Building a Future-Ready Supply Chain; Intermodal Rebounds; Strategic Shoring Gains Favor; and Other Logistics News
A look at the latest news stories in global supply chain and logistics.
Future-Ready Supply Chains
Building more resilient, adaptable operations to handle future disruptions is rapidly becoming a top priority for supply chain leaders. What are the key elements needed to build such resilience?
Investing in risk management strategies, advanced technologies, and external partnerships to stabilize operations were among the responses from 300 industry decisionmakers recently surveyed by R.R. Donnelley & Sons Company (RRD). In its Future-Ready Supply Chain Report, supply chain leaders indicate that they plan to make substantial adjustments within the next two years to boost their operations to respond to supply chain disruptions.
When it comes to risk management, their priorities include:
- Forming relationships with alternative suppliers (69%).
- Increasing reliance on domestic suppliers (67%).
- Frequently updating risk assessments to adapt quickly (50%).
Respondents are also investing in technology tools such as real-time visibility, IoT, and predictive analytics to boost resilience. They also cite strategies such as:
- Using AI for supply forecasting (59%).
- Using AI for visibility and operations (56%).
- Adopting advanced order management systems for agile fulfillment (60%).
Sustainability also plays a role in future planning; top priorities include sustainable logistics and sourcing. And 63% of companies expect to increase outsourcing over the next two years, primarily for speed and scalability.
High Costs Driving Ho-Ho-Hum Holiday Season?
Both retailers and consumers seem to have the same “item” at the top of their holiday wish lists this year: reduced inflation. Worries over the high cost of gifts—and the need to respond with corresponding business strategies that can help cut operating costs—have both groups concerned, shows data from Manhattan Associates’ latest Supply Chain Confidence Survey.
The survey polled U.S. consumers and retail and supply chain/logistics executives, digging into insights on inflation, shortened holiday timelines, and political uncertainty.
Consumers show clear opinions; 85% express concern over rising prices this holiday season and 64% indicate plans to cut spending on non-essentials, while 52% will prioritize discounts. In response, nearly 61% of supply chain leaders report having invested in new technologies and processes to run more efficiently and reduce overall costs this season.
Retailers and supply chain executives also mention these strategies as part of their holiday 2024 game plans:
- 70% plan to offer more promotions, with 56% using loyalty programs and 34% introducing flexible payment options.
- 80% will utilize AI for better inventory management and customer service.
- 35% expect to implement automation technologies to control costs and handle peak demand.
- 58% will increase their workforce to manage peak omnichannel demand.
Agility also emerged as an important theme for peak-season prep. “Deploying the right technology is more critical than ever before,” notes Manhattan Associates’ Ann Sung Ruckstuhl. “Retailers’ focus on unified commerce and improved supply chain visibility is expected to help meet consumer demands for a smooth holiday shopping experience.”
Intermodal Rail Rebounds
While intermodal rail has had somewhat of a rocky year, it appears to be ending strong. Total intermodal volume rose 9.8% year-over-year in the third quarter of 2024 (see chart below). International containers added 15.4% and domestic containers improved 6%, according to the Intermodal Association of North America (IANA). Trailers fell 11% during the same time period.
“International volume continued to be the growth engine in the third quarter,” says Joni Casey, president and CEO of IANA. “We expect this strength to drive overall traffic through the end of the year.”
The seven highest-density trade corridors, which collectively handled more than 60% of total volume, posted the following gains:
1. Southeast-Southwest: 25.9%
2. South Central-Southwest: 23.8%
3. Midwest-Northwest: 23.2%
4. Midwest-Southwest: 17%
5. Trans-Canada: 7.4%
6. Intra-Southeast: 2.7%
7. Northeast-Midwest: 0.4%
Port of Baltimore Gets Stacked
Helping to boost the Port of Baltimore’s comeback efforts after the Francis Scott Key Bridge collapse earlier this year is the recent launch of double-stacked rail operations at the port. The enhanced rail offerings open new opportunities for intermodal rail service in the Northeast and from the Port of Baltimore to Midwest markets. As an added bonus, the project was completed several months earlier than expected.
The port estimates that double-stacking containers will help grow its business by about 160,000 containers annually and will create 13,000 new jobs in construction and operations. Double-stacking will also complement the expansion of the Seagirt Marine Terminal, operated by Ports America Chesapeake, as home to supersized Neo-Panamax cranes that handle ultra-large containerships. Officials tout enhanced transportation cost efficiency and environmental gains as additional benefits of double-stacking.
While construction is still ongoing at several Maryland sites, vertical clearance improvements at rail bridges north of Baltimore are complete, providing rail carrier CSX the opportunity to operate double-stack rail service on a temporary route from the Port of Baltimore along the CSX network in Pennsylvania, New Jersey, New York, and onto the Midwest.
