John Johnson joined the DC Velocity team in March 2004. A veteran business journalist, John has over a dozen years of experience covering the supply chain field, including time as chief editor of Warehousing Management. In addition, he has covered the venture capital community and previously was a sports reporter covering professional and collegiate sports in the Boston area. John served as senior editor and chief editor of DC Velocity until April 2008.
Wal-Mart may see radio-frequency identification (RFID) tags attached to incoming cases and pallets as an ingenious solution to the problem of costly stockouts. But as the next group of suppliers ramps up to comply with the mega-retailer's 2006 RFID mandate, Wal-Mart may run up against an out-of-stock issue it can't control—a shortage of RFID tags.
Some analysts are warning that the industry can expect sporadic tag shortages during the first half of the year— possibly lasting into the third quarter—as tag manufacturers ramp up production for tags that meet the new second generation (Gen 2) standards that were ratified in late December. "We believe that demand will far outstrip capacity well into [2005]," says Larry Blue, vice president and general manager of Symbol Technology's RFID Tag Business Unit. "Those people who are not engaged right now [in an RFID pilot] may find it difficult to find tags, but that will change toward the middle to end of the year as more capacity comes on board."
Symbol, which purchased Rockville, Md.-based tag manufacturer Matrics for $230 million late last year, expects to produce 150 million tags in 2005—just enough to meet the needs of its current customers plus a couple of new ones. The company will continue to produce four million to five million tags per month in the first quarter, ramping up to 10 million to 12 million tags when its Gen 2 product becomes available.
In addition, Texas Instruments has confirmed plans to produce EPC Gen 2 tags. It expects to have working samples available in the second quarter and to begin volume production in the third quarter. Bill Allen, TI's director of marketing, says TI could be producing "tens of millions" of Gen 2 tags by year's end, "ultimately getting to hundreds of millions and then ramping to billions based on future demand." At the same time, Philips has accelerated its production of RFID tags as well.
The companies hardest hit by a shortage will likely be those that have come late to the game. Early last month Wal-Mart told DC VELOCITY that a handful of suppliers that ordered late have run into delays caused by the tags' 12- to 16-week lead times and that those suppliers will go live by the end of February.
Still, that will probably be a limited population. "There are certainly some [Wal-Mart] suppliers who … started too late [and] will have a hard time getting tags, but that is certainly not the majority of them," says Kara Romanow, research director at AMR Research.
"Depending on how quickly [Gen 2] rolls out, there may be a gap until TI or Philips really ramps up production. Once they enter the game, the entire landscape changes."
One change in the landscape could be a significant drop in price, especially if a company called OrganicID delivers on its business plan to produce organic printable tags. The venture-backed company recently entered into a partnership with International Paper to develop the first printable RFID tags from organic materials. Officials at OrganicID say the development could push down tag prices to 5 cents apiece or less.
the telltale part
You would hardly expect manufacturers still panting from their sprint to meet Jan. 1, 2005, RFID deadlines to show much enthusiasm for expanding their RFID use anytime soon. Yet electronics manufacturers and retailers eagerly await the day when all computers, DVD players and cell phones come tagged right down to their component parts.
It's not just that electronics suppliers can expect a relatively quick return on their RFID investment. They also see RFID as a formidable weapon in their battle to control returns. Tony Sciarrotta, director of returns management for consumer electronics manufacturer Philips, looks forward to the day when retailers routinely use RFID tags to electronically register each item sold. When that happens, says Sciarrotta, "we'll clearly be able to identify when and where specific products were purchased."
For retailers struggling against a tide of costly returns, that will be an enormous help. With information on exactly when products were bought, retailers will be better able to enforce time windows for returns, explains Dale Rogers, chairman of the Reverse Logistics Executive Council. And that's not the only return-related benefit, he says. "RFID will also make it much easier to track the cause of a return [and] to accumulate data about the return."
There's one population, however, that won't be overjoyed when the RFID revolution finally dawns. Scammers who buy new computers, switch out the new and faster parts with old parts, and return the new units with old parts are about to find out that for them, it's game over. Computer manufacturers have caught on. Within three to five years, they hope to be tagging not just their products but individual computer components, right down to the mother boards, DVD burners, and modems. Scammers, take note!
Online merchants should consider seven key factors about American consumers in order to optimize their sales and operations this holiday season, according to a report from DHL eCommerce.
First, many of the most powerful sales platforms are marketplaces. With nearly universal appeal, 99% of U.S. shoppers buy from marketplaces, ranked in popularity from Amazon (92%) to Walmart (68%), eBay (47%), Temu (32%), Etsy (28%), and Shein (21%).
Second, they use them often, with 61% of American shoppers buying online at least once a week. Among the most popular items are online clothing and footwear (63%), followed by consumer electronics (33%) and health supplements (30%).
Third, delivery is a crucial aspect of making the sale. Fully 94% of U.S. shoppers say delivery options influence where they shop online, and 45% of consumers abandon their baskets if their preferred delivery option is not offered.
That finding meshes with another report released this week, as a white paper from FedEx Corp. and Morning Consult said that 75% of consumers prioritize free shipping over fast shipping. Over half of those surveyed (57%) prioritize free shipping when making an online purchase, even more than finding the best prices (54%). In fact, 81% of shoppers are willing to increase their spending to meet a retailer’s free shipping threshold, FedEx said.
In additional findings from DHL, the Weston, Florida-based company found:
43% of Americans have an online shopping subscription, with pet food subscriptions being particularly popular (44% compared to 25% globally). Social Media Influence:
61% of shoppers use social media for shopping inspiration, and 26% have made a purchase directly on a social platform.
