More importers are trying to bypass ocean shipping backlogs by shifting to air, but they’re encountering capacity constraints, congestion, and delays there too.
Contributing Editor Toby Gooley is a writer and editor specializing in supply chain, logistics, and material handling, and a lecturer at MIT's Center for Transportation & Logistics. She previously was Senior Editor at DC VELOCITY and Editor of DCV's sister publication, CSCMP's Supply Chain Quarterly. Prior to joining AGiLE Business Media in 2007, she spent 20 years at Logistics Management magazine as Managing Editor and Senior Editor covering international trade and transportation. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.
With inventories low and ocean shipping backlogs delaying imports of consumer goods for weeks or even months, many U.S. importers are shifting from ocean to air. Normally, that would be an effective, if expensive, strategy, but as the COVID-19 pandemic grinds on, it has exacerbated some of the very problems shippers were trying to avoid: capacity constraints, congestion, and delayed deliveries.
In October 2021, international shipments (measured in cargo tonne-kilometers) were up 10.4% compared to October 2019, according to the International Air Transport Association (IATA). (IATA made its comparisons to pre-pandemic traffic.) Capacity was 8% lower than in October 2019, still problematic but a big improvement over the precipitous drop seen in early 2020. Capacity constraints are “slowly resolving” as increased passenger travel brings more belly capacity for cargo online, IATA said, but Director General Willie Walsh warned in early December that if governments’ reactions to the omicron variant dampen travel demand, “capacity issues will become more acute.”
For North American air cargo shippers in particular the situation remains very challenging as a confluence of issues slows shipments and raises costs, said Brandon Fried, executive director of the Airforwarders Association, at the Coalition of New England Companies for Trade (CONECT) Trade & Transportation Conference in Newport, R.I. Only about 25–30% of trans-Pacific cargo capacity has been restored so far, keeping rates high, he said. Charters for 747 freighter aircraft that had been around $750,000 reportedly jumped as high as $2 million but are starting to show signs of drifting downward, Fried said.
Air carriers are doing what they can to maintain or increase capacity. According to Fried, approximately 120,000 passenger aircraft flights have flown freight-only since the pandemic began. At Chicago’s O’Hare International Airport some freighters from China land, unload, and take off again, returning the next day with more consumer goods. To reduce congestion and keep cargo moving quickly, more airlines are landing at secondary airports like Hartford, Conn., Pittsburgh, Pa., and Rickenbacker International outside Columbus, Ohio—so many, he said, that Rickenbacker, which caters to air cargo, had to cap the number of flights it accepts.
Moreover, labor shortages related to the pandemic and to the time-consuming, difficult task of qualifying for and receiving security credentials are causing flight cancellations and slowing cargo processing. Inbound shipments often do not move out of cargo facilities quickly, which creates congestion; one conference attendee said it has been taking seven to 14 days to get international cargo out of John F. Kennedy International Airport in New York. A lack of investment in cargo infrastructure at major airports has exacerbated those bottlenecks, Fried added, noting that hours-long lines at some airports are chasing truckers away.
As if the pandemic-related difficulties weren’t enough, in 2021 the International Civil Aviation Organization (ICAO), a United Nations agency that provides technical expertise and recommends aviation policies for member governments to adopt, eliminated a program that specified security controls for all-cargo aircraft that differed from those for passenger aircraft. Since then, the U.S. Transportation Security Administration (TSA) has required physical screening of all international cargo on freighter aircraft.
“We are getting it done,” but it’s not easy, and Fried’s group as well as other forwarders’ organizations, integrated carriers, airlines, and shippers have been meeting with TSA on ways to expedite screening. One success: TSA is allowing approved third-party K-9 handlers to use dogs to screen for explosives and other contraband. That’s proving helpful, Fried said, but there likely aren’t enough approved, trained dogs and handlers to fully meet screening needs now or in the future. Less successful was TSA’s proposal for “secure packing facilities” that would exempt e-commerce companies that met very stringent security standards from some of the screening requirements. According to Fried, the “bar was set so high” that only one company is trying to implement the standards.
The venture-backed fleet telematics technology provider Platform Science will acquire a suite of “global transportation telematics business units” from supply chain technology provider Trimble Inc., the firms said Sunday.
