This Week in Logistics News (November 28 – December 5)

logistics newslogistics newsFour months ago I mentioned that after 30-plus years of golfing, my mom recorded her very first hole-in-one. As excited as my mom was, I know my dad was equally excited for her. They have been golfing together for the last 30-plus years, playing in tournaments and leagues together. My dad actually has another 30 years of golf on top of that. And over those 60 years of golf, he had never recorded a hole-in-one. He came close on a few occasions, with the closest being at Pebble Beach when his tee shot rolled about an inch wide. Well, now he can check hole-in-one off his golf bucket list. Two weeks ago, my dad joined the club, on the exact same hole as my mom, and recorded his first hole-in-one. He said it landed on the front of the green, took a hop, and rolled in. He saw it hit the pin but wasn’t entirely sure it went in until he walked up to the green. So, a big congrats to my dad. I guess maybe it’s my turn now. And now on to this week’s logistics news.

logistics newslogistics newsThe UK has become the first country to authorize the Pfizer / BioNTech COVID-19 vaccine, with the first doses scheduled to roll out next week. And according to multiple reports, the first doses of the vaccine are on the way to the US as well. While Pfizer is still seeking regulatory approval in the US, the first shipments are en-route from Brussels to US distribution centers aboard United Airlines charter flights. The flights were reportedly between Brussels and Chicago, and represent one leg of a chain, which will extend from Chicago to distribution hubs around the US. The Federal Aviation Administration (FAA) approved the shipments, which require the vaccine candidate to be packed in dry ice to keep it at the required -94 degrees Fahrenheit.

logistics newslogistics newsKeeping vaccines at very cold temperatures is a requirement for distribution. As mentioned above, the Pfizer vaccine must be kept at -94 degrees Fahrenheit, while the Moderna vaccine must be stored at -4 degrees Fahrenheit. AstraZeneca, which is hoping for a warmer temperature for its vaccine, stated that it can be stored and transported at normal refrigerated temperatures of 36 to 46 degrees Fahrenheit for at least six months. The Pfizer and Moderna vaccines are the front runners to hit the market, so frozen temperatures will be needed for storage and transportation. As a result, UPS has set up its own dry ice production and will provide portable, super-cold freezers to its health care. UPS can make as much as 1,200 pounds of dry ice an hour near its Worldport air hub in Louisville, KY, and can ship it the next day to US and Canadian hospitals and clinics. The company is also offering to hook up small freezers, made by partner Stirling Ultracold, for care providers that don’t have permanent facilities to keep vaccines from spoiling. The portable freezers can maintain temperatures as low as -112 degrees Fahrenheit.

logistics newslogistics newsAs the world prepares for the vaccine, Schiphol Airport in the Netherlands says it is ready. The airport is equipped with huge cold storage warehouses where KLM Royal Dutch Airlines employees are preparing for the surge in vaccine cargos that will need to be flown around the world in ultra-low temperatures. Schiphol Airport is a major hub in the pharmaceutical supply chain and has already handled some of the vaccines that have been used in trials. The KLM Cargo warehouse at Schiphol has four cold storage areas for pharmaceuticals and a fifth will be ready in January. The larger containers will be able to hold 30,000 doses of the vaccine.

Online shopping has been surging for the last 6+ months, and as we enter the home stretch of the holiday season, it will only continue to grow. Walmart is looking to utilize stores more this holiday season to take some of the strain off of distribution centers for online order fulfillment. The company will route some Walmart.com orders to local stores for fulfillment rather than to the company’s dedicated online fulfillment centers. With 2,800 of its more than 4,500 stores offering delivery services, the use of physical stores can speed up delivery timeframes for customers if the item is in stock and not at or below safety stock thresholds. Walmart SVP of Customer Product Tom Ward said that while customers will not notice a difference in the app or a service they need to select, they will notice that they are no longer looking for shipping updates. Instead, the orders will likely be delivered same-day, and arrive in a Walmart bag instead of a box.

Walmart is also changing one of its policies for online orders for Walmart+ members. The company has decided to drop the $35 minimum shipping threshold for members, giving it a chance to be more competitive with Amazon’s Prime membership program. Walmart announced earlier this week that orders for members on items such as electronics, clothing, toys, and other merchandise shipped through Walmart’s fulfillment centers will no longer carry a $35 minimum to qualify for free shipping. But grocery orders delivered through its stores will still carry a minimum purchase requirement.

Speaking of a surge in online shopping, everyone must be seeing revenues climb as more consumers turn to the web, right? Well, not exactly. Some companies are seeing surprise cost squeezes eating into profits, such as UPS and FedEx. The two companies have said they are running into a shortage of delivery vans, which was caused by pandemic-induced factory shutdowns, and exacerbated by the rise in e-commerce which necessitates home delivery. While FedEx and UPS don’t expect the scarcity will hobble delivery capacity, it adds to the rising expense of doing business as COVID-19 rages on.

While FedEx and UPS do not see van shortages hobbling delivery capacity, there is still the possibility of delivery delays this holiday season. And a lot of this has to do with port congestion. Some of the hottest toys this holiday season are sitting idly in shipping containers at big ports in Southern California. The delays in loading these toys onto trucks is spurring doubts that they’ll make it to retailers in time for Christmas. The California bottleneck appears to be mainly hitting smaller and mid-size toy manufacturers and has been partly spurred by a shortage of trucks and truck drivers during the pandemic. A shortage of loading equipment and labor at the ports this fall is only making matters worse. For example, MGA Entertainment, which makes LOL dolls and accessories, has 700 containers that have been sitting at ports for more than a month. As a result, only 60 percent of major retail chains’ stores nationwide have enough MGA toys in stock right now compared with the 98 percent retailers typically have at this time of year.

Elon Musk is going all-in with the Tesla semi-truck. While the company has been taking orders on its electric trucks that have a range of 300 to 500 miles on a single charge,  Musk has said that the next generation battery technology the company is working on has a higher energy density that should increase the range. Speaking at the 2020 European Conference on Batteries, Musk said that Tesla’s new battery technology could deliver a Class 8 truck that can cover 621 miles per charge. Tesla’s new battery uses cells that are structural members of the pack, which helps reduce the overall weight of the system. Musk estimates they would carry a weight penalty of a ton or less compared to a diesel powertrain on a 40-ton truck.

That’s all for this week. Enjoy the weekend and the song of the week, Bob Marley’s One Love.