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Logistics Intelligence Brief
Wednesday, November 17, 2021


Factory Output Rises More Than Forecast

Bloomberg/Transport Topics Olivia Rockman November 16, 2021

The report showed that the increase in factory production was driven in part by an 11% rebound in the output of motor vehicles and parts, suggesting automakers are having more success increasing output despite the ongoing global semiconductor shortage. The gain was the largest since July of last year.
Excluding autos and parts, manufacturing output rose 0.6% after a 0.2% decline a month earlier
Link: The Federal Reserve Board Of Governors Industrial Production and Capacity Utilization - G.17

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Home Depot Sales Gain Shows Americans Keep Fixing Up Houses

Bloomberg/Transport Topics Jordyn Holman November 16, 2021

Home Depot Inc. posted stronger-than-expected results in the third quarter, a sign that increased North American spending on home improvement continues to stretch through the pandemic.
Comparable-store sales, a key metric for retailers, increased 6.1% in the period, according to a statement released Nov. 16. That’s well above the 1.5% average estimate of analysts surveyed by Bloomberg.
The results show how some retailers are managing to overcome obstacles ranging from supply chain logjams and a labor shortage to a stubborn bout of inflation. Walmart Inc. also reported earnings Nov. 16 that outpaced Wall Street’s expectations.
Link: Home Depot Press Release The Home Depot Announces Third Quarter Results

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October retail sales see strong gains, according to Dept. of Commerce and NRF

Logistics Management Jeff Berman November 16, 2021

NRF reported that based on its calculation of retail sales, which excludes automobile dealers, gasoline stations, and restaurants to focus on what it calls “core retail,” pointed to a 1.7% seasonally-adjusted increase, from September to October, and a 10.8% annual increase on an unadjusted basis. These tallies were in line with September’s sequential 0.4% and 10.9% annual gains, NRF said, adding that its data showed an 11.3% unadjusted annual gain on a three-month moving average.
“October’s numbers highlight the retail industry’s ongoing hardiness now that we’re in the fourth quarter,” NRF Chief Economist Jack Kleinhenz said in a statement. “Consumers remain in high gear moving into the last months of the year. While it’s difficult to parse out exact amounts, the figures reflect the combined effects of Halloween and early holiday shopping.
Related: National Retail Federation October Retail Sales Grew as Consumers Got an Early Start on Holiday Shopping

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Walmart Raises Forecast and Says Shelves Are Stocked for Holiday Shoppers

The Wall Street Journal Sarah Nassauer November 16, 2021


“We gained market share in grocery in the U.S., and more customers and members are returning to our stores and clubs,” said Walmart Chief Executive Doug McMillon in a news release Tuesday. He said that Walmart has enough products to serve customers over the holiday season. “Customers continue to move away from early pandemic behaviors,” Mr. McMillon said on a call with analysts Tuesday.
Walmart’s results highlighted the uneven impact of supply-chain snarls, as large companies with deep pockets continue to show they can work around disruptions that are hobbling their smaller competitors. Some of the biggest U.S. retailers, including Walmart, Home Depot Inc. and Target Corp., have chartered their own cargo ships to sidestep congestion at U.S. ports.
Link: Walmart Press Release Walmart Releases Q3 Earnings

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Wayfair’s logistics service fuels capacity growth, strengthens carrier relations

Supply Chain Dive Max Garland November 16, 2021

• The popularity of Wayfair's end-to-end logistics service has bolstered the company's effective shipping capacity and strengthened its relationship with ocean carriers as suppliers inject more volume into the network earlier to avoid congestion and reduce costs, CEO Niraj Shah said on the company's Q3 earnings call.
• The service, CastleGate Forwarding, carried more than 40,000 TEUs in 2020 across its international network, the equivalent of a top 30 U.S. importer by volume, according to an investor presentation.
• "We can take possession of products in Asia, break the shipments in bulk to go to different locations, arrange for transport over the water and to population-adjacent fulfillment centers," Shah said. "We optimize the supply chain for our suppliers who cannot do it on their own."

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When will the supply chain return to normal? Try never

Fast Company Edward Hertzman November 16, 2021

The Workers Don't Exist
President Joe Biden recently announced that the West Coast ports would operate 24/7. Prior to this edict, there were two 9-hour shifts on the docks on Monday through Friday, with limited work Saturdays. The ports of Long Beach and Los Angeles funnel roughly 40% of all imports into the U.S, and there are nearly 100 vessels awaiting dock space.
To the uninformed, expanding service seemed like an excellent decision and an initiative sure to make progress in easing the congestion. Timely also, as retailers struggle to get product onto the shelves for the ever-critical holiday season. However, those paying close attention know that this won’t do much to change realities on the ground. Round-the-clock operating schedules are theoretically great—if you can get people to work.
The ports are struggling to get workers during the normal daily shifts, forget about enticing people to work overnight or on the weekends. This isn’t just a case of incentivizing, either. The workers don’t exist. COVID-19 and its restrictions have made keeping full staffing almost impossible. Case in point: As of late October, there’s a shortage of 80,000 truck drivers, according to the American Trucking Associations.

