Supply Chains Search for New Sources

All eyes are on emerging markets as logistics and supply chain professionals look for the next opportunity to combat an uncertain global economic climate. These executives also remain wary of recession, express concerns over elevated costs, and expect supply chains to continue moving out of China, according to the newly released Agility Emerging Markets Logistics Index.

The Index ranks countries for overall competitiveness based on their logistics strengths, business climates, and digital readiness—factors that make them attractive to third-party logistics providers, freight forwarders, air and ocean carriers, distributors, and investors.

Here are some key findings from the 2024 Index:

• India, Europe, and North America rank ahead of China as destinations executives expect to move production to in 2024 and onwards.
• A large percentage of executives see increased risk/decreased rewards in emerging markets.
• Many see India growing in importance as a producer and market, but cite inadequate infrastructure and corruption as the biggest obstacles there.
• Many predict a surge in Africa investment.
• 66% say climate change is something they’re planning for, or is already affecting their businesses.

Readers React: New Cybersecurity Executive Order

To address growing concern over cyber threats, President Biden signed an executive order amending regulations designed to safeguard U.S. vessels, harbors, ports, and waterfront facilities. The order aims to further protect these assets against cyber attacks and other threats.

Here’s what Inbound Logistics readers say about this new action:

“The new executive order will give the U.S. Coast Guard greater authority to enforce cybersecurity requirements. Securing the maritime sector is an essential part of building resilient supply chains.”

—Abe Eshkenazi, CEO, Association for Supply Chain Management (ASCM)

“This is a critical step forward in protecting U.S. ports. We also have to pay attention to common wireless vulnerabilities. Attacks leveraging wi-fi, Bluetooth, and IoT protocols may be used to access authorized infrastructure including IT and OT systems.”

—Dr. Brett Walkenhorst, CTO, Bastille

“This is a crucial advancement. Cyberattacks serve as stark reminders of the cascading impacts on America’s shipping ports and the U.S. economy. Employing due diligence and verifying partnerships are also key to mitigating external risks.”

—Cole Garson, COO, Remcoda

Is Same-Day Delivery Worth the Hype?

While implementing same-day delivery presents challenges, many companies say that the benefits are worth it. A majority of companies (80%) say they increased revenue after implementing same-day delivery, according to new research from Roadie, a UPS Company that offers a logistics management delivery platform.

The research, which provides an overview of the challenges and benefits associated with implementing same-day delivery services, finds that nearly one-third of retailers report a revenue increase of more than 10%. Executives also cite benefits including higher customer satisfaction (80%), and an increase in sales (70%) and retention rates (66%).

Additional research highlights include:

• Most companies (63%) offering same-day delivery have done so for three years or more.
• 68% report that same-day delivery ROI consistently increased each year.
• Companies say that growing ROI unlocks insights that help them make decisions about:
  ‣ Product and service offerings (65%)
  ‣ Expansion of same-day delivery in new regions (59%)
  ‣ Warehouse space (54%)
  ‣ Distribution facility locations (51%)
  ‣ Logistics investments (45%)
  ‣ Labor (37%)

One caveat: The transition to same-day delivery introduces higher operational costs for most companies surveyed, who report the need for innovative pricing strategies to mitigate these expenses.

Make Room for Twins

The popularity of supply chain digital twins is rising. These virtual replicas or simulations of a physical supply chain—created using real-time data and advanced technologies such as the Internet of Things, artificial intelligence, and machine learning—enable organizations to better understand, analyze, predict, and optimize their supply chain processes.

How great is the demand? According to Market.us, the worldwide supply chain digital twin market is projected to reach a value of $8.7 billion by 2033—a compound annual growth rate of 12% during the forecast period from 2024 to 2033.

The increasing complexity of supply chains, the need for greater visibility and control, and the rising demand for predictive analytics in supply chain management is driving the growth in this market, according to the report.

Top Trade Disruptors

While the pandemic is firmly in our rearview mirror, a new batch of disruptions have popped up to challenge the supply chain. The Q1/Q2 2024 Retail Sourcing Report from TradeBeyond outlines the top trade disruptors that are likely to throw a wrench into global sourcing plans and buying decisions in 2024. Here are the key highlights:

• Rate fluctuation: Extreme shipping rate volatility with attacks in the Red Sea have sent shipping rates surging since December, more than doubling the rates on some European lanes and creating substantially longer transit times.
• Looming uncertainty: The shipping crisis has made supply chain disruptions more likely, elevating fears of a return to the bottlenecks, component shortages, and product delays that supply chains endured in recent years.
• Tech spend coming: The pace of digitalization continues to accelerate in retail supply chains, with more than 90% of supply chain managers saying their companies are actively engaged in digital transformation. And 46% of supply chain executives anticipate that AI, cognitive computing, and cloud applications will be their greatest areas of investment in digital operations over the next three years.
• Manufacturing slump: The most recent GEP Global Supply Chain Volatility Index warned of continued downturn in global manufacturing through at least the first quarter of 2024 amid softened demand, especially in Europe.

Mega Money for Intermodal Projects

In a win for intermodal infrastructure, the U.S. Department of Transportation (USDOT) recently selected 37 projects to receive funding through the Bipartisan Infrastructure Law’s Mega and Infrastructure for Rebuilding America (INFRA) grant programs. Several of the projects will boost intermodal infrastructure across the country.

The Mega Program, also known as the National Infrastructure Project Assistance program, funds large, complex projects that are difficult to fund by other means and likely to generate national or regional economic, mobility, or safety benefits. Congress established the program in 2021 through the Bipartisan Infrastructure Law and dedicated $5 billion to the program over five years. The most recent awards were the second round of funding, worth roughly $2 billion.

INFRA is a competitive grant program that provides funding for multimodal freight and highway projects of national or regional significance to improve the safety, efficiency, and reliability of freight movement in and across rural and urban areas. The most recent annual program funding amount is $3.1 billion and the annual award amount is $1.5 billion.

Intermodal projects receiving grants in this round of Mega and INFRA funding include:

• America’s Green Gateway: Pier B Rail Program Buildout, Long Beach, Calif. The project will complete the Pier B On-Dock Rail support facility program by significantly enhancing container-on-rail service to and from the ports of Long Beach and Los Angeles.
• St. Lucie River Railroad Bridge Replacement Project, City of Stuart, Fla. The project will replace the existing 100-year-old St. Lucie River Railroad Bridge with a new double-track structure. By diverting freight traffic to rail, the project will increase safety for marine traffic, decrease the potential for blocked grade crossings and vehicle collisions, and shift single-occupancy vehicles to passenger rail travel.
• East River Berth Replacement Project, Garden City, Ga. The project will replace a port berth and two vessel berths at Georgia Ports Authority’s Port of Brunswick’s East River Terminal and will also reduce greenhouse gas emissions by supporting a modal shift from truck to rail for transporting commodities to the Port of Brunswick.
• Louisiana International Terminal Project, St. Bernard Parish, La. The project will construct a new container terminal on the Gulf Coast for the Port of New Orleans that is not air-draft restricted and can accommodate larger vessels.

Walmart Wings It

The nation’s largest retailer will soon boast the retail sector’s largest drone delivery footprint. Walmart recently unveiled plans to dramatically expand its drone capabilities across the Dallas-Fort Worth metroplex, adding more than 30 municipalities and towns in North Texas.

The expansion will enable the company to reach up to 1.8 million additional households—the most ever by a retailer offering drone delivery in a single market—and cover as much as 75% of the metro area.

Individuals who live within 10 miles of participating stores will be able to order thousands of items, ranging from snacks and beverages to baby wipes and over-the-counter medications, for delivery by drone in 30 minutes or less and potentially in as fast as 10 minutes.

