Ryder System is adding more distribution center space in the Chicago area.

Ryder said its new nearly 550,000-square-foot facility will open in suburban North Aurora, Illinois about an hour west of Chicago, in early January. It will be the company’s 10th multiclient distribution center in the market.

The facility will service shippers of consumer-packaged goods, including food and beverage, health and beauty, and household products, as well as general retail items.

“The multiclient warehouse expands our footprint in a key distribution hub, which is a one- to two-day drive from about half of the U.S. population,” said Darin Cooprider, senior vice president of consumer-packaged goods at Ryder.

When Ryder acquired Woodridge, Illinois-based Midwest Warehouse & Distribution System last fall, it gained nine multiclient distribution centers and eight dedicated customer warehouses. Thirteen of those facilities are in the Chicago area as well as one each in New York, Pennsylvania, Tennessee, and Texas.

The company’s new Chicago area site will employ 100 people, Ryder said. It will feature 54 cross-dock positions, 162 trailer stalls, access to area railroad ramps, ambient temperature controls, and food-grade certification.

Cooprider said multiclient warehouses offers the 3PL market scalability, which can contribute to efficiencies and save money.

“We can seamlessly transition customers into dedicated facilities {and} offer a flexible mix of transportation solutions to suit changing needs,” he said.

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Dive Brief:

• Plummeting delivery demand will pressure FedEx’s per-package revenue for the remainder of its fiscal year, which ends May 31, executives said on the company’s Q2 earnings call Tuesday.
• Per-package revenue, or yield, increased at FedEx Express (8%) and Ground (13%) YoY. But weaker demand, particularly at Express, drove a 3% overall decline in revenue.
• FedEx is bracing for volume softness to persist in the fiscal year’s second half. The company expects yields to grow domestically over that same period, although less so than in the first half, Chief Customer Officer Brie Carere said. Internationally, yields tied to Asia shipments are projected to decrease.

Dive Insight:

Consistent yield growth reflects FedEx’s pursuit of more profitable shipments and higher shipping rates. But as delivery activity falls and FedEx has capacity to burn, the balance of power appears to be shifting back in shippers’ favor.

Volume declines accelerated across all of FedEx’s major product categories in Q2. Carere noted in an October interview with Supply Chain Dive that the company was preparing for a moderate peak season with space to onboard new customers, in stark contrast to previous years of limited space and surging demand.

On Tuesday’s call, Carere said shippers are becoming more interested in deferred shipping services — which are generally cheaper at the expense of speed — in the current inflationary environment. The company is “working really hard to get the cost and the margins right in that product,” she added.

FedEx and rival UPS still hold significant influence over the parcel delivery market, despite demand easing. The companies announced higher general rate hikes of 6.9% for 2023, which they attributed in part to inflation. Parcel spend consultants have noted that added surcharges result in an even costlier increase for shippers.

“As far as how we’re going to handle the negotiations, we’re going to do it professionally and with grace,” Carere said. “We want to bring customers on that want to do business with us for the long term.”

Even though rates can be negotiated down, FedEx expects “a continued high capture rate” from the 6.9% increase and will continue to leverage surcharges, Carere added. The company is able to draw in more revenue per shipment when it is able to differentiate its offering from competitors and provide better service, she said.

FedEx Ground service levels have rebounded to pre-pandemic levels while service levels continue to improve at Express, said FedEx President and CEO Raj Subramaniam. According to ShipMatrix data, FedEx’s on-time delivery rate for the busy Nov. 24 to Nov. 30 stretch was 95.3%, versus 83.9% for the same period in 2021. UPS’ on-time performance was 96.6%.

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Dive Brief:

• Peak season is likely to bypass the air cargo market altogether after air freight demand fell for the eighth consecutive month in October, according to Clive Data Services.
• Volumes declined 8% YoY in October and levels remain 3% lower than in 2019, Clive said Nov. 2. Spot rates fell 20% YoY in October, but are still 94% higher than in 2019.
• “We are six weeks away from Christmas and there is no indication there will be a peak,” Niall van de Wouw, chief airfreight officer at Clive parent company Xeneta, said in a statement.

