After a challenging 2021, retailers will look to reassess their supply chains while juggling workforce and sustainability goals, says industry association exec.
Susan Lacefield has been working for supply chain publications since 1999. Before joining DC VELOCITY, she was an associate editor for Supply Chain Management Review and wrote for Logistics Management magazine. She holds a master's degree in English.
The 2021 holiday peak season was a harrowing one for retailers as they tried to navigate congestion at the ports, transportation capacity constraints, inventory and labor shortages, and rising inflation. Yet, in spite of these challenges, retail finished the year strong. According to Mastercard’s Spending Pulse, holiday sales rose 8.5% year-over-year. Furthermore, analysis from the logistics software company ShipMatrix, indicated that more than 90% of deliveries to residential addresses were on-time this holiday season.
What’s the outlook for the retail supply chain for 2022? Will the challenges of 2021 continue to dog retailers into the new year? According to Jess Dankert, of the Retail Industry Leaders Association (RILA), there are three main trends to watch this upcoming year:
Network reassessment: Don’t be surprised if many retailers start ripping apart their existing supply chains like knitters who have noticed a flaw in their work. The disruptions of the past two years are forcing many retailers to reassess their supply and demand networks, according to Dankert. They will be analyzing whether they have the correct number of facilities in the correct locations, looking at diversifying their suppliers and their transportation providers, and re-examining whether they have the correct balance between just-in-time and just-in-case inventory. To perform these assessments, many companies are looking to advanced analytics to help them with scenario planning and conducting “what-if” style analyses.
Workforce constraints: Like many other industries, retailers have been facing a tight labor market the past couple of years and expect to continue to do so into the new year. Smart companies are looking for workarounds, including implementing more automation in their distribution centers that will help their associates fulfill more orders faster, Dankert said.
Sustainability. In the wake of the United Nations’ Climate Change Conference (COP26) in Glasgow, more and more retailers are issuing climate change and sustainability goals. As a result, expect to see a greater focus on identifying how the supply chain can help companies meet those environmental, social, and corporate governance (ESG) priorities. Additionally, Dankert says she expects that major retailers will be open to sharing their best practices with others.
Relief ahead?
In terms of transportation congestion and capacity constraints, Dankert says she expects to see more capacity come online as the year progresses, particularly in terms of the ocean sector. However, RILA will be keeping a close eye on the upcoming contract negotiations with the International Longshore and Warehouse Union (IWLU), which represents 22,400 dockworkers along the West Coast. The last time the contract was up for negotiation, the affected ports saw disruptions and shipping delays.
In addition to collaborating with retailers, government officials, ports, and other transportation partners to mitigate the effects of disruptions in the near term, RILA is also working on long-term solutions. “We are looking farther down the road to address underlying systematic issue that predate the pandemic and that the pandemic shined a light [on], so that we don’t find ourselves in a perpetual ‘Groundhog Day’ situation where we are constantly reliving the same disruptions. Instead, we want to address some of those underlying challenges.”
These challenges include improving the infrastructure at the ports, data infrastructure, and data standardization. Dankert says she is hopeful that these improvements can be made as part of the Infrastructure Investment and Jobs Act, which was passed in November 2021. “But I think it’s essential that major users of that infrastructure have a role in saying where and how to best spend that investment for maximum impact on freight fluidity,” she said.
RILA’s upcoming supply chain conference, Link2022, in Dallas from Feb. 20–23 will look to help attendees gain a deeper understanding of these issues and facilitate collaboration on solutions to these challenges.
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.”