Ship Ahoy: Congress Considers 'Chips Ahoy' Act for National Shipbuilding Mobilization!
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U.S. House and Senate leaders are considering the introduction of a "Ships Act" aimed at revitalizing the country's naval and commercial shipbuilding industry, drawing inspiration from the successful CHIPS Act supporting semiconductor manufacturing. The proposed legislation aims to upgrade shipbuilding capabilities, enhance national security, and counter China's growing shipbuilding prowess. The Ships Act would include measures such as modernizing existing shipyards, establishing new construction and repair yards, and prioritizing workforce development to meet the industry's needs.
Check out today’s featured article from AJOT to read about the proposed shipbuilding mobilization by Congress, inspired by the “Chips Act”. What could this mean for the future of U.S. shipbuilding and manufacturing?
Featured Article:
Congress considering national shipbuilding mobilization modeled on the “Chips Act” | AJOT
“U.S. House and Senate leaders are discussing a proposed ‘Ships Act’ to dramatically upgrade U.S. naval and commercial shipbuilding along the lines of the $52 billion CHIPS Act supporting U.S. semiconductor manufacturing, according to Luke Lorenz, Director of Legislative Affairs, Navy League of the United States.”
Sustainability & Shortages ⚠️
Climate Change is a Major Threat to Food and Beverage Supply Chains
The impact of climate change on global food and beverage supply chains, including popular snacks like Doritos, was discussed at the Gartner Supply Chain Symposium/XPO. Concerns were raised about the availability of key ingredients such as corn, sunflower oil, dairy, and salt, which have been affected by droughts, geopolitical conflicts, and disruptions. To minimize the impact of climate change, supply chain professionals are advised to advocate for climate awareness, handle potential disruptions, collaborate with stakeholders, and implement preventive planning measures.
The global supply of corn is decreasing due to droughts, while the war between Russia and Ukraine has disrupted the supply of sunflower oil. Dairy supply chains have been affected by droughts and labor costs, leading to an increase in milk prices. The demand for salt, used in processed foods, has risen but faces supply disruptions. Gartner suggests a four-step approach, dubbed CHIP, which involves climate advocacy, handling disruptions, involving others, and preventive planning, to mitigate the impact of climate change on supply chains and avoid a world without Doritos.
Retail & Shortages 🛍️
Big Lots Innovates Sourcing Strategies to Address Product Shortages
Big Lots, in response to product shortages caused by the closure of UFI, has adopted various procurement strategies. They have sourced from bankrupt competitors and retailers with excess inventory and were able to access Broyhill merchandise at a discount through arrangements with banks. To accommodate new Broyhill sets, Big Lots has implemented promotions and marketed "mitigation furniture" brought in after the closure, although it has faced challenges selling these pieces individually online. Other furniture retailers, such as Lovesac and Williams-Sonoma, are also diversifying their sourcing strategies to address backlogs and shortages by exploring alternative countries for production.
In an effort to mitigate product shortages after UFI's closure, Big Lots has employed creative sourcing methods. This includes procuring discounted Broyhill merchandise through arrangements with banks and acquiring inventory from bankrupt competitors. However, the retailer has faced challenges in marketing separate pieces of "mitigation furniture" online, which were brought in to address the shortages. Meanwhile, other furniture companies like Lovesac and Williams-Sonoma are also diversifying their sourcing strategies, exploring alternative countries for production to alleviate supply chain disruptions caused by backlogs and shortages.
Let’s Get Global 🌎
🚢 Container Shipping Industry Confronts Unprecedented Downturn in Long-Term Rates. The container shipping industry witnesses a record-breaking 27.5% decline in global long-term freight rates in May, marking the ninth consecutive month of rate drops, according to Xeneta's Shipping Index. The collapse in rates reflects the new market reality, with subdued markets and lower-priced contracts replacing previous agreements. The industry faces continued challenges due to macroeconomic uncertainty, shrinking trade volumes, and geopolitical fluctuations, suggesting a prolonged period of unprofitability for carriers managing capacity adjustments and service restructuring.
⛏️ Are Critical Mineral Supplies Threatening the Progress of Renewable Projects? According to a report by insurance provider WTW, the progress of renewable energy projects is being hindered by downstream supply chain risks and the increasing costs of critical minerals. The demand for these minerals is expected to surge by up to 500%, while challenges such as human rights abuses, lack of infrastructure, and skilled labor shortages further complicate the supply chain. Rising commodity prices, material shortages, and longer lead times are making renewable energy projects less economically viable in the short term.
🌎 Companies Repatriating Production due to War, Economic Woes, and Social Media. As global supply chains face disruptions caused by factors like the Ukraine conflict and China's economic slowdown, a growing number of companies are opting to bring their production back home. The reshoring trend is gaining traction, with firms looking to source products locally to improve supply chain resilience and respond to unpredictable consumer demands. The shift towards domestic manufacturing is supported by government incentives, such as the US push for domestic chip and electric vehicle component manufacturing, as well as the European Union's investment in boosting chip production within the bloc.
iLevel With You 🏡
More topics for the average American household to consider…
⚠️ Macy's and Costco Issue a Cautionary Note on the Economy. Major retailers Macy's and Costco have raised concerns over changing consumer behavior and a pullback in spending, signaling potential economic challenges for the US. Macy's CEO, Jeff Gennette, noted a greater-than-anticipated decrease in customer demand, with shoppers reallocating spending towards essentials and services. Similarly, Costco's finance chief, Richard Galanti, observed a shift from pricier meats to cheaper alternatives, reflecting a trend seen in previous recessions. These developments highlight a decline in discretionary purchases and a potential impact on retailers, while businesses catering to travel and dining experiences may benefit from increased consumer spending.