Dive Insight:

This year’s evasive winter peak has yet to kick into gear as the air freight market continues to face softening conditions with no sign of any turnaround, according to Clive.

Although macroeconomic factors like inflation and low export orders continue to impact overall air activity, van de Wouw noted a rebound in ocean capacity will further impact air cargo demand as more shippers return to maritime transport.

“Airfreight received a boost in the last two years because of the incredible mess on the ocean side, but shippers are now likely to feel more comfortable moving back to ocean from a reliability point of view,” he said. “With these factors combined, I don’t see where a lot of general freight growth demand drivers will come from.”

Carriers and freight forwarders have reported weakening air demand in Q3. Overall air volumes at DSV’s Air & Sea division declined 10% YoY in Q3, and CEO Jens Bjørn Andersen said in an earnings call that ocean and air volumes could deteriorate as much as 15% next year.

Clive reported October air freight capacity was up 3% YoY and down 7% compared with 2019 levels. Meanwhile, dynamic load factors, which compare cargo flown with available capacity, were subdued in October at 61%, down 7 percentage points YoY and 1 percentage point lower than 2019 levels.

Spot rates, which continue to fall as capacity outpaces demand, were down 45% YoY on the Asia-U.S. trade lane, the sharpest fall among the top three volume corridors. Europe-U.S. spot rates were down 27% YoY, while Asia-Europe rates fell 25% YoY. Spot rates from Latin America to the U.S. dipped 11% YoY in October, according to Clive.

Despite the declines, the air market remains uncertain and shippers may not see long-term gains from falling air rates, according to van de Wouw. Labor supply on the ground would be the only development that could slow the decline in rates.

“If airlines and cargo handling companies continue to struggle to hire people and remain short-staffed, then the bottlenecks will create an upward pressure on rates because it will be difficult to get your goods through the value chain,” he said.

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Amazon unveiled a new delivery drone design on its website Thursday as the company continues to advance its Prime Air service ambitions.

The MK30 drone is set to come into service in 2024. It’s lighter and smaller than the MK27-2, which Amazon plans to use for Lockeford, California, and College Station, Texas, deliveries later this year.

“The MK30’s increased range, expanded temperature tolerance, safety-critical features, and new capability to fly in light rain will enable customers to choose drone delivery more often,” according to Amazon.

The MK30 will also have custom-designed propellers to reduce its perceived noise by 25%. The newest drone design will undergo “rigorous evaluation” by authorities such as the Federal Aviation Administration in order to prove its safety and reliability, the company said.

Amazon has spent years developing its drone delivery program in an effort to ferry goods quickly and cost-effectively. Customers in Lockeford and College Station will be among the first to receive Prime Air drone deliveries in the U.S.

“To sustainably deliver a vast selection of items in under an hour, and eventually within 30 minutes, at scale, drones are the most effective path to success,” Amazon said.

Amazon’s continued push to advance its drone technology comes at a challenging time for the company compared to the previous two years of skyrocketing demand. It is weighing changes to unprofitable business units, according to a Wall Street Journal report, in addition to cutting added operational costs and freezing corporate hiring. The company also confirmed last month that it would be ending field tests for its delivery bot Scout.

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Microsoft is looking to compete in the supply chain tech space with several new tools designed to integrate various supply chain systems.

The tech firm on Monday announced it created:

• A new product, called the Microsoft Supply Chain Center, designed to help customers connect data across various ERPs and third-party supply chain management solutions;
• A new way to package its products, called the Microsoft Supply Chain Platform, which allows the company to market various supply-chain related solutions to customers.

Consumer packaged goods company Kraft Heinz North America, truck-maker Daimler Truck North America and fitness firm iFit are already using the tech as part of the preview period, according to a Microsoft blog post.

The three companies, which helped pilot the new technology as preview customers, used Microsoft new offerings to solve distinct problems in supply chain management. Kraft Heinz used the supply chain center to increase its agility; iFit used it to optimize transportation costs; and Daimler used it to manage truck parts and suppliers.

