This Week in Logistics News (August 11 – 17)

logistics news

According to the National Retail Federation (NRF), total spending for K-12 schools and college combined is projected to reach $82.8 billion, nearly as high as last year’s $83.6 billion. The top four categories for back to schoolers (not back to college) are clothing ($236 million), electronics ($187 million), shoes ($138 million), and supplies ($122 million). While I still need to bring my kids shopping for a few new articles of clothing and shoes, our school district made buying supplies much easier for us this year. We were able to pre-order the required supplies for their classrooms through an online program, and the supplies will be waiting for my kids on their desks on day 1. It really does not get any easier than that. And if there’s one thing I love, it’s when things are easy. And now, on this week’s logistics news.

Uber is restructuring its freight brokerage division, meaning that Uber Freight will no longer be part of the parent’s Advanced Technologies Group. Uber will also close a deal to buy Otto Trucking, one of the two units that had been controlled by Otto, a company that Uber acquired in August 2016. These moves are part of Uber’s long-term strategy to move forward with its freight business and double its investment in the new unit over the next year. The unit of Otto Trucking that Uber will acquire develops technology to support the logistics services offered by Uber Freight. As part of the closing of the Otto Trucking deal, Otto Founder Lior Ron will return to run the newly created Uber unit. This announcement comes on the heels of the company’s announcement that it is closing its autonomous truck business.

Local union leaders representing the International Brotherhood of Teamsters has approved two five-year contracts with UPS and UPS freight workers. This approval paves the way for the 250,000+ workers the Teamsters represent to vote on the contracts in September. The new contract calls for a $4.15 per-hour raise over the five years of the contract, which would bring current driver’s average salary up to $83,000 per year. UPS and the union said they agreed to create 5,000 full-time jobs during the life of the contract, including a minimum of 2,000 sleeper team jobs by taking work off from freight railroad and onto trucks. Finally, the agreement creates a new class of driver, the “hybrid driver,” who work weekdays and weekends, whose pay would top out at more than $72,000 a year.

The Indian online grocery market is heating up. This week, Flipkart has announced the launch of its grocery store, Supermart. Supermart is Flipkart’s vehicle to take on the likes of Alibaba-backed Big-Basket, Grofers, and Amazon India. The company is planning to invest $264 million in the grocery vertical over the next three years. The company had a soft launch in Bengalaru a few months ago, and the initial numbers look promising. According to company officials, grocery transactions already form 25 to 30 percent of Flipkart’s overall number of transactions in the city. Flipkart is looking to expand the grocery business to Hyderabad, Chennai and Delhi by the end of the year.

As the trade conflict with China continues to heat up, China has filed a complaint with the World Trade Organization (WTO) regarding the legality of US policies. Specifically, China has said that a US decision to subsidize renewable energy firms and impose tariffs on imported products has seriously distorted the global market and harmed China’s interests. The complaint should not make an immediate impact, as Chinese exposure to the US market was already reduced by earlier trade disputes. In response, the US has accused China of using subsidies and bulk manufacturing capacity to drive down prices and put US competitors out of business in a range of sectors.

Shipt, the online grocery delivery service recently acquired by Target, is expanding its service in eight states. The company said it plans to begin same-day delivery of groceries, fresh food, household essentials, home goods, and other products from Target and Hy-Vee stores in select markets in Illinois, Iowa, Minnesota, Missouri, and South Dakota. The expansion brings the service to an additional 820,000 households across these five states. Shipt will also debut its service in Maine, while expanding in Connecticut and Wisconsin. Shipt currently services approximately 50 million households with growth plans to reach 80 million by the end of the year.

Trucking’s tight capacity is putting the squeeze on many US businesses. Empty trucks are harder to come by, and the result is reduced capacity and higher prices. Part of the capacity crunch is the driver shortage, while new ELD regulations have turned some lanes that were once a 1-day haul into 2-day hauls. The crunch is being felt this summer; while July is typically a slow month, spot market rates for July 2018 rose 29 percent compared to July 2017. This marks 17 straight months of year-over-year spot markets gains.

Rhode Island is at it again. A few years ago, the state announced plans to install toll gantries that would target class 8 trucks to raise money to fix state roads. Well, the state is once again preparing to charge tolls on major roadways to trucks only to raise more money to fund repairs to the state’s bridges. Rhode Island began collecting tolls at two locations in the southern part of the state in June. Within the next year- and-a-half, the state is planning to add 11 to 12 more automatic toll plazas including locations near the Attleboro, North Attleboro, and Seekonk lines along interstates 95, 295, and 195. It will be interesting to see if more states follow Rhode Island’s lead to target trucks to fund critical repairs.

That’s all for this week. Enjoy the weekend and the song of the week, Take It Easy by the Eagles.