Welcome back! And while a new year has donned, the same supply chain issues and trends continue to unfold as we enter 2022. One of the biggest trends and areas of interest is around autonomous vehicles (see the TuSimple news below). The technology that is driving autonomous vehicles continues to improve, and as my colleague Steve Banker asked earlier this week, “when does a technology really grow? When it is attached to a need.” For autonomous trucks, this need is the ongoing driver shortage. But labor shortages are popping up in all sorts of places. I read an article earlier this week about farm labor shortages. And John Deere, after years of testing, is ready to unleash the 8R autonomous tractor to the market this fall. The system sports six pairs of stereo cameras, powered by a pair of Nvidia Jetson modules, offering a full view of its surrounding. Its GPS guidance system, coupled with geofencing, keep the system on track for initial tasks, such as tilling. That could certainly help farmers keep their growing on track. And now on to this week’s logistics news.
- Walmart in the news:
- Biden finalizes US-EU steel imports deal
- US blocks tomato shipments from two Mexican farms
- Truck drivers, seafarers quit as omicron spreads
- Self-driving semi completes trip
- Port of LA in the news:
As the Covid pandemic continued to disrupt supply chains and in-person shopping, click and collect became more prevalent, due to its ease and inherent safety measures. In 2021, click and collect surpassed $80 billion, and it shows no sign of slowing down. For Walmart, this was a good thing, as its click and collect revenues surpassed $20 billion, which was 25.4 percent of the total market. Walmart has an advantage in the market, given that it has more than 3700 stores across the US offering the service, and its merchandise assortment ranges from sporting goods to groceries, and everything in between. This number should increase significantly in 2022, as forecasts see the market exceeding $100 billion.
Click and collect isn’t the only service Walmart is ramping up in 2022. The retailer is expanding its push to deliver groceries straight into customers’ kitchen fridges, even when they aren’t home. Earlier this week, Walmart said that it plans to make InHome, its $148 annual delivery option, available to 30 million US households by the end of the new year, up from six million today. Customers who subscribe order groceries online and select InHome as their delivery option. Walmart’s employees wear a camera when they enter customers’ homes, allowing shoppers to watch the process live from their phones. Walmart announced that it will hire around 3,000 workers to deliver orders for InHome, offering them an extra $1.50 an hour from most store jobs, which begin at $12 an hour.
During the G20 summit in October, negotiators reached an agreement on US imports of steel from the European Union, and President Joe Biden announced that the new agreement went into effect on January 1. The deal sets a quarterly tariff-rate quota, so the first 3.3 million metric tons of steel won’t be subject to a tariff, and any steel beyond that will be subject to a 25 percent duty. US steel industry groups such as the Steel Manufacturers Association and American Iron and Steel Institute have welcomed the deal, although they share concerns about some details and implementation. US importers still will be able to apply for duty exclusions for steel products from the EU that are not produced in the US, as had been allowed under Trump administration tariffs set in 2018. The new arrangement lasts through 2023.
Over the last few years, supply chain transparency has become more important, especially when it comes to abuses of the labor force. The Mexican produce industry has followed up on some promised reforms aimed at preventing the abuse of farmworkers. The Biden administration has brought fresh scrutiny to the industry as it is blocking all tomato shipments from the agribusinesses based in the Mexican state of San Luis Potosí due to accusations of forced labor abuse. Two businesses, Agropecuarios Tom and Horticola Tom, have reportedly withheld wages and subjected workers to abusive working and living conditions, among other violations, according to US Customs and Border Protection. While this move only blocks a small portion of the tomatoes shipped to the US, it sends a clear message about the seriousness of labor rights with its trading partners.
As the omicron variants continues to spread around the world, the logistics workforce is being hit hard. This goes beyond workers contracting the virus and missing work. Instead, government restrictions and border closings are making it harder for logistics companies to recruit workers, even with the promise of higher wages. Many seafarers are refusing to get back on ships and many truck drivers are looking for other work, as the long hours, required quarantines, and the unknown risks associated with Covid simply trump higher pay. According to the International Road Transport Union, around one-fifth of all professional truck driving jobs are unfilled, despite many employers offering increased wages. Some pockets of shipping are also sounding the warning bell about future hiring prospects.
Earlier this week, TuSimple announced that one of its fully autonomous semi-trucks completed an 80-mile run in Arizona. According to TuSimple, the test was the first successful trip by a self-driving class 8 vehicle on open roads with no human intervention. The run occurred in the evening, starting from a railyard in Tucson and finishing at a distribution center in Phoenix. The Arizona Department of Transportation and law enforcement officials supervised the trip. To help ensure safety, the fleet included a vehicle that drove 5 miles ahead of the semi to check for unexpected obstacles, and a trailing vehicle in place to intervene if necessary. The semi was able to navigate lane changes, traffic signal stops and merging via on-ramps.
A record-setting 10.7 million 20-foot containers passed through the Port of Los Angeles in 2021, up 13 percent from the previous record set in 2018. For 18 months now, the Port of Los Angeles has received 900,000 container units per month. Pre-pandemic, just one month with numbers like that would have been a record. While the volume is up, congestion is down. Currently, there are 4 container vessels are at anchor outside the Port of Los Angeles, while 10 remain anchored at sea at near the Port of Long Beach. The reduced congestion is because the port has slowed the rate at which ships come in. Forty-five ships are slowly drifting toward the port of Los Angeles about 150 miles offshore, rather than anchoring.
And with the record volumes, the Port of Los Angeles is doing everything it can to clear space on the docks. The port announced that it will charge ocean carriers for empty containers left nine days or longer at the port. The policy will take effect starting January 30 if approved by the Los Angeles Harbor Commission, which is set to take up the issue on January 13. Under the policy, ocean carriers will be charged $100 for an empty container dwelling for nine days, increasing in $100 increments per container per day until the container leaves the terminal. If approved by the Harbor Commission, implementation of the fee will be at the discretion of the port’s executive director, officials said.
That’s all for this week. Enjoy the weekend and the song of the week, John Mellencamp’s Rain on the Scarecrow.