Check Call: Peace out, 2021; it wasn’t nice knowing you

Hot Take

I think it’s safe to say that 2021 wasn’t the bright shining star we hoped it would be. If anything, 2021 has taught us a few more lessons to keep us humble. I, for one, had no idea that 100-plus ships could sit waiting for a time to come into port and thousands of flights a day could be canceled due to a covid outbreak. The past year is bound to give us some wild stories to tell for years to come, and here are the top 10 ways, in no particular order, I was a little surprised this year.

Oct. 28: The first time in 427 days the Outbound Tender Rejection Index was under 20%. It was a brief light in the darkness before peak season for retail.
A record-setting 100-plus container ships sitting in San Pedro Bay waiting for berths at the ports of LA and Long Beach.
The Port of Savannah, Georgia, using a nearby airport for container overflow.
The Ever Given getting stuck in the Suez Canal. While it wasn’t ideal for literally anyone trying to use the canal, I did appreciate the way the internet ran with the issue.
Air cargo rates suddenly becoming more affordable than ocean rates.
Omicron coming HARD for the world. The last thing we need is a shutdown. While the ports in China may have a zero-tolerance policy for COVID, meaning they’ll shut down operations if they have too many cases, that’s not how we want to alleviate the logjam on the West Coast.
Central Freight Lines shutting down. Though it wasn’t surprising overall, it was unexpected that it happened so suddenly at the end of the year.
Uber Freight acquiring Transplace. While it’s a solid play for Uber to increase its customer base and expand its services with Transplace’s current model, it was just a shocking and expensive deal.
ArcBest acquiring MoLo Solutions. Again another deal that makes sense; it just came at a pretty penny.
The great resignation or reshuffling. It’s a wake-up call to employers hemorrhaging employees that it takes more than ping-pong tables and beer coolers to retain top talent these days. Might be time to take a hard look at what people want.

Quick Hits

Peak-season delivery charges go away on Jan. 15, and UPS feels it has done such an amazing job this year that it’s giving itself a raise that starts the very next day. Jan. 16, UPS will implement an increase to parcel rates that will add 30 cents per package on all domestic ground residential deliveries. The joy doesn’t end there. The additional charge will also apply to packages traveling via UPS’ SurePost program with the U.S. Postal Service.

Still more good news: On top of the 30-cent-per-package rate there will be a $3.50-per-piece surcharge on shipments that require additional handling and a $40 fee for “large” packages that don’t fit on the conveyor belt (exceeding 96 by 130 inches). All of this being said, if you have a shipper that ships a large amount of parcels to residential customers, get a plan for this charge in front of them now. Whether that means the 3PL has to pass that charge through, eat it or bake it into the rate another way, those are some conversations to start having before it’s the night before the increase.

Do you still have the giving spirit inside of you? There might be one more thing you can do before the end of the year. Real Christmas trees are being collected all over the nation to be recycled. Trees can be turned into wildlife habitats, mulch, soil erosion barriers, etc. The possibilities are endless. But some people, particularly in urban settings, face obstacles getting their trees to local recyclers.

This is where the fun begins: volunteering. Time, energy, resources, etc. You can get involved by setting up a neighborhood collection site then get a driver who is willing to volunteer to take a couple neighborhoods’ worth to the recycling center. That’s the magic. Not only are the greenhouse gas emissions almost nothing, it’s better for the environment as a whole to recycle your tree vs. burning it or letting it sit in a landfill. It might be a stretch to get something off the ground this year, but small steps like this to offset emissions and choose more sustainable business practices will be a major part of the future of supply chain.

Market Check

Something is happening in Michigan that is more than just the Christmas rejections, and it is going to be one of the many snowstorms hitting the pointer finger’s knuckle. Saginaw and Detroit are having unprecedented rejection rates and are taking Toledo, Ohio, with them. Toledo is about two hours from Saginaw and about an hour from Detroit — not quite the same market but close enough to be affected equally by a decrease of trucks coming to the market.

If you have shippers in this market, verify their hours of operation before sending in a driver. Most Michiganders are used to this type of weather, but not all drivers will be seasoned ice-snow drivers. If you have a load coming from this market, know that capacity is tighter than even the rough usual. Have some patience, for a few extra days, while this market recovers from the holiday and winter weather.

Who’s with who

Yellow Corp. has gotten an upgraded debt rating from Moody’s Investors Service from Caa1 to B3. Now Yellow is “Carrying significant risk” but not enough to likely default on its debt. Thin operating margins, negative cash flow and moderately high financial leverage are the drivers behind Moody’s change in Yellow’s rating. Yellow isn’t out of the woods yet, but it is on its way to not becoming the next Central Freight Lines.

Blackstone Inc. has dipped more than a toe into the U.S. logistics real estate market. In 2019 Link Logistics was created to invest, develop, lease and manage a portfolio of domestic industrial properties on behalf of Blackstone. Since its inception in 2019, Link has acquired nearly 450 million square feet of domestic logistics property that comprises half of Blackstone’s global network. This year Link has advised Blackstone on the acquisition of $11.5 billion of U.S. property and dispositions of an additional $6.1 billion.