The retail giant is partnering with drone delivery companies Wing and Zipline for the service; both are authorized by the FAA to fly drones beyond the line of sight of operators.

Walmart says it has safely completed more than 20,000 drone deliveries over some two years of test flights.

AI in Transportation: All Talk, No Action?

While artificial intelligence (AI) is one of the most buzzed-about topics within the supply chain sector, AI adoption is lacking severely in the U.S. transportation and logistics (T&L) market, according to new data from HERE Technologies and Amazon Web Services. In a multi-country survey of transportation and logistics professionals in the United States, Germany, and the United Kingdom, HERE found a significant gap in the adoption of basic data analytics.

The survey results underscore the untapped potential of AI—from data analytics supported by machine learning to optimized fleet routing, predictive maintenance, and streamlined processes for strategic decision-making.

Here are the report’s key takeaways:

• Only 50% of T&L professionals across the three countries say that their organizations utilize basic data analytics in their operations. At the same time, 25% of all respondents state their organization leverages AI capabilities.
• Cost (23%) is the leading barrier to tech implementation.
• Potential disruption to existing services (12%) and lack of internal expertise (11%) were the second and third most cited barriers to technology implementation.

Somewhat conversely, survey participants were optimistic about their progress toward supply chain visibility, with 86% reporting notable progress toward supply chain visibility and 18% considering their progress significant. Among modes, 50% indicate truck freight has the highest visibility, while 45% cite ocean freight as the least visible mode of transportation (see chart).

Manufacturers: .ru Prepped Against Cyber Attacks?

The manufacturing sector faced an unprecedented 165% surge in cyber attack attempts last year—many coming from Russian and Chinese actors, according to Armis, an asset intelligence cybersecurity company. Its new report reveals that the industry faces severe safety, production, and critical infrastructure risks if security gaps aren’t urgently addressed.

Key highlights include:

• Global attack attempts more than doubled in 2023, increasing 104%. The manufacturing industry weathered a much higher-than-average rate of attacks at a 165% increase.
• In 2023, manufacturing was one of the top industries exposed to attack from Chinese and Russian actors. Compared to other industries, manufacturing experienced an intensified threat landscape, with .cn and .ru domains contributing to an average of 30% of monthly attack attempts.
• The concerning trend of operational technology (OT) devices accessing the internet highlights further potential vulnerabilities, with around 80% of engineering workstations and 60% of supervisory control and data acquisition (SCADA) servers having internet access over the past year. The vulnerabilities in these devices increase the potential entry points for bad actors.
• Data further highlights a concerning number of exploitable devices owing to usage of end-of-life or end-of-support operating systems that are no longer actively supported or patched for vulnerabilities and security issues by the manufacturer. Additionally, 12% of utilities and 11% of manufacturers are still using legacy operating systems—exacerbating cyber weaknesses.

Some key questions the report answers include:

• Why outsource this function? In addition to cost reduction, outsourcing the freight audit and payment function enables shippers to reduce time spent on tasks like collecting carrier invoices, conducting freight invoice audits, making payments to carriers, and pulling detailed reporting on freight costs and services.

The highly regulated nature of the U.S. transportation market is another factor pushing shippers to  freight audit and payment services. The report shows that shippers are adopting these services to ensure compliance with various regulations.

• How big is the market? The report notes a market value of $696.11 million in 2022 and projects that number to reach $1.85 billion by 2030, growing at a compound annual growth rate (CAGR) of 13.67% from 2024 to 2030.

• What are the market segments? Currently, the market is bifurcated based on organization size, mode, industry verticals, and geography.

• Large organizations make up the largest market share, accounting for 64.48% of the market in 2022, with a market value of $448.87 million. The report projects this number will grow at a CAGR of 13.67% during the forecast period.
• Road freight accounted for the largest market share of 39.16% in 2022, with a market value of $272.59 million. It is projected to grow at the highest CAGR of 14.33% during the forecast period.
• Top industries included in the market are retail, manufacturing, food and beverage, and healthcare. Retail accounted for the largest market share of 31.35% in 2022, with a value of $218.21 million and a CAGR projection of 13.84% during the forecast period.
• Regionally, the market is classified into North America, Europe, Asia Pacific, Middle East & Africa, and Latin America. North America accounted for the largest market share of 44.9% in 2022, with a market value of $312.57 million and is projected to grow at a CAGR of 13.77% during the forecast period.

This potential is clear in supply chains, where both the number and complexity of decisions are increasingly complex. Achieving goals such as reducing transportation costs and carbon emissions, or improving order fulfillment speed and accuracy, requires better visibility and agility in decision making.

Today, early adopters of AI are already achieving these goals across transportation and logistics, sourcing and procurement, manufacturing, and beyond.

I’ve heard success stories from supply chain executives. Their companies are capturing a digital record of their supply chains to better track and respond to evolving challenges, enabling continuous learning and improvement while training future logistics decision makers.

At one global CPG manufacturer, AI allowed teams to move from manual processes (such as managing transshipments in spreadsheets) to digitized recommendations. This company now relies on AI to identify needed stock movements and to calculate the best course of action by examining weight and volume utilization, truck utilization, and stackability. As a result, truckload utilization rose from 87 percent to 95 percent – reducing both transportation costs and carbon emissions, and improving customer service levels.

If you’re like many leaders I’ve spoken to recently, you may wonder how this new technology will improve OTIF performance, reduce labor and expedite costs, and help you better manage capacity. Moreover, you need to know you can trust AI to deliver accurate decisions and quantifiable results.

What Global Executives are Saying 

What Every Executive Needs to Know About AI-Powered Decision Intelligence, a recently commissioned IDC Global survey of Fortune 1000 companies, addresses some of these questions.

Leaders from eight countries and a range of industries were asked about the challenges and opportunities of AI-powered decision making.

Here are some of the takeaways:

• Survey respondents identify IT, operations, and supply chain as the top three business functions where AI-powered decision intelligence technology would have the greatest positive impact. (See chart above)
• Only 20% of survey respondents say they feel completely comfortable with the number of decisions that need to be made each day.
• 33% still rely on intuition or experience to make business decisions.
• There is a disconnect between executives and employees regarding “in-the-field” decision making: only 55% of executives say they mostly, or fully, know how these decisions are made.
• Companies that use AI-powered decision intelligence are improving business metrics up to 20% across product and service innovation, employee productivity, and customer and employee retention, among others.

What’s on the Minds of Manufacturing CEOs?

Manufacturing CEOs are making big plans for 2024, including accelerating investments in artificial intelligence, automation and robotics, while also raising the skill level of their current employees and recruiting highly trained workers. That’s the consensus of a year-long series of polls conducted by Xometry, an AI-powered, on-demand industrial parts marketplace. Here are some in-depth findings from the polls:

• Modernizing through AI. Manufacturing CEOs say AI will play a significant role in their company in the next one to two years. Of the CEOs who have already implemented AI, more than 70% have seen significant ROI in key areas such as supply chain management, quality control, and procurement.
• Domesticating manufacturing. Reshoring will continue to trend upwards with 76% of manufacturing CEOs having successfully reshored some or all of their operations throughout 2023, a move accelerated by federal tax incentives and initiatives such as “Build America, Buy America.”
• Tapping the brakes on EVs. While the automotive industry is primed for growth and innovation in 2024, EV manufacturers may be taking their foot off the accelerator when it comes to electric vehicles. Xometry’s Automotive Survey finds that 84% of automotive executives said current production timelines and waning consumer demand may make it difficult for the industry to meet the Biden Administration’s goals for the years ahead.
• Tracking a more sustainable future. Though EVs may be hitting a road bump for now, manufacturers are taking proactive action to limit greenhouse gas emissions across their industrial supply chains. Fifty-two percent of CEOs view climate change as an existential threat caused by human activity. In 2024, companies will make sustainability a business goal with more investment in measuring and tracking tools to prioritize decarbonization of their operations.
• Investing to fight a skilled labor shortage. Nearly four years post-pandemic, there remains a shortage of more than 600,000 manufacturing jobs waiting to be filled. As American manufacturing becomes more high tech, CEOs remain worried about attracting highly skilled talent. According to Xometry’s research, more than half (56%) of CEOs said they struggle finding qualified employees in today’s tight labor market.
• Pushing aside politics. Xometry’s Q4 CEO survey shows a near 50/50 split on whether Democrats or Republicans will better support manufacturing and the economy at large. The priorities remain non-partisan: bipartisan collaboration, public-private partnerships that invest in skilled labor, and proactive assistance from the federal government for the reshoring of manufacturing.

