🔋 Stay Charged, Congress
Good morning, supply chain aficionados! It's Monday, the start of a brand-new week filled with endless possibilities in the world of logistics. Time to shake off those weekend vibes and gear up for some supply chain excitement. Grab your favorite mug, fill it with your go-to caffeinated beverage, and join us for a fresh edition of our daily supply chain newsletter. We've got all the latest updates, trends, and insider insights to kickstart your week with a jolt of logistics knowledge.
So, let's jump right in and make this Monday a supply chain success story. ☕️
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As the summer driving season unfolds, it symbolizes a graduation party for America's electric vehicles, propelling us into the future, contingent on Congress's support. The passage of President Biden's Affordable Clean Energy Plan has spurred an influx of Americans opting for EVs, with automakers planning to introduce a dozen new models by 2024. Pricing parity with gas vehicles, improved battery technology, and enhanced charging infrastructure have made EVs increasingly appealing. The Bipartisan Infrastructure Law has also contributed to expanded charger networks and job creation.
To sustain the EV boom, federal clean energy investments and supportive policies are crucial, as they foster domestic production, job growth, and American innovation while maintaining global competitiveness. The future of transportation and the benefits it holds for the economy and the environment rely on Congress's commitment to EVs.
Check out today’s featured article from Real Clear Energy to read about the EV transition over the coming months in the United States. Will Congress step in and hinder the progress the industry is making? Or… will our elected officials continue to propel green energy policies forward, pushing Americans to continue migrating to EV models instead of their gas-powered counterparts.
Featured Article:
This Summer Is Graduation for American Electric Vehicles — Unless Congress Intervenes | Real Clear Energy
“This summer driving season seems like the graduation party for America’s electric vehicles.”
Leadership & Inflation 💰
Survey Reveals Concerns Among Supply Chain Professionals Regarding Increasing Operating Costs
Supply chain professionals are facing significant challenges, including fuel costs, inflation, and delays outside their control, according to a report by DispatchTrack. The study, based on a survey of over 100 logistics professionals, found that supply chain leaders expect operating costs to be 10% to 20% higher this year compared to previous years.
Despite these challenges, the majority of supply chain leaders remain optimistic about the future, with 61% reporting a positive business outlook for 2023. Many organizations plan to increase technology adoption and enhance their delivery capacity to navigate these challenges successfully.
Artificial Intelligence & Future 🤖
The Impact of ChatGPT on the Supply Chain Industry
The use of large language models (LLMs) such as ChatGPT has the potential to revolutionize the supply chain industry. LLMs are advanced AI tools that can understand and generate conversational text, making them ideal for communication, problem-solving, and providing insights. By leveraging LLMs, businesses can enhance demand forecasting, inventory management, and on-time delivery. These models can analyze vast datasets, identify problem areas within operations, suggest creative solutions, and provide valuable insights to improve day-to-day logistics operations.
Integrating LLMs into the supply chain can lead to data-driven decision-making, increased efficiency, cost reduction, and improved customer satisfaction. Embracing this technology will position businesses to be competitive, flexible, and sustainable in the evolving supply chain landscape.
Let’s Get Global 🌎
💨 Rapid Rise in EV Sales May Not Be Enough to Meet Emissions Reduction Targets. BloombergNEF predicts that global electric vehicle sales will more than double by 2026, reaching around 27 million units, driven by strong sales in China and the US. However, despite this growth, eliminating emissions from road transportation by the mid-century goal will require even greater efforts, with around 30% of the global vehicle fleet still burning gasoline and diesel fuel by 2050. BloombergNEF emphasizes the need for policymakers to prioritize investments in zero-emission trucks and expand charging infrastructure to accelerate the transition to EVs and achieve emission reduction targets.
🚢 West Coast Ports Face Congestion as Labor Dispute Causes Ship Backlog, Risking Supply Chain Disruption. Labor fight at West Coast ports leads to ship congestion and rising commercial shipping prices, posing a risk of supply chain disruptions and potential shortages or higher prices. The conflict between port operators and workers has raised concerns among lawmakers about the impact on the economy and consumer goods. The negotiations primarily revolve around wages, with both parties urged to reach a fair resolution to avoid further disruption to the supply chain.
