UPS shares dropped to a three-month low Tuesday as investors keyed in on cooling in package deliveries in the US during the second quarter as the logistics heavyweight turned in profit and sales growth that were ahead of expectations.
The company late Monday said consolidated revenue rose by 14.5% to $23.4 billion, higher than the $23.2 billion expected by analysts polled by FactSet.
Revenue in the US climbed by 10% to $14.4 billion, aided by a price per piece increase of 13.4%. But the report also said US average daily package volume fell by 2.9% during the three months ended June 30.
UPS stock fell as much as 9% to $190.27, the lowest price since April 27. The stock pared the loss to 8.3% during the session during which trading volume was heavy with more than 7.8 million shares exchanged by midday.
The company also posted a 15.8% decline in average daily volume shipments from business to residential locations.
UPS experienced a boom in package deliveries a year ago as the COVID-19 pandemic forced millions of people into lockdown, prompting them to have items they purchased delivered to their homes.
The company’s adjusted earnings of $3.06 per share beat the FactSet estimate of $2.81 per share. The latest quarter also showed a 30% rise in international revenue to $4.8 billion.
UPS backed its estimate of $4 billion in planned expenditures for 2021.
To expand its reach, Nestron is now in the process of preparing its debut in Northampton, UK, a little over 65 miles from London.
Toh says Nestron will close about 10 deals before the homes actually debut in Europe …
… but estimates that by the end of the year, it’ll sell over 100 units in the UK.
“We believe with the increase in marketing activities upon our debut, there are nearly 100,000 potential users in the UK, which will bring explosive and continuous growth to our local distributors,” Toh told Insider in an email statement.
Like other companies that ship products internationally, Nestron has struggled to move its tiny homes in the face of jammed ports and shipping delays.
But before we dive into how the company is overcoming these issues, let’s take a look at the two futuristic tiny homes that will debut in the UK: the $34,000 to $52,000 Cube One and the $59,000 to $77,000 Cube Two.
These prices vary widely due to a list of possible extra add-ons, such as solar panels, heated floors, and additional smart appliances.
The Cube One is more popular with solo occupants, while the larger Cube Two has been a hit with families, couples, and as a backyard unit.
Nestron debuted both units well before its UK plans but has since made sizing changes ahead of its overseas delivery: the Cube One’s size was boosted about 16.2 square-feet, while the Cube Two was expanded by about 25 square-feet.
Let’s take a closer look at the Cube One, which stands at about 156 square feet.
This square footage holds the living room, bedroom, bathroom, and kitchen space (which comes with cabinets, a sink, and a stovetop, according to renderings of the unit).
Like any typical home, the living room has a dining table and sofa, while the bedroom has a side table, closet, and of course, a bed.
Moving towards the bathroom, the tiny Cube One comes with a shower, towel rack, and sink, all in one enclosed space.
The little living unit also has built-in necessary amenities like lights, storage units, electric blinds, and a speaker.
There’s even room for a modern-day must-have: air conditioning units.
Now, let’s take a look at the larger Cube Two, which can accommodate three to four people with its two beds, both of which sit on opposite ends of the tiny home.
Like its smaller sibling, the almost 280-square-foot Cube Two has a living room, two beds, a kitchen, and a bathroom, all with the same furnishings as the Cube One.
However, the dining table in the Cube Two is noticeably larger, and there’s a skylight for added natural light and stargazing.
Both models come insulated and have smart home capabilities using Nestron’s “Canny,” an artificial intelligence system.
Canny can complete tasks like brewing your morning coffee or automatically adjusting your seat heights.
Everything is “smart” these days, which means the Cube One and Two can also come with motion-sensing lights and smart mirrors and toilets.
You might be wondering how Nestron plans to move its Cube One and Two tiny homes overseas in one piece. Well, let’s move on to everyone’s favorite topic: logistics, and how the company managed to ship its tiny homes despite global delays.
According to Toh, Nestron has had a “solid foundation built in the industry … allowing it to have a good relationship with experienced and professional forwarding partners.”
Despite this foundation, like other companies, Nestron has experienced delays related to the global supply chain jam, specifically congested ports in the UK.
As a result, the company’s forwarding charges were tripled what it initially expected, according to Toh.
But instead of charging its clients extra money for immediate shipping, Nestron decided it would pause shipping until costs were lowered.
