Sky High Ocean Freight Rates From Asia Attract Government Scrutiny
Ocean carriers have been skipping sailings to shore up their bottom line during the virus-induced downturn in manufacturing and consumer demand. Tactical blank sailings combined with record breaking rate spikes in the trans-Pacific trade have increased carrier profitability now that manufacturing and demand are coming back online. Decreased capacity and increased rates are helping ocean carriers recover at the expense of the global economy while suppliers struggle to meet pent up consumer demand. Government regulators have begun to exert pressure on ocean carriers to restore capacity and restrict rate increases. It has been customary to blank sailings during the Chinese Golden Week holiday, however the threat of intervention will surely impact carrier cost manipulations and capacity decisions.
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(Photo credit: OOCL)
Walmart And Amazon Drones Battle For Last-Mile Delivery Supremacy
Walmart and Amazon are engaged in a war of delivery drones. Although Amazon may be the largest e-commerce retailer, Walmart may have a structural edge enabling them to deliver groceries and household items by drone more quickly. Both players introduced short-range drones to transport small packages up to 5 pounds. According to Amazon, about 90% of products they sell weigh under 5 pounds.
Walmart claims they have a store within 10 miles of 90% of Americans. Amazon, by contrast, delivers from its fulfillment centers, usually located near major cities. That gives Walmart an edge until Amazon ramps up their rural presence.
Meanwhile, Amazon has patented a futuristic Jetson-style idea for distribution towers that look like beehives. The towers would function as fulfillment centers with landing pads for delivery drones, strategically located near high-density residential towers.
The current need for social distancing has accelerated a paradigm shift from brick-and-mortar stores to online shopping with contact-free delivery.
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(Photo credit: Amazon, via FreightWaves, and Walmart, via FreightWaves)