Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
Warehouses across the U.S. are filled to the rafters, and another wave of imports is coming soon as retailers stock up for the holiday peak season. That puts most companies in a pinch as they look for ways to deal with the extra inventory.
Conventional wisdom says that retailers can simply move their goods from expensive coastal distribution centers to cheaper rural locations or ship them directly to brick-and-mortar stores, “forward positioning” the inventory closer to consumers. But nothing comes for free in logistics; in practice, every option comes with its own costs and challenges.
For example, warehouse space is hard to find anywhere right now, thanks to soaring demand during the pandemic rebound. And even if you can find space, good luck paying for the truck to get your goods there; freight costs are higher than ever, thanks to rising fuel costs and tight capacity.
The conflict is real. A survey released in June by the shipping and mailing services provider Pitney Bowes showed that big retailers are now offering widespread discounts to shoppers as a way to draw down their inventory. “This summer will present both new challenges and new opportunities for brands,” Vijay Ramachandran, VP market strategy, global e-commerce at Pitney Bowes, said in a release announcing the survey’s findings. “Overstocks and markdowns will impact profitability but also create new openings to sell, as a large portion of consumers seek out deals—further aided by the return of [Amazon’s] Prime Day and other mid-year promotions. At the same time, our survey found a growing number of consumers cutting back on retail spending altogether as they react to record inflation and gas prices, and rising interest rates.”
Caught in a vise between rising stocks and slowing consumption, companies have to be more precise than ever in balancing the costs and benefits of carrying inventory, says Steve Denton, CEO of Ware2Go, a third-party fulfillment services provider that is owned by UPS Inc.
Waiting out the storm is not an attractive option, either. “The cost of storage is higher than [it was] a couple years ago because of the lack of warehouse space,” Denton says. “That means the margin evaporates if you carry [inventory] too long.”
FINDING NEW MARKETS
As for how companies can clear out some of that overstock, Denton urges them to explore new sales channels beyond the classic options of direct to store (DTS) and direct to consumer (DTC). For many merchants, an easy option is to liquidate their goods by selling them on a secondary market—such as Overstock.com or T.J.Maxx—or to sell them to the giant online retailer Amazon.
However, Denton points out that even those options carry some costs, such as the extra labeling compliance costs required of “Amazon 1P”—or first-party—partners (meaning companies that sell their products directly to Amazon, which then sells them to consumers). Choosing the “Amazon 3P”—or third-party—option could cost even more, since only the digital sale itself occurs on the Amazon marketplace in that model, leaving merchants to take care of order fulfillment and shipping themselves.
As companies fight their way through the thicket of rising inventory management costs, many are turning to a middle ground between the in-store and online models, using their stores as small DCs. That’s where software analytics has become an important tool for balancing the strengths and weaknesses of the purely warehouse and retail sites, says Amy Tennent, senior director for product management at Manhattan Associates, a supply chain software developer.
As Tennent explains, the “simple” decision to forward-deploy goods to a retail store actually represents a potential minefield. In theory, stockpiling goods at stores should shrink a retailer’s shipping costs by enabling practices like “buy online/pick up in store” (BOPIS) or minimizing shipping distances for items sent to consumers, she says. In pursuit of that goal, some companies create “mini fulfillment hubs” within some of their retail sites, then task their store employees with picking and packing orders for home delivery.
However, that strategy may have drawbacks because managers at each location must decide how much store labor to devote to e-commerce fulfillment work, as opposed to serving customers in the showroom, says Tennent. Make the wrong choice, and parcel shipments could be backlogged for days, or impatient customers could walk out of the store. “You need to identify specific labor assigned to the job, otherwise your store team will have to [fulfill online orders] while also serving customers,” Tennent says. “If they get only two or three orders a shift, then store associates can do it just fine. But if it’s 50, 100, or 150 [orders], then they need the right tools in place: pick-path optimization, batch picking, prioritizing orders, sorting and staging the products after picking, and a packing station.”
Generally speaking, the retailers most likely to benefit from forward-deployment strategies are those that are able to assign committed resources to the task, Tennent says. Ideally, that would mean deploying a dedicated labor force for every shift, using cloud-based software like supply chain management and warehouse management systems to balance all the variables.
JUMPING IN WITH BOTH FEET
When it comes to inventory-balancing technology, retailers have other tools at their disposal as well. Another type of software for the job is an order management system (OMS), a critical tool for coping with overstocks in any location, says Carson Krieg, industry solutions + strategy, last mile, at project44, a provider of freight data and supply chain visibility solutions.
Typically, the best results come when a retailer has both OMS software and a limited number of stock-keeping units (SKUs), he says. That combination allows companies to choose the most efficient option. Three common choices are: 1) to deploy inventory to multiple microfulfillment centers (MFCs) that are dedicated to shipping orders; 2) to rent short-term shared warehouse space through a marketplace like Flexe,Flowspace, or Stord; or 3) to use their own brick-and-mortar locations in the local market and implement a ship-from-store strategy.
