Shoppers are returning to stores as pandemic restrictions ease and more people have become vaccinated against COVID-19. And while that’s good for brick-and-mortar retailers, logistics experts and online merchants believe the upswing in e-commerce is here to stay.
Citing Adobe Analytics data, The Wall Street Journal reports that e-commerce grew 42% in the U.S. last year reaching a lofty $813 billion in sales. And while e-commerce sales are slightly down from their COVID-lockdown peak from last year, experts are continuing to invest for a more delivery-centric future.
DHL Supply Chain North America president Kraig Foreman tells the WSJ that logistics service providers as well as retailers are investing in new distribution centers and technology as a result of the sustained rise in online shopping.
Expanding distribution networks could also portend increasing complexity on the horizon for logistics — not only in the last mile, but further upstream where operators need to make critical decisions about which partners, carriers, modes and ports they rely on for inbound freight.
The record is not skipping. Even though many pandemic restrictions are easing, it doesn’t mean that the heightened port congestion and limited capacity will loosen up any time soon.
Zooming in on issues at U.S. ports, Transport Topics indicates that supply chain backlogs are likely to continue through the traditional peak season and into next year. And while west coast ports saw record high container volumes in April, current forecasts expect the number of imports to continue growing each of the next four months.
Meanwhile at origin, congestion at South China ports continues to get worse following last week’s news that Yiantian International Container Terminal had fallen under COVID-19 outbreak restrictions. The Loadstar reports that the backlog at Yiantian has caused delays at Shekou and Nansha, as carriers and LSPs scramble to reroute outbound shipments.
Under normal circumstances, Yiantian port manages as much as many as 25,000 TEUs a day, Vespucci Maritime CEO Lars Jensen told The Loadstar.
“Putting this in context, when Suez was blocked by the Ever Given, it impacted a daily flow of 55,000 TEU. But that ‘only’ lasted six days,” Jensen said. “In Yantian, we are at 14 days and counting –and there is the impact on Nansha and Shekou.”
As things open up, there might not be enough vessels to handle the backlog, causing further delays across global supply chains.
And just in case you were thinking of expediting some shipments using air freight, there’s a solid chance you’ll be fighting for the same limited capacity as everyone else.
Supply Chain Dive reports that air capacity still hasn’t returned to its pre-pandemic levels while demand is about 41% higher than it was a year ago. And as more LSPs and shippers look to the air as a means to overcome the slowdowns they’re seeing in ocean freight, it’s led to further increases in price.
The increases aren’t just limited to China-U.S. lanes either. European shippers are also paying premiums for shipments from both China to the EU and from the EU to North America.
One of China’s largest retailers is stepping into the world of autonomous logistics.
According to CX Tech, Cainiao, Alibaba’s logistics unit, is working to develop a fleet of self-driving trucks to augment its logistics workforce.
Alibaba also expects as many as 1,000 autonomous delivery robots within the next year, joining its competitors JD.com and Meituan in piloting new autonomous means to solve the last mile.
Reuters points out that most autonomous vehicle development is currently taking place among startups and existing vehicle manufacturers, and not retailers or LSPs.
The German parliament passed what might be the first post-pandemic laws governing supply chains Friday, as recent challenges have brought increased scrutiny on the importance of these vast global networks.
According to Reuters, the German supply chain act will hold companies of a certain size accountable for human rights and environmental abuses that occur across their global supply chains. Violation of the new rules could result in fines of up to 2% of a company’s revenue.
The regulation takes effect in 2023 for companies with more than 3,000 German employees and will expand to smaller companies the following year. The laws will affect nearly 5,000 companies by 2024.
Supply chains have come into the spotlight since COVID-19 exposed weaknesses amid a widespread crisis. But even before that, consumers had grown concerned about the standards under which their products were made and moved. Incidents like the tragic 2013 Dhaka factory collapse at Rana Plaza and Apple’s supplier pollution coverup a decade ago highlight the types of issues where the new German laws could have an impact — effectively holding companies responsible for the actions of their suppliers.
Thanks for stopping by, folks! Happy Friday! Don’t forget to check out last week’s news and come back next week for the following Friday Five logistics news roundup!
Congestion rises on multiple fronts due to black swans and systemic issues, while there finally seems to be some good news coming out of Long Beach and Los Angeles. Also, the Ever Given is back!
While coverage of COP26 has been all but scarce this past week, this week’s Friday Five has the supply chain angle to Glasgow’s buzzing talks, plus a port congestion update and an innovation win for Walmart.
Second verse, same as the first? In this week’s Friday Five, ports remain congested despite new attempts to move boxes out the door, while the reigning champs of supply chain chaos continue their shopping sprees.