To bypass these congestion issues, Nestron also decided to reroute its original plan to ship straight to the UK.
“In the end, [we] decided to travel over to Antwerp, Belgium, and then land in the UK,” Toh said. “This way, by the time we reach the UK port, the congestion would’ve been clear.”
Despite this detour, shipping costs were still higher than expected, in part because the company and its distributors still wanted to make the debut timeline.
“Since the demands are growing and people want to experience touch and feel with Nestron, we took the chance and sent the units off earlier this month, expecting them to arrive late July [or] early August,” Toh said.
To aid in the transportation process, the tiny homes have built-in retractable hooks to help make it compatible with cranes.
The homes’ structures are also stable enough to withstand the stress of moving, according to Toh.
And all the little living units are also packaged in waterproof fabric to both avoid rusting and to allow for easy inspection.
Being in the UK will allow potential consumers to “engage with Nestron units directly,” Toh said. “The experience will definitely influence the market interest and purchase power.”
Amazon is the second-largest US employer and still one of the fastest-growing in the country. It offers income and benefits to well over 1 million people, and it’s been a source of jobs and shopping convenience during the pandemic.
With that level of influence, Amazon’s operations have come under intense scrutiny, which has prompted a nationwide unionization effort. The following covers everything you need to know about what it’s like to work at the company.
How Amazon culls its workforce
Insider is investigating Amazon’s system for improving, or ousting, employees deemed underperformers. Once managers label workers as struggling, they are put on a “Focus” coaching plan. If they fail there, the workers are moved to another program called “Pivot,” and then finally to an internal company jury that decides their fate at the company.
The system has been criticized by some current and former employees, who say it is unfairly stacked against them and can encourage managers to give bad reviews to good staff. Amazon says it gives managers tools to help employees improve and advance in their careers. “This includes resources for employees who are not meeting expectations and may require additional coaching. If an employee believes they are not receiving a fair assessment of their performance, they have multiple channels where they can raise this,” a company spokesperson said recently.
There’s been a rash of lawsuits filed against Amazon alleging gender and racial bias. In May, five current and former female employees sued the company Amazon, claiming “abusive mistreatment by primarily white male managers.”
In February, Charlotte Newman, a Black Amazon manager, filed a suit alleging gender discrimination and sexual harassment. And last year, a high-profile female engineer called on the company to fix what she saw as a “harassment culture,” Insider reported.
An Amazon spokesperson said the company investigated the cases, found no evidence to support the allegations, and doesn’t tolerate discrimination or harassment.
The company’s fulfillment centers employ hundreds of thousands of people, offering pay and benefits that are competitive versus other retail-industry jobs. But the work can be grueling, some staff don’t stick around long, and there are growing efforts to unionize this modern blue-collar workforce.
Amazon warehouses are partly automated, using robots that zip around the shop floor fetching pallets of merchandise and bringing them to employees who pick the correct items and pack them for shipping. The company hires thousands of extra temporary workers each year to support a surge in orders during the holiday shopping period.
During the pandemic, online orders have jumped at an unusual time for Amazon. It prompted an unprecedented hiring spree last year but caused tension with workers concerned about entering warehouses that could spread the virus. These issues came to a head earlier this year, when employees at a fulfillment center in Bessemer, Alabama, voted on whether to form a union. The effort failed, but there’s a bigger union push gathering steam.
Amazon’s delivery network relies on thousands of drivers
The company partners with UPS, FedEx, and the US Postal Service, but it also operates a massive fleet of in-house delivery vehicles. These vans are driven by a combination of employees, third-party courier services, and contract workers.
Amazon is known for imposing strict time constraints on drivers and tracking how many times they stop and how fast they drive. While the company factors in break times – a 30-minute lunch and two 15-minute breaks – some drivers say they either can’t or don’t want to take them.
Earlier this year, a US lawmaker tweeted that Amazon workers have to pee in bottles. The company denied this, but multiple drivers confirmed it was part of the job. Amazon later apologized and said drivers have trouble finding restrooms because of traffic and being on rural routes, adding that the issue has been exacerbated by closed public bathrooms during the pandemic.
Amazon remains an important employer that is growing quickly. Unlike some of its Big Tech rivals, the company offers a range of positions, from highly technical roles to blue-collar jobs. It’s recruiting methods range from massive job fairs to tough one-on-one interviews.