🚗 The Impact of Inflation and Rising Interest Rates on Car Purchases in the US. As the Federal Reserve tackles inflation by increasing interest rates, many Americans face limitations when affording new or used vehicles. The rate hikes have led to lowered buying expectations, with more people opting for used cars or choosing to repair their existing vehicles instead. This trend has particularly affected lower-income consumers with credit scores below 620, making it difficult to access auto financing. The tightening of credit has resulted in a decline in subprime and deep subprime buyers in the market, impacting the overall vehicle sales landscape.
🤖 Serve Robotics Partners with Uber Eats to Roll Out 2,000 Delivery Bots. Serve Robotics and Uber Eats' partnership marks a significant advancement in the widespread adoption of autonomous delivery robots. The collaboration allows Serve to scale its operations and tap into operational efficiencies, essential for long-term success in the industry. While funding challenges have hindered expansion efforts for delivery bot companies, Serve's partnership with Uber has played a crucial role in expanding its delivery capabilities. The partnership, set to run through early 2026, is expected to be extended due to its positive outcomes. Serve has successfully completed numerous contactless deliveries in San Francisco and Los Angeles, experiencing growth in Los Angeles specifically, with over 200 participating restaurants.
⛽️ Diesel prices continue to decline for the sixth consecutive week. Average diesel prices in the United States have continued their decline for the sixth consecutive week, according to the Energy Information Administration (EIA). The current national average stands at $3.855 per gallon as of May 29, down from $3.883 the previous week. Even in California, known for its higher fuel prices, the average diesel price has decreased to $4.810 per gallon. The lowest prices are found along the Gulf Coast, with an average of $3.555 per gallon.
🚛 Increase of 9.2% in Positive Marijuana Tests Among Truck Drivers in Q1. According to data from the federal Drug & Alcohol Clearinghouse, the number of truck drivers testing positive for marijuana increased by 9.2% in the first quarter of 2023. However, a significant portion of those who failed the tests are not participating in the return-to-work program. As of March, 97,833 out of 129,100 drivers in prohibited status have not started the program. The issue of controlled substance abuse is being addressed by industry organizations, including the American Trucking Association, to educate drivers and tackle the root causes. The prevalence of marijuana use is not limited to the trucking industry but is a challenge for the entire U.S. workforce, with a report showing increased positivity rates for both marijuana and amphetamines.
🧢 Schools in Georgia and Wyoming to Increase Training for Truck Drivers. Georgia and Wyoming colleges are expanding their commercial driver's license (CDL) programs to address the shortage of truck drivers. Columbus Technical College in Georgia held a groundbreaking ceremony for a new CDL facility aimed at training transitioning military personnel and other individuals as truck drivers. At the same time, Laramie County Community College in Wyoming received a grant to cover the costs of CDL certification for over 100 students. These efforts aim to address the national driver shortage and improve employment opportunities in the trucking industry.
Get Smart 🧠
Ramp up that brain power for these advanced topics…
👨💻 Seizing the Advantage: Embracing New Technology Before It's Too Late. This blog post emphasizes the inherent disadvantages new technologies face when initially introduced, using examples like the transition from horses to gas cars and the resurgence of electric cars. Waiting for the new technology to surpass the old one poses significant risks, as competitors who embrace it early gain an edge by building systems around it and capturing customers. The importance of adapting and understanding new technology even when it's only partially effective is highlighted, as waiting until it catches up may lead to missed opportunities.
🤖 CEOs Envision the Broad Applications of AI Across Industries. In a series of interviews, several CEOs shared their positive outlooks on the integration of artificial intelligence (AI) into their businesses. They discussed various ways AI could benefit customers, including personalizing experiences, ensuring freshness in supply chains, streamlining hiring processes, improving communication with customers, and enhancing retail and e-commerce operations. While acknowledging the potential risks, these executives highlighted the enormous potential of AI and emphasized the need for responsible regulation to maximize its benefits.
📦 Parcel Carriers and Shippers Navigate Challenging Waters Amid an Oncoming Perfect Storm. Parcel carriers and shippers are facing a convergence of challenges, including restructuring at FedEx, slowing e-commerce volumes, high rates and surcharges, and upcoming labor negotiations between the Teamsters Union and United Parcel Service. The negotiations with the Teamsters are expected to be contentious and could potentially impact the industry as a whole. Meanwhile, FedEx is undergoing a consolidation effort and Amazon may consider opening its parcel network to non-Amazon packages. Shippers are advised to strategically manage their carrier relationships and prepare for potential disruptions in the market.
🌦️ Navigating Supply Chain Management Amid Climate Disasters. Navigating compliance with environmental, social, and governance (ESG) requirements while managing costs and supply chain risks poses significant challenges for companies, according to Kareem Mohamednur, partner at PwC. Balancing cost management, risk, resilience, and sustainability, achieving end-to-end visibility in the supply chain, particularly in measuring and reducing Scope 3 carbon emissions, and engaging suppliers to improve sustainability performance are key hurdles. Despite the difficulties, Mohamednur remains hopeful, citing advancements in technology for data acquisition and analysis, as well as increasing pressure from stakeholders to drive progress in ESG mandates.
🍺 Closing the Reporting Loophole for Driver Drug and Alcohol Violations. The Federal Motor Carrier Safety Administration (FMCSA) has implemented a system improvement to the Drug and Alcohol Clearinghouse, which now notifies employers of any changes to a driver's Clearinghouse record for up to 12 months after a pre-employment query. This addresses a previous gap in the system where violations could be reported by a prior employer after a pre-employment query, but not before the next annual Clearinghouse check. Employers now receive email notifications when a driver they have queried has new information recorded in their Clearinghouse record within 12 months.
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.