National

Axios Future

Pandemic-driven disruptions have left the global supply chain in a deep crisis, but new technologies and approaches could help avert the next one.

Why it matters: The inability to get goods made and shipped is raising prices and dragging down the global economy. 

More automation will help improve efficiency eventually, but a more sustainable supply chain may require companies to pivot from "just in time" to "just in case."

Driving the news: U.S. GDP growth slowed to 2% in Q3 2021, a lower-than-expected number economists attributed to the Delta variant and supply chain problems.

According to the Freightos Index, the median cost of shipping a standard metal container from China to the West Coast hit $20,586 in October — almost double what it cost in July, which was already twice what it cost in January and 700% higher than the cost a year ago.

Be smart: While the idea of a supply chain crisis can make it sound as if the global economy is experiencing a shipping deficit of some sort, in fact more goods than usual are flowing.

That's the problem: the pandemic led consumers to shift from spending money on services to spending on goods — well beyond what the global supply chain could handle — while COVID-related disruptions damaged the ability of factories to get the components and labor they needed to make all that stuff.

Add to that the years of companies prioritizing "just in time" manufacturing and shipping, with little excess inventory on hand to cushion disruptions, and you have a supply chain crisis.

"What's important is not so much the 60 or 80 container ships lined up off L.A. — that will eventually get resolved," says Hamid Moghadam, CEO of San Francisco-based Prologis, the largest industrial real estate company in the world. "It's a fundamental issue of capacity to carry more inventory in the system so that you don't have a problem."

The catch: There's a reason companies embraced "just in time" rather than "just in case" strategies — a dollar spent on banked inventory is a dollar that can't be invested elsewhere. Many goods, like fashion or high technology products, will also quickly lose value over time if stored in a warehouse as a hedge against logistics crises.

Moghadam notes that one solution could be to build more warehouses closer to consumers — which would benefit his company as a leading logistics landlord — but that often meets resistance with the public.

"People want their stuff immediately, but they don't want to deal with the traffic and the congestion," he says.

What's next: Since consumers are unlikely to abandon their desire for rapid shipping — especially since the pandemic led to a boom in e-commerce — one longer-term solution is to make the supply chain more efficient through automation and other technological advances.

The Colorado-based startup Outrider is automating operations in yards within distribution facilities, where goods move from trucks and other transport lines to warehouses. That can help reduce costs and improve safety, notes Outrider CEO and founder Andrew Smith.

San Diego-based Platform Science develops smart fleet management technology that keeps trucks on the road connected, strengthening "actual links in the supply chain," says Jack Kennedy, the company's CEO and co-founder.

As 3D printing matures, it will allow companies to produce necessary components where and when they're needed, sidestepping both "just in time" and "just in case" for "make on demand." 

By the numbers: Investors are paying attention — a record $45.1 billion has been raised by industrial startups so far this year according to Pitchbook, compared to $34 billion for all of 2020.

Yes, but: Those investors need to understand it can be harder and take longer to create change in sectors that deal in "atoms rather than bytes," says Will O'Donnell, managing partner of Prologis Ventures, the company's VC arm.

The bottom line: The pandemic-related supply chain crunch won't always be with us, but further crises will recur unless we can fundamentally change how we get things from A to B.

The supply chain of the future is (slowly) coming online

The logistics crunch is mostly due to shifting demand, but new crises will recur without better technology

Animation of a shipping container with a loading screen on it

Logistics

Transportation

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Axios Generate

American Airlines is more aggressively leaning into sustainable aviation fuels and research into new propulsion technologies to reach its goal of net-zero emissions in 2050, the company tells Axios.

What’s new: The Fort Worth-based airline gave Axios a first look at new details on how it plans to get to net zero.

Why it matters: Aviation is a growing source of greenhouse gas emissions, and one of the hardest to decarbonize because of the need to develop high-performing engines to run on something other than Jet-A fuel.

Details: The airline's planned reliance on sustainable aviation fuels, which are made from sustainable feedstocks like household solid waste or algae, has increased compared to last year's agenda.

By the numbers: Here's how the airline plans to get to net zero:

39% from sustainable aviation fuels (SAFs).

15% of emissions cuts would come from buying new, more efficient planes to replace older aircraft.

9% from air traffic control modernization to enable more efficient flight paths. 

3% would come from operational efficiency gains.

The bottom line: “The engine makers have really been pushing the barriers and trying to figure out how we can get to 100%” of SAFs in aviation fuel, rather than a 50% blend with traditional aviation fuel, an American Airlines official told Axios.

Editor's note: This story has been corrected to note that American Airlines is based in Fort Worth (not Dallas).

First look: American Airlines' new plan for net-zero emissions

Aviation is a growing source of greenhouse gas emissions and one of the hardest to decarbonize.

Illustration of condensation trails from a jet being wiped away with a sponge.

American Airlines

Climate change

Ominous forecasts about the impact of climate change serve as the backdrop for the world — led by U.S. lawmakers and companies — to debate big action on the problem, which could upend energy systems and our way of life.

Energy & Environment

Axios What's Next

In the span of less than a week, Hertz has made three big strategic moves intended to keep the car rental giant from fading into oblivion.

Why it matters: Ride-hailing and other mobility innovations are rapidly changing the way people get from A to B, posing an existential threat to traditional car rental services. 

Hertz, even more than rivals Avis and Enterprise, was also hammered during the pandemic when air travel collapsed, but it emerged from bankruptcy in June with an "if you can't beat 'em, join 'em" attitude.

