e-commerce

Consumerism Rages On Despite Pandemic Setbacks, New Statistics Show

January 1, 2022 by Levinson and Stefani Leave a Comment

2021 has been a year of consumer demand unlike any other–the coronavirus pandemic brought with it stay-at-home orders and folks rushing to online shops to have their home and personal care goods delivered quickly, a culture of modern shopping habits that is likely here to stay.

America’s truck drivers stepped up to the plate to keep the economy moving forward and to get products to store shelves and front doors efficiently, working harder than ever to keep customers happy and shops stocked. Because of this, the country’s shopping methods have changed drastically, with online purchases becoming a part of daily life for most people.

Now, American consumer confidence has risen significantly even as prices continue to rise and the virus’ latest variant makes its way across the world. In fact, although U.S. consumers admit their perception of overall conditions has dropped, their outlook into 2022 is a positive one–a perspective that is suprising consumerism experts.

Last week, business research organization, the Conference Board, noted that its consumer confidence index rose from 111.9 in November to 115.8 in December–it’s highest index number since July of this year. The consumer confidence index factors in current consumer perspectives regarding the present consumer conditions at hand, as well as public outlook for consumerism in the near future.

Apparently, although prices have been increasing lately at the fastest year-over-year rate since 1982, consumer inflation expectations are looking much more positive in December 2o21. Experts attribute these assessments to the falling gasoline prices that have been seen at gas stations across the country over the last month or so.

“Despite high inflation and the rising omicron wave, consumers are bullish on 2022,” said Navy Federal Credit Union economist, Robert Frick. “This reflects growing economic momentum, as job openings remain high and prices are dropping at the pump.”

These outlooks show overall positive changes on the horizon for consumerism in the coming months, and for this aspect of the economy in general, Frick noted.

“This is further evidence that consumer spending will keep rising and be the main factor fueling the expansion,” he said.

In regards to the alleviation of ongoing port bottlenecks and other factors in relation to price hikes and product shortages, President Joe Biden recently met with his supply chain disruptions task force to discuss the group’s ongoing, progressive efforts to bring lasting solutions to these issues. He noted that product availability on store shelves across the country has reached 91%–near its pre-pandemic numbers, and that inventory within various retailers has risen 3% from 2020.

This is a particularly positive sign, as most will remember the shock of seeing so many empty shelves in stores nationwide at the height of the pandemic, when opportunities to purchase sanitizing and clearing products, toilet paper, and even many kinds of foods were few and far-between.

“Packages are moving,” said Biden during his late-December task force meeting. “Gifts are being delivered. Shelves are not empty.”

These latest consumer numbers, collected for the first time since the coronavirus’ omicron variant appeared, shows a strong recovery in the country’s overall economy following the challenges of the recession brought about by the pandemic in 2020. Still, this latest variant may indeed threaten this newly-obtained economic strength, experts say.

Additionally, a recent Commerce Department report shows that American consumer spending decreased between October and November of this year, although holiday season shopping ramped these numbers back up quickly–regardless of any significant product shortages or higher-than-normal prices.

The sales report from November has not yet shown any consumer impact in relation to the omicron variant, however, and the additional uncertainty may bring about further consumer behavior changes.

Still, after making it through 2020 and 2021, these kinds of challenges are now to be expected.

“Looking ahead to 2022, both confidence and consumer spending will continue to face headwinds from rising prices and an expected winter surge of the pandemic,” said the Conference Board’s senior director of economic indicators, Lynn Franco.

Supply Chain Challenges Rage On, Bringing Added Pressure to Truckers Ahead of Holiday Season

October 29, 2021 by Levinson and Stefani Leave a Comment

“What we have is a storm within a storm,” said Logistics Professor at the University of Houston, Margaret Kidd. “Consumers have insatiable demand, and consumers are spending. E-commerce numbers through the second quarter of this year are up 57% from two years ago.”

The current supply chain is being stretched thin–with pressure being exacerbated by the e-commerce boom brought about by the pandemic. Significant policy updates are needed, industry experts say, as well as as innovations by transportation leaders, time, and money.

The upcoming holiday season is going to add further difficulty when more shoppers are hitting the internet and exponentially increasing demand.

“We don’t have an infrastructure that was prepared for this,” said Terry Esper, Logistics Professor at Ohio State University. “This is not just a holiday thing. This is not just a demand spike thing. This is about the economy being able to function.”

Of 2018’s retail sales, Esper noted, e-commerce represented about 13.8%–a figure predicted to grow an additional 26% by the year 2025.

The current truck driver shortage, on top of a warehouse and transportation industry labor shortage of about 490,000 employees, according to the U.S. Department of Labor, is adding additional stress to the situation.

“These are not easy jobs to fill,” said Mark Baxa, President of the Council of Supply Chain Management Professionals. “Let’s continue to find ways that make work-life balance as favorable as possible, and we’ll attract more people to the industry. We need to improve work-life balance, support driver health, and [improve] work conditions and compensation. We need to keep working at it.”

