An earlier peak for container shipments is expected, as shippers nervous about the potential for labor trouble at East and Gulf Coast ports this fall are putting in orders earlier, one carrier executive said. And in an indication of brands’ eagerness to expand their B2B partnerships, Nike is walking back a DTC shift begun three years ago. This is certainly cheaper for Nike from a fulfillment perspective. Here’s more on those stories and others making news in logistics and supply chain.
The CEO of German ocean freight giant Hapag-Lloyd told CNBC that he expects the peak season for loading up in advance of Q4 to come earlier this year, with inventories depleted and volumes picking up after the Chinese New Year. Rolf Habben Jansen, who heads up the world’s fifth largest ocean carrier, said he expects much of the volume from retailers to come in in the June-August window. This will be mainly due to shippers wanting to get ahead of any disruptions related to the Sept. 30 expiration of a contract covering dockworkers at 36 East Coast and Gulf ports.
Like the West Coast ports last year, union heads are promising workers will walk off if a new master agreement is not in place. Many indicators are pointing to container volume pickup from Asia, seen as hopefully the beginning of the end of a two-plus-year-old freight recession. For fiscal 2023, Hapag-Lloyd reported revenue of $19.4 billion, a decline of 46.7% over 2022, with EBIT of $2.7 billion, an 85% drop from $18.5 billion in the prior year. It was a rough comp, though, considering a massive 2022 for freight in general. Container volume for Hapag-Lloyd was relatively flat at 11.9 million TEU, but lower rates caused the huge ding in EBIT.
Sporting apparel giant Nike is continuing to reverse course on its well-documented strategy of pulling back on B2B and cutting out retail partners to focus much more heavily on DTC sales. On an earnings call last week, CEO John Donahoe said the company is “making some important adjustments,” including looking once again to wholesale partnerships for growth.
“While Nike Direct will continue to play a critical role, we must lean in with our wholesale partners to elevate our brand and grow the total marketplace,” Donahoe told analysts and investors. “And this is exactly what we're doing.” This shift is reflected in the Q3 numbers, as Nike’s direct business was flat, while wholesale revenue increased 3%, up 5% in North America. In the year-ago quarter, wholesale also outperformed direct in North America, up 32% vs. 23%. Signaling the change on its last earnings call in December, Nike said cutting ties with 50% of its wholesale partners had negatively impacted inventory management.
The board of California’s Occupational Safety and Health Administration (Cal/OSHA) has approved a safety regulation aimed at protecting warehouse workers from excessive heat. Summertime temperatures inside facilities have been a primary concern raised by groups looking to unionize warehouse workers, primarily (but not exclusively) at Amazon. California passed legislation in 2016 calling for the creation of draft standards on indoor heat.
The proposed regulations would cover not only warehouses but also schools and kitchens. They call for the addition of cooling devices, providing access to water, designating cooling-off break areas when temperatures hit a certain threshold, and checking for signs of heat illness. While not called out by name in the Cal/OSHA regulation, Amazon said in a statement that its “heat safety protocols often exceed industry standards, and it provides air conditioning in all of its fulfillment centers and air hubs.”
Pandion, a parcel delivery startup founded in 2020 by the creator of Amazon Air, has raised $41.5 million to grow its network, including adding new technology offerings, expanding its geographic reach, and increasing delivery speed for customers like Saks Fifth Avenue. Founder Scott Ruffin, who also worked on Walmart’s e-commerce transportation team, has combined a technology platform and a network of 500,000 last-mile drivers to purpose-build a parcel network for residential delivery.
The company claims coverage of 80% of U.S. homes and the capacity to deliver millions of packages. Along with the funding, Pandion announced a new crop of executives from Amazon, Walmart, C.H. Robinson, and other major stops. The company has sortation centers in Philadelphia, Dallas, Los Angeles, Chicago, and Atlanta, with more to come, and leverages machine learning to drive delivery optimization.
Chinese fast-fashion giant Shein is taking a page from U.S. retailers like Gap and American Eagle Outfitters who have outsourced fulfillment and distribution services. According to the Wall Street Journal, Shein plans to roll out what its chairman calls “supply chain as a service.”
The plan calls for letting brands and designers use Shein’s infrastructure and technology to test out smaller runs of new fashions to see how they perform, much as it has done to great success. Shein ships about 5,000 metric tons of apparel goods per day, according to Cargo Facts Consulting. Shein and its main Chinese competitor Temu together ship about 600,000 packages to the U.S. each day, according to a report from Congress.
Amazon and logistics giant Maersk have both announced expansions in Mexico, but the jury remains out on just how much nearshoring is actually taking hold there to drive business.
Maersk (Maersk) has opened a 323,000-square-foot warehouse near Tijuana to target cross-border trade. Maersk will offer storage, distribution and transportation services. Companies using the facility can take advantage of a Mexican program that offers tariff exemption for goods imported for manufacturing and then exported, much like Foreign Trade Zones in the U.S.
Amazon, meanwhile, is opening fulfillment centers in Monterrey and Guadalajara, while expanding its delivery hub network in Mexico to 27 locations. But poor infrastructure, a depressed economy, and concerns over drug gangs have significantly reduced the size of the expected nearshoring wave.
Uncertainty about the outcome of contract talks between dockworkers and port authorities along the East and Gulf coasts is borne out in a volume shift. An executive with Kuehne + Nagel said the company is seeing “a double-digit shift” from cargo moving from East to West Coast ports, due to concerns over labor as well as Red Sea and Panama Canal disruptions.
If you’re taking in cargo on the West Coast, or plan to, ShipBots is perfectly positioned to meet your warehousing and logistics needs. With facilities located in the Los Angeles area, ShipBots has ready access to the busy ports nearby, while providing state-of-the-art fulfillment and transportation services. A national network provides fast delivery times throughout the continental U.S., plus returns management, cross-border eCommerce and more. Contact ShipBots today to learn more.
