Retailers Brace for a Busy Summer
Concerned that contract negotiations between the dockworkers and port operators at 29 West Coast ports will drag on, retailers lobbied the White House to intervene before the current agreement expires on July 1.
In previous years, negotiations between the International Longshoremen and Warehouse Union and the Pacific Maritime Association have run beyond the expiration date and led to major disruptions to port operations.
The White House wants an early resolution in hopes of avoiding a repeat of 2014, when contract talks went on for 10 months after the contract expired. It took another nine months after a labor deal was reached in February 2015 for ports to return to normal service.
Visiting the Port of Los Angeles last week, President Biden called on negotiators to “find common ground and solve problems.” He also asked Congress to take up the Ocean Shipping Reform Act of 2022, which broadens the regulatory powers of the Federal Maritime Commission over container ship carriers while also promoting U.S. exports.
In the meantime, U.S.-bound retail container import volumes are expected to approach record volumes. “We’re in for a busy summer at the ports,” stated Jon Gold, vice-president for supply chain and customs policy at the National Retail Federation. “Back-to-school supplies are already arriving, and holiday merchandise will be right behind them.”
What is a Freight Broker?
The Infrastructure Act passed last year requires the FMCSA to issue new guidance on these definitions by Nov. 15.
Legally, under 49 U.S.C. 13102(2), a broker is a “person, other than a motor carrier or an employee or agent of a motor carrier, that as a principal or agent sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, transportation by motor carrier for compensation.”
But in 49 CFR 371.2(a) a broker is defined as a “person who, for compensation, arranges, or offers to arrange, the transportation of property by an authorized motor carrier. Motor carriers, or persons who are employees or bona fide agents of carriers, are not brokers within the meaning of this section when they arrange or offer to arrange the transportation of shipments which they are authorized to transport and which they have accepted and legally bound themselves to transport.”
FMCSA wants to know what evaluation criteria it should use when determining whether a business model/entity meets the definition of a broker. It also wants examples of operations that meet the definition of broker in 49 CFR 371.2—and examples of operations that do not.
The agency is seeking comments through July 11. Read the full notice here.
Climbers have a saying that the goal isn’t to reach the top of the mountain but to summit and get back down safely.
It’s a lesson that e-commerce companies can take to heart as consumers take advantage of generous return policies.
Zac Rogers, assistant professor of supply chain management at Colorado State University, has been tracking reverse logistics and e-commerce returns since 2008. Back then, the value of returned goods was about $300 billion. In 2020, he said, the value of returns and overstocked goods was $643.9 billion. That’s 3.1% of GDP.
“We live in a world of unlimited returns, especially in retail e-commerce,” Rogers said.
Navjit Bhasin of Newmine, a supply chain consultancy for retailers, offers five key benefits of reducing returns:
– Every $1 million return reduction adds $500,000 to the bottom line.
– Improved margins due to fewer markdowns.
– Cost savings in labor, shipping and DC space.
– Increased brand loyalty as a direct result of better buying experience.
– Enhanced environmental sustainability.
Back to Normal
Speaking just before Memorial Day to a conference hosted by Wolfe Research, Brad Hicks, J.B. Hunt’s president of highway services, provided some color about the levels of demand the company is seeing from customers.
“I don’t know that it has slowed down necessarily,” Hicks said. “We have heard from customers that, throughout the pandemic, they were shipping inefficiently, that truckloads were going out less than full at times. They seem to want to get back to maximizing utilization, whether it’s a container or trailer. Perhaps that has contributed to lower truckload volumes but the overall shipping of goods has remained relatively constant for us.”
Schneider CEO Mark Rourke made similar comments at a UBS conference earlier this month. Asked about news of rising inventories at big retailers, he said customers are seeing activity that tracks pre-COVID expectations. “This is the first meaningful time we’ve seen the more normal seasonality start to return on some of the other elements that serve retail,” Rourke said.