Help Wanted x 2 Million

The logistics and transportation sector is no stranger to challenging employment trends. Combating driver shortages, for instance, has been a top priority for trucking and intermodal companies for the past several years. And finding and retaining skilled warehouse workers has also been problematic for the distribution field.

The sector should continue to expect ongoing employment difficulties in the near future, according to Chad Raube, president and CEO of IntelliTrans, a global provider of multimodal solutions for bulk and breakbulk industries. What’s driving these trends? Raube points to increased order complexities; lower levels of available, seasoned staff; and changes in economic conditions where recovery rarely generates a return to prior staff levels.

“With continued growth forecast for domestic freight in 2024 and beyond, there is an expected need of nearly two million new employees for transportation and warehousing jobs, due to growth and attrition,” he says.

Adding to the challenge is the fact that companies are competing for a shrinking share of the population. Raube points to these stats: For workers aged 25 to 65, only 19% of the labor force will increase from 2021 to 2031, and 80% of the workforce in 2031 will come from the over-65 population.

Also, construction of new manufacturing sites has tripled in the past two years because of reshoring, which will change distribution patterns and transportation modes, adding to the urgency around these trends, he notes.

Three Industrial Real Estate Predictions

1. Look for vacancy rates to inch up further, as the construction pipeline continues to deliver new product throughout the country, while demand moderates further. The national vacancy rate should peak at just over 6% in 2024 before re-tightening.

2. Net absorption will remain tempered in 2024, as cooler consumer demand for goods, persisting elevated interest rates, and sticky inflation hamper growth.

3. As this wave of industrial product delivers over the next 12 months, the construction pipeline will shrink further, leading some markets to become supply constrained in 2025 as absorption starts to regain momentum.

Source: Cushman & Wakefield

Oversupply Makes Waves for Ocean Shippers

What do ocean freight experts see for 2024?

Shippers should expect more service disruption as container lines seek to manage oversupply and limit losses, predicts Philip Damas, managing director of Drewry Shipping Consultants and head of Drewry’s Supply Chain Advisors practice.

To control the level of oversupply, Damas expects a greater number of blank sailings, which will significantly reduce the predictability of containership departures.

Here are Damas’ key predictions:

• Container lines will collectively record profits of roughly $20 billion for 2023, but the oversupply of vessels will result in a collective loss of $15 billion in 2024.
• 2024 will be an ocean freight buyer’s market, and shippers should be able to secure significant rate cuts. “But,” Damas warns, “there will be a price to pay: the service reliability and service level of carriers will probably worsen.”
• In 2024, shippers will also need to contend with new EU Emission Trading System (ETS) surcharges from carriers. While current ETS surcharges on most trades are not high, Drewry is concerned about whether surcharges are “set at a justified, reasonable level,” as ETS surcharges are likely to more than double in 2025 and 2026.

2024: Year of Optimism and Growth?

Overcoming a slew of recent challenges seems to be breeding optimism in the supply chain sector. After enduring disruptions such as the pandemic, geopolitical conflicts, and monetary tightening, businesses are now adopting a growth mindset, according to Dun & Bradstreet’s Q1 2024 Global Business Optimism Insights report.

This is despite the fact that the report shows a downturn in global supply chain continuity due to geopolitical tensions, trade disputes, and climate-related disruptions in maritime trade causing higher delivery costs and delayed delivery times.

“Global businesses are adopting a more pragmatic stance towards their future,” explains Neeraj Sahai, president, Dun & Bradstreet International. “This shift in mindset suggests anticipation of additional growth in the forthcoming quarters, albeit with an underlying sense of continued caution.”

Key findings from the report’s five indices—measuring Q1 2024 compared with Q4 2023—reveal the following:

• The Global Business Optimism Index increased by 6.6%, indicating that businesses in advanced economies now feel more confident about their ability to absorb geopolitical and policy shocks, and are focusing more on growth opportunities.
• The Global Supply Chain Continuity Index fell sharply by 6.3%, with suppliers’ delivery time and delivery cost indices both deteriorating.
• The Global Business Financial Confidence Index increased by 10.1%; in addition, liquidity is expected to increase across firms of all sizes and businesses are more optimistic about their competitive positioning.
• The Global Business Investment Confidence Index rose 10.7%, showing a growing consensus that major central banks in advanced economies have reached a peak in the current interest rate hike cycle.
• The Global Business Environmental, Social and Governance (ESG) Index increased 7%, reflecting a positive shift in the commitment of firms worldwide towards sustainability practices.

“Greenwashing” Gaffes

With the current intense focus on sustainability, it’s not surprising that many companies are accused of “greenwashing,” or conveying a false or misleading impression of the environmentally friendly nature of their products or supply chains. Increasingly, however, many firms may be unintentionally guilty of the practice.

Nearly half (45%) of U.S. organizations are concerned they could be at risk of unintentional greenwashing, finds new research from Ivalua. With pressures from customers and regulators on the rise, organizations also face pressure to ensure all green claims are legitimate.

The study reveals less than half (48%) of organizations claim they are “very confident” that they can “accurately” report on Scope 3 emissions (emissions resulting from activities or assets not owned or controlled by the reporting organization). Meanwhile, nearly two-thirds (62%) say reporting on Scope 3 emissions feels like a “best-guess” measurement.

The research also shows that while 88% of organizations are confident they’re on track to meet net-zero targets, many don’t have comprehensive, fully implemented plans in place for:

• Adopting renewable energy (78% are confident in their plans)
• Reducing carbon emissions (68%)
• Adopting circular economy principles (72%)
• Reducing air pollution (67%)
• Reducing water pollution (63%)

The research also finds that more than half (51%) of organizations agree that unless green initiatives to reach net-zero goals also involve suppliers, they are a waste of time.

Quick Take: Sector Sentiment

• 74% of supply chain professionals foresee positive growth in the global container shipping industry in 2024.
• 53% expect an increase in container prices, 26% anticipate stability, and only 21% express pessimism about price decline.
• 30% of supply chain professionals say forecasting and planning is the most important area of business to improve with technology in 2024, followed by real-time visibility and tracking (24%), collaboration and connectivity (27%), and process automation (18%).

Source: Container xChange Industry Speak Survey

A Sea of Investment

The Great Lakes St. Lawrence Seaway system, a marine highway that supports more than 100 ports and commercial docks located in each of the eight Great Lakes states, and the provinces of Ontario and Quebec, has been the recipient of significant investment from public and private sources over the past five years.

An independent survey conservatively estimates that investments made between 2018 and 2027 will total $8.4 billion.

Prepared by Martin Associates, and titled Infrastructure Investment Survey of the Great Lakes and St. Lawrence Seaway System, the survey quantifies ongoing investments in the navigation system to help support long-term planning and economic development goals, while also building confidence in the system’s future viability.

