MARKET BRIEF | December 2020
Insights and stories for the logistics, shipping, and transportation industry.
WEATHER ALERT: WINTER STORM GAIL
This major winter storm has hit the Mid-Atlantic and Northeast U.S. Find out the latest on this storm from the National Weather Service.
This major winter storm has hit the Mid-Atlantic and Northeast U.S. Find out the latest on this storm from the National Weather Service.
MAJOR AIRLINES PREPARED FOR VACCINE TRANSPORT
With the global distribution of COVID-19 vaccines upon us, the “Big 3” U.S. airlines are at the ready. Other than the sheer scale and urgency involved, the biggest challenge is maintaining extremely cold temperatures throughout the transport process. American Airlines, United Airlines, and Delta Airlines have all acknowledged their plans involve measures such as carrying 15,000 of dry ice per flight, additions of cargo-only flights, arranging for refrigerated storage space, and procuring temperature-controlled trailers and shipping containers. One such container is the Opticooler, which can hold 4-5 pallets. Opticooler, which is made by DoKaSch Temperature Solutions, does not need dry ice to operate, and can run on a battery backup. Vaccines produced by Pfizer and Moderna are already rolling out to the public.
Airlines and carriers are assembling
resources for expedited vaccine delivery.
resources for expedited vaccine delivery.
With the global distribution of COVID-19 vaccines upon us, the “Big 3” U.S. airlines are at the ready. Other than the sheer scale and urgency involved, the biggest challenge is maintaining extremely cold temperatures throughout the transport process. American Airlines, United Airlines, and Delta Airlines have all acknowledged their plans involve measures such as carrying 15,000 of dry ice per flight, additions of cargo-only flights, arranging for refrigerated storage space, and procuring temperature-controlled trailers and shipping containers. One such container is the Opticooler, which can hold 4-5 pallets. Opticooler, which is made by DoKaSch Temperature Solutions, does not need dry ice to operate, and can run on a battery backup. Vaccines produced by Pfizer and Moderna are already rolling out to the public.
I.A.T.A. GUIDELINES FOR VACCINE DISTRIBUTION
The International Air Transport Association (IATA) has published their guidance on the effective global delivery of COVID-19 vaccines. Important factors in their “Guidance for Vaccine and Pharmaceutical Logistics and Distribution” document include:
The International Air Transport Association (IATA) has published their guidance on the effective global delivery of COVID-19 vaccines. Important factors in their “Guidance for Vaccine and Pharmaceutical Logistics and Distribution” document include:
- Availability of temperature-controlled storage facilities, and contingency plans when facilities are unavailable.
- Defining roles and responsibilities of parties involved.
- Industry preparedness, which includes aspects of:
- Capacity and connectivity
- Facilities and infrastructure
- Border management
- Security
BLACK FRIDAY REVIEW
The figures from this year’s “Black Friday” retail period are in. Overall, they represent great news for online retailers, which saw a 23% increase over last year. However, brick and mortar stores experienced a 52% decrease in foot traffic. Here are some details from that week:
Sales figures courtesy of Sensormatic, Adobe Analytics, and Salesforce.
Online retail continues its strong
momentum in 2020.
momentum in 2020.
The figures from this year’s “Black Friday” retail period are in. Overall, they represent great news for online retailers, which saw a 23% increase over last year. However, brick and mortar stores experienced a 52% decrease in foot traffic. Here are some details from that week:
- Total online spending totaled $12.8 billion.
- Thanksgiving Day drew $5.1 billion in online sales.
- Black Friday drew $9 billion in online sales.
- Mobile accounted for 46.5% of sales on Thanksgiving, and 40% on Black Friday.
- 52% of shoppers utilized curbside and in-store pickup.
- Retailers that offered curbside pickup had a 31% higher website conversion (successful transaction) rate.
Sales figures courtesy of Sensormatic, Adobe Analytics, and Salesforce.
OCEAN SHIPPING UPDATES
There is still massive congestion at the ports in Los Angeles and Long Beach. Actually, it’s unprecedented! It has gotten to the point where employers are strictly rationing longshore labor. Since there is no space at the terminals, import containers remain on the docks. Over-capacity import distribution centers are a significant contributor to the cause of this, which also leads to truckers unable to dray this cargo from the terminals to warehouses throughout Southern California. A record number of imports from Asia in August and September — adding to these woes — are even causing LA/LB terminals to pass on extra revenue opportunities by rejecting vessel calls from non-contracted carriers. More to come. (Literally.)
