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TOGETHER WITH

In today’s email:

• Three Freight Headlines: California bans driverless trucks on state roads, an Ohio trucking company owner is indicted in a theft scheme, and FreightTech firm CloudTrucks lays off up to 40% of its staff due to a tough freight market.

• Samsung & Apple: Supply Chain Shift from China to Southeast Asia

• Around the Freight Web: Oklahoma truck driver arrested in $2.9M drug bust, why steak prices are soaring, startups in California are investing heavily in developing charging networks for semi-trucks, plus more.

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🐔 WHAT’S COOKIN’ IN FREIGHT

🚛 California Votes Against Driverless Trucks. The California State Assembly has passed a bill prohibiting driverless trucks over 10,000 pounds on state roads, mandating a safety driver. Labor groups, including the Teamsters, have supported the bill, citing potential job losses due to autonomous trucking. The Autonomous Vehicle Industry Association (AVIA), however, views this as a setback for road safety and tech competitiveness. California-based autonomous trucking firms such as Kodiak Robotics, Plus, Waymo, and TuSimple currently employ safety drivers.

🥷 Ohio Trucking Owner Indicted in Theft Scheme. Ohio-based trucking company owner, Gurtej Singh, also known as Gary Bhullar, was indicted on charges including conspiracy to steal from interstate shipments and making a false statement. Authorities allege that Singh, using his positions at Bhullar Transport Group LLC and Cargo Solution Express, Inc., conspired with other owner-operators to steal goods destined for Amazon and Bath & Body Works, directing drivers to a warehouse where the cargo was stolen from their trucks.

☁️ CloudTrucks Layoffs 40% of Staff. It’s a cloudy day at CloudTrucks. The San Francisco-based FreightTech company CloudTrucks, which has raised approximately $142 million since its inception in 2019, has laid off an undisclosed number of its workforce due to a challenging freight market, with a source suggesting up to 40% of employees were affected. CEO Tobenna Arodiogbu emphasized the need to maintain competitive rates and to serve customers efficiently, while expressing gratitude for the contributions of departing employees.

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🇨🇳 SUPPLY CHAIN SHIFT FROM CHINA TO SOUTHEAST ASIA

Samsung's Strategic Move

In 2008, Samsung made a strategic decision to relocate its manufacturing from China to Southeast Asia, beginning with a plant in the Bachan region of Vietnam. The move aimed to counteract increasing labor costs in China and intense competition from local smartphone manufacturers. By 2019, the South Korean tech giant had completely shut down its phone factories in China, while also significantly reducing its workforce in the country. This move insulated the company from geopolitical tensions, Trump-era tariffs on Chinese goods, and supply chain disruptions experienced during the Covid-19 lockdowns.

Apple Follows Suit

Following Samsung's successful relocation, Apple too began diversifying its manufacturing operations. The decision came in response to Covid-19 disruptions and violent protests at its main manufacturing plant in China in 2022. The tech company recognized the risk of concentrating too much of its operations in one location and started seeking alternatives. Apple's plan to move away from China accelerated, focusing its attention on Southeast Asian countries, mainly Vietnam and India.

Embracing Vietnam and India

Both Samsung and Apple have found Vietnam and India to be favorable locations for their operations, primarily due to financial incentives and growing markets. Samsung now manufactures half of its smartphones in Vietnam, enjoying a lower corporate tax rate compared to China. Similarly, Apple has transferred part of its watch and iPad production to the country. In India, Samsung has built the world's largest mobile phone factory and manufactures between 20-30% of its smartphones. Apple also intends to produce its iPhone 14 models in India for the first time, indicating a commitment to these new hubs.

Challenges and Future Trends

Despite the significant shift away from China, both Samsung and Apple may still depend on Chinese suppliers for some components. This reliance was particularly evident during the height of the Covid-19 outbreak when Samsung had difficulties securing Chinese components. Therefore, the tech giants need to be tactful in handling their diversified supply chains. The shift to Southeast Asia represents a wider trend of de-risking against geopolitical tensions and trade uncertainties, demonstrating a strategy akin to diversifying a financial portfolio.

Source: The Wall Street Journal YouTube

AROUND THE FREIGHT WEB

🚔 Oklahoma Drug Bust: Oklahoma truck driver Edgar Favela-Hernandez was arrested and charged with Aggravated Trafficking of Illegal Drugs after 102.5 pounds of cocaine, worth $2.9 million, was found in his semi-truck.

⚡ California's EV Trucking Boom: In response to California's stringent emissions regulations, a surge of startups are investing heavily in developing charging networks and offering services to support the state's transition to electric trucks.

💥 Georgia Tow Crash: A Florida woman was seriously injured in Georgia when her car hit a tow truck's ramp and launched about 120 feet in the air, hitting another car and resulting in hospitalization for both drivers.

📦 IKEA Buys Made4net: Furniture retailer IKEA has acquired cloud-based supply chain and warehouse management software provider Made4net to bolster its omnichannel fulfillment network.

🌍 Sustainability Infographic: A significant majority of consumers value sustainable shipping and packaging practices, and are willing to pay more or wait longer for eco-friendly ecommerce options.

🥩 Steak Prices Soaring: Increased costs of raising cattle due to droughts, high inflation, and pandemic disruptions have resulted in a shrinking supply of beef, causing record-breaking steak prices.

MEME OF THE DAY

By Paul-Bernard Jaroslawski
In Collaboration With Chat GPT-4