The survey also reveals investment in specific aspects of the system, including:

• $636 million in vessel enhancements between 2018 and 2022; $328 million planned between 2023 and 2027.
• $2.1 billion to enhance port and terminal infrastructure between 2018 and 2022; $1.1 billion planned between 2023 and 2027.
• $3 billion in waterway infrastructure (locks, breakwaters, navigation channels) between 2018 and 2022; $1.2 billion planned between 2023 and 2027.

“The survey’s conclusion is clear: both the public and private sector recognize that maritime commerce on the Great Lakes and St. Lawrence Seaway remains essential to the economies of the United States and Canada, and are investing to protect this irreplaceable system,” said U.S. Transportation Secretary Pete Buttigieg.

U.S. Ports: Let’s Have Some Funds

The U.S. Department of Transportation selected 41 projects to receive $653 million in grant funding under the Port Infrastructure Development Program, part of approximately $17 billion included in a 2021 infrastructure spending bill for ports and waterways.

The program was designed to improve U.S. port capacity and efficiency and, in turn, help multimodal shipping networks meet rising demand for freight services, according to the Biden Administration.

Nearly $173 million in grants are earmarked for smaller port facilities, which officials say will improve regional supply chains and ease pollution concerns. One of the largest awards—more than $43 million—will replace the lone dock in the remote city of Cold Bay, Alaska.

The largest grant—more than $54 million—will overhaul and expand the Husky terminal at the Port of Tacoma. Other top grants:

• $52 million for projects at the Port of Long Beach, California.
• $50 million for a new container yard at the Port of Wilmington, Delaware.
• $47 million+ for an offshore wind manufacturing hub at the Port of Baltimore.

Taking the Supply Chain’s Pulse

While it has been four years since the start of the pandemic, risk and resilience still dominate supply chain concerns. Companies continue to accelerate efforts to diversify and localize their supply networks, according to McKinsey’s latest annual survey of supply chain leaders.

The survey also reveals a dramatic revolution in the way companies operate their supply chains, with a sharp increase in the adoption of advanced techniques for supply chain planning, execution, and risk management.

Among the survey’s additional highlights:

95% of respondents report challenges with their supply chain footprint in the past 12 months.

50% report their supply chains are reliant on another region and 89% plan to reduce this dependency with focus on Western Europe and Southeast Asia.

64% regionalized their supply chains, with 42% bringing production closer to where they expect to sell their goods. 100% doubled backup production sites in the past year.

66% brought suppliers closer to their main markets, driven mostly by the automotive and consumer industries, while 78% moved away from single sourcing of raw materials.

In 2022, 68% of companies planned to review their inventory management strategy. In practice, 55% of retail and consumer companies are on backswing with too much inventory amid a pullback in spending. That’s a stark contrast to high-tech industries that increased inventories (55%) as buffer to offset the risk of supply chain disruptions amid increased demand.

While 71% increased digitization, 92% report having insufficient talent to operate digitally enabled supply chains.

67% planned to improve supply chain visibility, yet only 30% completed implementation in the past 12 months.

All in Favor, Say AI

Manufacturing CEOs are investing significantly in artificial intelligence (AI) and workflow automation tools, according to Xometry’s latest quarterly American Manufacturing Resilience poll with Forbes and polling firm John Zogby Strategies.

Fifty-seven percent of U.S. CEOs say they invest in these new technologies to improve efficiency and strengthen their supply chains,

In addition to AI, 28% of manufacturing CEOs are investing in robotics, and 27% are focusing on job training and upskilling. Among those who have implemented AI, 67% have already seen a significant return on investment, while 31% expect a strong ROI in the future.

Manufacturing CEOs have taken significant proactive measures to prepare for the AI boom, deploying AI in various measures in their organizations (see chart), with 76% of it being used in supply chain management, followed by procurement (71%), quality control (47%), and automation (37%).

Highlights of the poll include:

• Reshoring continues to accelerate, as 76% of CEOs have successfully reshored some or all of their overseas facilities or are in the process.
• 83% of CEOs believe that the health of American manufacturing depends on reshoring production capabilities.
• 70% of manufacturing CEOs are on track to beat last year’s sales and 68% are on track to beat last year’s profits.
• 65% say they will increase wages by the end of 2023, with 33% holding the line and only 2% decreasing wages.

When it comes to the supply chain, CEOs are most concerned about a major cybersecurity attack (24%), followed by a large-scale or global war (20%), banking instability (16%), labor strife (14%), terrorist attack (11%), and pandemic (6%).

In the labor domain, the manufacturing industry faces challenges in attracting highly skilled talent as it becomes more high-tech. More than 56% of manufacturing CEOs struggle to find qualified, highly skilled employees.

COVID Hangover Still a Thing

To analyze expectations around the 2023 peak season, third-party logistics company Kenco conducted two surveys: its Annual Supply Chain Survey, polling 125 supply chain practitioners, and its eCommerce Peak Season Pulse, surveying more than 225 U.S. adult consumers.

Some key insights from the surveys include:

• 60% of supply chain practitioners say the “COVID hangover” still impacts supply chains.
• 30% of practitioners say managing inventory challenges is their biggest concern .
• Consumers show similar inventory concerns; 60% indicate product availability as their top concern.
• 35% of practitioners have implemented new technology to prepare their operations for peak season (see chart), including 35% who have explored AI for their operations to manage everyday processes.
• 72% of consumers say they would select slower shipping options if it means free shipping.

What’s Up With 3PLs?

Harris Williams, a global investment bank specializing in M&A advisory services, highlights key insights into the future of the third-party logistics (3PL) space and lessons from the market.

• U.S. 3PLs’ continued focus on technology innovation, coupled with a more nimble workforce and open market transparency accelerating out of the pandemic, supports further enhancements in productivity and economic growth potential—even amidst an evolving broader U.S. economy facing the uncertain impacts of continued inflation and interest rate changes.
• Within the 3PL landscape, economic challenges and resulting shipping volume declines led to excess freight capacity and an extended dip in freight rates in 2023. A meaningful pickup may not occur until Q2 or Q3 2024.
• Shippers are putting far more emphasis on procurement and supply chain management. 3PLs must expand their solutions to meet shipper challenges and add incremental value as thought partners offering end-to-end solutions rather than simply serving as suppliers.
• M&A activity is expected to stay strong despite challenging market conditions, while the thesis and target criteria for investing within the transportation space have changed to include more asset classes: from a prior focus on hard asset ownership and core infrastructure opportunities, infrastructure investors are now expanding their aperture to include select asset-light businesses. They are also more open to establishing long-term or perpetual funds to support their investments across economic and transportation environments.
• The best 3PLs are adopting purposeful technology, adding sought-after services, and offering valuable, consultative approaches to their shipper partners while staying ahead of the pack on key market themes such as onshoring, ESG, and cybersecurity.

Cyber Risk: A Growing Concern

As cyberattacks continue to increase in frequency, no industry is immune, including transportation. In fact, according to the 2023 Travelers Risk Index, 55% of transportation leaders worry a great deal or some about cyber risks.

As strategic cargo theft continues in prevalence and severity, a potential cyberattack is a growing concern for transportation companies. About half (51%) of transportation companies worry about the potential for compromise, theft, and/or loss of customer/client records due to theft.

The transportation industry can do a lot more to become better equipped to combat threats, the report finds. Among the takeaways:

• Fewer than one-third (32%) of transportation company respondents have simulated a cyberattack to identify areas of system vulnerability.
• Fewer than half (48%) of transportation businesses purchase cyber insurance to protect against a data breach/cyber event.
• 50% of transportation companies have written a business continuity plan in the event a cyberattack occurs.
• 54% of transportation companies have a cybersecurity incident response plan in the event a cyberattack occurs.