There is still massive congestion at the ports in Los Angeles and Long Beach. Actually, it’s unprecedented! It has gotten to the point where employers are strictly rationing longshore labor. Since there is no space at the terminals, import containers remain on the docks. Over-capacity import distribution centers are a significant contributor to the cause of this, which also leads to truckers unable to dray this cargo from the terminals to warehouses throughout Southern California. A record number of imports from Asia in August and September — adding to these woes — are even causing LA/LB terminals to pass on extra revenue opportunities by rejecting vessel calls from non-contracted carriers. More to come. (Literally.)
FULL TRUCKLOAD MARKET CAPACITY
While demand levels remain higher than normal, capacity will continue to be the driving factor for full truckload (FTL) pricing throughout Q4, and into Q1 of next year. This tight market is compounded due to drivers coming off the road for the holidays, and only accepting local runs. We are currently in the middle of a driver shortage with 100,000 less Commercial Driver’s Licenses issued in 2020 and an estimated 73,200 fewer drivers on the road. 27 states closed their State Driver License agencies at some point this year. 40% of schools closed down at some point during the year, and 20% are currently closed right now. Schools are also graduating smaller classes due to social distancing measures. Trucking companies are currently offering sign-on bonuses as well as higher per-mile pay to attract current Commercial Driver’s License holders.
While demand levels remain higher than normal, capacity will continue to be the driving factor for full truckload (FTL) pricing throughout Q4, and into Q1 of next year. This tight market is compounded due to drivers coming off the road for the holidays, and only accepting local runs. We are currently in the middle of a driver shortage with 100,000 less Commercial Driver’s Licenses issued in 2020 and an estimated 73,200 fewer drivers on the road. 27 states closed their State Driver License agencies at some point this year. 40% of schools closed down at some point during the year, and 20% are currently closed right now. Schools are also graduating smaller classes due to social distancing measures. Trucking companies are currently offering sign-on bonuses as well as higher per-mile pay to attract current Commercial Driver’s License holders.
LOGISTICS BY THE NUMBERS
The Logistics Managers’ Index (LMI) is a monthly report put out by Colorado State University, Rutgers University, and other schools, and it monitors various metrics within the industry. Any figure above 50% represents growth, and anything below that level represents contraction. The most recent report features some notable numbers:
The Logistics Managers’ Index (LMI) is a monthly report put out by Colorado State University, Rutgers University, and other schools, and it monitors various metrics within the industry. Any figure above 50% represents growth, and anything below that level represents contraction. The most recent report features some notable numbers:
- The overall index was 70.8% (a 1% decrease, but still very high).
- Inventory levels were at 69.6% (a 7.6% decrease).
- Warehouse capacity was at 38% (a 2.2% decrease, and the lowest it has been since reporting began in 2016).
- Transportation prices were at 85.8% (a 0.3% increase).
SUPPLY CHAIN JOB BOOST
With the afore-mentioned boom in online retail sales, comes the need for increased support staff to manage the supply chain. Between March 2 and May 11, grocery and warehouse managers, forklift operators, order selectors, IT specialists, and general warehouse labor saw a big jump in demand. This job growth is expected to grow throughout the decade.
Jobs in the supply chain sector are
on the rise.
on the rise.
With the afore-mentioned boom in online retail sales, comes the need for increased support staff to manage the supply chain. Between March 2 and May 11, grocery and warehouse managers, forklift operators, order selectors, IT specialists, and general warehouse labor saw a big jump in demand. This job growth is expected to grow throughout the decade.
SUPPLY CHAIN IMPORTANT FACTORS
By now, you may have noticed a theme (although unintended) of this newsletter being that the logistics industry is experiencing chaotic times. In order to best mitigate issues that can arise from this chaos, it’s important to meticulously manage these aspects:
By now, you may have noticed a theme (although unintended) of this newsletter being that the logistics industry is experiencing chaotic times. In order to best mitigate issues that can arise from this chaos, it’s important to meticulously manage these aspects:
- Cargo Location – This is not always as easy as it sounds, even in our increasingly connected world. Ensure your carrier is equipped with some sort of GPS tracking system that you can access for real-time insight.
- Cargo Integrity – In some cases, there are external factors that could damage your product, such as light, shifting in transport, and excessive levels carbon dioxide and humidity. If temperature control is needed, it’s better to invest in the right solution than dealing with the alternative. Having sensors continuously monitoring your cargo — and reporting that data — can help measure all these conditions, and help with contingency planning.
- Trusted Carriers – It’s important to find a carrier/3PL you trust. Someone that will treat your cargo as if it was their own. Relationships like that are hard to come by, but we may know someone. 😉
- Expanded Analytics – As with any other aspect of business, it’s not sufficient to just examine high-level numbers. Drill down into your analytics to find insights that audit root causes for supply chain disruptions, inefficient routes, where money is being wasted, and ultimately evaluating metrics that dictate whether your 3PLs are underperforming.
For more information on Aeronet Worldwide, visit Aeronet.com.