“The platform gives our team the ability to be more agile – assessing risk and opportunities faster than ever before,” Mitch Arends, executive vice president and head of operations at Kraft Heinz North America, said in a statement for the blog post. “Simply put, it provides the end-to-end visibility we need to keep our products on people’s tables across North America, and there’s nothing more important.”

Other companies can sign up to trial the technology as part of an official preview period, which is starting this week. Some Microsoft customers will automatically gain access to the trial as part of their existing agreements, according to the blog post.

Microsoft already offers various products that can help with supply chain management. It has Dynamics 365, an ERP, and Azure, a cloud-computing platform. The tech firm has also been signing new contracts with shippers and forging other partnerships, such as on a data integration for order management with FedEx, to further develop its supply chain technology.

But prior to the Supply Chain Center, Microsoft did not have a clear way to market its wide array of supply chain management products and integrations, according to Mike Bassani, general manager of supply chain and business applications at Microsoft.

“You really now have this kind of one two punch of a hub product in [Dynamics 365], and kind of a spoke product or a surround product in Microsoft Supply Chain Center,” Bassani said in an interview.

The new system aims to act as a connector to both internal Microsoft products and external Microsoft products. In a press release, Microsoft highlighted the Supply Chain Center would be able to connect to other ERPs, like SAP and Oracle. The tech firm also noted FedEx, FourKites, C.H. Robinson and Overhaul each built native experiences on the platform for ease of use.

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Dive Brief:

• Ocean carriers plan to ramp up blank sailings to counteract softer demand and declining volumes.
• Maersk, Matson and Zim reported in Q3 earnings that they are prepared to reduce capacity in the face of lower demand. Maersk has already taken out around 15% of capacity from Pacific and Asia-Europe trade lanes, CEO Søren Skou said this month.
• Matson foresees challenges over the next two quarters for the Transpacific trade lane as more shippers divert cargo away from the West Coast, according to Chairman and CEO Matthew Cox. “We expect more reductions and scheduled changes to meet the lower demand levels,” he said.

Dive Insight:

Demand has fallen significantly due to customers moving cargo away from the West Coast, Ali Ashraf, director of ocean product at C.H. Robinson told Supply Chain Dive in an email. Ashraf expects carriers to remove somewhere between 17% to 20% of capacity to the West Coast in Q4 to account for declining demand and lower rates.

It is typical for carriers to remove capacity following the peak retail season. This year, however, peak season took place over the summer as retailers ordered earlier to avoid delays. As a result, “it’s likely we’ll see more blank sailings at this time than in past years, especially compared to the past two years,” Ashraf said.

Consulting firm Sea-Intelligence said in a Nov. 11 report, “The number of blank sailings have been ramped up drastically on the Transpacific.” Carriers added 34 blank sailings on Asia-North America West Coast, and 16 on Asia-North America East Coast.

Demand is a major factor in how ocean carriers allocate capacity.

It is cheaper for an ocean carrier to sail a ship at 100% capacity than it is so sail it at anything less. “We would never sail two ships with 50%, but would always sail one ship with 100% because we simply can take out a tremendous amount of cost,” Hapag-Lloyd CEO Rolf Habben Jansen said on the company’s Q3 earnings call.

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Dive Brief:

• Victoria’s Secret has been moving shipments away from air in favor of ocean transport as freight rates stabilize, Chief Finance and Administrative Officer Tim Johnson said on a Dec. 1 earnings call.
• The retailer expects the modal shift to help abate burgeoning costs. The company had seen supply chain costs rise by roughly $300 million last holiday season due in part to a reliance on air freight. Now, the company expects closer to $100 million in incremental supply chain costs from fall 2022 to spring 2023.
• “As we move into 2022 and [the] supply chain started to get incrementally better from a flow perspective, it gave us the confidence that we could start taking merchandise off of airplanes and start putting it on boats,” Johnson told analysts.