Enticing more workers to enter the transportation industry also means that further cost increases will come into play–more companies will need to boost spending on not only employee salaries and benefits, but on technology as well.

“Part of our supply chain constraint is labor,” said Esper. “If you want access to labor, you’re going to start to have to look at what you pay. We also need to look at technology, and now is the time to consider more investments in more automated operations, robotics, and such. There is a business case for this, and the writing is on the wall.”

With these shortages on top of an incredibly aggravated supply chain in the midst of a higher-than-ever e-commerce demand, the truck drivers that are stepping up to serve the public during this time will be put under enormous pressure by consumers and trucking companies alike.

“I understand the pressures, economic and otherwise, of labor shortages and supply chain issues, but we have to be very conscious and deliberate to not let that get in the way of safety measures,” said Levinson and Stefani’s Ken Levinson. “We also want to make sure that we’re not letting outside influences put pressure on companies and drivers to do things that aren’t safe, even with these added pressures that we have right now. It’s just not worth the risk.”

Because of this, Levinson wants to be sure that all passenger drivers are staying as defensive and aware as possible while sharing the road with commercial motor vehicles–especially during the holiday season.

“Just be aware and follow all the safety rules–especially in regards to speeding,” he said. “Don’t be a distracted driver, and be very careful of improperly using your phone. If you have to use your phone, make it hands-free–don’t, under any circumstances, text while driving. The consequences can be devastating. It’s hard enough to drive safely in normal circumstances, but if you add speeding or distracted driving or texting, and even inclement weather during the holidays, it’s just a recipe for disaster.”

Of course, these are all suggestions we hear often as drivers, but it’s vitally important that we do what we can to stay as safe as possible around these truckers who could be rushing to make a delivery on time, or who may be fatigued after spending incredibly long hours on the road.

“Your own vehicle could be in a tough spot with all those factors,” added Levinson, “and when you couple it with a truck driver who may be overworked, tired, unhealthy, speeding, and distractedly driving or using a phone–it could be catastrophic.”

Are Resilience Investments the Answer to Freight Booms?

September 29, 2021 by Levinson and Stefani Leave a Comment

“Our whole collective endeavor here is really designed to have the intermodal product be as competitive as possible in the truck,” said Oliver Wyman consulting firm partner of surface transportation, Adriene Bailey, at the recent Intermodal Association of North America’s Intermodal Expo.

Bailey also served as a moderator for the panel at the exposition, where participants from the intermodal freight industry debated the amount of investment funding that should be allocated toward resiliency-boosting infrastructure and other expenditures. The push for these kinds of infrastructure upgrades comes after the industry disruptions and demand surges brought about by the coronavirus pandemic.

The group discussed whether or not system overcapacity may lower overall efficiency while chassis availability continues to be a major issue for trucks moving containers. In fact, at the root of the overarching issue is that there is currently an excessive number of containers waiting on any given chassis for a longer period of time than necessary before they’re finally unloaded–meaning the equipment being used in those movements are occupied for days, according to Georgia Ports Authority director of strategic operations, Duke Acors.

The intermodal freight industry as a whole needs to make major changes to its turnover times if any efficiency improvements are going to become realistic, Acors added.

“I am not positive that if you threw another 5,000 chassis into the pool it would make a difference,” he lamented. “The entire supply chain needs to be evaluated.”

Still, there are not enough of the needed chassis types in the areas they are most necessary, causing the current difficulties for the intermodal industry to meet the demands of intermodal freight to increase quickly, explained C&K Trucking president, Mike Burton.

“Everything that we are focused on is…’What we can do to get more chassis?’” he said. “Having to chase all over the city to find a chassis kills our productivity and causes a number of delays.”

The exponential increase of shipments coming in and out of ports across the country in the wake of the pandemic–and the e-commerce boom that came along with it–has overwhelmed many industry professionals without any break in sight.

“We are now going [on] a year–14 months or so–that we have struggled,” said director of international sales at CSX Transportation, Jay Strongosky. “Every stakeholder is struggling, and no one is happy with their service.

CSX, for instance, had to hire an additional 300 conductors in 2021–more than were onboarded in the past two years combined, Strongosky added. This isn’t unique to his company, though. Many companies throughout the industry expected a potential recession during the first year of the pandemic and decided to lay off many employees. Now, with freight volume numbers ending up through the roof, those same companies are currently understaffed and scrambling to boost their recruitment numbers–in the midst of a worsened truck driver shortage.

Luckily, though, the Expo’s panelists unanimously agreed that the intermodal industry has been able to stay steadfast throughout various labor issues, emergency weather events, or other month-or-two-long disruptions that regularly occur throughout the country. Georgia Ports Authority, in particular, has worked to stay ahead of potential downfalls by keeping its capacity at around 20% above demand.

