This Week in Logistics News (June 2 – 8)

logistics newsMy kids have officially become obsessed with Hamilton, Lin-Manuel Miranda’s masterpiece musical about the life of American Founding Father Alexander Hamilton. Every time we get in the car, the first thing they ask for is to listen to Hamilton. They sing the songs constantly, day and night, taking turns between who gets to be Alexander Hamilton and who gets to be Aaron Burr – the oldest always ends up being Hamilton. Over the last couple of months, Lin-Manuel Miranda has revisited the Hamilton mix tapes and started to release a monthly “Hamildrop” which is a cover of one of the songs, often done in an entirely different style. The first one I heard, and played for my kids, was Weird Al Yankovic’s Hamilton Polka, which my kids find hilarious and amazing at the same time. In May, Helpless by the Regrettes dropped. It is a high energy rock version of the original. I still have a few more months before I get to see Hamilton, but the monthly Hamildrop will help me get through the wait. And now on to this week’s logistics news.

The Teamsters union and UPS are in the midst of negotiating a new contract, with the current contract expiring July 31. Earlier this week, unionized UPS workers authorized a strike as they continue to bargain for their new contract. This is common tactic in union contract negotiations, but nonetheless, if the union does strike it could deal a significant blow to the package delivery giant’s operations. The Teamsters reported that more than nine out of 10 members voted to support a strike if necessary. So far, the two sides are eight weeks into the negotiations, and do not appear to be close to striking a deal.

The trade war is picking up steam, and Mexico has retaliated for the tariffs the United States has placed on steel and aluminum imports. On Tuesday, Mexico imposed a series of tariffs against US exports to its market valued at $3 billion. The tariffs range between 15 percent and 25 percent, and will raise the prices of US products including pork, apples, potatoes, bourbon, and cheese. The tariffs will impact just over 1 percent of US exports to Mexico, but the message is clearly political. Just consider the fact that Senate Majority Leader Mitch McConnell is from Kentucky, and Kentucky bourbon is one of the biggest targets by Mexico. In addition to the agricultural products and bourbon, Mexico imposed tariffs on a variety of US steel products exports.

Speaking of the steel and aluminum tariffs, China is negotiating to have the tariffs removed. The US is demanding that China reduce an existing $375 billion trade deficit by $200 million, cease state funding to Chinese companies that compete internationally, and stop Chinese companies from taking intellectual property from US companies as a prerequisite for doing business. If China does not meet these demands, the tariffs will go into place on July 15. Chinese vice-premier and lead negotiator Liu He told Commerce Secretary Wilbur Ross, his Washington counterpart in the discussions, that China would buy $70 billion worth of American agricultural and energy products including soybeans, corn, natural gas, crude oil, and coal. However, China has said that if the tariffs are indeed imposed, the deal would be rescinded. This could get very interesting.

Uber Freight has added a new feature to its mobile app that is targeting small trucking fleets. The “fleet mode” tool on the app is targeted towards fleet owners of 10 trucks or less. Initially, the app was designed for owners of one truck, and small fleets could not compete. The new feature allows dispatchers to find and assign loads based on multiple drivers’ availability without leaving the app. Uber Freight sees this as a huge market opportunity as, according to the Federal Motor Carrier Safety Administration (FMCSA), nearly 90 percent of all motor carriers in the US have 6 or fewer trucks.

Alibaba has announced a couple of technology innovations that provide a glimpse into the future of the company’s delivery strategy. The first is an autonomous delivery robot named the G Plus. The robot can carry multiple packages of different sizes, travel longer distances than its predecessors, and moves at a blistering 9.3 mph. The loading box can also change sizes depending on what is being delivered. The robot uses a built-in navigation system that relies on LIDAR, and will reduce its speed in crowded areas. Once the robot reaches its destination, it will automatically drop off the package or a customer can enter a PIN to retrieve the package. The second piece of technology is the Cainiao box, which is a storage locker equipped with facial recognition software. The box, which can be installed right outside a customer’s door, will only open for the owner or delivery people. The box is also temperature controlled through an app, so fresh food and frozen items can be delivered as well. The G Plus will begin commercial production by the end of the year, but there is no timetable for the Cainiao box.

Shell Lubricants and Airflow Truck Company have announced the results of the Starship Initiative demonstration run, which was a six-day, 2,410-mile trip from San Diego to Jacksonville, FL along Interstate 10. The truck averaged 8.94 mpg during the trip, which is about 3 mpg more than the industry norm. But as Shell pointed out, this is not the only metric that is worth measuring. The trial also looked at freight ton efficiency, which takes into account the weight of the load being hauled plus mpg. In the demonstration, the truck achieved a freight ton efficiency average of 178.4 ton-miles per gallon, a 248 percent improvement over the on-highway Class 8 industry average of 72 ton-mpg. While the truck incorporated some design elements to lower its weight, such as a carbon-fiber body and hood, it also included a number of additional aerodynamic features, such as roll cage tubing and trailer-mounted solar panels, that brought its weight up to the standard 33,000 pounds. Carlos Maurer, Shell Lubricants America president, said if all 2 million trucks in the United States could achieve the same freight ton efficiency as the Starship, it would reduce 229 million tons of CO2 per year, which is a 60 percent drop from current levels.

And finally, spot rates have surged to record highs. According to monthly data from loadboard Truckstop.com, all three major truckload segments, dry van, reefer, and flatbed, have reached record highs. Dry van rates climbed 3 cents in May, to $2.52 a mile, second only to January’s $2.54 a mile monthly average. Compared to last May, van rates were up 60 cents in May. Reefer rates grew 10 cents in May from April, to $2.81 a mile — a 74-cent increase from May 2017 and the highest monthly average on record for reefer haulers. Flatbed rates jumped 9 cents in May to $2.75 a mile, which is the highest average since Truckstop.com began distributing monthly rates data. It also represents a 50-cent jump from the same month last year.

That’s all for this week. Enjoy the weekend and the song of the week, the latest Hamildrop, Helpless by The Regrettes.