Happy new year and welcome back to the Logistics Viewpoints news round-up. The holiday season was another record breaking year, as customers flocked to the web and to the store for all their gift-giving needs. And for those living near the Dutch coast, an additional round of gifts is showing up. Or should I say washing up. An estimated 270 containers are thought to have been knocked off the Panamanian-flagged MSC Zoe in rough seas near the German Wadden Sea island of Borkum. Beach combers have been picking up the spoils in Vlieland, Terschelling and Ameland. The items include chairs, toys, and even flat-screen televisions. However, people have been warned to keep away from closed containers, as three contain organic peroxides, which are highly explosive. Hopefully everyone will heed that advice. And now, on to this week’s logistics news.
- Laundry detergents shrink for Amazon
- Buy online, pick-up in-store drives holiday retail sales
- Trump hails “big progress” towards China trade deal
- China to restrict imports of scrap steel, aluminium from July
- Freight delays loom if government shutdown goes long-term
- Walmart in the news:
As e-commerce continues to grow, so too do the cost of last mile deliveries. As a result, retailers and brand manufacturers are looking at ways to make every order as profitable as possible. One way to do this is to make packages lighter. Tide and Seventh Generation have introduced redesigned laundry detergents that are several pounds lighter by cutting down on plastic in their packaging and using less water in their formulas. This means lower shipping costs for Amazon and other online retailers. For consumers, the new packaging has been designed to better survive the shipping process without leaking. Tide is putting its detergent into a cardboard box, making it 4 pounds lighter than its 150-ounce plastic bottles, but still able to wash the same 96 loads. Seventh Generation went with a compact plastic bottle that’s less than 9 inches tall, rectangular in shape and has no measuring cup.
Speaking of Amazon and shipping costs, brick and mortar retailers found a secret weapon this holiday season to help in the battle for market share: buy online, pick-up in-store (BOPUS). Retailers like Walmart, Best Buy, and Target expanded their BOPUS offerings this holiday season. The goal is two-fold. First, offering free in-store pick-up satisfies the same-day need of customers, or adds flexibility for customers that do not want an item shipped to their house. I actually took advantage of BOPUS for a gift this year for my wife, as I didn’t want her to see the LL Bean box on our doorstep. Secondly, it gets the customer in the store for cross-sell and up-sell opportunities. So just how much did these retailers use the service? According to Adobe Analytics, BOPUS spending increased 47 percent from November 1 to December 19 compared to a year ago, making it the biggest holiday on record for online pickups.
The escalating trade war, and the hope for advanced negotiations, have been a hot topic around here. According to President Trump, there has been “big progress” between the President and his Chinese counterpart Xi Jinping. The two presidents spoke at length by telephone Saturday, with each expressing satisfaction with trade talks initiated after their meeting earlier this month in Argentina. Trump said in a tweet that negotiations were “moving along very well” toward a comprehensive deal, while Chinese state media said Xi believed both sides wanted “stable progress.” A US trade delegation is heading to China next week to continue discussions. The planned discussions have both nations hopeful that the trade war may be easing, and a lasting agreement can be made.
China has announced another policy regarding imports. This time, the country is restricting the imports of scrap steel and aluminium starting July 1. Currently, scrap steel is on the unrestricted import list of solid waste products usable as raw materials. Starting July 1, scrap steel will be placed on a restricted import list, according to the Ministry of Ecology and Environment. Copper and aluminium raw materials meeting relevant national standards would not be considered solid waste, and can be imported as regular goods, it said. In the last year, China has clamped down on solid waste imports. The restrictions on waste imports are part of a “war on pollution” begun in 2017 that aims to clean up the economy and encourage domestic firms to recycle.
The government shutdown is nearing day 14 and has affected nearly 800,000 workers. Democrats have vowed to pass a funding bill; however, it does not include funding for the southern border wall, and Senate Republicans say they will not pass the bill without President Trump’s approval. The impact on the supply chain could be felt soon, as freight delays loom if the shutdown goes long-term. Reports indicate that backups and congestion on land and along the waterfront will be the most impactful, due to a lack of customs clearance personnel. The Port of Los Angeles for example, which is the country’s largest container port, relies on both the US Customs and Border Protection and the US Coast Guard for clearing and securing freight. Both are part of the Homeland Security department, which is affected by the shutdown. Port of Los Angeles spokesman Phillip Sanfield said the shutdown has so far not slowed freight clearance as customs and security agents there are exempt from the government funding problem. However, if the shutdown goes long-term, this could all change as the port expects record import volumes.
The driver shortage has been a growing concern for the shipping industry. However, in 2018, Walmart hired around 1,400 new drivers, up from 922 in 2017. Since August, the retailer added about 694 drivers in net fleet growth, a number which includes the turnover that’s coming mostly from retiring drivers. In direct response to the shortage, Walmart began aggressively hiring drivers this fall by offering $1,500 referral bonuses, using social media to reach the younger generation, shortening the application time from 73 days to 31 days, and changing the format of its hiring events resulting in a higher pass rate. Drivers still must have at least 30 months of experience and meet other stringent requirements. A first-year driver can expect to make $86,000 driving for Walmart.
Walmart is making a big bet on home delivery in China as e-commerce continues to grow. In its second year of a partnership, Walmart is introducing a new sales model with Chinese logistics company Dada-JD Daojia. The company is also exploring smaller stores and focusing on China’s lower-tier cities. In its latest store opening, Walmart is occupying about half the normal square footage of its typical “hypermarket” and will use a mini program within China’s ubiquitous WeChat messaging app to check out digitally. Customers that live within three kilometers of a store can also get guaranteed one-hour delivery. These are the moves the retail giant needs to make to stay competitive with Alibaba in the most populous country in the world.
That’s all for this week. Enjoy the weekend and the song of the week, Wipe Out by the Safaris.