As port officials, carriers, and the government sort out the short- and long-term fixes for the Baltimore bridge collapse and port closure, shippers are looking to their 3PLs to help them readjust to an era of what seems like continual disruption. And in a nod to the economic reality of escalating returns costs, retail giant Walmart is passing some of that onto its 3P marketplace sellers in the form of higher rates. Here’s more in brief on those and other top news stories in supply chain and logistics.
What kind of supply chain impact is being felt from the March 26 collapse of the Francis Scott Key Bridge in Baltimore? And what will it be long term? According to the Department of Transportation’s FLOW program, a public-private supply chain data initiative, there are no immediate bottlenecks anticipated at ports in Savannah and New York/New Jersey, where containers bound for Baltimore have been diverted. DOT met with shippers, port operators, ocean carriers, railroads, trucking companies, and other FLOW stakeholders to review data and discuss diversion strategy.
Long term, experts are predicting the impact will be more severe. Concerns included a cascading effect on global supply chains, especially in the lead-up to the holiday peak. There’s also the threat of a dockworker strike at East and Gulf Coast ports this fall, which the Baltimore situation could exacerbate. For now, one expert said container traffic is being diverted to the West Coast – where volumes have already been growing – then shipped by rail and truck to the East Coast, increasing costs and timelines.
According to analysis from S&P Global Market Intelligence, MSC, Maersk, and Zim are the three ocean carrier lines most affected by supply chain disruptions caused by the Baltimore bridge collapse. The three carriers collectively accounted for nearly three-quarters of container traffic in the port in the twelve-month period ending in February. Not surprisingly, auto supply chains are the hardest hit, as Baltimore is the top port for auto and truck importing.
A year after the pandemic was officially declared dead, shippers are looking to 3PL partners for a number of things, according to the president of Penske Logistics. These include ways to de-risk the supply chain for business continuity, make network adjustments to deal with sourcing realities, and better visibility and intelligence into supply chain performance.
Shippers are also of course looking to make their supply chains as cost-effective as possible. “Covid came with extreme cost increases for everyone,” Penske president Jeff Jackson told DC Velocity. “Shippers are [now] in a cost-scrutinizing mode with 3PLs, trying to sift through what was really inflationary that needs to be sustained, and what was more of a margin grab opportunity that they now want to claw back.”
Walmart announced to third-party sellers on its marketplace that it raised rates for return shipping on seller-fulfilled orders as of March 20, the first time it has done so since 2022. While not publicly disclosing the rate or the increase, Walmart told Supply Chain Dive the bump was “nominal.”
The company advised sellers they could either pay the return shipping fee or add a “keep it” rule, where the shopper is refunded the purchase price upon initiating the return online or in-store. Rates for outbound shipping remain unchanged. “Keep it” rules are growing in popularity as a way for sellers to avoid the cost of returns on inexpensive, low-margin items. According to an annual survey by the National Retail Federation and Apriss Retail, an estimated $743 billion in merchandise was returned in 2023, representing 14.5% of sales. The figure for eCommerce orders was 17.6%, and 10.02% for physical stores.
The latest Purchasing Managers Index (PMI) from S&P Global showed that in March, manufacturers were receiving goods from suppliers faster, the second consecutive month to show improvement. This was good news as it showed that supply chain disruptions caused by traffic diversion away from the Red Sea were lessening. It also helped dampen inflation caused by pressure on supply costs, S&P reported.
There was divergence regionally, however. Supplier delivery times in the U.S., Japan and Asia remained unchanged, while improving in Europe but falling off in the UK. Both shipping and labor costs trended down in March, with energy and raw materials costs remaining below long-term averages.
Both wholesale and retail inventories increased 0.5% sequentially in February, adjusted for seasonal variations and trading-day differences, according to a monthly release from the Census Bureau. While wholesale inventories were down 1.6% from February 2023, retail inventories increased a healthy 5.6% year-over-year, a positive economic sign.
The lower wholesale stock levels indicate the ongoing shift from a “just in case” to a “just in time” inventory model, based on lower demand levels. During the pandemic-fueled eCommerce boom of 2020 and 2021, massive ordering was the norm, due to concerns about supply chain disruptions, leading to huge overstock levels. That has since been whittled down significantly, and the leaner “just in time” model has taken root.
Reminiscent of something out of the Will Smith thriller “I Robot” (hey, the Isaac Asimov-penned scenario is only 11 years away), Gartner analyst Dwight Klappich predicts that by 2027, 10% of intralogistics robots will be humanoid-type bots capable of walking, lifting and moving stock. Klappich said these human-like robots will reach the same “level of adaptability” as human workers, and be more cost-effective and reliable for the same types of tasks in the face of labor shortfalls. In a Gartner survey of supply chain managers released late in 2023, 51% of respondents said robots are “highly disruptive technologies,” with 60% calling them “highly important to their businesses.”
“Buckle up” seems to be growing in popularity as a 2024 buzz phrase, and with good reason. In a high-stakes election year sure to superheat, with the threat of escalating war and heightened geopolitical tensions, supply chain shocks are a fairly safe bet. In this atmosphere, shippers are looking to logistics partners such as 3PLs to help them mitigate the risks as much as possible.
To that end, ShipBots is a tech-forward logistics company with deep experience in eCommerce fulfillment that can help shippers meet their performance goals in an increasingly challenging environment. Our nationwide eCommerce network provides fast order processing and delivery, and a full suite of value-added services. With a state-of-the-art facility close to the busy ports of Los Angeles/Long Beach, ShipBots are experts in LA fulfillment. Clients have seen a 97% increase in average order value, and an 18% decrease in cart abandonment. Get in touch for a free quote today!
