Welcome to Check Call, our corner of the internet for all things 3PL, freight broker and supply chain. Check Call the podcast comes out every Tuesday at 12:30 p.m. EST. Catch up on previous episodes here. If this was forwarded to you, sign up for Check Call the newsletter here.
Inside this edition: designer brands relying more on 3PLs; Mexico gains another manufacturer; and more acquisitions.
Full price for fabulous. Gucci, Dior, Chanel — all top designer brands — are working with 3PLs. That’s a combination not many saw coming. While other consumers are making swaps to lower-priced goods and opting for frozen quick service meals over going out, many luxury shoppers have gone in the opposite direction. According to a study by the NPD Group, luxury cosmetics and skin care grew to $6 billion in the third quarter of 2022 alone (a 15% increase in sales from the same period in 2021). Luxury cosmetics will increase in sales in a recessionary period colloquially referred to as the lipstick index. It’s the influx of makeup sales during the recession. Leonard Lauder, chairman emeritus of Estee Lauder, coined the “index” in the early 2000s when he noticed that lipstick sales were inversely related to a strong economy.
What does it have to do with 3PLs? Great question. I’d love to tell you. Luxury brands are all about aesthetics and experience. With the rise in influencer “unboxing” videos, brands are focused on their logistics now more than ever. Good 3PLs make sure that products are stored, picked, packed, etc., with care to reduce damage and lost product. 3PLs that specialize in providing luxury experiences work with designer brands to create custom packaging that is Instagrammable and on-brand.
Turn to the lipstick index. 2023 is no doubt a recessionary period that will see cosmetics rise to the surface once more. When prospecting with new customers, cosmetics might not be your worst bet. More and more cosmetic companies will be doubling down on the direct-to-consumer boxes. Anything for the Gram.
Welcome to downtown Coolsville. Dana Inc., an automotive supplier for Toyota, has joined the ranks of shippers moving manufacturing operations to Mexico. The new plant in the state of Queretaro will cost a cool $21 million and cover 9,870 square feet. The facility is expected to create 110 jobs, potentially 300 down the line. Toyota Tacoma and Tundra trucks will get their new drive shafts from the expansion.
In the press release, Queretaro Gov. Mauricio Kuri González said: “I want to leave a better Querétaro than the one I found myself, and there is no other way to do it, if it is not through citizen participation, betting that the companies [will] continue to have this confidence in Querétaro.”
This will be more and more common as we head into 2023 and shippers look to make moves to Mexico and Latin America.
Market Check. Outbound tender volumes nationwide have recovered slightly from the beginning of the year but still leave a lot to be desired. Major shippers are making efforts to reduce inventories, but consumer spending hasn’t caught up with retailers’ need to shed the bloat. The bottom of the freight market is coming. It’s just a matter of which carriers can hold on till we get to the other side. The hopeful news is that once retailers have seemingly corrected their inventory problems, outbound tender volumes will begin to rise and bring back a stable trucking market.
Who’s with whom? Maersk has collected another acquisition.This time it has acquired Martin Bencher Group, a Danish project logistics expert. Turns out those Danes are lethal with noncontainerized operations. The cost of the deal is about $61 million. Peter Thorose Jensen, CEO of Martin Bencher, said: “We look forward to becoming an integral part of Maersk. Our companies complement each other in so many ways, that we expect a seamless transition experience for both our colleagues and clients.” Either way you look at it, a top-tier project logistics company and the MVP of container shipping joining forces is going to be a successful venture.
In other acquisition news: Descartes Systems Group has acquired Supply Vision, a provider of shipment management solutions for North American logistics service providers. Supply Vision has developed a reputation for helping LSPs digitize operations and assist with life-cycle management. The company is also integrated with Descartes MacroPoint. The deal cost a casual $12 million in cash and then some additional money based on performance. The maximum possible earn-out is $3 million.