David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
To say that retailers are facing unprecedented challenges might be an understatement. After surviving the pandemic shutdowns, retailers met the challenge of surging consumer demand only to run up against a whole new set of obstacles: supply chain disruptions; runaway inflation; skyrocketing fuel and transportation costs; new, highly contagious strains of Covid; and a looming economic recession. All of this comes at a time when they are entering peak season. Many have stocked up on merchandise already, but are they the right products?
For some answers, we turned to Zac Rogers, an assistant professor of operations and supply chain management at Colorado State University. His primary research interests include the financial impact of supply chain sustainability, emerging logistics technologies, supply chain cybersecurity, and purchasing and logistics issues. He is also a researcher and co-author of the monthly Logistics Managers’ Index (LMI) report, which tracks trends and developments in the industry.
Rogers earned his B.S. and MBA degrees at the University of Nevada, Reno, and his Ph.D. in supply chain management from Arizona State University. He recently spoke with DC Velocity Group Editorial Director David Maloney.
Q: We have seen how even the smallest disruption can ripple throughout our supply chains, leading to shortages and delays. There are so many things that could potentially go wrong this peak season. What do you think is going to happen?
A: Yes, we are in a funny place going into peak season. We have seen inventories climb at an unprecedented rate over the last six months. What that really has to do with is the fact that supply chains are so long-tailed—longer tailed now than they really should be because of things like shutdowns at Shanghai, congestion at ports, and overcrowded warehouses. Everything is moving more slowly. What I keep hearing from folks is that whatever your normal leadtimes are, you can expect them to essentially triple—so that what would typically take 90 days to produce now takes 270 days. These are really long leadtimes, and the inventories that we see now reflect an economy that no longer exists. They reflect the economy of 2021, when we had really hot consumer spending.
Q: Prices are high, and we’re seeing record inflation. What are retailers’ expectations this holiday season with such high inventories? Will consumers see many pre-holiday sales as a result?
A: Yes, I think there will be some sales.
The other thing, ironically, is that we already have some holiday inventories, as some of the things that arrived here in February and March were supposed to get here last November in time for the 2021 holiday selling season. Some companies actually held onto winter coats or apparel. We are already seeing some pretty aggressive selldowns at some retailers.
Another thing that often gets lost in the discussion is that a lot of the inventory we have isn’t ready to go. It is “work in process” inventory. For instance, there was a Wall Street Journal article about GM in the first week of July that talked about 95,000 units that weren’t going to be delivered on time. There is a lot of inventory like that, and it represents a significant investment. We are seeing a similar bottleneck with lithium batteries and things like that that tend to come from Russia and Ukraine. So, we have a lot of inventory that is not even sellable.
Q: What kinds of goods will consumers look to purchase this holiday season? Are we looking at durable goods, consumables, or entertainment and escapism as we have in the past couple of years?
A: I think entertainment and escapism will be a big piece of it. If you look at spending on services relative to durable goods, it has really shifted toward services in the last few months, partially because the lockdown is over. People can go on vacations. They can go to sporting events, concerts, and movies.
I would also anticipate some demand for electronics. People had a really hard time getting laptops, phones, and videogame systems during the last few years because of the semiconductor shortage.
Q: Although we want to be done with Covid, Covid is not done with us, and we could see more surges and shutdowns in places like China. What effect would shutdowns have on peak season?
A: Well, it would be pretty tough if we had another shutdown in China. I don’t really think we’re going to see widescale shutdowns in the United States partly because of the midterm elections this fall—I just don’t think that anyone is going to want to be the “shutdown guy,” honestly. With China, we have already had huge disruptions, and, honestly, we haven’t really seen the tail end of the spring 2022 shutdowns yet. We were still feeling the aftereffects of the 2020 shutdowns at the end of 2021, and then we pivoted right into more shutdowns in early 2022 in China. It is going to take us a while to work through those.
One of the things that have become clear over the last year is that supply chains are not something you can just turn on and off quickly. They take a long time to get moving again. When I used to work in a warehouse, everyone would go to lunch for a half hour, and once everybody got back, it still took 20 to 30 minutes for things to get moving again because you need goods flowing through the process. It’s the same with supply chains. It takes a while for them to get turned back on, and the sort of “stop, start, stop, start” pattern we’ve seen is terrible for us. If we keep seeing that, then we are going to continue to have big disruptions.
Q: Speaking of warehouses, the industry is still struggling with a severe labor shortage as peak season gets underway and the amount of inventory that needs to be shipped out starts to grow. What do you foresee for the labor situation, and is that going to present problems with delivering goods on time?