“Adding double-stack capabilities to and from the Port of Baltimore allows us to take our container business to another level and puts us on a more level playing field with our competitors,” said Maryland Port Administration Executive Director Jonathan Daniels when announcing the launch.
AI Is Winning the VC Game
In the first nine months of 2024, AI-related deals accounted for 33% of total investments into venture capital-backed companies based in the United States. That’s up from 14% in 2020 and could go even higher in the years ahead. AI deals accounted for 37% of the $38 billion raised by VC-backed companies in Q3 2024, with four of the 10 largest deals involving AI-related companies, according to CrunchBase data analyzed by EY.
Proximity Rules
While global sourcing has been an accepted business strategy for several decades now, long and globalized supply chains have proven vulnerable to disruption. As a result, proximity to the U.S. market is emerging as a primary value driver in supply chain strategy, according to a new KPMG report, The Proximity Premium.
With growing geopolitical and economic uncertainties, executives say that speed-to-market and supply chain resilience have become priorities for U.S.-based companies. The survey, which polled 250 leaders from businesses with at least $1 billion in annual revenue, details how U.S. companies are leveraging proximity for resilience in supply chains.
Here are some key findings:
Nearshoring Gains Favor:
- 73% of surveyed executives report improved supply chain efficiency through strategic shoring.
- Companies are concentrating supply chain locations within the Americas, projecting a 16% increase in U.S.-focused supply chains.
Shift in Strategic Priorities:
- 81% expect the majority of their U.S.-serving supply chains to operate within the Americas after strategic shifts.
- 66% of executives cite political and economic uncertainties as major factors driving supply chain reevaluation.
Evolving Goals:
- Flexibility (27%), speed (28%), and sustainability (27%) have gained importance, reflecting a shift from cost-focused strategies, which decreased from 37% in 2022 to 33% in 2024.
CEOs Clock Time on SCM
With a general consensus that the operating environment over the next 12 months will continue to be challenging for businesses, leaders are being strategic about where they focus their time and efforts. One area rising to the top is supply chain management, according a new report from Proxima. In its Supply Chain Barometer, 3,000 CEOs from the United States, U.K., and Europe share insights on the challenges and priorities ahead.
It’s clear that supply chain is cemented in the C-suite agenda for the foreseeable future: A striking 96% of CEOs are set to spend the same (41%) or more (55%) time on supply chain-related topics this year (see chart). Just 4% of CEOs foresee the amount of time spent on supply chain-related topics decreasing in the year ahead.
Among the 55% of CEOs spending more time on supply chain issues, the majority anticipate an increase of up to 20%, equating to as much as one day a week more. Figures were highest among CEOs within the private equity (47%), media and entertainment (45%), and leisure and hospitality (43%) sectors.
CEOs planning to spend an additional 10% or more of their time on supply chain-related topics were greatest within the industries of communications and high-tech (76%), health and pharmaceuticals (72%), and construction (70%), reflecting the complexities involved in emerging high-value supply chains.
Ready, Set… Return
While consumers gear up for holiday purchases, retailers are already prepping for the onslaught of expected returns. Top of mind for retailers wishing to optimize holiday-driven reverse logistics are topics such as the rise of returns fraud, the role of AI in mitigating returns, inventory management strategies, and shifting returns policies, among others.
A recent survey of U.S. retailers, conducted by returns management solutions provider goTRG, shows that retailers are more focused than ever on addressing the ongoing challenge of returns. (See their top priorities below.)
With holiday retail sales predicted to increase between 2.3% and 3.3% in 2024 according to Deloitte’s annual holiday retail forecast, the focus on returns is apt. The backdrop of significant economic and political uncertainties surrounding this year’s peak season also influences how retailers plan and execute their holiday strategies.
Here are some of their top concerns and focus points, according to the report:
- 63% of retailers categorize returns as a severe or significant problem.
- 60% of retailers raised prices in the past 12 months to offset the growing costs associated with returns.
- 47.4% of retailers are already utilizing AI to minimize return rates by offering more detailed product descriptions and sizing information, thus improving purchasing confidence.
- 52.4% of retailers indicate that returns fraud worsens during the holiday season.
- In 2023, return fraud ballooned into a $101-billion issue, affecting 13.7% of all returns, according to NRF. To combat these challenges, 52% of retailers are implementing one or more preventative measures.
- Respondents indicate the top three forms of returns fraud are the return of used, non-defective merchandise (17%), the return of merchandise purchased with stolen or otherwise illicit payment methods (16%), and the return of shoplifted or stolen goods (14%).