Supply Chains Fall Behind on Data-Driven Decisions

Supply chain leaders cite the need to reduce costs, improve the customer experience and expedite delivery times as their top challenges, yet fewer than half leverage supply chain data to inform their strategy and 14% don’t use supply chain data at all to make decisions.

That’s according to a new report by supply chain visibility provider FourKites, which polled 500 supply chain leaders on their use of technology to connect disparate supply chains. The report finds:

• 48% of respondents rate themselves as “not great” or “struggling” at digitizing their supply chain.
• 43% struggle to integrate internal systems and have a single source of truth.
• 42% are investing in technology in the next six to 12 months to de-risk their supply chains. Investments are even more pronounced among enterprise companies, where 70% plan to increase tech investment.
• Nearly 52% of companies are diversifying their supplier/provider base in efforts to de-risk their supply chains.

Transportation industry Springs a Leak

Out of all industries, the transportation field ranks among the top 10 in terms of how many companies have suffered data breaches where consumer data was leaked, reveals the latest NordPass study. In total, nearly 280 transportation organizations worldwide lost clients’ data.

Key takeaways from the study:

• Private companies make up 60% of all transportation organizations whose clients’ data was stolen.
• Smaller companies were found most likely to lose clients’ data. In the transportation field, companies with up to 50 employees had their clients’ data compromised the most.
• Entertainment companies are the worst in ensuring clients’ data. While one might assume otherwise, technology companies are also not much better.

Source: NordPass

The Promise of eBLs

By Niels Nuyens, Head of Digital Trade, Digital Container Shipping Association

The Fit Alliance eBL declaration (see sidebar below) gives global trade stakeholders the opportunity to express support for digitalization, specifically regarding the bill of lading. The largest ocean carriers have committed to 100% eBL in 2030. Their commitment should also nudge trade partners to embrace digitalization.

A 2023 FIT Alliance survey found that many participants in global trade are reluctant to get started. Why? Because their trade partners are not ready. The declaration gives those in the industry who are keen to change the platform a way to publicly articulate that support.

Many of the largest trading banks have also expressed their support for digitalization through the declaration. Similarly, many freight forwarders are leveraging the declaration to express support. With both stakeholders groups as well as carriers on board, retailers, manufacturers, and exporters should now be encouraged to join the eBL movement.

It makes sense for many reasons: process efficiency, improved security, environmental benefits, and better law enforcement.

What is especially exciting are the opportunities that global consulting firm McKinsey refers to as “trade enablement.” It is expected that large corporations as well as small and mid-sized enterprises will have better and easier access to global trade, and the ability to unlock new business models.

There is an additional reason why digitalization in global trade is crucial. By 2050, it is expected that global trade will triple. This provides a wealth of opportunities. However, it also means that the involved parties must get ready to support and handle that growth or miss the boat. Digitalization is one of the enablers; so is the eBL as part of the end-to-end documentation process.

The business case for the eBL is huge, for all global trade participants.

Committing to eBLs

The FIT Alliance has introduced the Declaration of the Electronic Bill of Lading (eBL) to secure industry-wide commitment to digitalization and to help make international trade more efficient, reliable, sustainable, and secure.

The declaration’s aim is to secure commitment from all stakeholders in international trade to collaborate on driving digitalization, starting with eBLs. Nine of the largest ocean carriers have already committed, and shippers will come on board by default through the transactional platforms they use via the FIT Alliance members.

The potential impact of this change is immense, promising billions in cost savings, improved customer experiences, and greener transport methods. In fact, a McKinsey study estimates that if eBL achieved 100% adoption in the container sector alone, it could unlock $30-40 billion in global trade growth by reducing trade friction.

Reshoring Speeds Up

Reshoring is accelerating as U.S. and European companies want to de-risk their supply chain from geopolitical developments and supply chain disruptions. Companies are also moving production from China and Asia to Europe and the United States to reach their CO2 emission reduction goals.

Those are the findings of a recent BCI Global survey of supply chain leaders from large European and U.S. companies.

Half of the interviewed companies implemented reshoring initiatives in the past three years, totaling up to 20% of their Asia-based production capacity. Barriers include selecting cost-effective production locations and finding the right suppliers.

One out of four companies that reshored is disappointed about the cost savings, finds the research.

Nine out of 10 surveyed companies want to decarbonize their supply chains, mainly driven by their own strategic objectives. But for 50% of respondents, compliance with regulations and customer requirements are important drivers as well.

Unlocking the Future for SCM Professionals

Supply chain management is often regarded as a dynamic and evolving industry, but what’s the perspective of young professionals entering this field?

A recent collaborative effort among the Council of Supply Chain Management Professionals, Penske Logistics, and Korn Ferry sought to uncover just that by gathering responses from nearly 200 young professionals under the age of 30.

Here are some key findings from the study:

• High job satisfaction. A remarkable 96% of young professionals express excitement about their supply chain careers, with an equally high percentage keen on recommending these careers to others.
• Diverse career motivations. More than half (58%) of young professionals in the supply chain field are attracted by the diverse range of opportunities available, highlighting the attractiveness of the sector.
• Tangible impact. 57% recognize the tangible impact supply chain roles have on business outcomes, emphasizing the significance of their contributions.
• Exposure and awareness. More than half (53%) have gained firsthand supply chain exposure through internships or education, contributing to an increased awareness of the field.
• Changing perceptions. Interestingly, the percentage of those “strongly agreeing” that supply chain is an excellent career choice has declined by over 10% since 2016. This shift likely reflects the heightened competition in the field and underscores the importance of compensation, advancement opportunities, and work flexibility in retaining talent.

3PLs Perform a Balancing Act

Time to fulfill is getting shorter year over year. Nearly 54% of 3PL respondents pick, pack, and prepare packages for shipment within one hour of order receipt. 76% of all orders get fulfilled in less than three hours. Only 7% of companies take more than one day to fulfill, on average.

Source: Extensiv 3PL Warehouse Benchmark Report

Record fulfillment times (54% fulfill in less than one hour), more available warehouse capacity (65% operate at less than 90% capacity), and a more tempered outlook for 2024 are among the results of Extensiv’s fourth annual Third-Party Logistics (3PL) Warehouse Benchmark Report.

Key takeaways from the 2023 report include:

• Slowing growth. While a majority of 3PLs still show positive order and profitability growth, a larger group of 3PLs now see flat or declining profits as the economy fluctuates. Although approximately one-third of 3PL respondents show more than a 25% increase in order volume growth year over year and 42% indicate an increase of up to 24%, 22% of respondents either remained the same or saw a decline. The number of 3PLs with no change or declining order volumes more than doubled in 2023 compared to 2022.
• Available capacity. More warehouses report being under capacity or under-utilized than in the prior three years, opening up the opportunity to bring on more clients, diversify services, or partner with other 3PLs to create geographically dispersed 4PL fulfillment networks. This available capacity also will lead to more aggressive customer acquisition efforts in 2024.
• Expensive labor. Although companies report slightly more labor availability, the workforce comes at a higher cost this year, leaving 3PLs to focus on ways to optimize worker productivity and time to contribution. Seventy percent of respondents cite increased labor costs over the last year, and 53% indicate that labor makes up more than 40% of overall business costs.
• Cash flow. With lengthy invoice creation cycles, high interest rates, and customer time to payment slowing, 3PLs see more pressure on managing cash flow and less ability to invest for the future. Those who experienced high profitability growth capitalized on process efficiencies and, on average, were 187% more likely to spend fewer than 8 hours monthly on billing and invoicing.
• Faster fulfillment. This year shows the fastest time to fulfill versus any previous year (see chart), highlighting the need for brands to expand shipping cut-off times for end consumers. Participants who reduced fulfillment time to 90 minutes or less were, on average, 1.5 times more likely to experience high and medium profitability growth.