💸 Understanding the Factors Behind Rising Business Prices. The reasons behind the ongoing global inflation crisis remain a topic of debate among economists. While some attribute it to supply chain disruptions, geopolitical conflicts, and economic policies, others argue it's driven by "greedflation," where companies exploit higher inflation rates to increase prices and boost profits. However, a recent New York Federal Reserve survey suggests that customer demand is the primary factor influencing pricing decisions for businesses, outweighing considerations such as profit margins and overall inflation. This indicates that businesses have the freedom to set prices as long as they do not alienate their customer base.
iLevel With You 🏡
More topics for the average American household to consider…
🚗 California aims to emulate New York in saving public transit despite car obsession. California residents like Sadaf Zahoor, who depend on public transit and have never owned a car, fear that the financial struggles of transit agencies in San Francisco and Oakland may lead to reduced services. These agencies, which have relied on federal aid that is set to expire, faced a significant decline in ridership during the pandemic and are now dealing with budget deficits. While the agencies have requested assistance from the state government, including a spending plan similar to New York's, the automobile-reliant culture of California makes it a challenging sell.
🔋 GM's electric vehicles to tap into Tesla's expansive charging network. General Motors (GM) has announced that its electric vehicles (EVs) will be able to use Tesla's extensive charging network starting in early 2024. In addition, GM plans to adopt Tesla's connector, a plug that links EVs to charging stations. This move follows Ford's decision to enable its EVs to access Tesla's charging network and use Tesla's connector, aiming to establish it as the industry standard.
⚡️ Conservative Consumers Embrace Electric Vehicles, Shunning Gas Guzzlers. Conservative buyers in Republican-leaning areas like Collin County, Texas, are increasingly drawn to electric vehicles for reasons beyond environmental concerns. Factors such as the technology's cool features, cost savings on gas, and convenience are enticing them to switch to EVs. The EV market share in these areas is growing, signaling that EV adoption is not limited to liberal coastal regions. To achieve the Biden administration's goal of increasing EV sales, it is crucial to attract EV buyers regardless of their motivations, ensuring the success of the EV boom.
🇺🇸 White House Celebrates Progress in Supply Chain Recovery. The White House is touting the improved state of supply chains and their impact on inflation. Officials claim that supply chain congestion has subsided, store shelves are well-stocked, and shipping costs have significantly decreased since their peak in 2021. While acknowledging that new risks and challenges remain, the White House credits its focus on resilience and collaboration with industry for easing supply chain bottlenecks and providing relief for consumers dealing with high costs of living. However, they also acknowledge that more work needs to be done to address overall inflation.
📦 Parcel consultants predict significant rate increases in 2024. Parcel consultants anticipate significant rate increases of 6% to 10% in base rates and accessorials charges for 2024. Weak pricing in the parcel delivery sector for the remainder of 2023 will be followed by rate hikes driven by inflation and carrier dominance in the business-to-business (B2B) and business-to-consumer (B2C) markets. Shippers are advised to negotiate strong agreements with rate caps to mitigate steep increases, although some level of increase is expected in next year's plans.
Get Smart 🧠
Ramp up that brain power for these advanced topics…
🎙️ Podcast Episode: Unveiling the Roots and Solutions of Global Supply Chain Failures. In this episode, Jack Buffington, a supply chain expert, sheds light on how the COVID-19 pandemic simply brought to the surface the long-standing issues plaguing global supply chains. Discussing his book, "Reinventing the Supply Chain: A 21st-Century Covenant With America," Buffington explores the historical significance of supply chains in the global economy and emphasizes the need for their transformation to drive social and cultural change in America. The conversation also delves into the concept of a "community-based supply chain," which combines local and global elements.
📺 Watch: Rethinking the End-to-End Supply Chain. Sumit Dutta, a supply chain expert from EY, believes that to achieve a true "end-to-end" supply chain, businesses need to design their supply chain from the start, considering factors such as sourcing, shipping destinations, and customer service. This requires integrating cost efficiency, customer service, agility, and sustainability into the supply chain design, which can be facilitated by breaking down traditional functional silos and embracing digitization and automation. By linking manufacturing with planning and adopting predictive decision-making, companies can elevate their supply chain operations to a higher level.