37% of Americans buy from online retailers in other countries, with 70% doing so at least once a month. Of the 49% of Americans who buy from abroad, most shop from China (64%), followed by the U.K. (29%), France (23%), Canada (15%), and Germany (13%).
While 58% of shoppers say sustainability is important, they are not necessarily willing to pay more for sustainable delivery options.
Schneider says its FreightPower platform now offers owner-operators significantly more access to Schneider’s range of freight options. That can help drivers to generate revenue and strengthen their business through: increased access to freight, high drop and hook rates of over 95% of loads, and a trip planning feature that calculates road miles.
“Collaborating with owner-operators is an important component in the success of our business and the reliable service we can provide customers, which is why the network has grown tremendously in the last 25 years,” Schneider Senior Vice President and General Manager of Truckload and Mexico John Bozec said in a release. "We want to invest in tools that support owner-operators in running and growing their businesses. With Schneider FreightPower, they gain access to better load management, increasing their productivity and revenue potential.”
Economic activity in the logistics industry continued its expansion streak in October, growing for the 11th straight month and reaching its highest level in two years, according to the most recent Logistics Managers’ Index report (LMI), released this week.
The LMI registered 58.9, up from 58.6 in September, and continued a run of moderate growth that began late in 2023. The LMI is a monthly measure of business activity across warehousing and transportation markets. A reading above 50 indicates expansion, and a reading below 50 indicates contraction.
October’s reading showed the fastest rate of expansion in the overall index since September of 2022, when the index hit 61.4. The results show that the industry is continuing its steady recovery from the volatility and sluggish freight market conditions that plagued the sector just after the Covid-19 pandemic, according to the LMI researchers.
“The big takeaway is that we’re continuing the slow, steady recovery,” said LMI researcher Zac Rogers, associate professor of supply chain management at Colorado State University. “I think, ultimately, it’s better to have the slow and steady recovery because it is more sustainable.”
All eight of the LMI’s indices grew during the month, with the Transportation Prices index showing the most growth, at nearly 6 points higher than September, reflecting increased activity across transportation markets. Transportation capacity expanded slightly during the month, remaining just above the 50-point threshold. Rogers said more capacity will enter the market if prices continue to rise, citing idle capacity across the market due to overbuilding during the pandemic years.
“Normally we don’t have this much slack in the market,” he said. “We overbuilt in 2021, so there’s more slack available to soak up this additional demand.”
The LMI is a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
The port worker strike that began yesterday on Canada’s west coast could cost that country $765 million a day in lost trade, according to the ALPS Marine analysis by Russell Group, a British data and analytics company.
Specifically, the labor strike at the ports of Vancouver, Prince Rupert, and Fraser-Surrey will hurt the commodities of furniture, metal products, meat products, aluminum, and clothing. But since the strike action is focused on stopping containers and general cargo, it will not slow operations in grain vessels or cruise ships, the firm said.
“The Canadian port strike is a microcosm of many of the issues that are impacting Western economies today; protection against automation, better work-life balance, and a cost-of-living crisis,” Russell Group Managing Director Suki Basi said in a release. “Taken together, these pressures are creating a cocktail of connected risk for countries, business, individuals and entire sectors such as marine insurance, which help to mitigate cargo exposures.”
The strike is also sending ripples through neighboring U.S. ports, which are hustling to absorb the diverted cargo, according to David Kamran, assistant vice president for Moody’s Ratings.
“The recurrence of strikes at Canadian seaports is positive for U.S. ports that may gain cargo throughput, depending on the strike duration,” Kamran said in a statement. “The current dispute at Vancouver is another example of the resistance of port unions to automation and the social risk involved with implementing these technologies. Persistent disruption in Canadian port access would strengthen the competitive position of US West Coast ports over the medium-term, as shippers seek to diversify cargo away from unreliable gateways.”
The strike is also affected rail movements, according to ocean cargo carrier Maersk. CN has stopped all international intermodal shipments bound for the west coast ports of Prince Rupert, Robbank, Centerm, Vanterm, and Fraser Surrey Docks. And CPKC has stopped acceptance of all export loads and pre-billed empties destined for Vancouver ports.
Connected with the turmoil, Maersk has suspended its import and export carrier demurrage and detention clock for most affected operations. The ultimate duration of the strike is unknown, but the situation is “rapidly evolving” as talks continue between the Longshore Workers Union (ILWU 514) and the British Columbia Maritime Employers Association (BCMEA), Maersk said.
Terms of the acquisition were not disclosed, but Mode Global said it will now assume Jillamy's comprehensive logistics and freight management solutions, while Jillamy's warehousing, packaging and fulfillment services remain unchanged. Under the agreement, Mode Global will gain more than 200 employees and add facilities in Pennsylvania, Arizona, Florida, Texas, Illinois, South Carolina, Maryland, and Ontario to its existing national footprint.
Chalfont, Pennsylvania-based Jillamy calls itself a 3PL provider with expertise in international freight, intermodal, less than truckload (LTL), consolidation, over the road truckload, partials, expedited, and air freight.
"We are excited to welcome the Jillamy freight team into the Mode Global family," Lance Malesh, Mode’s president and CEO, said in a release. "This acquisition represents a significant step forward in our growth strategy and aligns perfectly with Mode's strategic vision to expand our footprint, ensuring we remain at the forefront of the logistics industry. Joining forces with Jillamy enhances our service portfolio and provides our clients with more comprehensive and efficient logistics solutions."