Preparing for AI Overhaul

A majority (93%) of manufacturing and business-to-business companies plan to increase their investments in artificial intelligence within the next 12 months, finds a new benchmark study from Lucidworks. However, the survey finds differences depending on location: 100% of Chinese and Australian manufacturing respondents say they plan to increase investment, compared to only 92% of U.S. participants.

Here are some additional key takeaways:

• 42% of manufacturing participants have a positive sentiment toward AI, 12% of participants have a negative sentiment and the rest are neutral.
• The most common expected impact of Gen AI in manufacturing is business operations improvement, followed by automation and efficiency gains.

Beyond the Line of Sight

The Federal Aviation Administration (FAA) has authorized UPS’s drone delivery subsidiary, UPS Flight Forward, to operate drones beyond an operator’s line of sight. This effectively permits autonomous UPS drones to fly across much longer distances—and potentially carry packages from a distribution center to customer homes.

UPS plans to utilize Matternet’s M2 drone, which can carry up to 4.4 pounds as far as 12.4 miles in suburban and urban corridors. The parcel delivery giant operates a “remote operations center” in Kentucky and plans to make flights in Florida, North Carolina, and Ohio, FAA officials told Reuters.

The FAA had asked for public feedback on drone authorization requests from UPS and three other prospective operators. The FAA approved Phoenix Air Unmanned’s inspection and aerial work in late August 2023, while the UPS announcement cleared Montana startup uAvionix. The final request—whose name was not disclosed—remains pending.

FAA officials hope to make “beyond line of sight” operations routine, economically viable, and scalable. Agency personnel continue to review the final report of a committee charged with developing those rules.

Warehouse Automation Powers Up

Robotics and warehouse automation are in high demand and poised to grow. As companies look for ways to handle growing e-commerce orders, increase productivity, reduce labor costs, and enhance overall supply chain operations, these high-tech solutions are a potential answer.

Robotics, artificial intelligence, machine learning, and sensor technologies are constantly improving, making robots more powerful, adaptable, and economical for warehouse applications.

The growth is substantial. The global warehouse automation market was valued at $4.4 billion in 2020 and is expected to reach close to $10.45 billion by 2029, with an annualized growth rate of 15.6% from 2022 to 2029, finds Adroit Market Research.

Blowing in the WindWings

A first-of-its-kind propulsion system for large cargo vessels is in the works.

Agribusiness company Cargill collaborated with BAR Technologies, Yara Marine Technologies, and Mitsubishi to debut “WindWings”— rectangular sails measuring more than 120 feet high that can be affixed to cargo ships, using wind power to replace some propulsion that would ordinarily be powered by diesel fuel.

BAR partnered with Cargill to develop the sails with funding from a European Union initiative to decarbonize the shipping sector. The sails were manufactured by Yara Marine Technologies and installed on the Pyxis Ocean, a Mitsubishi-made cargo vessel chartered by Cargill.

The project could help existing ships meet upcoming emissions limits by retrofitting their vessels with WindWings. The global shipping industry accounts for roughly 3% of the world’s greenhouse gas emissions, and the International Maritime Organization recently reached an agreement to gradually bring those emissions down to zero by 2050. Newly built ships, meanwhile, could see average fuel savings of 30%. With alternative fuels, those savings could be even higher.

Project officials plan to monitor the Pyxis Ocean over the coming months to optimize the design and operation for future trips and production. BAR and Yara plan to build hundreds of sails over the next four years.

Panama Canal Disruptions Extend Beyond Droughts

As droughts have caused congestion on either side of the Panama Canal, global supply lines are battling another slew of problems, according to Brian Alster, general manager, third-party risk and compliance, Dun & Bradstreet.

Due to the high volume of ships currently stuck in the canal, the cumulative estimated impact on the supply chain could potentially rise as high as 13,980 TEUs and more than $333.4 million for volume and value, respectively, according to Dun & Bradstreet findings.

The congestion is especially impactful for long-distance shippers that usually carry large cargo volumes through the Panama Canal. With routes still facing a severe decline in shipment volumes, expect significant delays and impacts, especially on micro and small businesses.

The Yellow Effect on the LTL Market

By: Martin Burnham, President, Hercules

When Yellow Corp., the third-largest U.S. LTL carrier, suddenly stopped operations, shippers were left scrambling to find capacity to cover stranded loads. Fortunately, because of the soft LTL market so far this year, there was plenty of available capacity, and carriers were able and willing to step in and transport those loads.

Some shippers had already shifted freight from Yellow to other carriers over the past year to supplement service or improve performance in certain lanes. So when the official closure happened there wasn’t a panic, as carriers had already been gradually incorporating that freight into their network.

While Yellow’s customers were generally able to find capacity to meet their immediate needs, the company’s absence will be felt across the industry, especially as we head into peak season. If the economy plays out favorably, freight volumes will increase and we’ll see some capacity constraints. This could put pressure on companies, similar to what we saw in 2022 when shippers were scrambling for truck space.

Despite lower freight volumes and economic uncertainty, LTL carriers are looking to add capacity and terminals to their networks to meet future demand. Consequently, trucking companies are working to purchase Yellow’s 12,000 trucks and 150 terminals as well as hire the 30,000 drivers suddenly looking for jobs. Not likely to be confined to a single carrier, those shifts will be spread across many LTL players. In fact, as much as 25% to 50% of Yellow’s freight could go to carriers outside the 10 largest LTL providers, according to Goldman Sachs.

Looking ahead, shippers should plan to diversify their carrier base and use those carriers somewhat regularly to keep relationships strong. When freight volumes increase or disruptions arise with other truckers, the other carriers in your network can adapt more quickly and seamlessly because the relationship has been established and necessary connections and system integrations have already taken place.

It’s also critical to select the right carrier partner. Yellow was an attractive option because of its large service coverage and rates that were below the industry average. But when selecting a carrier there’s more to consider beyond cost and network. The following factors will have a tremendous impact on your business:

• Service specialization. In addition to looking for a broad service network, partner with carriers with specialized services or those that are strong in specific lanes and regions that align with your delivery needs.
• Reliable customer service. While much of transportation and logistics has become automated, the human component is still critical. Working with carriers that provide consistent account teams and can be reached quickly when you need them can be critical, especially when disruptions arise.
• Claims. Claims are a nightmare. They upset your customers when goods are not received on time, they upset the carrier as it reduces profitability, and they strain the shipper’s inventory. Find a carrier with a low claims rate to avoid this operational and financial headache.
• Transit time. Predictability and speed are central to today’s supply chain, making fast and consistent transit times important. LTL carriers that allow for nonstop shipments without passing through multiple breakbulk terminals on the way to a destination can result in faster transit times and minimize an opportunity for product damage.

Shippers should be proactive in partnering with LTL carriers that don’t just provide the coverage and rates they want, but also the fast, quality, and on-time service they need.

Shippers Share High Hopes

What are shipper expectations for Q4—traditionally the busiest shipping season of the year? The latest BlueGrace Logistics Confidence Index finds:

• Expected revenue growth. Positive responses increased, indicating most shippers (64%) are optimistic about revenue growth in the fourth quarter of 2023.
• Impact on inventory levels. Responses reveal a nuanced view of shippers’ outlook on inventory levels. Although a slightly larger portion compared to Q3 anticipates revenue fluctuations negatively affecting inventory, the majority still foresees a positive impact. This mix of perspectives suggests a dynamic marketplace where adaptability will be key.
• Order sentiment. A noteworthy finding shows the unprecedented level of neutral responses at 66% regarding order sentiment. This high level of uncertainty hints at an equilibrium between expansion and contraction, implying that most shippers are adopting a cautious approach, likely influenced by prevailing market ambiguities.
• Consensus. The Q4 data reveals a remarkable alignment among shippers in terms of revenue, inventory, and orders. This convergence, not seen in more than one year, showcases a unified perspective within the industry and signifies that stakeholders have identified common ground and expectations for the upcoming quarter.

