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.
Economic cycles come and go, but geography is forever. For the city of Detroit, whose cycle has followed the "to hell and back" trajectory, its future as a major North American logistics player could hinge on whether transportation and logistics users view its location on the continent's map as a blessing or a curse.
Detroit sits at the nexus of U.S.-Canada trade, with its proximity to Toronto, considered the gateway to Canadian commerce. It is located near four of the five Great Lakes as well as the U.S. transcontinental railroad system that connects with Great Lakes port traffic. It is home to three major U.S. interstate highways: I-75, I-94, and I-96. Between 1,000 and 1,450 acres of land are located near urban areas ripe for industrial development, a rarity among large metropolises, according to WSP| Parsons Brinckerhoff, a New York-based engineering and professional services company that last year prepared an extensive report for the Michigan Economic Development Corp. outlining Detroit's potential as a logistics center.
As the North American hub of auto production, Detroit has a superb automotive logistics infrastructure backed by the highly skilled employees needed to keep the automotive supply chain humming. The city and the state of Michigan are well positioned to attract high-tech investment as vehicles become embedded with more technological features than ever before, according to Walter Kemmsies, managing director, economist, and chief strategist of the ports practice for Chicago-based real estate and logistics services giant JLL Inc. In an era when cars are becoming computers on chassis, a company like General Motors Corp. will find itself competing as much with Microsoft Corp., the Seattle-based software behemoth, as with rival carmakers, Kemmsies said in a phone interview.
Agriculture is one of Michigan's core industries, owing to the rich coal-black soil that naturally occurs statewide. Building a new logistics complex in Detroit could help support growing U.S., North American, and global demand for foodstuffs, experts said.
In addition, the city's core downtown area is thriving, thanks in part to large investments made by Dan Gilbert, founder of mortgage firm Quicken Loans, and Mike Ilitch, founder of pizza chain Little Caesar's. Both firms are headquartered in downtown Detroit.
The core area's resurgence has, to some degree, spilled over into increased demand for all types of commercial and industrial space. As of the end of the second quarter, warehouse and DC space in metro Detroit had a 93.67-percent occupancy rate, according to CBRE Group Inc., a commercial real estate company. Vacancy rates across various categories are at all-time lows, and the metro area represents a prime market for speculative construction, according to CBRE.
LOCATION, LOCATION, LOCATION
But the obstacles for Detroit are as apparent as its possibilities. Michigan, which appears on the nation's map as a mitten surrounded by water, is a headache for motor carriers who use the Detroit River to traverse the U.S.-Canada border. The 86-year-old Ambassador Bridge, which connects Detroit with Windsor, Ontario, and which last year handled more than $120 billion in NAFTA-related trade, is burdened with 14,000 vehicles a day—about 10,000 of them trucks—squeezed into just four lanes of road. The span, which is owned by industrialist Manuel "Matty" Moroun, who built his fortune providing shipping and logistics services to the auto industry, is the busiest cross-border transport link in North America.
Purolator International Inc., the U.S. arm of Mississauga, Ontario-based transport firm Purolator Inc. and a big user of the cross-border infrastructure, stopped using the bridge years ago, according to John T. Costanzo, president of the U.S. arm. Instead, the unit's drivers use the less-congested Blue Water Bridge, which connects the two countries at Sarnia, Ontario, about 68 miles northwest of Windsor. The relatively light vehicle backlogs at Sarnia outweigh the higher costs and the longer transit times to get there, Costanzo said.
Michigan's far northern location makes it unsuitable for handling the east-west traffic through which most U.S commerce flows, experts said. The state's northern locale and peninsula-like configuration also make it a poor choice for nationwide retail distribution and e-commerce fulfillment, which is optimally handled through massive hubs in more centrally located and landlocked states like Ohio. Cities like Chicago and Columbus, Ohio, both not far from Detroit as the logistics crow flies, have well-established logistics hubs that are situated along east-west shipping routes.
Canada's advanced and efficient infrastructure offers a compelling alternative to Detroit and Michigan. Canada has invested heavily to build a world-class shipping network to support its export-driven economy. U.S. exporters, especially in the Midwest, will often bypass the U.S. to connect with Canada's infrastructure, often through Montreal-based rail powerhouse Canadian National Inc., to get their goods loaded onto vessels for delivery to foreign markets, Kemmsies of JLL said.
Though Detroit lies along CN's line between Chicago and Montreal, the railroad doesn't have a major presence there. By contrast, CSX Corp., the Jacksonville, Fla.-based Eastern railroad, uses Detroit as its hub for all of Michigan. Norfolk, Va.-based Norfolk Southern Corp., CSX's main rival in the East, also relies on the Detroit facility.
