Like a fresh breath of spring air, a number of reports are pointing northward, evidence of positive activity in logistics and supply chain, as well as global trade and cross-border eCommerce. The Logistics Managers Index (LMI) has seen a few months of results pointing to expansion, while B2B activity on the Tradeshift platform for Q1 was at the highest level in five quarters.
The full restoration of the Port of Baltimore brought sighs of relief from officials there, and Amazon is beefing up its West Coast logistics presence as a hedge against potential East Coast port labor issues this fall. Here’s our latest news digest from the intersection of commerce, logistics, and supply chains, and what it means.
Increases in warehouse utilization and transportation prices were among the drivers of an increase in the LMI for May. The diffusion index hit 55.6, up 2.7 points from 52.9 in April; any reading above 50 indicates expansion. Transportation prices were up 13.7 points to 57.8, the highest level since June 2022, while warehouse utilization hit 64, an 8.9-point increase.
“We are not quite ready to call an end to the freight recession that has been ongoing for the past two years,” said Zachary Rogers, associate professor of supply chain management at Colorado State University in a release. “But the past few readings suggest that the logistics industry is moving back toward growth, which would be a positive sign for the overall economy.”
Researchers attributed May’s growth to confident retailers looking to expand their capabilities and demand. The index is maintained by academics from Florida Atlantic University, Arizona State University, Colorado State University, Rutgers and the University of Nevada at Reno, and surveys director-level supply chain leaders.
Global trade appears to be on the upswing, according to a Q1 index report from Tradeshift, which tracks transactions on its platform. While total B2B activity in cross-border eCommerce was three points below the expected range, it was the highest level in five quarters. Order volumes were one point above the expected range, following a Q4 surge. China’s economic recovery grew two points above the expected level, with the U.S. increasing by one point; domestic orders were seven points higher than the expected level. The UK was the only geography tracked where trade activity fell backward.
The United Nations Conference on Trade and Development (UNCTAD) is also predicting a rebound in international trade this year, after a 3% contraction in 2023.
With order volumes rising, invoice payment times for suppliers are decreasing from a Q3 2022 peak, Tradeshift reported, although payments are still taking 6% longer than before the pandemic.
“We’ve been deliberately cautious about making any predictions over the timing of a global trade
recovery, especially given numerous false dawns amidst four years of intense macroeconomic
volatility,” said Tradeshift CEO James Stirk. “So whisper it for now, but the outlook appears to be getting a little brighter.”
After dialing back an eCommerce warehouse network that was over-built in response to the pandemic demand explosion, Amazon is back in growth mode, various media outlets are reporting.
Amazon signed at least six U.S. leases for warehouses larger than 1 million square feet in the first five months of 2024, its total for all of 2023, according to an analysis by commercial real estate platform CoStar. It’s also significant that all six facilities are in the western U.S., three in California and three in Phoenix. CoStar speculates this is to hedge against labor concerns on the East Coast, where a dockworker’s union contract expires Sept. 30; a West Coast agreement is in place through 2028.
Amazon has been on a logistics buildout for several years to insource fulfillment for its massive eCommerce marketplace and has dabbled in offering logistics as a service. Last year it completed a regionalization plan that improved network efficiency.
Over half of consumers surveyed in the U.S. and UK said they had made a cross-border eCommerce purchase in the past year, with the propensity skewing toward younger shoppers. These were two of the findings in a new report from customer experience management firm Nosto. The top reason for doing so: finding lower-priced goods than at home, cited by 41% of respondents.
Fifty-two percent of the 2,000 consumers surveyed said they had made a cross-border eCommerce purchase in the past year, while another 23% said they had considered it. Just over two-thirds of those aged 35-44 said they bought from an overseas e-tailer; the figure dropped to 64% for 25-34-year-olds, 61% for 16-24-year-olds, 53% for 45-55-year-olds, and 37% for those over 55. Fashion and apparel was the top purchase category, cited by 70% of those who made a purchase, followed by sporting goods and hobbies (57%) and health and beauty (54%).
China is looking to build warehouses in other countries in an effort to help more native companies sell their goods abroad, Reuters reported. The Chinese commerce ministry this week released draft rules on warehouse construction and expansion of cross-border eCommerce.
While major companies like fast-fashion giants Shein and Temu, and marketplaces like Alibaba, JD.com, and Tencent have made overseas markets an engine for growth, the new initiative is aimed at providing opportunities for those mainly selling domestically. A sluggish Chinese economy, hampered by a real estate collapse, has eCommerce firms looking to other markets as a lifeline.
This has opened a new avenue for growth for some firms previously focused on domestic consumption, which remains muted by a macroeconomic slowdown, prolonged property crisis, and income insecurity.
With the main channel of the Port of Baltimore reopened as of June 10, officials there are looking for the return of traffic that was diverted to other ports after the March collapse of the Francis Scott Key Bridge when the Singapore-flagged cargo ship Dali struck one of its moorings.
The Dali was refloated on May 20, and teams worked feverishly to clear the last of the major bridge debris that had kept the main federal channel closed. Five major ocean carriers – Maersk, MSC, Hapag-Lloyd, ONE, and OOCL — have restarted full operations at the Port of Baltimore, or signaled it through bookings, according to Supply Chain Dive.
The reopening of a lesser channel in April saw traffic resume at the Port of Baltimore. Before that, volume was diverted to ports in New York and Norfolk, Virginia, officials from Geodis told Supply Chain Dive.
Like a surfer who paddles out and turns to catch that incoming wave, businesses need to be in a position to take advantage of a market turn before it arrives. The positive signs noted above are hopeful signs that the latter half of 2024 will witness an uptick in commerce activity.
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