Shipment Volumes and Peak Season: What to Expect

Facing a complex international scenario of inflationary pressure and high interest rates, there is a ton of speculation around the effects of the 2023 peak season, with global stocks signaling caution and reflecting a slower pace of replenishment.

The cycle of shipments and restocking for 2023 will be very similar to 2022, when the peak season did not increase the respective volumes, experts predict.

“It is expected that the rising interest rates around the world, except in Japan, will make inventory replenishment and shipping less necessary,” says Mario Veraldo, CEO MTM Logix, a logistics company. “However, unlike 2022, when rates were reduced during the high season, there is an expectation that rates will have a small increase this year.”

Veraldo attributes this recovery to global increases in specific product categories, reflecting a growing relationship in product categories in different geographical regions.

“These trends provide insights into current market dynamics, highlighting the importance of adaptability and strategic planning in a complex global market environment,” he notes. “The main challenge lies in the replenishment process in many sectors, which generally involves little data and relies heavily on intuitive ‘gut feelings’. This approach contributed to the whip effects experienced during the pandemic.”

The order book for container ships is at its highest ever, reflecting the restructuring of supply and demand in the sector. This aligns with the trends in global inventory figures, interest rates, and specific product category increases, all of which are influencing the current freight rate dynamics.

These trends suggest a scenario in which, unless the world economy grows and the movement of goods increases, freight rates could fall below pre-pandemic levels. This could lead to a scenario of prolonged deflation, Veraldo notes.

Yellow Went Under. Now What?

Now that Yellow Corp. is out of business, what can shippers do to keep freight moving while limiting costs?

With Yellow’s operations accounting for 9% of total U.S. LTL capacity, its collapse immediately tightened up the market. Other carriers are happy to keep former Yellow freight moving—for a price. Analysts say Yellow rates were 10-20% below competitors, and carriers are raising rates in the aftermath of the bankruptcy.

Pricing aside, carriers are also using the Yellow collapse to optimize the freight they move. If new loads from former Yellow customers are a better, more profitable fit for the carrier’s network than existing freight, they take action to purge less-desirable freight.

How? Mid-contract, out-of-cycle pricing actions. Shippers receive notice of a major rate increase or accessorial charge, and they have the choice to accept it or cancel their contract. An example of this tactic is a carrier changing their rules tariff on lightweight shipments. Carriers have a rule in their tariffs document called the “cubic capacity minimum” that applies an alternate rate or the standard rate—whichever is highest—to lightweight, low-density shipments of 750 cubic feet and greater that weigh 6 pounds per cubic foot or less.

For some carriers, the cubic capacity minimum now has been updated to apply to shipments of 350-750 cubic feet at 4 pounds per cubic foot—targeted to price out light, fluffy freight and smaller shipments. The shift makes shipments as small as three pallets eligible for the cubic capacity minimum, down from the previous 6 pallets threshold.

The cyclical nature of transportation supports the fundamentals for shippers: Build lasting relationships and maintain favorable contracts by upholding practices that make them a shipper of choice.

But careful analysis can also pay off. Identifying lane imbalances can allow shippers to capitalize on major differences among carriers that yield meaningful cost savings.

Success in today’s LTL market requires investing in the give-and-take of long-term carrier relationships and digging deep to capitalize on opportunities when market conditions work in their favor.

– Kevin Day, President, LTL, AFS Logistics

Taking a Hard Look at Drayage

The U.S. drayage industry is poised to grow from $6.1 billion in 2022 to $8.3 billion by 2027. A new report from PortPro, a drayage software provider for drayage carriers, identifies the following trends:

•  Primary growth drivers come from a global increase in consumer demand for ecommerce. Areas to watch for more future growth include electronics, food and beverage, autos, chemicals, oil and gas, and pharmaceuticals.
•  Drayage is at a technological crossroads. Growth-minded drayage carriers are adopting technology to digitize operations and improve efficiency and services.
•  Increased investments to strengthen the infrastructure of the entire port ecosystem to accommodate growth in consumer spending and imports. Improvements to bridges, new equipment, new larger vessels, overall operation expansion, new technologies, and more employees impact all players.
•  A sustainable future is top of mind, but slow in adoption. Carriers share concerns for building infrastructure to support e-fleets and other AI opportunities on the road and in warehouses.

Regulations Roundup

No matter what industry your company is in, you need to stay aware of relevant regulations and take steps to comply.

Here is a brief roundup of some major government agencies in the logistics and supply chain space and their current rules.

Federal Motor Carrier Safety Administration (FMCSA)

The FMCSA regulates commercial motor vehicle (CMV) safety in the United States. This includes regulations on securing cargo, driver hours of service, and vehicle maintenance. Recent FMCSA rules include:

• More frequent drug and alcohol testing for drivers. The FMCSA now requires truck drivers to be tested for drugs and alcohol at least once every two years, and more often if they have a positive test result or are involved in a crash.
• Electronic logging devices (ELDs). All commercial motor vehicles must be equipped with ELDs that track driver hours of service. This rule was originally implemented in 2017, but some exemptions expired in 2023.
• More efficient and effective safety fitness determinations. The FMCSA’s new safety fitness determination process focuses on identifying carriers that are most likely to pose a safety risk, and takes into account a wider range of factors, such as vehicle maintenance records and driver history.
• The safe introduction of automated driving systems (ADS). The FMCSA has published a notice of proposed rulemaking (NPRM) for ADS-equipped commercial motor vehicles. The NPRM seeks comment on several issues, including how to ensure that ADS-equipped CMVs are operated safely and how to address the liability implications of these vehicles.

Food and Drug Administration (FDA)

The Food and Drug Administration regulates the safety of food, drugs, and medical devices including how they are manufactured, transported and stored.

While there are no new transportation regulations specifically for 2023, the FDA’s key transportation regulations include:

• Hazard Analysis and Risk-Based Preventive Controls for Human Food rule. Requires food facilities to identify and control hazards that could cause foodborne illness, and to implement preventive controls to reduce the risk of these hazards.
• Sanitary Transportation of Human and Animal Food rule. Establishes sanitary practices for truckers and rail shippers, loaders, and receivers involved in transporting human and animal food to ensure its safety.
• Current Good Manufacturing Practice (cGMP) regulations for Finished Pharmaceuticals: Establishes requirements to ensure quality and safety during the manufacturing, processing, packaging, labeling, and holding of finished pharmaceuticals.

Environmental Protection Agency (EPA)

To reduce greenhouse gas emissions and air pollution from vehicles, the EPA has proposed several new transportation regulations for 2023, including:

• New fuel economy standards for light-duty vehicles. These standards would require light-duty vehicles such as cars and trucks to get an average of 55 miles per gallon by 2026, up from 40 miles per gallon in 2023.
• New emissions standards for heavy-duty vehicles. These standards would require heavy-duty vehicles such as trucks and buses to emit less nitrogen oxides and particulate matter.
• Renewable fuel standards. These standards would require a certain percentage of transportation fuel to come from renewable sources, such as corn ethanol and biodiesel.
• Proposed regulations on electric vehicles. These regulations could include requirements for automakers to sell a certain number of electric vehicles each year, or for utilities to provide charging infrastructure for electric vehicles.

Governing Bodies

Here are some other government agencies issuing regulations that may affect your supply chain and logistics operations:

Occupational Safety and Health Administration (OSHA) regulates workplace safety.

