The end of the great recession marked the beginning of a slowly unwinding recovery for most of the world's economies and industries. By and large, we have seen increased volumes of cargo carried by most transportation modes in most regions. However, the recession has created a systematic, short-term shift in demand for one mode: airfreight. While the airfreight market will continue to be dominated by the relationship between supply and demand over the short term, the outlook for the industry will also be influenced by the changing footprints of manufacturing and retail consumption in developing markets.
Over the past year, rate volatility has increased in the airfreight market. This was driven in part by the push to fulfill demand for the latest, must-have electronic devices during headline-generating releases. Overall, however, capacity has grown at a faster rate than has cargo; despite gyrations in the spot markets, shippers find themselves paying rates today that are similar to those they were paying a year ago. It appears this trend will hold true for the next year. One reason is that more capacity is expected to come online to serve the passenger segment (and with it, more belly space). Another is that fuel prices—one of airlines' biggest costs—are projected to remain flat for the foreseeable future, steadied by technological advances in the extraction of oil and changes in demand for petroleum products.
Article Figures
[Figure 1] Infrastructure quality in manufacturing growth marketsEnlarge this image
Demand pressures for airfreight services are likely to remain dormant coming out of the recession. The dominant attitude among global shippers now is that airfreight is a premium service in a low-cost world. A mode shift to ocean freight continues even as ocean experienced dramatic rate fluctuations during 2012. While this is not a new phenomenon during economic downturns, the typical return of volumes from ocean to air that we would normally expect to see in a recovering economy has not yet materialized.
Some degree of rate volatility is likely to continue as spiky demand patterns persist in the consumer electronics industry, but shippers can expect that rates will continue at historically low levels, with some event-driven capacity issues on a limited number of lanes.
Some rays of hope
Despite this depressed outlook, the future does offer some rays of hope for the industry. New manufacturing capacity is pivoting away from China and its extensive multimodal transportation infrastructures. According to the 2013 Global Manufacturing Competitiveness Index, a report issued by the Council on Competitiveness, China remains the top base for manufacturing. However, India and Brazil are becoming more desirable manufacturing locations. New players like Indonesia and Vietnam are also becoming manufacturing hubs capable of providing low labor costs.
These shifts will benefit airfreight over the short term, as these countries are well behind China in the development of critical transportation infrastructure like roads and ports. As shown in Figure 1, the World Economic Forum measures the road, rail, and port quality in these up-and-coming manufacturing locations as being well below those in China. However, the airport infrastructure in these new manufacturing bases is more closely aligned, in terms of quality and capacity, with the air infrastructure in China. Infrastructural inefficiencies with respect to rail, roads, and seaports in these new manufacturing bases mean that ocean transportation does not offer the same value proposition relative to air service there as it does in China.
On the consumer front, China, Brazil, and India remain very strong opportunity markets for global retailers, according to A.T. Kearney's 2013 Global Retail Development Index report, while Chile and Uruguay join Brazil as the top three prospects primed for immediate expansion.
Growth in retail consumption in South America and Asia benefits all players in the air transportation industry. More balanced cargo flows should improve yields and utilization, bolstering profitability. The industry's underlying cost structure will also be lower, creating an opportunity to deliver lower rates for shippers even on head-haul lanes.
Over the short term, the forces that have guided the industry post-recession will continue to prevail. With additional new capacity, depressed demand, and a lack of inflationary pressure from fuel costs, airfreight pricing should remain volatile but trending at historical lows for the near term. Manufacturing and retail trends will change the dynamic in the industry over the long haul and will contribute to a more stable, less costly global air cargo network, to the benefit of both shippers and service providers.
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.”