But of course, not every company is able to take full advantage of those options; many lack the necessary software or have an extensive product catalog. “If the retailer has a [large] number of SKUs, it may not benefit [it] to implement an MFC strategy due to the storage costs in local markets. It will depend on the maturity of [the retailers’] pick, pack, and ship processes and their cost to stock additional forward inventory,” Krieg says.
When it comes to clearing out their overstocked warehouses and reining in their storage costs, companies today have more choices than ever before. Among other options, they can ease the pressure by turning to liquidation websites, Amazon partnerships, shared warehouse space, and hybrid retail/DC facilities.
Choosing among those options may not be easy, but with the right logistics partners and finely tuned software, warehouse leaders can realistically assess the costs and benefits of every choice. No option offers a silver bullet, but experts say that strategies abound for managing the nation’s inventory glut.
Autonomous forklift maker Cyngn is deploying its DriveMod Tugger model at COATS Company, the largest full-line wheel service equipment manufacturer in North America, the companies said today.
By delivering the self-driving tuggers to COATS’ 150,000+ square foot manufacturing facility in La Vergne, Tennessee, Cyngn said it would enable COATS to enhance efficiency by automating the delivery of wheel service components from its production lines.
“Cyngn’s self-driving tugger was the perfect solution to support our strategy of advancing automation and incorporating scalable technology seamlessly into our operations,” Steve Bergmeyer, Continuous Improvement and Quality Manager at COATS, said in a release. “With its high load capacity, we can concentrate on increasing our ability to manage heavier components and bulk orders, driving greater efficiency, reducing costs, and accelerating delivery timelines.”
Terms of the deal were not disclosed, but it follows another deployment of DriveMod Tuggers with electric automaker Rivian earlier this year.
Manufacturing and logistics workers are raising a red flag over workplace quality issues according to industry research released this week.
A comparative study of more than 4,000 workers from the United States, the United Kingdom, and Australia found that manufacturing and logistics workers say they have seen colleagues reduce the quality of their work and not follow processes in the workplace over the past year, with rates exceeding the overall average by 11% and 8%, respectively.
The study—the Resilience Nation report—was commissioned by UK-based regulatory and compliance software company Ideagen, and it polled workers in industries such as energy, aviation, healthcare, and financial services. The results “explore the major threats and macroeconomic factors affecting people today, providing perspectives on resilience across global landscapes,” according to the authors.
According to the study, 41% of manufacturing and logistics workers said they’d witnessed their peers hiding mistakes, and 45% said they’ve observed coworkers cutting corners due to apathy—9% above the average. The results also showed that workers are seeing colleagues take safety risks: More than a third of respondents said they’ve seen people putting themselves in physical danger at work.
The authors said growing pressure inside and outside of the workplace are to blame for the lack of diligence and resiliency on the job. Internally, workers say they are under pressure to deliver more despite reduced capacity. Among the external pressures, respondents cited the rising cost of living as the biggest problem (39%), closely followed by inflation rates, supply chain challenges, and energy prices.
“People are being asked to deliver more at work when their resilience is being challenged by economic and political headwinds,” Ideagen’s CEO Ben Dorks said in a statement announcing the findings. “Ultimately, this is having a determinantal impact on business productivity, workplace health and safety, and the quality of work produced, as well as further reducing the resilience of the nation at large.”
Respondents said they believe technology will eventually alleviate some of the stress occurring in manufacturing and logistics, however.
“People are optimistic that emerging tech and AI will ultimately lighten the load, but they’re not yet feeling the benefits,” Dorks added. “It’s a gap that now, more than ever, business leaders must look to close and support their workforce to ensure their staff remain safe and compliance needs are met across the business.”
The “2024 Year in Review” report lists the various transportation delays, freight volume restrictions, and infrastructure repair costs of a long string of events. Those disruptions include labor strikes at Canadian ports and postal sites, the U.S. East and Gulf coast port strike; hurricanes Helene, Francine, and Milton; the Francis Scott key Bridge collapse in Baltimore Harbor; the CrowdStrike cyber attack; and Red Sea missile attacks on passing cargo ships.
“While 2024 was characterized by frequent and overlapping disruptions that exposed many supply chain vulnerabilities, it was also a year of resilience,” the Project44 report said. “From labor strikes and natural disasters to geopolitical tensions, each event served as a critical learning opportunity, underscoring the necessity for robust contingency planning, effective labor relations, and durable infrastructure. As supply chains continue to evolve, the lessons learned this past year highlight the increased importance of proactive measures and collaborative efforts. These strategies are essential to fostering stability and adaptability in a world where unpredictability is becoming the norm.”