A: You are absolutely right about inventories. In our Logistics Managers’ Index (LMI) “inventory level” metric, we were in the 70s for five of the first six months of 2022. Anything above 70 we would consider to be significant rates of growth because anything over 50 indicates expansion. Once you hit 70, you are really seeing a high level of growth. Before 2022, I think we were only in the 70s with inventory twice. It is moving really, really quickly.
That is also reflected in our “warehousing capacity” metric. With warehouse capacity, we have the same rules—anything over 50 indicates expansion and anything under 50 is contraction. We have been in the 30s or 40s now every single month since September of 2020. For almost two years, we have seen pretty significant rates of contraction in available space. That is due to the shift of warehouses, even though there are so many more warehouses now.
If you look at the warehouse absorption from 2021, a plurality of that was warehouses smaller than 100,000 square feet. Those tend to be urban warehouses. That is something that I think is often missed in discussions about warehouse labor issues. Yes, we have more warehouses than we’ve ever had, and there is more inventory moving through them, and it is more stressful than it has ever been, but they are also in a different place geographically. They are tending to go toward places where wages are higher.
Adding to that, the cost of living is rising at the fastest rate in 40 years. That is one of the things that are really driving the push toward automation in warehouses. We are seeing a huge boom in demand right now for fulfillment automation, any sort of robotic systems that can help supplement labor.
Q: Let’s take a moment to talk about trucking and the freight markets. CSCMP’s latest “State of Logistics Report” predicts a slowdown in these markets. We’ve even heard from some quarters that there may be a truck market collapse because of a buildup of capacity that now may not be needed. What is the near-term outlook for trucking and freight?
A: Well, peak season will be a godsend for some of the players—especially the smaller truckers. I know a lot of people are saying that 2022 might be like 2019, when we saw a virtual wipeout of the trucking industry. We had 3,000 carriers go out of business in 2019 and 2020. I don’t know that it’s going to be that severe, and there are a couple of reasons for that.
In 2017 and 2018, the economy was hot, and we had these huge orders for big Class 8 trucks. Plus, going into 2019, we essentially had an unlimited capacity to overbuild. We also had big orders for Class 8 trucks in 2020 and 2021. The difference is that because of the semiconductor bottleneck, we weren’t able to produce trucks nearly as fast as we wanted to. In some ways, the semiconductor shortage saved the trucking industry from itself.
As for transportation capacity, we tracked that metric in the Logistics Managers’ Index and again, any number over 50 indicates growth and anything under 50 indicates contraction. We had contraction in transportation capacity from July 2020 to March 2022, and then after March 2022, the diesel [price] shock happened and suddenly, capacity went positive. What is interesting, though, is that in June, capacity growth was lower than it was in May. So, the rate of growth was slowing down—to 61 in June. If you compare that to 2019, we are still not even close. In 2019, we saw the transportation capacity growth rate number go as high as 72, which indicated really significant rates of growth.
And then pivoting over to the metric of price for transportation: I think in June, we got down to 61.3 for transportation price, which is important because transportation rate growth is now lower than capacity, and when that happens, it usually means that something is going on economically.
As for what’s ahead, I do anticipate a lot of pain for smaller carriers. I think in the last week of June, the spread between wholesale and retail prices for diesel was about 73 cents per gallon. Smaller carriers don’t have the volume to buy diesel at wholesale prices. Their costs are much higher than big fleets’ costs. Also, the big fleets saved a ton of cash over the last two years because times were so good, they were able to put cash away. We are already seeing the big players start to absorb many of these smaller owner-operators. It is just not a level playing field.
Q: How do the higher fuel prices, capacity issues, and other factors affect shippers?
A: Every month we ask our respondents to do a future prediction: What do you think is going to happen across all of our different metrics? It is interesting. Over the next 12 months, our respondents predicted a growth rate of 59.6, so about 60 for transportation price, and that represents moderate, steady growth. This is the type of growth that we would consider sustainable. What that tells us is that prices are going to continue to go up, but at a mild and sustainable pace—one that won’t have us pulling our hair out the way we have for the last two years. In some ways, it could be sort of a relief.
Now, that growth rate probably reflects a move toward more contract carriers and less spot-market stuff, which again is harder for the little guys in the margins who are really relying on spot markets. But for the industry as a whole, what it seems like is that we are moving back toward equilibrium.
Q: How will rising interest rates affect our peak season?
A: I think some people have been hoping the Fed will ride in to save the day with inflation, but there is a great new tool out from the San Francisco Federal Reserve that individually tracks demand-driven and supply-driven inflation and helps to explain what’s going on. Supply-driven inflation is when price is going up really quickly, but supply is not going up quickly, like oil. Demand-driven inflation is when price goes up but then supply goes up, like apparel or footwear. If you look at the last three or four months, the vast majority of the inflation right now is coming from the supply side. It’s not that prices are just going up because consumers are spending money like crazy. Prices are going up because there is not enough supply to meet demand.
