Colliers’ November 2024 report provides an in-depth analysis of current supply chain conditions, focusing on labor dynamics, freight rates, and best practices in inventory management.
Labor Market Insights
- Wage Trends: Over the past year, labor costs have increased by 3.9%, marking the smallest rise since Q3 2021. Notably, the average salary for a Warehouse Associate II decreased by 1.2% compared to the previous quarter.
- Employment Shifts: Warehousing jobs have declined for 17 of the past 18 months, with total positions dropping from 1,942,200 in May 2022 to 1,764,100—a 9.2% decrease.
Freight Rate Fluctuations
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- Truckload Rates: Recent months have seen a decline in truckload rates, attributed to factors such as excess carrier capacity, reduced consumer spending, seasonal trends, and lower fuel prices.
- Ocean Freight: Ocean container rates have decreased by 42% on average since early August, primarily due to overcapacity and weakened demand. Specifically, rates from Shanghai to Los Angeles/Long Beach fell by 26%.
Inventory Management Best Practices
Effective inventory management is crucial for profitability. Colliers recommends:
- Demand Forecasting: Accurately determining required inventory levels and optimal locations at the SKU level.
- SKU Rationalization: Identifying and removing underperforming SKUs from the inventory portfolio.
- Inventory Targeting: Calculating cycle stock, safety stock, and reorder points based on forecasted demand.
- Supply & Demand Balancing: Ensuring inventory supply aligns with forecasted demand to minimize working capital.
Implementing these practices can lead to increased inventory turns, improved order fill rates, optimized working capital investment, and better real estate utilization.
Port Activity and Labor Negotiations
- All nine major U.S. ports reported year-over-year increases in TEU volumes.
- The International Longshoremen’s Association and the United States Maritime Alliance resumed contract negotiations in November 2024, impacting East and Gulf Coast ports.
Colliers’ report underscores the importance of proactive supply chain management in navigating current market dynamics and preparing for future disruptions.
