Above the Fold: Supply Chain Logistics News (May 6, 2022)

“All leaders are learners. The moment you stop learning, you stop leading. I learn as much as I can, from as many as I can, as often as I can.” – Rick Warren

The quote above is especially true for supply chain and logistics professionals. The good news is that there are plenty of paths to learning today, including peer-to-peer learning communities like Indago, webcasts and other online events, and industry conferences, which are ramping up again.

I just returned from the RouteSmart Technologies INTERSECT 2022 conference (stay tuned for highlights and takeaways in a future post), and I’m scheduled to speak/attend other events organized by Descartes Systems Group, Transporeon, Manhattan Associates, and Trimble in the coming weeks and months (see our Speaking page for links to these events).

If you are planning an in-person or virtual event this year and looking for a keynote speaker or panel discussion moderator/participant to share insights and research on supply chain and logistics trends and topics, please contact me to learn more and discuss ideas.

Keep learning 🙂

And now, here’s week’s supply chain and logistics news:

A Painful July Ahead?

“Some U.S. companies are warning that Covid-19 lockdowns in Shanghai and elsewhere in China are denting sales, disrupting operations and putting added strain on supply chains that could be felt well into the summer,” reports Thomas Gryta in the Wall Street Journal. The article references Apple, Honeywell, Tesla, P&G, and General Electric among the companies affected or raising red flags. Here’s an excerpt from the article featuring a quote by a J.B. Hunt executive:

Even if the lockdowns lift soon, the ripple effects may be felt for months as many of the cargo ships currently waiting outside Shanghai will make their way to the U.S., where ports are starting to improve after months of congestion.

“That certainly is going to make its way back into the U.S. here this summer,” said J.B. Hunt Transport Services Inc.’s Chief Commercial Officer Shelley Simpson on a conference call Thursday. The freight carrier transports goods by truck and rail and its operations include last-mile delivery services.

“Our customers are concerned about the July time frame,” Ms. Simpson said.

They’re also concerned about July because that’s when the current contract between the International Longshore and Warehouse Union and the Pacific Maritime Association (PMA) expires. Will it be a repeat of 2014? If you don’t remember what happened back then, here’s a brief summary by Erik Kulisch in FreightWaves:

Negotiations started a month before the deadline and lasted 10 months. Port conditions deteriorated as longshoremen called in sick or didn’t show for assignments. The number of crane moves fell from about 25 to 27 per hour to eight. By early 2015, there was a queue of 40 vessels outside the Southern California ports — seemingly tame compared to 100 waiting vessels in recent periods, but considered extremely harmful at the time. Once there was an agreement, it took six months to unclog ports and restore fluid operations.

Add to the mix record diesel prices (averaging $5.50 per gallon, up $2.34 from a year ago) and congested railways, and this could be a very painful summer for supply chain professionals. 

But that is par for the course these days.

Transplace Powers Uber Freight in Q1 2022

In last Friday’s post, I highlighted how times were relatively good for logistics service providers and supply chain technology companies. The trend continues this week, with Uber reporting revenue of $1.8 billion in Q1 2022 for its Uber Freight division, an increase of 69% quarter-over-quarter and 506% year-over-year. Much of this growth was due to Uber’s acquisition of Transplace (this was the first full quarter of combined Uber Freight and Transplace performance). Here’s more from the press release:

Adjusted EBITDA of $2 million: Freight Adjusted EBITDA grew $27 million QoQ and $31 million YoY, reaching profitability for the first time. Freight Adjusted EBITDA margin as a percentage of Gross Bookings improved 9.7 percentage points YoY to 0.1% driven by increased marketplace efficiency and density of our digital platform, continued automation of the load life cycle, and positive contributions from Transplace. We believe Freight is well on-track to achieve the net run-rate synergies of $40M+ expected to be realized 12-24 months from the closing of Transplace.

The vision put forth by Uber and Transplace when the acquisition was first announced is still a work in progress and will likely take some time to fully realize, but the honeymoon stage is apparently going very well. 

And with that, have a happy weekend!

Song of the Week: “Hallucinogenics” by Matt Maeson