Dive Insight:

During Q3 last year, Victoria’s Secret was nearly entirely dependent on transporting merchandise via airfreight, especially during the holiday season. At the time, the company had ordered 200 million units of stock for the fall season, 45% of which were delayed between 2 to 9 weeks, CEO Martin Waters told investors during a Q3 2021 earnings call.

“In some cases, we won’t get the merchandise at all. So, all of our plans are being reworked, [and] 90% of our merchandise will come in by air,” Waters said during the call. “In addition to that we have 100 vessels at anchor right now that are not coming to shore.”

At the time, rising ocean and air rates as well as higher raw materials prices led the retailer to forecast higher supply chain YoY expenses, the CFO shared.

Since then, ocean and air rates have normalized compared to last year’s high cost environment. Transpacific spot rates in November were down 32% YoY for air cargo, and 79% YoY for ocean shipments, according to Xeneta’s Clive Data Services.

Now, Victoria’s Secret joins the list of retailers optimistic about margins as freight costs continue to soften going into 2023. Gap also saw improved margins in Q3 as air freight rates normalized YoY spending levels.

“When we think about the margin … we do expect to have some tailwind as we go into spring season, particularly around freight rates and freight opportunity year over year,” Johnson told analysts.

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Managing equipment in a complex and highly active environment like a warehouse or a public road is a big enough challenge on its own. Safety is priority one every day at your site, and worker devices (whether embedded or mobile) exist in support of that directive. Only the appropriate content and applications should be accessible at all times, or you could be exposed to exceptional liability—we frequently hear from our logistics customers that device misuse while operating equipment was one of their biggest fears. But ensuring that every piece of technology with a touchscreen is a fully managed object at the infrastructure level is an immense undertaking to begin on your own.

There’s no one-size-fits-all solution in your industry. No one has the “easy fix.” A single pane of glass is ideal, but getting there is not so simple. Maybe you’ve caught yourself explaining this up or across, and it’s easy to see where the conversation goes next: “Can we build it?” And in most cases, no satisfying answer really emerges, because building is itself an immensely uncertain and complex process. Forecasting your costs and resourcing, let alone a timeline to a workable solution, is folly. All you know is that it will be harder, take longer and not work as well as you’d hoped.

What happens when you introduce a new hardware target? When existing equipment reaches software end of life (EOL)? Or your tooling falls out of security or other industry compliance? Instead of focusing on delivering innovation in a reliable, scalable way, you end up being the maintenance engineer for your own infrastructure, fighting the device management war on two fronts.

Warehousing handhelds, forklift controls, industrial information displays, digital safety signage, rugged tablets and other hardware present a complex heterogeneous deployment, one that no organization was prepared to manage ten years ago. But devices have changed the face of industry and logistics, augmenting worker capabilities, enhancing safety and increasing efficiency. There’s no going back: Whether it’s an industrial site, distribution center, or an 18-wheeler (we have experience: ask Summit Trucking), devices are the future any place where real work needs to be done.

But where others see devices as a new and irksome problem to solve, you see an opportunity to innovate and build on the advantages devices give your organization. If you could update all your warehousing handhelds worldwide – reliably, consistently – with the push of a button, how much more frequently would you be able to push new content and fixes? What if all those form factors – tablet, handheld, embedded, in-vehicle mounted, signage – really could be seen and centrally managed from one clean, modern dashboard?

At Esper, we understand the beauty of a predictable, reliable, scalable system. Because we built one! Companies at all phases of the supply chain use our device infrastructure to take their device strategy to the next level. With best-in-class infrastructure and tooling, they’re able to stop thinking about devices as a mess to be cleaned up, and start thinking about them as a harmonized and unified platform to deliver the best, safest and most helpful experience possible to employees and customers.

Using the power and ubiquity of the cloud, Esper can give you the power to manage devices at any scale, update content and applications, enforce policy and safely test any changes with exacting parameters and targeting to ensure every deployment meets your (understandably!) high standards. Take the next step in your device journey – we’ll show you what Esper can do for you.

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