The company ranks among the top employers among technical students. In a survey published last year, Amazon came 10th in a survey of engineering students, beating out Intel and IBM but trailing Tesla and SpaceX.
FedEx fell on Friday by as much as 5.6% after its latest earnings report revealed labor and logistical pressures eating away at margins, even as the company slightly beat analyst earnings expectations.
The stock slid as the market opened on Friday, immediately falling by over 3%. It continued to fall to an intraday low of $286.52 before paring some losses.
The US labor shortage has cost the courier on wages and shipping efficiency, pushing up labor costs and depressing on-time shipping rates. In response, FedEx said it would boost capex by 20% and open 16 new facilities by the end of the year. In spite of the reopening pressures, the company’s sales rose 30% in the fourth quarter of 2020, as delivery demand remained sturdy.
Thursday’s reported earnings came in just cents above expectations, leading some analysts – who had become accustomed to consistent overperformance – to describe the results as a disappointment.
FedEx CEO Fred Smith expressed optimism for future quarters, saying that continued strong sales in conjunction with ongoing investments in the firm’s delivery network would soon result in better margins.
Shares of FedEx were trading at $291.46 at 2:08 p.m. ET, down 3.79%.
Boats are becoming more expensive and harder to find across the US, from small vessels to large yachts.
Boat prices are up, and customers are left waiting months longer than anticipated for their purchases. In Michigan, which is a hub for boaters due to the surrounding Great Lakes, one dealership is displaying signs warning would-be customers to “Buy now before they are gone,” WXYZ Detroit reported.
The state’s largest pontoon dealer has only one new pontoon for sale, and the sales manager spoke of “inventory shortages” to WXYZ. The dealership is also promoting trade-ins and “cash for boats,” similar to the run on used cars going on that has increased prices at the fastest ever rates. Boat prices have risen about 10% over the last year, the sales manager said.
For customers looking to buy new, wait times start at three to even six months, or longer for specialty or unusual orders.
Even the rich aren’t immune to shortages as yachts in particular become harder to find. “People just aren’t putting their boats up for sale,” Charles Corbbishley of RCR Yachts told Rochester First. He says buyers for new boats are on wait lists that go through 2023.
Like many shortages going on right now, a few causes converged to make boat buying difficult. Boating saw a rise in demand at the beginning of the pandemic that has continued since, The New York Times reported. In 2020, people increasingly spent their money socially distant activities that felt safe, like furniture upgrades and even new homes. Boats are similarly a way for people to enjoy the outdoors and spend time with family without interacting too closely with strangers.
Along with new demand, boaters faced all the same supply chain disruptions that shocked the rest of the global market. As Rachel Premack explained for Insider, some factories shut down in the early days of the pandemic, slowing production of nearly everything. Then came a shipping container shortage, making logistics even more complicated. Port congestion and Texas storms earlier this year only made things worse.
Getting a boat is hard, and keeping it in good shape isn’t any easier. Parts for maintenance and repairs are impacted by the same shortages as boats themselves.
People might not be aware of the full impact the current shipping crisis will have on higher prices for consumer goods, a leading economist told Bloomberg.
Even if companies pass the cost of rising shipping fares straight to customers, this will only have a slight effect on headline inflation – but its full impact might be being overlooked, Volker Wieland, economics professor at Frankfurt’s Goethe University in Frankfurt and a member of the German government’s council of economic advisers, said.
“Even if the order of magnitude is smaller than estimated, the dynamic builds over a year and has significant effects,” he told Bloomberg.
“That means there’s a danger we’re underestimating the impact.”
A shortage of workers, lack of shipping containers, and massive port traffic jams caused by growing demand for imported goods are all causing shipping costs to soar, Insider’s Rachel Premack reported. According to the Drewry World Container Index, shipping containers cost nearly four times as much as they did this time last year.
Ports face other problems, too. Authorities introduced stricter COVID-19 measures after a recent coronavirus outbreak in Guangdong, South China, causing congestion at four major ports.
Many Starbucks stores are facing shortages of vital products, and the issues could be getting worse.
Starbucks is putting orders for at least 25 items on “temporary hold” as of June 4 due to supply chain issues, according to an internal company update viewed by Insider.
“Starbucks will put a temporary hold on production until supply chain issues are resolved,” the posting says. The list, confirmed by three Starbucks employees in Arizona, Georgia, and Oregon, includes popular items like hazelnut syrup, toffee nut syrup, chai tea bags, green iced tea, and other products.