In addition to tallying the supply chain impact of those events, the report also made four broad predictions for trends in 2025 that may affect logistics operations. In Project44’s analysis, they include:
More technology and automation will be introduced into supply chains, particularly ports. This will help make operations more efficient but also increase the risk of cybersecurity attacks and service interruptions due to glitches and bugs. This could also add tensions among the labor pool and unions, who do not want jobs to be replaced with automation.
The new administration in the United States introduces a lot of uncertainty, with talks of major tariffs for numerous countries as well as talks of US freight getting preferential treatment through the Panama Canal. If these things do come to fruition, expect to see shifts in global trade patterns and sourcing.
Natural disasters will continue to become more frequent and more severe, as exhibited by the wildfires in Los Angeles and the winter storms throughout the southern states in the U.S. As a result, expect companies to invest more heavily in sustainability to mitigate climate change.
The peace treaty announced on Wednesday between Isael and Hamas in the Middle East could support increased freight volumes returning to the Suez Canal as political crisis in the area are resolved.
The French transportation visibility provider Shippeo today said it has raised $30 million in financial backing, saying the money will support its accelerated expansion across North America and APAC, while driving enhancements to its “Real-Time Transportation Visibility Platform” product.
The funding round was led by Woven Capital, Toyota’s growth fund, with participation from existing investors: Battery Ventures, Partech, NGP Capital, Bpifrance Digital Venture, LFX Venture Partners, Shift4Good and Yamaha Motor Ventures. With this round, Shippeo’s total funding exceeds $140 million.
Shippeo says it offers real-time shipment tracking across all transport modes, helping companies create sustainable, resilient supply chains. Its platform enables users to reduce logistics-related carbon emissions by making informed trade-offs between modes and carriers based on carbon footprint data.
"Global supply chains are facing unprecedented complexity, and real-time transport visibility is essential for building resilience” Prashant Bothra, Principal at Woven Capital, who is joining the Shippeo board, said in a release. “Shippeo’s platform empowers businesses to proactively address disruptions by transforming fragmented operations into streamlined, data-driven processes across all transport modes, offering precise tracking and predictive ETAs at scale—capabilities that would be resource-intensive to develop in-house. We are excited to support Shippeo’s journey to accelerate digitization while enhancing cost efficiency, planning accuracy, and customer experience across the supply chain.”
Donald Trump has been clear that he plans to hit the ground running after his inauguration on January 20, launching ambitious plans that could have significant repercussions for global supply chains.
As Mark Baxa, CSCMP president and CEO, says in the executive forward to the white paper, the incoming Trump Administration and a majority Republican congress are “poised to reshape trade policies, regulatory frameworks, and the very fabric of how we approach global commerce.”
The paper is written by import/export expert Thomas Cook, managing director for Blue Tiger International, a U.S.-based supply chain management consulting company that focuses on international trade. Cook is the former CEO of American River International in New York and Apex Global Logistics Supply Chain Operation in Los Angeles and has written 19 books on global trade.
In the paper, Cook, of course, takes a close look at tariff implications and new trade deals, emphasizing that Trump will seek revisions that will favor U.S. businesses and encourage manufacturing to return to the U.S. The paper, however, also looks beyond global trade to addresses topics such as Trump’s tougher stance on immigration and the possibility of mass deportations, greater support of Israel in the Middle East, proposals for increased energy production and mining, and intent to end the war in the Ukraine.
In general, Cook believes that many of the administration’s new policies will be beneficial to the overall economy. He does warn, however, that some policies will be disruptive and add risk and cost to global supply chains.
In light of those risks and possible disruptions, Cook’s paper offers 14 recommendations. Some of which include:
Create a team responsible for studying the changes Trump will introduce when he takes office;
Attend trade shows and make connections with vendors, suppliers, and service providers who can help you navigate those changes;
Consider becoming C-TPAT (Customs-Trade Partnership Against Terrorism) certified to help mitigate potential import/export issues;
Adopt a risk management mindset and shift from focusing on lowest cost to best value for your spend;
Increase collaboration with internal and external partners;
Expect warehousing costs to rise in the short term as companies look to bring in foreign-made goods ahead of tariffs;
Expect greater scrutiny from U.S. Customs and Border Patrol of origin statements for imports in recognition of attempts by some Chinese manufacturers to evade U.S. import policies;
Reduce dependency on China for sourcing; and
Consider manufacturing and/or sourcing in the United States.
Cook advises readers to expect a loosening up of regulations and a reduction in government under Trump. He warns that while some world leaders will look to work with Trump, others will take more of a defiant stance. As a result, companies should expect to see retaliatory tariffs and duties on exports.
Cook concludes by offering advice to the incoming administration, including being sensitive to the effect retaliatory tariffs can have on American exports, working on federal debt reduction, and considering promoting free trade zones. He also proposes an ambitious water works program through the Army Corps of Engineers.