Now, back in March, April, and May of 2021, it was very much demand-driven. That was right when the stimulus checks came out, and the inflation we saw in early 2021 was really the result of consumers spending money on elastic goods.
The drivers that we’re seeing now are fuel and groceries. It is really the headline inflation that is supply-driven. People are not going to stop buying gas or food, so if the Fed raises interest rates, there will be some demand destruction, but it is going to be demand destruction of the things that weren’t really driving inflation anyway. That will make it even more difficult, I think, for companies to run down their inventories as quickly as they’d like because those goods sitting in inventory would be demand-driven goods that are being targeted by the Fed.
Warehouse automation orders declined by 3% in 2024, according to a February report from market research firm Interact Analysis. The company said the decline was due to economic, political, and market-specific challenges, including persistently high interest rates in many regions and the residual effects of an oversupply of warehouses built during the Covid-19 pandemic.
The research also found that increasing competition from Chinese vendors is expected to drive down prices and slow revenue growth over the report’s forecast period to 2030.
Global macro-economic factors such as high interest rates, political uncertainty around elections, and the Chinese real estate crisis have “significantly impacted sales cycles, slowing the pace of orders,” according to the report.
Despite the decline, analysts said growth is expected to pick up from 2025, which they said they anticipate will mark a year of slow recovery for the sector. Pre-pandemic growth levels are expected to return in 2026, with long-term expansion projected at a compound annual growth rate (CAGR) of 8% between 2024 and 2030.
The analysis also found two market segments that are bucking the trend: durable manufacturing and food & beverage industries continued to spend on automation during the downturn. Warehouse automation revenues in food & beverage, in particular, were bolstered by cold-chain automation, as well as by large-scale projects from consumer-packaged goods (CPG) manufacturers. The sectors registered the highest growth in warehouse automation revenues between 2022 and 2024, with increases of 11% (durable manufacturing) and 10% (food & beverage), according to the research.
The Swedish supply chain software company Kodiak Hub is expanding into the U.S. market, backed by a $6 million venture capital boost for its supplier relationship management (SRM) platform.
The Stockholm-based company says its move could help U.S. companies build resilient, sustainable supply chains amid growing pressure from regulatory changes, emerging tariffs, and increasing demands for supply chain transparency.
According to the company, its platform gives procurement teams a 360-degree view of supplier risk, resiliency, and performance, helping them to make smarter decisions faster. Kodiak Hub says its artificial intelligence (AI) based tech has helped users to reduce supplier onboarding times by 80%, improve supplier engagement by 90%, achieve 7-10% cost savings on total spend, and save approximately 10 hours per week by automating certain SRM tasks.
The Swedish venture capital firm Oxx had a similar message when it announced in November that it would back Kodiak Hub with new funding. Oxx says that Kodiak Hub is a better tool for chief procurement officers (CPOs) and strategic sourcing managers than existing software platforms like Excel sheets, enterprise resource planning (ERP) systems, or Procure-to-Pay suites.
“As demand for transparency and fair-trade practices grows, organizations must strengthen their supply chains to protect their reputation, profitability, and long-term trust,” Malin Schmidt, founder & CEO of Kodiak Hub, said in a release. “By embedding AI-driven insights directly into procurement workflows, our platform helps procurement teams anticipate these risks and unlock major opportunities for growth.”
Here's our monthly roundup of some of the charitable works and donations by companies in the material handling and logistics space.
For the sixth consecutive year, dedicated contract carriage and freight management services provider Transervice Logistics Inc. collected books, CDs, DVDs, and magazines for Book Fairies, a nonprofit book donation organization in the New York Tri-State area. Transervice employees broke their own in-house record last year by donating 13 boxes of print and video assets to children in under-resourced communities on Long Island and the five boroughs of New York City.
Logistics real estate investment and development firm Dermody Properties has recognized eight community organizations in markets where it operates with its 2024 Annual Thanksgiving Capstone awards. The organizations, which included food banks and disaster relief agencies, received a combined $85,000 in awards ranging from $5,000 to $25,000.
Prime Inc. truck driver Dee Sova has donated $5,000 to Harmony House, an organization that provides shelter and support services to domestic violence survivors in Springfield, Missouri. The donation follows Sova's selection as the 2024 recipient of the Trucking Cares Foundation's John Lex Premier Achievement Award, which was accompanied by a $5,000 check to be given in her name to a charity of her choice.