Starbucks declined to comment on the memo. The company has previously said ongoing product shortages are localized and not nationwide.
No shortage of issues
Customers have been complaining online for weeks about shortages of their favorite items, from oat milk to drink syrups and baked goods.
“We are constantly running out of food,” and customers sometimes get angry with employees over these shortages, the employee said. “It is out of our control. We try to tell them the company cannot keep up with demand … They end up getting mad and most of the time they just drive away. We try to explain there are shortages but they do not care.”
Starbucks confirmed that stores are dealing with shortages of different products, and said the specifics vary by location. The company said there’s no single item that is out across the board at all stores.
“We are experiencing temporary supply shortages of some of our products. Specific items will vary by market and store, and some stores will experience outages of various items at the same time. We apologize for the inconvenience, and are working quickly and closely with our supply chain vendors to restock items as soon as possible,” a spokesperson told Insider in a phone call.
Some stores have displayed signs that say “we are currently experiencing temporary outages of some of our food and beverage items.” These signs were officially distributed from Starbucks corporate to individual stores, the spokesperson confirmed. The Pennsylvania employee also shared an update about a potential straw shortage coming soon.
A global problem
The shortages have been an ongoing problem for Starbucks this year. In April, Insider reported a widespread oat milk shortage impacting Starbucks just a month after it was introduced at the chain. Workers at locations across the US told Insider about other shortages in April, including cups, flavored syrups, and baked goods.
Shortages and price hikes are affecting the entire retail sector. Bikes, cars, meat, cheese, and even ketchup are all becoming more expensive, in part thanks to disruptions to the global supply chain from COVID-19, plus a shipping container shortage and port congestion. These factors created what experts called a “perfect storm” in global transportation.
Starbucks says it cannot predict when products will be restocked, although everything on menus is slated to be refilled with no permanent cancellations.
Diapers are about to get even more expensive, and parents are worried.
Prices of furniture, household necessities, electronics, and nearly all other consumer goods are set to rise this year in a “perfect storm” of shipping delays, supply chain disruptions, and changes to demand because of the pandemic.
“This is one of the bigger increases in commodity costs that we’ve seen over the period of time that I’ve been involved with this, which is a fairly long period of time” Proctor & Gamble operating chief Jon Moeller said of his 33-year career.
Diapers are far from the only products affected as consumers continue to spend money on goods over services. Bikes, cars, meat, cheese, and even ketchup are all becoming more expensive. Goldman Sachs analysts predict that increased prices will continue through at least the end of 2021 as the supply chain continues to grapple with disruptions and unpredictable demand.
Amazon recently installed AI-powered surveillance cameras in its delivery trucks that monitor drivers’ behavior in what the company says is an effort to reduce risky driving behaviors and collisions.
Whether the cameras ultimately accomplish that goal may depend on how much productivity Amazon is willing to sacrifice in order to keep drivers safe, according to a transportation expert who studies AI-powered safety systems.
Amazon’s cameras, which are made by a startup called Netradyne, record 100% of the time that the vehicle’s ignition is on, tracking workers’ hand movements and even facial expressions and audibly alerting them in real-time when the AI detects what it suspects is distracted or risky driving.
Almost immediately, drivers pushed back – and one even resigned, according to the Thomson Reuters Foundation – citing concerns about the cameras eliminating virtually any privacy they once had, as well as potentially making them less productive.
Several drivers told Insider’s Avery Hartmans and Kate Taylor they’re worried about Amazon penalizing them for using their phones on the job, even though they need the devices for navigation. Others said the additional safety precautions they’re taking to avoid committing infractions, like stopping twice at an intersection or driving slower, are making it hard to keep up with the company’s notoriously demanding delivery quotas, which can run as high 300 packages per day.
But that’s exactly the trade-off Amazon may be forced to make, Matt Camden, a senior research associate at the Virginia Tech Transportation Institute, told Insider.
“If a fleet wants to reduce risky driving behaviors, it’s critical to look at why the drivers are doing that in the first place, and usually, it’s because there’s other consequences that are driving that behavior,” such as “unrealistic delivery times,” Camden said.
“They want to keep their job. If they miss their delivery time, that’s going to look bad – they could be fired, they could lose their livelihood,” he said. “And if [the delivery time] is unrealistic, then they have to find a way to get it done.”