Customs and Border Protection (CBP) regulates the import and export of goods.

Department of Transportation (DOT) regulates the transportation of goods by air, land, and sea.

Securities and Exchange Commission (SEC) regulates the financial aspects of supply chain operations.

Sky Miles

We’re one step closer to the future after Alef, a startup developing a flying car, was recently granted Special Airworthiness Certification by the Federal Aviation Administration.

Alef’s all-electric Model A can drive on roads and also vertically take off and land. It has a driving range of 200 miles and a flight range of 110 miles. The gimbaled cabin of the vehicle remains steady and stable during flight since it’s mounted to a rigid frame that allows it to pivot. The propellers are enclosed within the frame to enhance safety and cut down on noise.

The Model A currently is designed to accommodate one to two passengers, but the company says it is developing a Model Z four-person sedan with increased range. As testing continues, Alef says it remains on track to deliver the first Model A vehicles by the fourth quarter of 2025. The Model Z will have to wait until 2035.

Oh, the price? A mere $300,000.

Don’t Get Held Up for Ransom

To avoid supply chain ransomware attacks, follow this advice from Adam Scamihorn, product director, InterVision:

1. Deploy proactive cybersecurity defense measures. The only way to prevent an attack—or curtail its impact on business continuity—is to enact a ransomware protection strategy.

2. Include zero-trust security in your cyber-defense practices. Zero-trust systems require robust and frequent user authentication through multi-factor authentication and single sign-on protocols, regardless of where the user is geographically located.

3. Work with a cybersecurity partner, either through an internal position like head of cybersecurity, a third-party vendor, or both.

4. Procure a ransomware response strategy. Evaluate and test the response strategy with both desktop exercises and disaster recovery testing that utilizes a secure gapped recovery site with immutable data repositories.

5. Consider a cyber insurance plan. Cyber insurance covers some losses associated with a ransomware breach, including direct damages stemming from encryption or data loss.

6. Evaluate your suppliers’ cybersecurity practices. Consult with suppliers to ensure full visibility into their ransomware response plan and general cybersecurity measures.

7. If breached, note the damage and file a report. Pinpoint all affected devices and categorize impacted data. Work with legal counsel to determine the scope of legal and regulatory concerns based on the data impacted. This will inform the next appropriate steps to take.

8. When necessary, address ransomware appropriately. It is never wise to pay a ransom. Instead, focus on restoring device functionality expeditiously.

9. Inform stakeholders if a breach occurs. Work with legal counsel and develop an appropriate communication strategy. Be clear and upfront when informing top stakeholders of the damage and its possible ramifications.

10. Review internal processes and make improvements after a breach. Identify where the ransomware entered and fortify that gap. Invite outside parties to review security protocols and ensure that future ransomware attacks fail.

The full article is here.

Ryder Rides AI Wave

To prepare for the coming artificial intelligence (AI) wave, Ryder Systems has established Baton, A Ryder Technology Lab, based in Silicon Valley.

Baton’s mission is to pioneer customer-facing technologies to revolutionize how Ryder customers interact with their transportation and supply chain networks. These technologies will digitize and optimize networks at a level not currently available in the industry.

Leading Ryder’s innovation lab are Andrew Berberick and Nate Robert, co-chief product and technology officers for Ryder. The two founded San Francisco-based startup Baton, which was known for the development of a proprietary logistics technology focused on optimizing transportation networks. Ryder acquired the startup in 2022.

Baton’s first challenge is to create a first-of-its-kind, AI-powered digital platform and optimization engine that facilitates a new, integrated approach to managing transportation networks for customers where seasonality and fluctuating demand inhibit the continuous use of resources.

Ryder’s Nate Robert (left) and Andrew Berberick at Baton. (Photo: Business Wire)

Tech Adoption on the Rise

Innovative technology is on the rise and companies are ready to invest. The top technologies for investment in the near future are artificial intelligence/machine learning and 3D resource planning software, coming in ahead of electric vehicles, robotics, and new WMS/TMS software, according to the latest CartonCloud Logistics Index Report.

Of nearly 2,000 respondents surveyed, 27% say their business is likely to invest in artificial intelligence/machine learning in the coming months. This was closely followed by 3D resource planning software at 26%, and robotics and automation at 23%.

Anticipated Volume Growth Lifts Intermodal Outlook

Total intermodal volumes fell 10.4% year-over-year in the second quarter of 2023, according to the Intermodal Association of North America (IANA). All segments showed declines: domestic containers, 6.3%; international containers, 13.2%; and trailers, 20.1%.

“Slower year-over-year demand for goods and a competitive freight environment have taken its toll for a second quarter,” says Joni Casey, president and CEO of IANA. “On the other hand, the numbers suggest a later peak this year and an improved picture for the second half of 2023.”

The seven highest-density trade corridors, which collectively handled more than 60% of total volume, were all down in the second quarter. Total intermodal marketing company volume fell 31.9% year-over-year in Q2, with intermodal traffic down 16.5% and highway loads down 39.7%.

CEOs Set Supply Chain Priorities

A majority of CEOs are spending more time on supply chain issues, finds the 2023 Supply Chain Barometer from procurement and supply chain consultancy Proxima.

The research also reveals that:

• Supply chain issues remain a headache. More than half (52.6%) of CEOs say they expect to spend more time on supply chain issues in the coming 12 months.
• Human rights issues are a key concern. More than two-thirds of CEOs (70.3%) say they are concerned about the potential for human or labor rights issues in their supply chain.
• Global supply chains are being rewired. In last year’s Supply Chain Barometer, just over one-quarter (26%) of CEOs said they had actively looked at on- or nearshoring some or all of their supply chains. This year’s results find that 4 in 10 (44.6%) CEOs in the United States who have a resilience problem are already either onshoring or considering it as an option, and a similar ratio (39%) are looking seriously at nearshoring.
• Progress is slow on decarbonization. The research shows that just over one-third of U.S. CEOs (34%) say they have a formal business plan for decarbonization, and 34% have begun strategic collaboration conversations with their suppliers.

Weaving CO2 Into Yarn

Walmart is teaming up with a California startup to test technology that removes  carbon dioxide from its supply chain, with plans to eventually turn that CO2 into yarn for clothing.

As part of a pilot project with San Leandro-based Rubi Laboratories, Walmart will identify factories in its supply chain where carbon dioxide in waste gases can be captured using Rubi’s reactor systems.

The majority of the world’s captured CO2 is currently used for oil extraction, according to the Global CCS Institute, but Rubi’s system uses biochemical processes to convert the gas to cellulose, the main substance in the walls of plant cells. It’s a technique inspired by the way trees use carbon dioxide to grow.

That cellulose is used to produce lyocell yarn, which can be made into textiles. After performance testing, Walmart and Rubi plan to develop a prototype apparel collection. The pilot project runs through the end of 2024.

Top 3 Emissions Challenges and Priorities

What does the current landscape of corporate sustainability efforts look like? According to Optera’s 2023 trend report, Corporate Emissions in 2023: Large Organizations’ Top Challenges & Priorities, key trends include:

1. Emission reduction and regulatory compliance are top priorities. One-third of respondents report emissions reduction project implementation as the most pressing task this year. Compliance with regulations and verification comes close behind, with 25% of respondents citing it as their top priority.

2. Emission inventory processes are on the rise. The study reveals that 72% of organizations have undergone at least one emission inventory process.

3. Sustainability leaders are concerned about inaccurate emissions data. Fewer than 30% of respondents use tools that address the most common data issues. Incomplete and inaccurate data is holding back sustainability leaders from comprehensive, high-fidelity emissions data collection and analysis.