Congress is moving to put driverless 80,000-lb trucks on public roads. Plus: 13,000 California CDLs get cancelled, diesel hits a 32-year record, Florida wants $50K to get your truck back, and more.
Ryan Schreiber breaks down everything about strategy, relationships, mindset, and AI in logistics.
Oil spikes to $120 on Iran news before settling near $106. Plus: another influencer shipment gets stolen, Wyoming can now pull your truck, 24 states sue over tariffs, and more.
🤔 Question of the Day: Who was the top trading partner of the U.S. in 2023?
Good Friday morning & Happy Hanukkah. Today's feature focuses on the significant changes in America's trade strategy and their implications for logistics – Mexico and Vietnam are moving up. We've also got details on the biggest counterfeit goods bust in U.S. history, New York's potential noncompete ban, and the Q3 earnings of Lululemon and RH.
🤔 Question of the Day: Who was the top trading partner of the U.S. in 2023? Scroll to the bottom to find out.
In today's email:
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🐔 WHAT’S COOKIN’ IN FREIGHT
🚨 $1 Billion Fake Luxury Bust. In the largest U.S. bust of its kind, authorities seized about 219,000 fake luxury items worth an estimated $1.03 billion. Two individuals, Adama Sow and Abdulai Jalloh, face charges for running a massive counterfeit trafficking operation from a Manhattan storage facility. Officers say counterfeit goods trafficking isn't a victimless crime. Intellectual property theft and the black market trade of knock-offs undercut legitimate businesses and deceive consumers.
👩⚖️ New York Looking to Ban Non-competes. New York may be next in line to ban non-compete agreements, which impact 1 in 5 Americans. This could be a game-changer for the freight broker industry, known for strict non-compete agreements. Workers across all fields, from service to logistics, stand to gain the freedom to change jobs without being held up by contracts. Governor Hochul's decision could swing between a salary cap (which would allow non-competes for those making 250K or more) or a full ban. The outcome may influence a nationwide policy shift.
📈 Lululemon Leaps, RH Stumbles. In Q3 2023, contrasting trends emerged as Lululemon's apparel sales climbed, reflecting consumer preference shifts, while Restoration Hardware's home furnishings struggled amid housing market challenges. Lululemon's revenue rose by 19% to $2.2 billion, backed by a 13% surge in comparable sales and an impressive gross margin increase to 58.1%. However, the company still exercises caution for Q4, postponing any discounts until closer to Christmas. Meanwhile, RH faced difficulties, with revenues hitting a modest $751 million and operating margins slightly below expectations due to external economic challenges. RH hopes for demand to accelerate in the first half of 2024 as the housing market bounces back.
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The United States' approach to international trade, particularly with China, has changed significantly over the past five years. The COVID-19 pandemic and geopolitical tensions have led to a reassessment of dependency on Chinese manufacturing, with American companies diversifying their supply chains. The trend of nearshoring has also been gaining in popularity as the U.S. looks to neighbor Mexico as a manufacturing location.
The U.S.-China trade war, which began in 2018 under President Trump, changed the trend of making trade easier and introduced new trade rules and tariffs from both countries. After a short drop and quick recovery, China began falling off a cliff, with Mexico quickly replacing it as the top U.S. trade partner. Take a look at the waves in the chart below.
In 2021-2022, the pandemic brought extreme bottlenecks and delays in goods coming from China, where lockdown measures were frequent and stringent. These issues pushed many companies to reorganize their supply chains as 2022 came to a close.
The drop in imports was broad-based across various sectors, including industrial equipment, consumer electronics, clothing, and pharmaceutical goods. Still, some sectors, like electronics, faced challenges moving away from established Chinese supply chains.
The chart below shows the changes that have occurred over the past years in goods imports for the U.S. Ron Hetrick, Senior Labor Economist at Lightcast, calls attention to the dramatic shifts happening in the country's import strategy. The changes are significant and "are critical for companies investing in overseas operations," Hetrick explains.
Regional Dynamics:
Asia’s Emerging Role:
Clearly, the game is changing; supply chains are shifting. New manufacturing hubs are taking shape, and if you're smart, you need to be keeping watch. As Hetrick mentioned, now is the time to plan future moves wisely to take advantage of new opportunities as the map is redrawn.
With the rise of nearshoring in Mexico, there also come certain challenges, such as cargo theft, the Mexican driver shortage, and "the rising differential between domestic and cross-border trucking rates," according to a report from Redwood Logistics.
Still, Uber Freight estimates that "453 new companies...are in the process of relocating to Mexico [and] at the same time, there's a lot of investment from companies that already have a footprint in Mexico.
And logistics will follow. C.H. Robinson recently opened a new 400,000 sq. ft. facility in Laredo, TX, while Redwood Logistics has expanded its operations into new offices in Monterrey, Mexico.
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AROUND THE FREIGHT WEB
🚛 Class 8 Orders Surge. Despite a sluggish freight market, Class 8 truck orders in November reached a 14-month high, surpassing 40,000 units.
😫 The Hardest Driving Job. Founder Adam Wingfield shares his real-life story about the tough double-duty of driving for McLane, involving long night shifts and complicated delivery challenges.
👨⚖️ Dispatch Manager's Fraud Sentence. A former dispatch manager at Roadrunner Temperature Controlled was sentenced to 18 months for embezzling nearly $113,000 from the company.
📦 Innovative Tracking Labels. Reelables, a UK company, has developed the first shipping labels with built-in 5G tracking devices, offering a breakthrough in supply chain visibility and automation.
🦺 Safety Ratings for Unrated Trucking Companies. Major trucking and broker firms are urging the Federal Motor Carrier Safety Administration to assign safety ratings to over 90% of carriers currently unrated.
📉 Venture-Backed Shutdowns. Around 3,200 venture-backed US firms have folded this year, having raised $27.2 billion, data by PitchBook reveals.
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FREIGHT MEME OF THE DAY
Also, check out:
Answer: The European Union was the top trading partner of the U.S. in 2023.
Congress is moving to put driverless 80,000-lb trucks on public roads. Plus: 13,000 California CDLs get cancelled, diesel hits a 32-year record, Florida wants $50K to get your truck back, and more.
Ryan Schreiber breaks down everything about strategy, relationships, mindset, and AI in logistics.
Oil spikes to $120 on Iran news before settling near $106. Plus: another influencer shipment gets stolen, Wyoming can now pull your truck, 24 states sue over tariffs, and more.
The Supreme Court just heard arguments in the broker liability case we’ve been tracking. Plus: oil shipping costs explode, trucking insurance is stuck in 1980, regulators brace for a carrier crackdown, and more.
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