Supply chain indicators give signs of new inflationary issues for Americans



Good morning! Happy Wednesday! As we dive deeper into February, our team has been keeping a close eye on the latest developments in the world of supply chain management. From logistics challenges to emerging trends, we've got you covered with all the essential news and insights you need to stay ahead of the curve.

So, without further ado, let's dive into today’s supply chain newsletter and explore what's new in the world of supply chain management.

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Warehouses and distribution centers are important components of the supply chain because they store and move goods from producers to consumers. Increases in the rates charged by warehouses and distribution centers may indicate increased demand for storage and transportation services due to factors such as increased consumer demand or supply chain disruptions. These increases can lead to higher costs for businesses, which may be passed on to consumers in the form of higher prices for goods and services. Therefore, changes in warehouse and distribution center rates can serve as a leading indicator of inflationary pressures within the economy.

Check out today’s featured article from CNBC to read about the supply chain indicators that could be warning of more inflationary troubles for Americans. With warehouse rates climbing, an expanding inventory glut, and growing concerns across industries… can the average American household see prices rising again into 2023? ☕️


Featured Article:

There’s a new inflation warning for consumers coming from the supply chain | CNBC

“Warehouses and distribution centers are pushing rates higher, with U.S. storage prices up 1.4% month-over-month and nearly 11% year-over-year.”


Deliveries & Labor Issues 🤝

UPS lays off unspecified number of Teamsters union junior drivers

Citing the so-called “22.4 classification” in the UPS-Teamster contract, the company has sent an unspecified number of junior drivers packing. The classification refers to junior drivers that work for the company Tuesday through Saturday, and UPS advised the press that due to “uneven demand”, the drivers needed to be reassigned. The reason that the move may be made is that according to the contract, junior drivers should be laid off because any senior drivers are affected.

The Teamsters union has opposed the "22.4 classification" in the UPS-Teamster contract because it allows UPS to pay lower wages to part-time workers who are hired after August 1, 2018, compared to the wages of full-time workers who perform the same duties. The "22.4 classification" refers to a hybrid position that combines both driving and delivery duties, which was created in the 2018 contract negotiations between UPS and the Teamsters. The union argues that this classification undermines the traditional seniority system and creates a two-tiered wage structure that unfairly disadvantages newer part-time workers. Teamsters has been pushing for UPS to eliminate this classification and provide equal pay and benefits to all workers who perform the same job functions.

Read more from Freight Waves ▶


Covid-19 & Driver Issues 🚛

U.S.-imposed vaccine mandate continues to block unvaccinated truck drivers from crossing the Canada-U.S. border

Despite the formal public health emergency in the U.S. scheduled to end May 11th, the vaccine mandate remains tightly in place at the 49th parallel. Some industry leaders are fighting for the mandate to end, stipulating that the vaccine mandate has already been voted to end for foreign air travelers. Some claim that truckers seem to be shouldering the burden of the greater public health risk than the rest of society, some citing the ‘Freedom Convoy’ protesters that converged on the city of Ottawa in early 2022.

Despite Canada and the United States’ regulations changing, the World Health Organization still identifies Covid-19 as a public health emergency of international concern.

Read more from Truck News ▶


Let’s Get Global 🌎

A person in a suit moving their hands around a globe of Earth.

🌎 A world once fighting over oil… is now fighting over metals. There is a global battle over precious metals such as lithium, cobalt, nickel, and copper because they are critical components used in the manufacturing of batteries for electric vehicles, renewable energy systems, and electronic devices. As the world shifts towards a more sustainable and tech-driven future, demand for these metals has skyrocketed. This has led to intense competition among countries and companies to secure access to reliable sources of these metals. Previously, oil was the dominant resource in global conflicts due to its importance in the energy sector. However, the rise of new technologies and the push towards a greener economy has shifted the focus towards the battle for critical metals.

👗 Shein is in hot water with U.S. Senators over cotton sourced from China’s Xinjiang region. The massive retailer is being questioned by Democratic Sens. Bill Cassidy, Elizabeth Warren, and Sheldon Whitehouse in a letter over the company’s involvement with cotton sourced from China’s Xinjiang Uygur Autonomous Region. There have been allegations for some time that the fast-fashion retailers have been turning toward the region of cotton production, but Shein has vehemently denied these claims and stated that they are false. It is important to note that Xinjiang has been a focus of controversy due to allegations of human rights abuses against the Uyghur Muslim minority population by the Chinese government, including forced labor and repression.

