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.
An industry that's been steadily losing altitude for nearly 20 years is likely to struggle for a while longer, according
to a group of international air cargo executives.
Cargo heads surveyed earlier this month by the International Air Transport Association (IATA), the global airline trade group,
said they don't expect profits to improve over the next 12 months due to a cluster of challenges that will continue to plague the
business. Global trade demand remains subpar, and cautious businesses appear willing to trade down in transit times by choosing a
slower transportation mode in return for lower rates relative to air. About 42 percent of the cargo leaders expect volumes to grow
over the next 12 months, the lowest proportion since April 2009, the depths of the "Great Recession." About 48 percent expect no
change, and 9 percent forecast a decline in volumes.
The projections, if accurate, will prolong what has been a difficult 20-year cycle for air cargo. After strong growth in the
1980s and through much of the 1990s, the industry hit a wall when the dot-com implosion of 2000-2002 sparked a global recession
and curbed demand for high-value information technology (IT) equipment that would typically be transported by air. In the ensuing
years, cargo demand, while somewhat volatile, has remained mostly flat. This mirrors a slowing in global economic growth that
made many shippers think twice about booking non-urgent shipments with premium-priced air services.
In the 1980s and 1990s, air cargo was marketed as a means of compressing order and inventory cycle times by getting goods to
market faster than if they moved via land or sea. However, air transport's speed advantages have been diluted by the industry's
inability to adopt digital processes that expedite the input and exchange of data between airlines and forwarders. This delays the
release of airfreighted goods and lends credence to the old maxim that the typical airfreight shipment actually spends 80 percent
of its time on the ground.
In the most recent cycle, the problem of slack demand has been amplified by a rise in global aircraft capacity, which has the
knock-on effect of expanding the amount of lower-hold space where much of the world's air cargo is carried. The oversupply has
driven down cargo yields—the revenue generated by flying one ton of cargo one mile—to levels not seen since the second
half of 2009, according to the survey. About 90 percent of respondents said they expect yields to be unchanged or to fall over the
next 12 months.
The tenor of the respondents' comments should not come as a surprise to IATA, which already forecast a 6 percent year-over-year
drop in yields in 2016.
Ironically, the addition of aircraft capacity that is impairing cargo profitability is in response to a bullish outlook for
passenger business, which accounts for the lion's share of an airline's revenue. About 68 percent of airline CFO respondents
expect passenger volumes to rise over the next 12 months as terrorism-related disruptions fade and falling fares help stimulate
demand.
Capacity is also being propped up by the dramatic drop in jet fuel prices, which has allowed airlines to keep more fuel-guzzling
planes flying when they might otherwise have been grounded if prices were higher. In June, the spot, or noncontract, price for a
gallon of jet fuel stood at $1.38, according to the U.S. Energy Information Administration (EIA), a unit of the Department of
Energy. In June 2014, a gallon on the spot market was priced at more than $2.88.
Jet fuel prices have recovered from the multi-year low of 93 cents a gallon set in January. Still, most respondents to the IATA
survey expect operating costs to remain unchanged or fall further for the next 12 months. This is due in part to the carriers'
practice of fuel "hedging," where they place bets on commodity markets to protect themselves against an expected price move in
the product.
Low fuel prices depress cargo yields by reducing the revenue that is captured by jet fuel surcharges. According to estimates by
Chicago-based aircraft manufacturer Boeing Co., fuel surcharges affect 40 percent of world air cargo prices.
In the latest edition of its biennial world air cargo forecast, which was published in 2014, Boeing said it expected global
traffic to climb by 4.7 percent a year through 2034, spurred in part by increasing consumer and business demand in far-flung
markets away from traditional trade lanes. However, those markets today offer more potential than they do results, and any
growth there does not offset weakness in the traditional air cargo trade lanes.
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 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."