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.
The maritime shipping giants are acting to steer their valuable ships away from recent flurries of missiles fired from the shores of the Red Sea near the Bab al-Mandeb Strait, which threaten the cargo, the vessels, and the mariners, and have already led to quickly rising insurance prices for ships sailing in that area.
While military vessels from the U.S. and other nations continue to knock many drones and missiles out of the skies, a number of missiles have found their targets in recent days, sparking fires on some ships and knocking containers overboard. The violence continues to escalate as a side effect of Israel’s war with Hamas in the Gaza Strip region of Palestine.
One example of that violence was a strike on Friday on the MSC vessel “Palatium III” and another on the Hapag-Lloyd vessel “Al Jasrah.” Hapag-Lloyd cited that incident in its decision to alter its sailing routes. “Fortunately, the crew was not injured, and the vessel could continue its journey. As we see it today, the situation around the Suez Canal and the Red Sea is unsafe and the risks for our crews onboard are unacceptable,” Hapag-Lloyd said in a statement to shippers. “This is why we have had to take the decision to avoid the Suez Canal and the Red Sea with immediate effect, and instead route our ships around the Cape of Good Hope. We will reassess the situation in the Red Sea regularly and reinstate our services through the Suez Canal when the situation in the area is deemed safe and secure for our ships and crews and your cargo onboard.”
More broadly, the events raise the risk of further disruption to global supply chains, since the suspension of vessel routes through the Red Sea affects over 50% of the weekly container shipping capacity on routes between the Far East and Europe, forcing a diversion around the Cape of Good Hope and adding about 10 days to journeys, according to a report from Daniel Harlid, Senior Credit Officer, Moody’s Investor Service.
With close to 20,000 vessels passing through the Suez Canal each year, a suspension of trips would impact economies throughout the European Union (EU), since that region imported close to 20% of its goods by ocean transport from Asia in 2022, Harlid said. Most of that trade passed through the Suez Canal, and kinks in that supply chain could soon affect both retail and general manufacturers, which rely on that source for products such as rubber and plastics (42%), iron/steel/ferroalloy products (32%), and automobile industry products (28%).
In search of alternate routes, ships are also struggling to pass through the Panama Canal, said Polly Mitchell-Guthrie, VP, Industry Outreach & Thought Leadership at Kinaxis. That other canal has sharply restricted the number of size of vessels cutting between North and South American each day in reaction to a historic drought that is starving the famous locks of sufficient water to operate.
“With no clarity on whether the risk of Houthi rebel attacks will be contained in days, weeks or months, the Red Sea route may no longer be a viable option, an outcome that will cause a huge headache for shippers,” Mitchell-Guthrie said in a email statement. “As these disruptions from climate change and geopolitics play havoc with the world’s most critical trade chokepoints, higher prices won’t be far behind, much to the chagrin of central bankers and consumers alike, just as inflation seemed to be cooling.”
Another impact of the violence could be an increase in out of stock items following the winter holidays, according to an analysis by supply chain visibility platform provider Project44. That’s because of the dense traffic through the canal, with some 40 vessels near the strait and over 100 vessels in the wider area as of December 16, the company said. “The additional lead time these shipments will take was not scheduled as retailers were planning their inventory, and after the peak shopping season through the holidays, it is possible that inventories will be depleted. It is important to note that this should not impact holiday shopping and would more likely be noticeable in February,” project44 said.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.