Amazon, being the pioneer it is, continues to make significant strides in adapting environmentally friendly initiatives. The retail giant aims to complete the switch from using plastic packaging to recycled paper before the end of this year for its North American market. In other news, consumer spending in May saw a slight rise. Could this be a sign that inflation and high interest rates are beginning to have some impact?
Read on to learn more about the latest news and trends across the North American freight, CPG, and retail markets.
In their biggest plastic packaging reduction effort, Amazon is switching from plastic air pillows to recycled paper filling for packaging across North America.
The logistics and e-commerce behemoth aims to eliminate 15 billion plastic pillows annually. According to the company, the move is a no-brainer because paper offers similar or better protection and is easier to work with.
As of June 20, the company was already 95% done with the switch. It expects to complete the transition for most prime-day deliveries by the end of the year. An Amazon spokesperson said using recyclable materials will help minimize waste while ensuring customers receive their items undamaged. The transformation from plastic to paper is but one of the fulfillment giant’s sustainability efforts. Other projects include include package-free shipping and AI-powered recycling sorting.
The U.S. retail sales grew in May, albeit more modestly than in April.
The pace was slower, and some categories experienced a decline, suggesting inflation and rising debt are beginning to catch up with consumers, leading to more cautious spending. However, despite the slower sales growth, experts can see the situation’s negatives and positives.
On the downside, weaker spending could hurt retailers and slow economic growth. Conversely, slower spending might be critical in controlling inflation and preventing a recession. The Federal Reserve is likely to agree. The slower spending suggests that rising interest rates are curbing demand without causing a major slowdown. Prices are still high, albeit increasing at a slower pace.
Some retailers are even lowering prices to be able to compete.
The International Longshoremen’s Associaton (ILA), the largest union of maritime workers in North America, canceled labor talks with port operators that were due to start in mid-June.
The union, which represents 85,000 longshore workers along the East Coast, Gulf Coast, and other locations, canceled talks after learning that some shipping lines violated the existing Master Contract by leveraging automated machines. That agreement expires September 30, and union leader Harold Daggett says longshore workers are prepared to go on strike the next day.
Considering the state of the freight industry and the significant role the East Coast and Gulf Coast ports play in supply chains, a strike could disrupt imports during the peak holiday season, wreck major supply chains, and inevitably harm the U.S. economy just weeks before the November presidential election.
Maersk Line, the world’s second-largest ocean carrier, is accused of using automation in ports. The ILA contends this violates the current agreement and threatens the job security of thousands of dockworkers. Maersk denies any wrongdoing and criticized the ILA for using negotiations as leverage. The current standoff between both parties sounds familiar to a tense negotiation on the West Coast last year, forcing the Biden administration to intervene.
That said, while the negotiations have started out poorly, it is unlikely to lead to a strike.
During the pandemic, Target was inundated with excess inventory from stockpiling merchandise due to the volatile market and fluctuating demand.
Luckily for the brand, Target’s supply chain chief, Gretchen McCarthy, revamped their strategy. She oversaw the company’s inventory reduction by $2 billion in two years through discounts, supplier order cancellations, and enhanced demand forecasting. Of course, enhancing demand forecasting would not have been possible without artificial intelligence and machine learning. Those technology-driven solutions helped optimize inventory placement.
Under McCarthy’s watch, the company began using its stores as fulfillment centers for same-day pickup and delivery, directly competing with Amazon and Walmart. It also improved in-store inventory tracking to ensure online shoppers can see what’s available before placing an order.
This strategy has led to a much more nimble and efficient supply chain. with lower inventory levels and the ability to meet customer demand through various shopping channels.
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Operating on the world’s first collaborative logistics platform, Zengistics is a technology company that executes freight.
