Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
During a stint at the old Emery Worldwide from 1987 to 2005, Richard Zablocki can remember times when airfreight forwarders were able to get so physically close to the aircraft they used that they could truck their customers' cargoes right up to the plane.
For Zablocki and other executives, there was something symbolic about that degree of operational intimacy between airlines and airfreight users. For a large part of the 1980s and through the 1990s, air freight was the devil-may-care diva of the transport modes. The U.S. economy was booming, as were airfreight-centric markets like Japan. Airfreight growth was juiced by surging demand for high-value technology and telecommunications equipment to support buildouts of the Internet and the wireless telecommunications spectrum. The push toward global just-in-time manufacturing convinced many shippers and forwarders that it was better to whisk products to their destinations by air as needed rather than invest in expensive buffer inventory that would be prone to obsolescence. Above all, Sept. 11 was just another date on the calendar.
"It was very desirable for a freight forwarder to be located near an airport," said Zablocki, who today is vice president of trade lane management for Dutch multinational forwarder Ceva Logistics LLC.
The thrill appears to be long gone, however. The 9/11 terrorist attacks ended the practice of airfreight forwarders' trucks pulling right up to aircraft. In addition, the airfreight industry is very far removed from its halcyon days of the roaring '90s. Middling demand for the past 15 years has kept rates low. Meanwhile, business costs across the board have continued to rise. Today, air freight is a luxury many companies can't afford, save for emergency situations or hot product rollouts. As a result, property within three to five miles of a gateway that would support fast-cycle distribution patterns doesn't generate nearly the interest it used to. Yet close-in rents remain high because of what are still considered premium locations. At Los Angeles International Airport (LAX), for example, rents for occupying a facility around three miles away are about double the rents for a building 10 miles away.
Aside from companies shipping perishable items like flowers, seafood, and produce that can't be more than five miles from airport property, "demand for airfreight space within a three-mile radius has really tapered off," according to Luke Staubitz, a Los Angeles-based executive vice president at JLL (formerly Jones Lang LaSalle), the real estate and logistics services giant. Staubitz, whose focus is LAX, said he is not as familiar with the situation at other U.S. gateways. However, he believes demand for close-in freight space also remains soft at gateways like New York, Seattle, Miami, and Dallas.
One exception is DHL Global Forwarding, a unit of the DHL transport and logistics empire, and the world's largest air forwarder. The company's buildings are located close to all U.S. and North American air gateways, said Jannie Davel, head of airfreight for the Americas. But there are few airfreight firms with the volumes, resources, and needs of the DHL unit. For the rest, locating as far as 15 miles out is usually a better deal, according to Staubitz. Tenants get more bang for the buck by having access to larger and more modern buildings, while remaining close enough to meet tight cutoff times for aircraft departures, Staubitz said. (Anything beyond 15 miles is problematic for providers because of the extra distance and the risk of traffic congestion, he said.)
While locations may change, the characteristics of the prototypical airfreight facility remain the same. The standard structure is narrowly configured, with no more than 50,000 square feet of capacity under the roof and often less than that. There is also a preponderance of dock doors. The design is driven by the need for fast turns of relatively small products of high value, the classic airfreight consignment. "Everything is built [around] moving the freight as quickly as possible" to hit airline cutoff times and keep the expensive stuff moving, Staubitz said.
CHANGING ATTITUDES
The flagging demand for close-in airport space has, to some degree, mirrored air freight's fortunes over the past 15 years. Two recessions in the last decade have reshaped shipper attitudes toward air use. The first, between 2000 and 2002, led to the collapse of many information technology (IT) firms and upended the high-voltage growth plans of the survivors, many of which had been major airfreight users. The second, the so-called Great Recession, leveled virtually every industry and led to unprecedented declines in airfreight volumes.
The legacies of both downturns still haunt the industry. Frugal shippers have migrated to more economical forms of transport that focus on time-definite deliveries rather than on the fastest transit possible. In the U.S. and Europe, that has meant more road transport; between continents, it has meant more ocean freight. These modes have improved in speed and, most important in many users' minds, reliability. While there is always hope air freight can surmount these seemingly secular obstacles and return to the glory days of the 1990s, no one sees that happening.
Traffic gains are expected to remain in the low- to mid-single digits for years to come, accompanied by one-time or cyclical surges for the peak holiday season, the Lunar New Year, new product launches, and diversions from ocean freight during events such as the recent West Coast port contract dispute, which helped drive February's global air volumes up 11.4 percent year over year, according to the International Air Transport Association (IATA), the leading airline trade group.
Over the years, freight forwarders and others in the aircargo community have found themselves being pushed farther away from airport gateways. Starting with security measures following the 2001 terrorist attacks, it reached a somewhat ludicrous crescendo last October when New York Gov. Andrew Cuomo proposed relocating JFK Airport's entire cargo apparatus to Stewart International Airport, 60 miles north of New York City, so the Port Authority of New York and New Jersey, JFK's operator, could use the freed-up space to build hotels, shops, and restaurants for travelers. The plan, much derided from the start, has gone nowhere.
Zablocki of Ceva said the shifts in site selection also reflect changes in how the tenants themselves do business. For years, it was common for a big forwarder to specialize in one transport mode. Today, that same forwarder may have evolved into a one-stop shop whose service menu includes air, ocean, trucking, warehousing and distribution, and customs brokerage. If an industrial complex houses all of those services, it then behooves the company to be centrally located near as many of them as possible, even if it means being farther away from the airport, according to Zablocki. "We are an end-to-end service provider, so it makes sense to be in the middle of everything," he said.
Forwarders also need to get creative in getting the most from their facility space, Zablocki said. Ceva's LAX facility, for example, has been designated a free trade zone, a special geographic area where goods may be landed, handled, manufactured or reconfigured, and re-exported without the intervention of the customs authorities. Zablocki said the operation has been effective in boosting the value of LAX as a logistics center.
States across the Southeast woke up today to find that the immediate weather impacts from Hurricane Helene are done, but the impacts to people, businesses, and the supply chain continue to be a major headache, according to Everstream Analytics.
The primary problem is the collection of massive power outages caused by the storm’s punishing winds and rainfall, now affecting some 2 million customers across the Southeast region of the U.S.
One organization working to rush help to affected regions since the storm hit Florida’s western coast on Thursday night is the American Logistics Aid Network (ALAN). As it does after most serious storms, the group continues to marshal donated resources from supply chain service providers in order to store, stage, and deliver help where it’s needed.
Support for recovery efforts is coming from a massive injection of federal aid, since the White House declared states of emergency last week for Alabama, Florida, Georgia, North Carolina, and South Carolina. Affected states are also supporting the rush of materials to needed zones by suspending transportation requirement such as certain licensing agreements, fuel taxes, weight restrictions, and hours of service caps, ALAN said.
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.