Another week, another winter storm in the Northeast. It is a seemingly endless onslaught of snow, with another potential blizzard on the horizon. Last week I wrote about e-commerce grinding to a halt with the back-to-back storms, and Clint Reiser wrote about the weather’s impact on the supply chain (and his pursuit of a roof rake). Well, things are just going to get worse. I have nowhere to put the snow anymore, nor do any of my neighbors, surrounding towns, or major cities. Aside from the visibility issues of 10 foot tall snowbanks, delivery trucks have nowhere to park. I’ve seen countless delivery trucks “parked” in the middle of the road, blocking the flow of traffic. While this is something that would normally irritate me, these drivers have nowhere else to go, and no other alternatives. The result is traffic congestion, delayed deliveries, and a sense of longing for spring. Luckily, yesterday was truck day for the Red Sox. Only 52 days until opening day.
And now, on to the news.
- West coast ports shutting down…again
- Walmart tests grocery pick-up service
- Sidecar pushes into package delivery
- Winter storm wreaks havoc on northeast e-tailers
- Cass Freight Index report points to 2015 growth
- For-hire trucking increases 3.5%
As of yesterday, West Coast ports are shutting down for four days as a result of the ongoing labor standoff. The ports on the West Coast run from Seattle to Los Angeles, and account for half of the imports into the United States. Previously, there had been worker slowdowns which resulted in massive gridlock and a slow flow of goods from the ports. But this shutdown could be devastating. According to National Retail Federation and National Association of Manufacturers, a shutdown of ports in cities like Los Angeles, San Francisco, Portland and Seattle would cost the U.S. economy almost $2 billion per day.
“The last prolonged port shutdown of the West Coast ports was the 10-day lockout in 2002 which some estimate cost the U.S. economy close to $1 billion a day and took months to recover from. The NRF-NAM estimates that a five-day stoppage would reduce GDP by $1.9 billion a day. This would increase exponentially with a 20-day stoppage resulting in a loss of $2.5 billion a day.”
Walmart is jumping into grocery pick-up service. The retail giant is testing the service at three Arizona stores, as well as one in Bentonville, AR and Denver, CO. The retailer is offering thousands of items, from fresh produce and dairy to electronics and toys. Unlike other online services, which typically include a $10+ delivery fee, Walmart’s pick-up service is free to customers provided they place a $30 order. Customers choose a delivery timeframe at check-out and receive a call when their order is complete. Upon arriving at the store, they call a designated telephone number and a store associate will load the groceries into their car. This service could have a big impact on working parents, as they can place an order in the morning and pick up the groceries on their way home from work. Depending on how successful it is, there could certainly be labor implications of picking and running groceries all day.
Sidecar, a ride-hailing start-up in competition with the likes of Uber and Lyft, announced plans to use its fleet of cars to introduce a package delivery service, delivering items like food and groceries for partner companies. The program will use drivers that are already picking up and dropping off customers. This move will put Sidecar into same day delivery category, competing with the likes of Amazon and Google, as well as other smaller companies like Deliv and GrubHub. This is an interesting move by Sidecar, as it is combining two increasingly popular services – same day delivery and crowdsourced delivery. It is probably an easier transition for an established company than for a new start-up to just compete in the delivery market.
Another winter storm as brought the e-commerce world to a halt. Monday’s storm in Boston dropped another twenty inches of snow on an already snow covered world. As a result, UPS canceled all pick-ups and deliveries in Boston. FedEx also warned of significant delays across the region. With so many e-tailers dependent upon their delivery network, since they do not have their own private fleets, this news was devastating. E-tailers are warning shoppers that their orders will most likely be delayed, costing them both money and customer satisfaction points. Just how costly has the winter been? According to Adobe, a storm on January 27 cost retailers an estimated $35 million in sales.
The Cass Freight Index report points to continued growth in 2015. The report noted that the economy was “much stronger” in 2014, with the year representing the best year for the supply chain sector since the recession. But even with a strong performance, strong GDP seen during the second and third quarters tailed off in the fourth quarter in the form of more modest growth, coupled with the ongoing issues at West Coast ports centered around labor and capacity issues and also negatively impacting late December shipment volumes. January freight shipments—at 1.027—were up 2.7 percent annually and down 4.7 percent compared to December.
And finally, steady job gains in the trucking industry have brought employment levels back to pre-recession levels. For-hire trucking companies added about 2,400 jobs in January, which is a 3.5% growth over last year. The for-hire trucking industry nearly doubled its hiring rate in 2014, expanding payroll by 46,000 jobs, compared with 24,900 in 2013. But even with the continued growth, the driver shortage is still a concern, as driver demand cannot be met. Many trucking companies are looking at cost-effective incentives to bring in new drivers, but there is still a long road ahead.
That’s all for this week. Enjoy the weekend and the song of the, California Dreamin’ by the Mamas and the Papas.