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Using “queuing theory” to understand supply chain logjams

Market Place Kai Ryssdal November 16, 2021

“Marketplace” host Kai Ryssdal spoke with Keely Croxton, a professor of logistics at Ohio State University about how “queuing theory” — the mathematical study of waiting lines — helps explain ongoing supply chain issues. The following is an edited transcript of their conversation.
High utilization makes systems more vulnerable to variability
Ryssdal: Just on that variability thing, how important is it to be able to adapt when systems are running at close to full capacity before they get stressed? Like, I imagined our port operations in this country were running pretty close to capacity before the pandemic, and now they’ve got this huge burst that they can’t handle.
Croxton: Yeah. So we can learn from queueing theory is exactly what you were just suggesting — that the higher the average utilization rate of our system, the longer the wait times and the more brittle the system is. These ports were already working pretty close to full utilization, which just makes them unable to handle not only the change in variability of that processing time, but also a sharp increase in simply the arrival rates.

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Driverless Deliveries: How Close Are We? (Walmart Reference)

Knowledge@Wharton November 15, 2021

In the race for retail customers, Walmart is closing in fast on the middle mile.
The company announced earlier this month that it is operating driverless delivery trucks from a distribution center to a Neighborhood Market store in Bentonville, Arkansas, where Walmart is headquartered. The deployment is a first because there are no other driverless deliveries along the so-called middle mile of the supply chain anywhere in the world.
The achievement brings Walmart closer to using autonomous vehicles (AVs) to traverse the challenging last mile of getting goods straight into the hands of customers. But Wharton management professor John Paul MacDuffie said technology still has some distance to go before it catches up to the aspirations of retailers chasing the speed and cost-efficiency that AVs can offer.

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O’Brien holds commanding lead in race for Teamsters president

Freight Waves Mark Solomon November 16, 2021

Sean M. O’Brien is moving inexorably closer to being elected the next general president of the Teamsters union.
In the second day of vote tallying, O’Brien held a commanding lead over his opponent, Steve Vairma, according to results posted Tuesday afternoon by the Teamsters’ Office of the Election Supervisor. With the union’s central and southern regions partially reporting, O’Brien had received more than 34,798 votes, compared to Vairma’s 11,103 votes. Ballots were currently being counted in the central region, where O’Brien holds an overwhelming lead.
O’Brien’s running mate, Fred Zuckerman, held an equally sizable advantage over his opponent, Ron Herrera. Zuckerman had received 34,254 votes as of midday Tuesday, compared to 11,592 votes for Herrera. Zuckerman and Herrera are vying for the post of general secretary-treasurer, the second-highest office in the 1.3 million-member union.

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Sysco to expand truck driver academy nationwide

Transport Dive S.L. Fuller November 16, 2021

• Sysco opened its first driver academy during the previous quarter, CEO Kevin Hourican said during a recent earnings call. He announced the company's plan to open the Sysco Driver Academy program during a call in August.
• Hourican said the company is "bullish" on expanding the academy across the country next year in attempts to bolster its driver pipeline.
• "The most important population for us is our driver population. It's a highly skilled job," Hourican said. But he admitted the company is trying to boost its lower-than-typical retention rates. Retention bonuses for drivers have had "a noticeable and visible positive impact on retention," Hourican said.

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ATA, Freight Stakeholders Tout Infrastructure Bill’s Enactment

Transport Topics Eugene Mulero November 16, 2021

Among provisions in the law specific to trucking is an apprenticeship program for drivers younger than 21 to eventually qualify to drive Class 8 trucks in interstate commerce.
“After countless hearings and meetings on Capitol Hill,” Spear said, “ATA members will finally see the fruits of their labor: A 38% increase in road and bridge funding, and an infusion of highly trained, younger talent into our workforce.”
“After countless hearings and meetings on Capitol Hill,” Spear said, “ATA members will finally see the fruits of their labor: A 38% increase in road and bridge funding, and an infusion of highly trained, younger talent into our workforce.”

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Biden’s $7.5 billion EV charging plan will require a lot of patience

The Verge Sean O'Kane November 16, 2021

The Biden administration’s effort to blanket the country in half a million new EV chargers in the next half-decade got $7.5 billion in funding Monday when the president signed the $1.2 trillion infrastructure bill into law. But while those chargers will be necessary as electric vehicle sales continue to climb, Biden’s plan will require institutional — and personal — patience.
Not only will it simply take a while to build out that many chargers, but the majority of what gets built will likely be of the “Level 2” variety, which can replenish about 25 miles of battery capacity per hour. That means EV buyers in the US will have to get used to the idea of sipping energy while they’re out and about and doing most of their charging at home.
The use case we think will be the most frequent is you’re doing something else in your life — you’re at the grocery store, or the movies, or church — and you’re just going to plug in there,” says Joe Britton, the executive director of the Zero Emission Transportation Association. “[That’s] instead of the gas station model, which is like, ‘Oh shoot, I’m on empty, I need to go and get all the way to full immediately.’”

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