Detroit's aging rail intermodal facility is in dire need of updating. However, a joint bid by CSX and the Michigan Department of Transportation to obtain federal grants for modernization and expansion fell short at the U.S. Department of Transportation, even though CSX was willing to pony up half of the project's projected $42.1 million cost.
Then there is the land itself, a good part of which is, in industrial property lingo, "blighted." "There are buildings, but many of them are obsolete," said Joseph G.B. Bryan, a principal consultant of Parsons Brinckerhoff and the report's primary author. Many parts of Detroit were badly neglected as it withered for years on the economic vine. City and state officials will need to erect "contemporary properties" if Detroit is to attract meaningful shipping and logistics investment, Bryan said.
The 197-page report, issued in March 2015, calls for creating a "Trade, Logistics and Industrial District" (TLI) in Southwest Detroit that would be funded by the public and private sectors to the tune of $1.6 billion to $2.2 billion. Government would kickstart the project with an investment of $400 million to $530 million over a six- to eight-year period, according to the report. The state, which commissioned the study, supports its findings. However, Michigan officials have not signed off on the TLI project because it has not received unanimous support, according to people familiar with the matter.
The TLI project would form a three-legged stool for Michigan to compete in today's logistics market, the report said: First, it creates a portfolio of logistics assets aggregated in one area. Second, it sends a message that the state is committed to the task. Lastly, it produces a "springboard for growth" by cultivating what the report called a "targeted cluster" of industries that would benefit from Detroit's location. The project would generate 15,000 to 20,000 long-term jobs in Michigan, 6,000 to 8,000 of those in metro Detroit, according to the report.
A BRIDGE TOO FAR FROM COMPLETION?
At the heart of the project is a transborder bridge named after Gordie Howe, the late hockey legend who spent most of his career with the National Hockey League's Detroit Red Wings. The proposed $2.1 billion span, expected to open around 2020, would initially have six lanes but could be widened to 10 lanes, and perhaps more. The bridge would create a straight shot between Windsor and the proposed logistics cluster, which would be located about one mile west of the Ambassador Bridge in Detroit's rundown Delray neighborhood.
The Howe Bridge is expected to handle 26,500 vehicles a day by 2025, which will ease congestion at the Ambassador Bridge and provide shippers with more transportation options. Significantly, the Canadian government will fund the span's entire construction, while the U.S. will subsequently contribute revenue collected from tolls.
Getting the Howe Bridge up and running on schedule may not be easy. Unsurprisingly, Moroun, the Ambassador Bridge's owner, has been its most vocal opponent. He has sued the governments of Canada and Michigan to stop its construction and has proposed to build a second span of the Ambassador Bridge, which he would also own. Critics have said Moroun's opposition stems from the prospect of lost profits from duty-free gasoline sales at the Ambassador Bridge.
In July, David Duncan, the Canadian official in charge of the project, told a Canadian paper that the span may not open by 2020 because about 30 properties on the U.S. side have yet to be acquired and may prove difficult to buy.
Andrew Doctoroff, special projects adviser to Michigan Gov. Rick Snyder (R) and the governor's point man on the Howe Bridge project, said the span will brighten the outlook for the city's logistics services, but even if the project runs into trouble, it will not alter the course of the broader TLI initiative. The TLI effort is "not dependent on the Gordie Howe Bridge," Doctoroff said in a phone interview.
Bryan of Parsons Brinckerhoff said Detroit and Michigan—which for the purposes of their logistics outlooks are one in the same—will succeed if officials understand what the metro region is capable of, and what it's not. Detroit's strengths lie in supporting distribution from manufacturing operations, not retail distribution, Bryan said. It can be a key player in serving Michigan, its surrounding markets, and the NAFTA trades, he added. But it cannot and will never be a lead actor in nationwide distribution, he said.
Bryan said the TLI project is critical in leveraging the natural assets that Detroit and the state of Michigan could bring to bear on the logistics market. The initiative would "vault Michigan into a trillion-dollar market with 21st century capabilities, with a marquee site in the midst of the state's largest city, and a package of assets that is rare anywhere in the United States," he wrote.
The project won't guarantee that businesses will choose Michigan for their logistics operations, Bryan said. But it makes Michigan "fully competitive in the game, and that is the game changer the state needs," he wrote.
A version of this article appears in our October 2016 print edition under the title "We heard it through the grapevine ... ."
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.”