Retailers rethink shipping as costs rise, ocean freight delays increase, and new tech enhances responsible sourcing
Greetings everyone,
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Global manufacturing rose this past month, a positive sign for retail. Yet, rising ocean freight rates
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On the whole, global logistics costs remain high after reaching a 20-month peak in June. We will likely see consumer buying habits
Let’s dive into the details of what happened in July.
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More ocean disasters pile on top of existing delays
Storm swells as high as 30 feet near the southern tip of South Africa put a damper on Cape Hope shipping, a particularly important route as a workaround to avoid the Red Sea.
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The Cape wasn’t the only important shipping route affected by extreme weather this past month. Hurricane Beryl swept through the Gulf, leaving much of southeastern Texas without power for several days, and closing down the Port of Houston and other Texas ports for two to three days.
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Between the Red Sea rerouting and drought in the Panama Canal, ocean shipping has already been hit hard in 2024. With the added pressure brought on by the recent storms, ocean prices have continued to rise — for instance, average rates of 1,200 USD for shipping a 40-ft container from China to Europe in October have now jumped to about 7,000 USD.
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More bad news for ocean freight: A US East Coast labor strike is predicted to break out in October
Collective agreements between the ILA and USMX are set to expire at the end of Sept 2024.
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ILA has some serious grievances already; East coast ports use automated processes to process trucks coming into the port, reducing the workload for port employees. The major grievances are over automation and wages.
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Based on the lack of agreement, it is likely that a strike will ensue. That strike is expected to have a significant impact on global shipping, contributing to a container shortage and driving prices up even further this autumn.
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Shipping costs are up, and retailers are done paying for premium shipping
Consumers are continuing to demand super-fast delivery, but retailers are beginning to realize that the financial payoff just isn’t there.?
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In a recent survey, 85 percent of retailers in the US named their main priority as reducing total cost per order
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It’s not surprising that retailers are prioritizing cheaper shipping. The fact is that no matter how much shoppers love overnight shipping and the like, cost continues to regin as the most important factor for shipping options.
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?Finding cheaper shipping options has meant that many retailers are looking outside of the main carriers at smaller regional ones, which can offer more choices and better discounts.?
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What’s fibertrace and how can tech help ESG tracking of the future?
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It’s a pretty shocking fact that 7 out of 10 of the major cotton-producing countries face accusations of using child or forced labor to produce textiles.
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Tracing the origins of a garment throughout its entire supply chain is notoriously tricky, and even the best actors have struggled with responsible sourcing
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That’s exactly what Target is aiming for with their recent partnership with agribusiness Cargill. Together, the retailer and raw cotton buyer will use Fibertrace, which uses digitally trackable pigment to trace garments from raw cotton to apparel, to deliver on company traceability goals.
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It’s exciting to start to see major companies investing in traceability tech
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The textile industry is complex, but just like people generally want to know where their food is coming from, they want to know where the things they put on their bodies come from.
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According to a PWC survey from last year, 75% of global consumers said they'd pay up to 5 percent more to know the origin of their clothing.?
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From CBIP
We’ve published the following blogs this last month. Give them a read if you have a couple of minutes.
Want daily updates from CBIP? Make sure to follow me via Twitter (@Nbartlett_CBIP) and CBIP (@CBIPLogistics) for thoughts and conversations on the industry every week.
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Until next month,
Nick Bartlett