Instead, Camden said, companies like Amazon need to approach technology-based safety systems “from a more positive standpoint, from a training standpoint and say: ‘We’re not going to nitpick you. We just want you to be safe.'”
“Netradyne cameras are used to help keep drivers and the communities where we deliver safe,” Amazon spokesperson Alexandra Miller told Insider in a statement.
“Don’t believe the self-interested critics who claim these cameras are intended for anything other than safety,” she added.
Netradyne could not be reached for comment.
Miller told Insider in Amazon’s pilot test of the Netradyne cameras from April to October 2020, accidents decreased 48%, stop-sign violations decreased 20%, driving without a seatbelt decreased 60%, and distracted driving decreased 45%.
However, independent research on the Netradyne “Driveri” camera system Amazon uses, and AI camera systems generally, is more sparse.
In an informational video for its camera rollout, Amazon claimed “the camera systems” can “reduce collisions by 1/3 through in-cab warnings,” citing studies by an investment bank called First Analysis as well as VTTI, where Camden works. (First Analysis could not be reached for comment).
Amazon didn’t respond to questions about which studies it was referring to in the video.
Camden said VTTI hasn’t looked at Netradyne’s cameras specifically, but that a study it conducted in 2010 found “video-based monitoring systems” without real-time alerts or AI prevented between 38.1% and 52.2% of “safety-related events” when tested on two different company’s delivery fleets.
But those safety benefits were a result of funneling data from the cameras to safety managers, who could then give feedback to drivers to help them drive safer.
“We can’t say that these AI-powered cameras would reduce 10%, 20%, 30%, 50% [of safety incidents],” Camden said. “We can’t get that specific number yet because we haven’t done the research, but it makes sense that in-vehicle alerts do work to address risky driving,'” Camden said.
Similar technologies do show promise, he said, citing VTTI research that showed real-time lane-departure warnings reducing crashes by more than 45%.
But Camden also said when VTTI did a study last year looking at why some delivery fleets are safer than others, it ultimately came down to which ones had a strong “safety culture” and were “prioritizing and valuing safety, at least on the equal level as productivity, if not higher.”
“The safest ones typically said: ‘If you’re tired, we don’t care if you miss your delivery, we want you to stop. We want you to take a break. If you have to go to the bathroom, we want you to stop and go to the bathroom. We don’t want you to feel pressured to keep going.'”
Camden said those fleets made it clear that drivers could reject unrealistic delivery times and wouldn’t be penalized if the route took longer because of traffic or construction.
“It’s easier said than done, of course, because productivity is driving the business. They have to make money, they have to keep their customers happy,” he said.
“But really, it comes down to creating the policies and the programs to support safety, support the driver, because we don’t want them speeding. We don’t want the drivers cutting corners to try to make a delivery.”
Your favorite bubble tea shop may not be serving its signature drink for a while as shipping delays are keeping some retailers from getting the supplies to make the sweet beverage.
The shortage started about a month ago, according to Oliver Yoon, the vice president of sales and global marketing for Boba Direct, a Chicago-based nationwide supplier of bubble tea products.
US ports on the East and West Coasts have been overwhelmed for months as consumer spending has increased along with a bevy of logistical issues amid the COVID-19 pandemic. Boats, carrying tens of thousands of shipping containers, are waiting outside ports.
“It’s a perfect storm really,” Yoon said.
Bubble tea, which has exploded in popularity in recent years, is a Taiwanese milk tea drink with a variety of flavors that features chewy pearls of tapioca. Supply has been tightened for the last month, Yoon said, and it’s not likely to let up until the end of April at the earliest.
Bubble tea products like tapioca pearls, popping bobas, flavored powders and syrups, and disposables, are all stuck in a “huge bottleneck,” said Yoon.
But it’s not just bubble tea. “It’s pretty much any kind of consumer product,” Yoon said.
But consumers just need to be patient, said Yoon. “This is temporary, not forever.”
For retailers selling bubble tea, they’re frustrated, too, said Yoon.
“I get it; they’re a small business, and they’re trying to survive. We’re all in the same situation – just trying to survive,” he said. “COVID really affected the situation with importing. No one anticipated what happened last year; it’s one of these domino effects later on in the future.”
Have you tried to order a food or drink item but were told it was sold out for the time being? Email the reporter of this article at email@example.com.