Trimble's other core transportation business units — Enterprise, Maps, Vusion and Transporeon — are not included in the proposed transaction and will remain part of Trimble's Transportation & Logistics segment, with a continued focus on priority growth areas following completion of the proposed transaction.
Terms of the deal were not disclosed but as part of this agreement, Colorado-based Trimble will become a shareholder in Platform Science's expanded business. Specifically, Trimble will have a 32.5% stake in the newly expanded global Platform Science business and will receive a Platform Science board seat. The company joins C.R. England, Cummins, Daimler Truck, PACCAR, Prologis, RyderVentures, and Schneider as a key strategic investor in Platform Science along with financial investors 8VC, Activant Capital, BDT & MSD Partners, Softbank, and NewRoad Capital Partners.
According to San Diego-based Platform Science, the proposed transaction aims to enhance driver experience, fleet safety, efficiency, and compliance by combining two cutting-edge in-cab commercial vehicle ecosystems, which will give customers access to more applications and offerings.
From Trimble customers’ point of view, they will continue to enjoy the benefits of their Trimble solutions, with the added flexibility of the Virtual Vehicle platform from Platform Science. That means Virtual Vehicle-enabled fleets will receive access to the Virtual Vehicle Marketplace, offering hundreds of new and expanded applications, software, and solution providers focused on innovating and improving drivers' quality of life and fleet performance.
Meanwhile, Platform Science customers will enjoy the added choice of Trimble's remaining portfolio of transportation solutions which will be available on the Virtual Vehicle platform, the partners said.
"We believe combining our global transportation telematics portfolio with Platform Science's will further advance fleet mobility and provide our customers with a broader portfolio of solutions to solve industry problems," Rob Painter, president and CEO of Trimble, said in a release. "Increased collaboration between the new Platform Science business and Trimble's remaining transportation businesses will enhance our ability to provide positive outcomes for our global customers of commercial mapping, transportation management, freight procurement, and visibility solutions. This deal will result in significant synergies along with tremendous opportunities for employees to continue to grow in a more-competitive business."
The acquisition comes just five months after Platform Science raised $125 million in growth capital from some of the biggest names in freight trucking, saying the money would help accelerate innovation in the commercial transportation sector.
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.
Economic activity in the logistics industry expanded in August, though growth slowed slightly from July, according to the most recent Logistics Manager’s Index report (LMI), released this week.
The August LMI registered 56.4, down from July’s reading of 56.6 but consistent with readings over the past four months. The August reading represents nine straight months of growth across the logistics industry.
The LMI is a monthly gauge of economic activity across warehousing, transportation, and logistics markets. An LMI above 50 indicates expansion, and a reading below 50 indicates contraction.
Inventory levels saw a marked change in August, increasing more than six points compared to July and breaking a three-month streak of contraction. The LMI researchers said this suggests that after running inventories down, companies are now building them back up in anticipation of fourth-quarter demand. It also represents a return to more typical growth patterns following the accelerated demand for logistics services during the Covid-19 pandemic and the lows of the recent freight recession.
“This suggests a return to traditional patterns of seasonality that we have not seen since pre-COVID,” the researchers wrote in the monthly LMI report, published Tuesday, adding that the buildup is somewhat tempered by increases in warehousing capacity and transportation capacity.
The LMI report is based on a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
That hiring surge marks a significant jump in relation to the company’s nearly 17,000 current employees across North America, adding 21% more workers.
That increase is necessary because U.S. holiday sales in 2023 increased 3.9% year-over-year as consumer spending grew even amidst uncertain economic times and trends like inflation and consumer price sensitivity. Looking at the coming peak, a similar pattern is projected for this year, with shoppers forecasted to drive a 4.8% increase in holiday retail sales for 2024, Geodis said, citing data from Emarketer.
To attract the extra workforce, Geodis says it will offer competitive wages, peak premium pay incentives, peak and referral bonuses, an expedited payment option, and flexible schedules. And it’s using an AI-powered chatbot named Sophie to serve as a virtual recruiting assistant.
“We acknowledge the immense responsibility we have to our customers to deliver exceptional service every day, and this is especially true during peak season,” Anthony Jordan, GEODIS in Americas Executive Vice President and Chief Operating Officer, said in a release. “Because peak season is the most business-critical sales period of the year for many of our retail clients, expanding our workforce is vital to ensure we have a flexible, dynamic team that can handle anticipated surges in demand.”