🚢 Port of Los Angeles Approves $2 Billion Budget for Fiscal Year 2023/2024. The Los Angeles Board of Harbor Commissioners has given its approval to a $2 billion annual budget for the Port of Los Angeles for the fiscal year 2023/2024. The budget focuses on increasing investments in port infrastructure, supporting sustainability initiatives, and enhancing operational efficiency. Despite the challenges faced in the previous fiscal year, the Port forecasts a 5.1% year-over-year increase in cargo volumes, with a total of 8.9 million TEUs expected in FY 2023/24. The budget also allocates funds for environmental and decarbonization projects, as well as community-focused infrastructure improvements.
🔋 The Relationship Between the IRA and the US Battery Supply Chain: Understanding the Context. The Biden administration's Inflation Reduction Act (IRA), aimed at promoting clean energy technologies and bolstering the US clean energy industry, has had a significant impact on the lithium-ion battery (LiB) value chain for electric vehicles and energy storage. The IRA has attracted investment in the US downstream cell industry and is seen as a game changer for the country's battery economics. The commentary highlights the importance of cathode costs in the battery supply chain, the dominant role of China in the global battery market, and the vulnerability of the US supply chain, prompting the need for the IRA to enhance supply chain resilience and reduce reliance on China.
💰 Corporate reports reveal extensive reliance on supply chain financing. U.S. corporate bankruptcies are on the rise in 2023, reaching their highest level since 2010. This is accompanied by declining S&P 500 earnings and tightening financial conditions, including higher interest rates and stricter lending standards. The use of supply chain financing (SCF) by companies, which functions as a form of short-term borrowing, has come to light, with about $80 billion of SCF obligations identified among S&P 500 companies in Q1 filings. However, the true amount of SCF outstanding is likely higher, indicating potential liquidity risks and increased corporate debt levels.
🚛 Addressing Critical Infrastructure Challenges for Electric Trucks. The deployment of battery-electric trucks in North America has been hindered by significant infrastructure issues, as discussed by Voltera CEO Matt Horton in a conversation with Jim Park, equipment editor. The key challenges include the lack of charging infrastructure in many regions, the need for a major overhaul of the grid to support electric trucks, and the financial burden of upfront costs and installation of infrastructure. Despite these challenges, solutions can be found through collaboration with policymakers, targeted investments, and innovative financing options to enable the widespread adoption of electric trucks and realize the benefits of reduced emissions and economic savings.
⚖️ Lawsuits Filed by 19 States against EPA Regarding California's Heavy Truck Phaseout. Lawsuits have been filed by 19 states, led by Iowa, against the U.S. Environmental Protection Agency (EPA) over its support for California's future ban on heavy diesel vehicles. The states argue that the EPA is attempting to regulate the trucking industry out of existence through net-zero emissions standards and that the truck ban will increase costs, devastate demand for liquid fuels, and result in job losses. They contend that California's regulation violates the Clean Air Act and other federal laws and are petitioning the court to review the EPA's actions.
🔥 Julie Su, the nominee for Labor Secretary, remains under scrutiny regarding AB5. Julie Su, President Biden's nominee for Labor Secretary, faced additional scrutiny during her testimony before the House Committee on Education and the Workforce regarding her role in California's controversial worker classification law, AB5. Su, who previously served as California's labor commissioner during the implementation of AB5, faced concerns from groups such as the Owner-Operator Independent Drivers Association (OOIDA) that her policies would negatively impact independent truckers. Despite Su's assurance that she would not pursue an AB5 model on a national level, there are lingering doubts about her qualifications for the role of Labor Secretary. The Senate will ultimately vote on her nomination, but the timing of the vote is unclear.
Riddle of the Day:
I'm a crucial link from start to end, Connecting suppliers and customers, my friend. From raw materials to finished goods I go, In warehouses and trucks, high and low. I ensure products flow without a hitch, Bringing satisfaction with every stitch. What am I?
The Workday Dash is an aggregation of articles regarding the transportation logistics, trucking, and supply chain industries for November 27, 2024, from iLevel Logistics Inc.