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Supply Chain Nightmare Fears Grow As Rail Strikes More Likely

Supply Chain Nightmare Fears Grow As Rail Strikes More Likely

We recently reported a short update on supply chain fears surrounding the talks of a potential rail strike this December. Now we’re back to give you a few more details. On Monday, one of the biggest rail unions rejected a deal, becoming the third union that failed to reach contract agreements per PBS news. 

Everyone’s fear is so heightened because a strike would send ripples across an already shaky supply chain. Already, President Joe Biden has had to come into the negotiations to try and keep the strikes at bay back in September, but it’s clear now that the rail unions won’t be easily subdued. The president already has to walk a careful line because critics say he is too “pro-union.” At the same time, supporters could be turned off by any aggressive action towards workers.

Here is what key voices are saying about a potential rail strike.

  • Jeremy Ferguson, president of the largest rail union said, “Members aren’t necessarily voting on the money issues…it’s quality of life, and how they’re treated.” 
  • A statement from the Retail Industry Leaders Association read, “Retailers urge policymakers to use every tool at their disposal to avoid a self-inflicted economic disaster.” 
  • White House press secretary Karine Jean-Pierre stated, “a shutdown is unacceptable because of the harm it would inflict on jobs, families,” but did not comment further on any congressional action.

At this stage, the slight recoveries that we were starting to see this holiday season could be completely wiped out if an agreement isn’t reached and congress does not force any action. We won’t have long to find out, as a strike could happen as early as December 9th. 

Latest And Greatest News From Around The Freight Web: 11/21/22

Latest And Greatest News From Around The Freight Web: 11/21/22

Written by Adriana Pulley

Check out our latest roundup of the top headlines from around the freight and logistics world. We gather news related to brokers, carriers, shippers, logistics startups, freight tech, and more. Here’s what we’ve got for November 21, 2022.

There’s Bud: 

The winner of the 2022 World Cup will receive €75 million worth of Budweiser beer prepared before the sale of alcohol was banned during the Qatar-hosted games. Budweiser plans to sue FIFA for breach of contract for the last-minute change.

Got the Power: 

This week’s FreightWaves Supply Chain Pricing Power Index sets the negotiating power for rates at 35 in favor of shippers as carriers struggle to source freight.

Free Falling: 

Ocean carriers panic as bookings from China to North Europe and the US west coast tank and FAK rates plummet. The drop isn’t helped by a high number of recent blank sailings.

 Cargo Theft: 

Two L.A. theft rings that have stolen more than $18 million in merchandise have been taken down. Read this guide on how to prevent cargo theft this holiday season.

 Streak Continues: 

New York remains the nation’s #1 port for the third-consecutive month, handling nearly 20% more trade volume than it did pre-Covid.

Retail Giant Walmart Strong Arms Its Suppliers

Retail Giant Walmart Strong Arms Its Suppliers

Written by Adriana Pulley

Walmart warns its suppliers that they will not be paying higher prices for products anymore. The move spurred rivals Target and Amazon to take a similar stance per the Wall Street Journal. 

These larger retailers are reclaiming power by canceling orders, resisting price increases, and in some cases asking suppliers to provide discounts. 

The Supplier’s POV

  • Estée Lauder Cos. says beauty product sales would drop further than expected due in part to tighter inventory management by some US retailers. 
  • Mohawk Industries Inc., a flooring and carpet manufacturer, says sales of many products are down and freight isn’t moving as retailers work to shrink their inventories
  • Newell Brands Inc., producer of Rubbermaid and more, had to cut its sales and profit outlook in both September and October. It hopes to shrink the $500 million inventory surplus it has this year.

The Retailer’s POV

  • Walmart CEO Doug McMillon says the company is searching for innovative ways to avoid price increases: shrinking packages, and earlier orders…or competition. 
  • Walmart sales increased 8.2% in Q3 compared to last year, beating predictions. The company showed confidence by announcing a $20 billion share buyback
  • Food sales are up, but retailers look to cut prices on home goods, apparel, and electronics. 

The Consumer POV

  • 56% of Americans feel companies are frivolously raising prices, per a Deloitte survey. 
  • 8 in 10 consumers plan to rethink or reduce spending in the next 3-6 months, per The NPD Group research.
  • People still spend on little feel-good items like chocolates, fragrant soaps, and air fresheners, according to market experts. 

As suppliers rushed to build inventory last year…

…they increased hiring and struggled to meet freight needs at so high a rate. The demand was high, and these suppliers were able to shift the power in their favor. Earlier this year, however, retailers flashed warnings about high inventory levels. Walmart and Target buyers stopped placing orders with Newell and other suppliers in a swift takeback of power. 

The tough play isn’t anything new for giant Walmart. 

However, these latest negotiations will continue to be exceptionally fierce due to the unpredictability of today’s economic climate. Retailers seek to attract increasingly thrifty shoppers, but producers want price hikes to cover rising costs. Yet it’s clear that in this game of tug-of-war, Walmart just has more pull.