“Last year, we grew on 20%, so we are going to have to reevaluate,” added Acors.

Rising demand will also be aided by improvement projects taking place as soon as possible or in the long-term, such as Georgia Port’s efforts to speed the process of infrastructure initiatives like the project working to boost twenty foot-equivalent unit capacity by 650,000 at the state’s facility in Savannah.

Should the industry allocate capital to a rainy day fund, such as when UPS Inc. began stockpiling equipment before reaching the winter holiday shopping season? It’s hard to tell, because this unprecedented freight increase brought on by an unprecedented pandemic has been impossible to predict and incomparable to any regular busier-than-usual season.

“The pandemic is like a 100-year flood,” said Burton. “As a group, we are not solving it. Customers are not happy across the board. We are broken, and I don’t know that we can fix it.”

Capacity Under Intense Pressure With Various COVID-19-Related Obstacles

June 15, 2021 by Levinson and Stefani Leave a Comment

The capacity market is seeing major additional obstacles regarding the high-demand trends brought about by the coronavirus pandemic.

As manufacturers and retailers continue to boost their inventories in the booming era of e-commerce (made much more prevalent during the country’s stay-at-home orders), the economy is beginning to finally recover–but capacity is under more pressure than ever.

“There are short-term and longer-term implications,” said CH Robinson’s vice president of retail and supply chain solutions, Noah Hoffman. “The retail space continues to put demand on all suppliers. The retail community can’t keep up with both inbound and outbound constraints and e-commerce continues to fuel that space. So, certain inventory for retailers are at record lows.”

Economic growth is being boosted, currently, by government stimuli and the opening-up of the economy after the COVID-19 vaccine has been more widely distributed. This means that the ways in which consumers purchase their goods is shifting–rapidly–including the kinds of items people are beginning to buy again.

“This is going to compound the demands on capacity that’s already not readily available,” Hoffman added.

Additionally, now, infrastructure spending is coming back at a rapid rate, and construction efforts are now underway on a large scale.

“What we’re seeing right now versus last year is capacity is coming back,” explained Hoffman. “This is positive news. The thing is, it’s just not fast enough to keep up with demand.”

In mid-2020, nationwide lockdowns caused the marketplace’s supply to plummet, with many truck drivers out of work. Now, capacity improvements have come often at the hands of small carriers, and capacity itself is seeing major shifts in a positive direction although it isn’t meeting the current demand as much as the industry would like–yet.

“As it relates to the Southeast region of the U.S., we had the cold snap in February,” Hoffman noted. “That delayed the production season–call it two to three weeks. On top of that, we had a rebound floral season that led to a $2.6 billion Mother’s Day and floral season–which is a record high. And so, you have compounding volumes of looming produce season, [and] a blooming floral season that puts a ton of pressure on the [temperature] control capacity.”

Still, with capacity under so much stress, new challenges are arising–especially with the recent shutdowns along the oil pipeline affecting pallet availability.

“I would say it’s not only just the increase in demand, it’s the volatility and the unanticipated levels of the demand,” said Douglas Kent, Association for Supply Chain Management‘s executive vice president of strategy and alliances. “Managing the supply chain networks for known demand is much easier than managing unknown demand.”

Now, with difficulty in predicting the long-term effects of these changes, there is a wide array of disruption possibilities.

“So, we’ve got variability and volatility in demand,” Kent added. “When you combine that with the concerns around capacity in the overall network, this is like the perfect storm of chaos.”

Although a variety of consumer trends can change demand, the key to capacity is equipment and drivers. Not only has the nationwide driver shortage been a long-term obstacle for the trucking industry, but the current shortage in semiconductor chips has been an added difficulty.

“Now, with this chip situation, which is fallout from the pandemic and China, they’re not able to make enough [semiconductors] for the demand out there,” explained chief operating officer for Aim Integrated Logisitics, David Gurska. “Fortunately, we have a leasing arm, Aim NationaLease, so we’re fortunate to have slots and everything available, but if you’re just the average company, trying to buy a semi right now isn’t the easiest thing.”

This limitation within capacity means the industry needs to boost its overall optimization–any volatility will make it difficult to efficiently allocate resources and employees when they are readily available.

“A lot of it is course-correcting the last couple of years,” said FourKites’ senior vice president of customer success, Glenn Koepke. “So, it was a buyer’s market for a couple of years. And then, typically, what happens is there’s some sort of…black swan event that triggers the change because it was a buyer’s market for so long.”

Additionally, motor carriers have seen more of an ability to increase compensation for workers with the disruptions coming at a time of such high demand–and this isn’t likely to stop any time soon.

“Why is capacity continuing to crunch? A lot of it is just [an] imbalance of supply,” explained Koepke. “There’s always talk over whether we have a true trucking shortage or not. I think one could argue it’s just an imbalance.”