US Diesel Demand Decline May Indicate a Recession
Good morning! Today is Tuesday, May 8th, and we are excited to share with you the top stories and trends from around the industry. Whether you are a supply chain professional, business owner, or simply interested in staying up-to-date on the latest developments in the field, our newsletter is your go-to source for timely and relevant information. So grab your coffee, settle in, and let's dive into today's supply chain news! ☕️
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US diesel demand and prices have weakened due to a decrease in freight and industrial activity, which has slowed down amidst falling consumer demand for goods and higher interest rates. As inflation remains an issue, some refiners are already seeing a drag on diesel demand while transportation and logistics companies say a "freight recession" is already happening, and smaller trucking companies are shutting down. Container imports into the US have dropped while freight activity is slowing as consumers shift spending from goods purchases during the pandemic to vacation and travel.
Check out today's featured article from Oil Price to read about the declining diesel demand and what it may mean for the United States economy. How will the transportation sector be affected? Will this spin into the recession so many economists have been warning about?
Featured Article:
Falling U.S. Diesel Demand Signals A Recession | Oil Price
“Diesel prices have fallen this year as higher interest rates and falling demand for consumer goods drove down consumption.”
Artificial Intelligence & Manufacturing 🤖
Using AI to Enhance Worker Safety in Manufacturing
AI is being used to improve worker safety in manufacturing by streamlining processes and reducing hazardous elements in the workplace. Autonomous vehicles such as drones and robots can perform dangerous tasks, while predictive AI can monitor asset conditions and reduce the amount of maintenance needed. Computer vision is a standalone tool that can detect hazards such as workers not wearing protective equipment or anomalies in production environments, and virtual training can help prepare workers for real-life scenarios.
However, introducing new technology into a manufacturing site can also introduce new risks, and a hybrid approach of combining the strengths of humans and robots may be the best solution.
Labor Issues & Regulations 📋
Washington State Passes Bill to Protect Warehouse Workers
Washington state has passed a bill that aims to protect warehouse workers from productivity quotas, making it the third US state to pass such legislation, after New York and California. The law prohibits employers from setting work quotas that interfere with employees’ health and safety, and also grants workers the right to take breaks, use the bathroom, and engage in other activities without retaliation. The International Brotherhood of Teamsters praised the legislation as critical to ensuring that employers are held accountable for the safety of their workers, and said that similar legislation is pending in 12 other US states.
Amazon, which is based in Seattle, the largest city in Washington state, has faced complaints about the risks to the health of its workers, including charges by the Occupational Safety and Health Administration that lifting packages puts workers at risk of lower back injuries. The company disputes these charges and has pointed to investments in safety innovations and process improvements to reduce the risk of injury to its employees.
Let’s Get Global 🌎
🇮🇳 Challenges Remain for India's Aspiration to Become the Next China. The COVID-19 pandemic led many companies to reevaluate their supply chains, which relied heavily on China, and look for alternatives such as India, which offers low-cost production. India also has a demographic advantage, with 65% of its population under 35 years old, in contrast to China's aging population. However, India faces challenges such as insufficient infrastructure and the cultural expectation that women should stay at home, hindering their participation in the workforce. While India is projected to overtake Japan and Germany as the world's third-largest economy by 2035, the country still has a long way to go to achieve its goals.
🇨🇳 First VLCC with Four Rigid Sails Delivered by China. China Merchants has taken delivery of the world's first second-generation eco-friendly VLCC, named New Aden, which is fitted with four rigid sails and other energy improvements. The supertanker was built by Dalian Shipbuilding Industry Company (DSIC) and is also fitted with the latest SOx and NOx technologies to reduce emissions. According to DSIC and its parent company CSSC, the vessel was designed to operate between the Middle East and the Far East, and it is expected to achieve an annual fuel saving of 9.8% and reduce emissions by more than 2,900 tons of carbon.
🚢 California Loses Dominance in Ports as Cargo Shifts to the East. California's $2.8tn freight industry is facing a threat as Southern California's ports are losing their dominance due to the pandemic's cargo crush pushing the ports close to breaking point. This has caused ports from New York-New Jersey to Houston to grow their market share, leading to a gradual shift that is being supercharged by simmering West Coast port labor talks, the near-shoring of factory production amid rising tensions with China, and US population growth shifting to the Sunbelt states. Additionally, the decline in market share for the West Coast has accelerated since the pandemic, leading to concerns that the LA-Long Beach docks may struggle to stay the US’s No. 1 ocean gateway over the long run.
iLevel With You 🏡
More topics for the average American household to consider…
✈️ New Regulations for Flight Cancellations and Delays Proposed in the US. The Biden administration is proposing new regulations that would require airlines to compensate passengers and cover expenses, such as meals and hotel rooms, if they are stranded for reasons within the airline’s control. The rules would require airlines to pay compensation beyond a ticket refund and to cover expenses that consumers incur, including rebooking on another flight, if the airline causes a cancellation or significant delay. Airlines for America, which represents the largest carriers, has stated that airlines have no incentive to delay or cancel flights and that more than half of cancellations in 2022 and 2023 have been caused by “extreme weather” or air traffic control outages. The Transportation Department is working with the airlines to reduce cancellations and delays this summer when air travel could exceed pre-coronavirus pandemic records.
