Welcome back. I hope everyone had a relaxing holiday season and was able to get some much-needed rest. I know I certainly did. And luckily, unlike a large number of people out there, all of my Christmas packages arrived on time (although there were a few close calls). According to new data, while UPS, FedEx, USPS, and other carriers handled a record crush of holiday packages, some 2 million packages arrived late. According to ShipMatrix, the on-time delivery rate for UPS was 97.6 percent for packages scheduled for delivery between December 20 and 26, while FedEx came in at 96.5 percent and the Postal Service at 94.7 percent. All in all, I think this was actually better than a lot of people expected, given how quickly capacity sold out, and how much e-commerce volume was expected this holiday season. And as the saying goes, better late than never. And now on to this week’s logistics news:
- New COVID vaccines need absurd amounts of labor and materials
- Tesco and Boots to help distribute Oxford/AstraZeneca vaccine
- H-E-B, Hy-Vee kick off COVID-19 vaccinations
- Amazon buys Boeing jets from Delta, WestJet
- A Canadian “buy-local” effort fights Amazon on its own turf
- US to allow small drones to fly over people and at night
- West and east coast ports report strong November volume
- UK freight shipping costs quadruple after Brexit, COVID
The first doses of the COVID-19 vaccine began arriving at hospitals last month, which sent a surge of hope around the world. However, since that time, the supply of the vaccine has been short of what was initially expected, leaving hospitals scrambling to get their hands on more supply. The issue here is that the new vaccines need an absurd amount of labor and materials to be manufactured, especially considering that a vaccine has never been made at this speed or scale before. Much of what is needed to produce these vaccines are in short supply, and there are not any facilities in the world that have manufactured them at the required scale before. Pfizer and Moderna have been building out their supply networks to move from clinical stage production to large scale production. However, each step in the manufacturing process requires raw materials that, before COVID, were only produced in the amounts needed for clinical research.
Tesco and Boots are ready to help the UK government distribute the new COVID vaccine developed by Oxford/AstraZeneca. Unlike the recently approved vaccines developed by Pfizer and Moderna, which need to be stored at ultra-cold temperatures, the Oxford/AstraZeneca vaccine can be stored at warmer temperatures. This means that it can be stored and transported in regular refrigeration trucks. Tesco has offered to use its country-wide distribution company Best Food Logistics to aid the roll out of the vaccine. Boots is preparing to open three COVID-19 vaccination sites in Halifax, Huddersfield, and Gloucester in conjunction with local GP-run clinical commissioning groups, with plans to open more in the coming weeks.
In the US, two regional grocery chains, H-E-B and Hy-Vee, have begun administering the Moderna COVID vaccine to health care personnel. H-E-B is using its partnership with the Texas and the Center for Disease Control & Prevention (CDC) to provide frontline health care workers with COVID-19 vaccinations, administered by their pharmacy staff. The company has been allocated a very limited supply of vaccines by the state and is adhering to the phased approach of vaccinating health care workers and community health providers who are caring for symptomatic COVID patients. H-E-B has requested another vaccine allocation to keep up with demand. Hy-Vee is also administering the Moderna vaccine to frontline health care workers in Iowa and Minnesota. Hy-Vee announced that it plans to hire 1,000 pharmacy technicians across its market areas as it works to expand coronavirus testing and prepare for the distribution of COVID-19 vaccinations.
Amazon continues to grow its air fleet to move goods around the country. Earlier this week the company announced it is buying 11 used Boeing 767-300 jets from Delta and WestJet as prices have dropped. The move is not overly surprising given how much the pandemic has fueled not only e-commerce growth, but the expectation of faster shipping options. The four WestJet planes are being converted to cargo jets and will join the Amazon Air fleet this year, while the seven Delta planes will be added in 2022 after their conversion. Amazon said the Amazon Air fleet will have more than 85 planes, both leased and owned, by the end of 2022.
As Amazon continues to grow, so too does the pressure on small businesses that are trying to compete with the e-commerce giant. In Canada, the COVID lockdown pushed more people to explore e-commerce options, and one local shopper was trying to figure out what local stores offered curbside pick-up. Ali Haberstroh realized that companies like Amazon, Walmart, Target, Costco, and numerous other large retailers were thriving during the pandemic, while the local stores were struggling. As a result, a website called Not Amazon was created to drive sales to independent stores. So far, the website has garnered more than half a million page views and grown to include 4,000 businesses across Toronto, Calgary, Halifax, and Vancouver. The site is now submission-based, and thousands of businesses are awaiting Ms. Haberstroh’s approval.
The Federal Aviation Administration (FAA) Has taken additional steps toward make commercial drone deliveries a reality. The FAA said its long-awaited rules for the drones will address security concerns by requiring remote identification technology in most cases to enable their identification from the ground. In its latest decision, the agency said small drones will be allowed to fly over people and at night in the US. Previously, small drone operations over people were limited to operations over people who were directly participating in the operation, located under a covered structure, or inside a stationary vehicle. The rules will take effect 60 days after publication in the federal register in January.
The nation’s ports continued to see record or near-record rates along the east and west coast. With the holiday season in full swing, ports saw strong volume throughout November. The Port of Los Angeles had a strong month as the nation’s busiest facility processed 889,746 20-foot equivalent units, a 22 percent increase compared with November 2019, when the facility moved 728,917 TEUs. From a year-over-year percentage standpoint, the adjacent Port of Long Beach had an even stronger month, with workers processing 783,523 TEUs, a 30.6 percent increase over the 599,985 containers moved in the year-ago period. Port officials said it was the best November in the facility’s 110-year history. On the East Coast, the Port of Virginia in November reported a 23.3 percent year-over-year increase as it processed 279,868 TEUs compared with 226,982 in 2019.
And finally, a combination of Brexit and a new strain of COVID have pushed the cost of moving freight from France to the UK to more than four times the usual level. The spot rate for last-minute shipments across the English Channel reached more than 6 euros per kilometer ($4.56 a mile) for a full truckload in the final week of 2020. That’s up from an average of 1.50 euros to 3 euros, with some isolated cases of firms charging 10 euros per kilometer. Truckers say the current lack of chaos at Britain’s key ports could mask the risk of logjams returning later this month as both countries adapt to new trading arrangement after Britain’s exit from the European Union.
That’s all for this week. Enjoy the weekend and the song of the week, CeeLo’s Better Late than Never.