🤖 Asia’s labor cost advantages in manufacturing can be fought with investments in AI domestically. AI can be used to optimize supply chain management, reducing lead times and increasing efficiency in the movement of goods between manufacturing facilities and warehouses. This can help to lower costs and make US manufacturing more competitive with Asian manufacturers. Additionally, AI-powered robots and machines can perform tasks that were previously done by human workers, such as moving and packing goods in a warehouse. AI can also be used to monitor and inspect products during the manufacturing process, reducing the risk of errors and defects.


iLevel With You 🏡

More topics for the average American household to consider…

👚 Returns are often sent to a landfill, according to the National Retail Federation. US shoppers may not be aware that many of the brand-new items they return end up in a landfill anyway, regardless of condition. Some suggest that shoppers should read the return policy carefully before making a purchase to ensure that the company accepts returns and has a sustainable approach to handling them. Additionally, try to return items in their original packaging to reduce waste and make it easier for the retailer to resell the product. Look for retailers that have sustainable return programs, such as offering return labels that allow customers to send back items using eco-friendly shipping materials or partnering with companies that specialize in reselling or recycling returned products.

💰 Electric vehicles may be as affordable as gasoline cars in 2023. While the price tag on electric vehicles has often played a part in why many Americans cannot afford them, sticker prices are beginning to decline. Due to increased competition among automakers and government incentives, the prices between new electric vehicles and gasoline-powered vehicles may be comparable. Automakers Tesla, General Motors, and Ford Motor have all ramped up activity to create new factories to increase battery manufacturing. The cost of electric vehicles (EVs) has been declining steadily over the past few years, and it is expected that the price tags of EVs will become comparable to those of gasoline-powered cars within the next few years, possibly as soon as the mid-2020s.

🤖 Amazon self-driving startup Zoox Inc. will begin shuttling passengers in California. Founded in 2014 and headquartered in Foster City, California, Zoox's vehicles are designed to be fully autonomous, with no driver or passengers, and can operate in both urban and suburban environments. The vehicles are intended to be used for a variety of purposes, including ride-sharing, delivery services, and autonomous transportation in controlled environments such as campuses and theme parks. In December 2020, Zoox was acquired by Amazon, which plans to integrate the company's technology into its own logistics and transportation services. Zoox has attracted significant attention and investment from the automotive and technology industries and is widely regarded as one of the most promising startups in the autonomous vehicle space.

💨 U.S. natural gas consumer spending grew 37% in 2021. The amount spent on natural gas rose in every state in 2021, nearly doubling in Oklahoma and Texas. Compared to other fossil fuels such as coal and oil, natural gas produces fewer emissions of pollutants such as sulfur dioxide, nitrogen oxides, and particulate matter. As a result, many companies and governments are turning to natural gas as a cleaner and more sustainable energy source. Many companies are also investing in natural gas infrastructure, including pipelines and liquefaction facilities, which provide additional economic benefits. Overall, the growth in natural gas spending in America can be attributed to a combination of factors, including the shale gas revolution, environmental concerns, economic benefits, and energy security.


Get Smart 🧠

Ramp up that brain power for these advanced topics…

⛏️ Rare earth mining is underway in California’s Mojave Desert. While China still controls nearly 60% of the world‘s rare earth mining operations, the United States is looking to close the gap over the next decade. China’s dominance in the market poses a threat to the US supply chain and national security risks, according to the U.S. Department of Commerce. MP Materials, a publicly traded mining company that operates the Mountain Pass mine in California, is heading the way for America’s rare earth mining industry. The company's mission is to provide a secure and sustainable supply of these critical materials to customers around the world, while also adhering to environmentally responsible mining practices.

✈️ Spirit AeroSystems reports massive operations loss last quarter, citing supply chain issues. Headquartered in Wichita, Kansas, the company designs and manufactures fuselages, wings, and other components for many of the world's most well-known aircraft, including the Boeing 737, 747, and 787, as well as the Airbus A320 and A350. The company is committed to innovation and sustainability, with a focus on reducing its environmental impact and developing new technologies to enhance the safety and efficiency of air travel. In Q4, the company reported a 76% widening of its operating loss due to shortages of manufacturing materials.

🚛 Class 8 sales forecast a strong 2023. Truck drivers could anticipate a strong year in sales despite economic headwinds due to a number of factors, including strong demand for goods, driver shortages, and government stimulus. Increasing vehicle demand and elevated carrier profits are what to thank, regardless of higher financing costs and restrictive credit availability. Overall, while the pandemic has created many economic challenges, the trucking industry is well-positioned to weather these challenges and provide opportunities for drivers in the year ahead.

🧠 Innovation investment should be a priority among supply chain executives. Investing in innovation can provide a competitive advantage by enabling companies to improve their supply chain processes, reduce costs, increase efficiency, and enhance customer satisfaction. By adopting new technologies and processes, companies can stay ahead of the competition and maintain their market position. Market conditions are constantly evolving, and companies need to adapt to these changes to remain competitive. Innovation investment can help companies to respond to changing customer demands, emerging technologies, and new business models, and to take advantage of new opportunities.

📦 What benefits can standardization of warehouses bring to logistics? Standardization refers to the process of establishing consistent processes, procedures, and infrastructure across multiple facilities, which can help to streamline operations and improve efficiency. Standardization can help to reduce costs by enabling companies to leverage economies of scale, eliminate redundant processes, and optimize resource allocation. For example, by standardizing warehouse layouts and equipment, companies can reduce the need for custom designs and minimize the cost of maintaining and replacing equipment.


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