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State of the Shipping Address
State of the Shipping Address
October 3, 2022

s we wrap the third quarter of 2022, we reflect on the macro-trends in our industry, backlit by the upcoming peak season and underscored by a rapidly unfolding set of narratives in our economy. This latest blog serves as a pre-peak industry report with the added encouragement and forward-looking charge of a presidential address. To begin, we must provide one powerful quote: “It is not the strength of the challenge, but the strength of our resolve, that will prevail.”

Our first macro-trend, instrumental infrastructure.

We've likely heard about ongoing congestion in our coastal ports. The U.S. government stated that a previous blanket strategy to instate 24/7 operations wasn’t supported by enough incentive. Where it was employed, the bottleneck was not removed, simply pushed elsewhere. White House Port and Supply Chain Envoy Gen. Stephen Lyons provided remarks at the ASCM Connect Annual Conference on this topic. “We need transparency across a fairly opaque industry” and to “commit to [meaningful] liquidity.” There are certainly lots of ways transparency is being discussed, not just in terms of efficiency, but sustainability and customer experience.

There is still work to be done, but we’re making progress in other ways. With Postmaster General Louis DeJoy at the helm, USPS is poised to become a competitive organization, shifting their focus from wholly mail to better inclusion of parcel delivery. This represents a needed outlook change that has plagued the agency for the last several years while demand put major stress on aging infrastructure and processes.

Our second macro-trend, let’s talk labor.

The bottlenecks noted above speak to a larger trend of overall volume, from which the effects are felt downstream. Let’s take Amazon for example. Among the distribution workforce, general distaste for past holiday expectations has Amazon reporting sharp turnover rates approaching 150% annually, even going as far to track a weekly turnover (3%). Analysts explain that, as unsatisfactory as this may sound, it is somewhat by design, much like any high intensity, short-term expectancy model. On the other hand, retailers and wholesalers are increasing wages and benefits, hoping that the employee majority will vote with their loyalty. Minneapolis-based Target Corporation is in this mix, committing $300 million more in 2022 to wage-related expenses.

Our third and final macro-trend, e-commerce demand.

With a few years under our belts seeing markets that can only be described as unpredictable, the major carriers, distributors, and producers alike are solidifying their bullish or bearish positions on e-commerce. One such story is DHL’s investment in robotic order fulfillment to the tune of 2,000 machines at an Ohio client facility. Similar investments are being made across the midwestern US, marking further adoption of the scalable efficiency demonstrated by automation.

As ever, carriers are building up fleets and teams backed by holiday hiring incentives, that they may put a bow on 2022 once the last few holiday packages hit their respective doorsteps. These short and long-term strategies hedge on either side of the e-commerce equation, but will prove impactful despite where the ebbs and flows equalize.

Bringing it into focus

If this year has taught us anything, it’s that, when we zoom out from the data and headlines, perspective matters. A seismic change can reveal better paths forward. The innovation of tomorrow is already here, it just needs adopting. The truths we hold self-evident, our visibility to package movement and the sustainability of a “delivered in a few hours” model, must be taken in context of their impact on the furthest corners of the network and those making it operational.

In closing, while the world continues to march on with a careful step and a hopeful eye to the future, our shipping nation is continuing its path toward efficiency, innovation, and always delivering.

Ludwig Dischner III, MA, PMP
Marketing & Commercial Project Analyst ~ ConnectShip
Ludwig contributes to ConnectShip in brand development, project management, content production, video animation, UX/UI design and development, marketing research, analytics, business strategy, legal administration, and some musical talents, too. Ludwig is an integral piece of the team, communicating logistics solutions to a wide range of audiences and improving ConnectShip's project management. Ludwig holds a master’s degree in strategic communication and in project management from the University of Oklahoma, after graduating from the University of Tulsa with a bachelor's degree in business marketing. He also maintains his PMP certification.