition were not disclosed, but Mode Global said it will now assume Jillamy's comprehensive logistics and freight management solutions, while Jillamy's warehousing, packaging and fulfillment services remain unchanged. Under the agreement, Mode Global will gain more than 200 employees and add facilities in Pennsylvania, Arizona, Florida, Texas, Illinois, South Carolina, Maryland, and Ontario to its existing national footprint.
Chalfont, Pennsylvania-based Jillamy calls itself a 3PL provider with expertise in international freight, intermodal, less than truckload (LTL), consolidation, over the road truckload, partials, expedited, and air freight.
"We are excited to welcome the Jillamy freight team into the Mode Global family," Lance Malesh, Mode’s president and CEO, said in a release. "This acquisition represents a significant step forward in our growth strategy and aligns perfectly with Mode's strategic vision to expand our footprint, ensuring we remain at the forefront of the logistics industry. Joining forces with Jillamy enhances our service portfolio and provides our clients with more comprehensive and efficient logistics solutions."