Looking for a quick summary of the top supply chain and logistics news and trends making waves this week? Read our weekly "Supply Chain Snapshots" for helpful summaries and commentary to get you up-to-speed on the news you need to know.
#1. The Sky Won’t Fall, and Other Retail Predictions for 2023
2023 is predicted to be a good year for retail—especially for companies that appeal to the higher and lower ends of the market.
At this time, unemployment is low, and the general consumer outlook is a positive one.
More showroom stores are likely to crop up, which comes with many advantages including lower build costs, reduced labor and payroll costs, less on-hand inventory, and lower rent.
For these reasons, showroom retailers will settle into smaller spaces, but optimize on locating in more attractive neighborhoods or high street locations.
Circular or resale retail is expected to skyrocket and remain a strong driving force for years to come.
Trends show consumers are receptive to visiting "used" areas across all verticals because it’s fun, better for the environment, and less expensive.
#2. A Tech ‘Golden Age’ Awaits Supply Chains Limping Out of the Pandemic
Experts predict that supply chains are moving towards a tech-focused landscape where everything from assembly lines to in-store shelves will be tracked in real-time via automation.
Investors have been funding logistics tech companies at a rate of $9 billion a quarter since late 2020.
According to CB Insights, the number of unicorns, which are startups valued at more than $1 billion, has doubled to more than 60 in just 18 months.
Newer logistics companies are shifting toward an online presence to reduce the amount of manual labor and increase the amount of data visibility.
Right now, less than 10% of warehouses globally are fully automated.
“What worked 30 years ago is not going to work going forward,” explains Corey Tollefson, President of Worldwide Field Operations with Scottsdale, Arizona-based Blue Yonder Group Inc…“This is just the first step of a multi-year, probably multi-decade transformation of many supply chains.”
“It’s probably the best time in the last few years to hire technical talent,” explains Flexport Co-CEO Dave Clark “...we need to be automating much of the decision-making along the way so that people can focus on how to add other incremental value to the process.”
The ongoing supply chain issues facing equipment manufacturers in America are something that Congress cannot ignore.
A recent Association of Equipment Manufacturers (AEM) survey found that 98% of respondents are still facing big supply chain troubles.
58% of participants stated they are experiencing worsening conditions.
Equipment manufacturers have faced significant supply chain bottlenecks because they are struggling to recruit and retain skilled workers, falling behind schedule, and cannot source the components they need.
Congressional action may reduce the stress on American supply chains to ensure businesses are better prepared to deal with future disruptions.
It is predicted that advanced tools and techniques can help companies anticipate and prepare for supply chain disruptions while making informed decisions.
Experts across the fashion industry predict that 2023 is the year when more sustainability efforts will come to fruition as many companies are funding the movement.
“2022—it was the year of maturity. Now, it’s [time] to implement at scale, on the ground,” says Marie-Claire Daveu, Chief Sustainability Officer and Head of International Institutional Affairs at Gucci and Balenciaga’s parent company Kering. “If we want to have a big effect on the planet, we have to speed up in 2023.”
Some ways brands are trying to improve sustainability include, reducing electricity usage in stores, reducing chemical and water use, opting for more sustainable materials with natural, bio-based fibers, and repurposing or recycling used materials.
“I think we will continue to see a push for policies like the NYS Fashion Act and the Federal Fabric Act,” explains Caroline Priebe, Founder of the Center for the Advancement of Garment Making (CAGM), although she does not expect U.S. lawmakers to actually pass any bills this year.
“It’s great to see resale and ‘sustainable’ materials go mainstream, but we would love for the industry to tackle its bigger issues like overproduction, supply chain management, and linear lifecycles,” explains CAGM’s Esponnette.
#5. Retailers Pull Back From Using Chartered Cargo Ships
Retailers are moving away from using chartered ships now that ports congestion has cleared and supply chain pressures have eased.
Costco Wholesale Corp., Home Depot Inc., and Party City Holdco Inc. are among companies that have reduced ship charters amid plentiful space on container ships and fast-slumping ocean-shipping rates.
Rates to charter ships have seen a massive drop from early 2022—a time when they were near maximum capacity.
Companies trying to run their own vessels are struggling with challenges, including securing berth space at ports and returning empty containers to Asia.
#6. Some Supply Chain Managers Are Wary of Shifting Trade Back to West Coast Ports
According to a CNBC supply chain survey, numerous logistics managers say they do not know how much trade they will bring back to West Coast ports once an International Longshore and Warehouse Union (ILWU) labor deal is reached.
Out of 341 logistics managers surveyed, 18% of respondents said they would bring back 10% of their diverted trade, another 12% said they would bring back 20% of the trade they moved away, and 12% said they would bring back 60% of their diverted trade.
Of those surveyed, 49% said they did not divert trade, while 40% did not want to divert it.
A main reason managers moved trade elsewhere was because of an ILWU strike, while around 40% cited California’s AB5 “gig worker” law and rail delays as a reason.
The question stands if the unresolved fears have caused managers to migrate trade away from the West Coast to East Coast and Gulf ports indefinitely.
East Coast warehouses as well as the two large railroads that service the ports seeing the boom in containers have benefitted greatly from this shift.
According to ITS Logistics, the volume of freight moving out of the East Coast doubles that of the West Coast.
We’ll be back next week with our next edition of Supply Chain Snapshots.