💰 Yellen Warns of Limited Choices if Congress Fails to Address Debt. Treasury Secretary Janet Yellen has warned that there are "no good options" for the US to avoid an economic "calamity" if Congress fails to raise the nation's borrowing limit of $31.381tn in the coming weeks. Yellen did not rule out President Joe Biden bypassing lawmakers and acting on his own to try to avert a federal default. Republicans are demanding spending cuts in return for raising the borrowing limit, while Biden has said the threat of default shouldn't be used as leverage in budget talks. An increase in the debt limit would only allow borrowing to pay for what Congress has already approved.
🛬 FAA Warns House GOP Spending Cuts Could Have Devastating Impact on U.S. Air System. Proposed cuts to the Federal Aviation Administration (FAA) by House Republicans would result in a significant exacerbation of an existing shortage of air-traffic controllers, leading to furloughs, the halting of hiring and training, and the cessation of work on air-traffic computer systems, warns FAA Acting Administrator Billy Nolen. The situation would “wreak havoc on summer air travel,” Nolen said in a letter to lawmakers. Transportation Secretary Pete Buttigieg called the proposed FAA budget cuts “perfectly backward” and stated that the agency is trying to upgrade critical infrastructure while ramping up hiring.
🧳 US Airlines Rake in $7 Billion Annually from Checked Baggage Fees. Last year, U.S. airlines earned over $6.7 billion in baggage fee revenue, with American Airlines alone earning nearly $1.4 billion from checked bags, accounting for more than 2% of the carrier's full-year revenue. While most bags flew for free for decades, in recent years, fees have surged, boosting the bottom line of the nation's carriers. Ensuring that a passenger's bag arrives at its destination requires a complex process that involves an army of workers, conveyor belts, and airport tugs.
🚙 Evolution of the Parking Industry to Stay Afloat: An $8 Billion Industry. The US parking industry, which earned about $121 billion in 2022, is slowly recovering from the Covid-19 pandemic, with the entire parking industry projected to earn about $144 billion in 2023. However, insiders say that demand for paid parking is either flat or declining in nearly every market, except for healthcare facilities and events. Insiders also say that the industry is crowded and fragmented, and is worried about demand declines brought about by e-commerce, ride-hailing, and post-pandemic work trends. As such, the industry has been forced to reinvent itself by investing in new services and technology, including an app that allows customers to reserve spaces ahead of time and pay for parking on their phones, as well as technology for charging electric vehicles.
Get Smart 🧠
Ramp up that brain power for these advanced topics…
👔 Destination XL's Strategy to Avoid Inventory Issues: From Stores to Suppliers. Destination XL (DXL) CEO Harvey Kanter has said too much inventory is "the kiss of death" for retailers, causing them to "chase their tail" rather than bring in new merchandise. DXL has put in place machine learning and inventory management practices to keep its inventories under control. Kanter added that DXL takes a philosophical approach to purchasing and procurement, erring on the side of buying too little to stock its stores, which is particularly important given the number of sizes DXL carries. DXL has reduced inventory by 9.2% since 2019, according to the company.
🤖 Automation in Warehouses Set to Reach 26% by 2027. Warehouse automation is expected to be installed in more than one-quarter (26%) of warehouse sites by 2027, up from 14% in 2017, according to a report by Interact Analysis. The Covid-19 pandemic has accelerated the adoption of warehouse automation due to factors such as labor shortages and an increase in e-commerce. Sectors with the highest adoption rate of warehouse automation will be food and beverage and parcel areas, due to the predictability of throughput and the size/weight of the items handled.
🔦 How long will the journey to "dark warehouses" be? Dark warehouses that operate without human presence have been around for years in Europe and are now expanding in other regions. However, for the moment, the majority of large distribution facilities are committed to using collaborative robots that work side by side with humans. Honeywell Intelligrated’s chief technology officer, Mehul Patel, says that while total warehouse automation is a journey, it is important to focus on the software that generates the data needed to keep things running smoothly, such as information that informs the optimal layout of a warehouse and how it operates with the greatest efficiency.
🍊 Skilled Logistics Providers Crucial for the Food and Beverage Industry. Logistics providers in the food and beverage industry must have skilled team members, the right equipment, and comprehensive training to meet the unique challenges of the sector. Logistics workers must thrive in communication and be expert problem-solvers. Food safety regulations, limited shelf life, and seasonality are some of the challenges that logistics providers in this sector face. With advancements in technology, including real-time tracking and GPS, AI, and analytics, logistics providers can turn data into actionable insights to improve operational efficiencies, reduce costs, and expand operations at a massive scale.
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.