Employees of dedicated contract carrier Lily Transportation donated dog food and supplies to a local animal shelter at a holiday event held at the company's Fort Worth, Texas, location. The event, which benefited City of Saginaw (Texas) Animal Services, was coordinated by "Lily Paws," a dedicated committee within Lily Transportation that focuses on improving the lives of shelter dogs nationwide.
Freight transportation conglomerate Averitt has continued its support of military service members by participating in the "10,000 for the Troops" card collection program organized by radio station New Country 96.3 KSCS in Dallas/Fort Worth. In 2024, Averitt associates collected and shipped more than 18,000 holiday cards to troops overseas. Contributions included cards from 17 different Averitt facilities, primarily in Texas, along with 4,000 cards from the company's corporate office in Cookeville, Tennessee.
Electric vehicle (EV) sales have seen slow and steady growth, as the vehicles continue to gain converts among consumers and delivery fleet operators alike. But a consistent frustration for drivers has been pulling up to a charging station only to find that the charger has been intentionally broken or disabled.
To address that threat, the EV charging solution provider ChargePoint has launched two products to combat charger vandalism.
The first is a cut-resistant charging cable that's designed to deter theft. The cable, which incorporates what the manufacturer calls "novel cut-resistant materials," is substantially more difficult for would-be vandals to cut but is still flexible enough for drivers to maneuver comfortably, the California firm said. ChargePoint intends to make its cut-resistant cables available for all of its commercial and fleet charging stations, and, starting in the middle of the year, will license the cable design to other charging station manufacturers as part of an industrywide effort to combat cable theft and vandalism.
The second product, ChargePoint Protect, is an alarm system that detects charging cable tampering in real time and literally sounds the alarm using the charger's existing speakers, screens, and lighting system. It also sends SMS or email messages to ChargePoint customers notifying them that the system's alarm has been triggered.
ChargePoint says it expects these two new solutions, when combined, will benefit charging station owners by reducing station repair costs associated with vandalism and EV drivers by ensuring they can trust charging stations to work when and where they need them.
New Jersey is home to the most congested freight bottleneck in the country for the seventh straight year, according to research from the American Transportation Research Institute (ATRI), released today.
ATRI’s annual list of the Top 100 Truck Bottlenecks aims to highlight the nation’s most congested highways and help local, state, and federal governments target funding to areas most in need of relief. The data show ways to reduce chokepoints, lower emissions, and drive economic growth, according to the researchers.
The 2025 Top Truck Bottleneck List measures the level of truck-involved congestion at more than 325 locations on the national highway system. The analysis is based on an extensive database of freight truck GPS data and uses several customized software applications and analysis methods, along with terabytes of data from trucking operations, to produce a congestion impact ranking for each location. The bottleneck locations detailed in the latest ATRI list represent the top 100 congested locations, although ATRI continuously monitors more than 325 freight-critical locations, the group said.
For the seventh straight year, the intersection of I-95 and State Route 4 near the George Washington Bridge in Fort Lee, New Jersey, is the top freight bottleneck in the country. The remaining top 10 bottlenecks include: Chicago, I-294 at I-290/I-88; Houston, I-45 at I-69/US 59; Atlanta, I-285 at I-85 (North); Nashville: I-24/I-40 at I-440 (East); Atlanta: I-75 at I-285 (North); Los Angeles, SR 60 at SR 57; Cincinnati, I-71 at I-75; Houston, I-10 at I-45; and Atlanta, I-20 at I-285 (West).
ATRI’s analysis, which utilized data from 2024, found that traffic conditions continue to deteriorate from recent years, partly due to work zones resulting from increased infrastructure investment. Average rush hour truck speeds were 34.2 miles per hour (MPH), down 3% from the previous year. Among the top 10 locations, average rush hour truck speeds were 29.7 MPH.
In addition to squandering time and money, these delays also waste fuel—with trucks burning an estimated 6.4 billion gallons of diesel fuel and producing more than 65 million metric tons of additional carbon emissions while stuck in traffic jams, according to ATRI.
On a positive note, ATRI said its analysis helps quantify the value of infrastructure investment, pointing to improvements at Chicago’s Jane Byrne Interchange as an example. Once the number one truck bottleneck in the country for three years in a row, the recently constructed interchange saw rush hour truck speeds improve by nearly 25% after construction was completed, according to the report.
“Delays inflicted on truckers by congestion are the equivalent of 436,000 drivers sitting idle for an entire year,” ATRI President and COO Rebecca Brewster said in a statement announcing the findings. “These metrics are getting worse, but the good news is that states do not need to accept the status quo. Illinois was once home to the top bottleneck in the country, but following a sustained effort to expand capacity, the Jane Byrne Interchange in Chicago no longer ranks in the top 10. This data gives policymakers a road map to reduce chokepoints, lower emissions, and drive economic growth.”