"We want to become a critical and essential component of modern mobility and that whole ecosystem," interim CEO Mark Fields tells Axios.

What's happening: In a rat-a-tat series of deals with leading mobility companies this week, Hertz's strategy is coming into focus.

Tesla purchase. Hertz said Monday it will purchase 100,000 Tesla Model 3s by the end of 2o22 — by which time they'll comprise 20% of Hertz's fleet —as its first step in a shift toward electric vehicles.

Uber partnership. Two days later, Hertz said it would make up to 50,000 of those Teslas available exclusively to Uber drivers, ensuring it has rental customers for its EVs while also helping Uber achieve its own zero-emissions goals.

Carvana deal. Also on Wednesday, Hertz struck a deal to utilize Carvana's used-car sales website and logistics network to unload 1- to 2-year-old vehicles from its rental fleet.

Between the lines: The rental car industry — which buys and sells millions of vehicles annually — is an important cog in the used car market. 

Historically, Hertz has sold vehicles from its rental fleet through wholesale auctions like Manheim, direct-to-dealer programs and its 68 Hertz Car Sales locations. 

By using Carvana's online marketplace, Hertz can likely fetch higher prices — and better margins — for its cars than selling them at auction. 

Hertz said the partnership with Carvana, which delivers used cars to customers' doorstep, will be important as it embarks on an ambitious effort to transform its fleet.

"We're disrupting ourselves, and as we do that, I think we’ll disrupt the industry," said Fields, who was formerly CEO of Ford Motor. 

How Hertz is fighting to stay relevant

In a rat-a-tat series of moves, Hertz aims to transform its business

Image of a Hertz airport rental counter. 

A Hertz car rental counter in the Miami International Airport. (Photo by Joe Raedle/Getty Images)

Hertz

How Hertz's big Tesla deal could boost EV adoption for everyone

More electric cars on rental lots could give the the EV movement a boost

Image of several white Tesla Model 3 cars parked under a Hertz rental sign. 

Hertz is adding 100,000 Teslas to its rental fleet in a big push toward electrification. Photo: Hertz

Tesla

Electric vehicles

Axios Closer

Chip shortages could be viewed as a blessing for AutoNation at this point.

Driving the news: The car chain reported its sixth-consecutive quarterly earnings record on Thursday. That's thanks to higher consumer prices driven by production constraints. 

Why it matters: Demand for cars continues to eclipse supply, creating more room for AutoNation and other dealers to raise prices and lift profits.

By the numbers: September month-end inventory was about 5,000, less than a 10th of 2019 levels (56,000). 

Same-store gross revenue rose 18% year over year and over 2019, while same-store gross profit rose 29% over 2020 — and a whopping and 45% over 2019.

Yes, but: Used car sales did the heavy lifting — same-store used car sales grew 20% compared to 2020 and 23% versus 2019. New car sales fell 11% from a year earlier and fell 20% from 2019.

On the flip side, for consumers selling or trading in cars, the price appreciation is a windfall, Mike Jackson, AutoNation CEO, said on the earnings call Thursday. 

Go deeper: Used car prices are increasing again

Rising car prices fuel AutoNation's great year

Car demand continues to eclipse supply, creating more room for AutoNation to raise prices and lift profits.

Gif of the price of a used car skyrocketing.

An illustration of a price sticker on a used car.

This week, I spent two glorious fall days evaluating dozens of cars, trucks and SUVs on the roads near Ann Arbor, Michigan, to determine the best of the best. 

Why it matters: The annual comparison drive brings together 50 professional automotive journalists from the U.S. and Canada who are jurors for the independent North American Car, Truck and Utility Vehicle of the Year awards.

I test drive new cars all year long, but the opportunity to compare vehicles back to back, on the same routes — and to share impressions with my fellow jurors — is invaluable. 

It's also a great opportunity to talk to the engineers who designed them, to learn more about what makes each model unique. 

How it works: There are three rounds of voting to winnow down the list of new or substantially changed vehicles each year.

 This week we compared the 23 semifinalists  — eight cars, six trucks and nine utility vehicles (many with multiple powertrains or trim levels) — to pick the finalists. These will be announced Nov. 17 at Automobility LA, the preview event for the Los Angeles Auto Show.  

Winners in each category will be announced in January.  

I'm still weighing my picks, but here are some key takeaways after two days of comparison driving: 

Touchscreens are getting bigger and more distracting.

Knobs are actually useful — please put them back! 

Battery electric models are becoming mainstream.

Assisted driving systems are getting more intuitive. 

Luxury models are really just like your family room on wheels. 

I'll leave you with two surprise contenders from the week: 

Rivian's R1T electric pickup truck. At $73,000, the first vehicle from the EV startup surprised many journalists for its quality and attention to detail. It's still early, though, and the question is whether this newcomer can master mass production.

Ford's Maverick hybrid pickup. There's a ton of value in this little pickup, which starts under $20,000 and gets 42 miles per gallon in city driving. It's the answer for climate-conscious drivers on a budget who want a truck but have been priced out of the market. 

The catch: Only one can be truck of the year. 

What we're driving: the year's best vehicles

Rivian's R1T and Ford Maverick pickup trucks are among the surprising contenders

Image of Axios' Joann Muller in the driver's seat of the Hyundai Ionic 5 battery-electric vehicle

Joann Muller in the battery-electric Hyundai Ionic 5, which has a futuristic interior. Photo: Miles Johnson for Axios

Ford Motor Company

Carmakers keep testing the limit of what people will pay for an automobile packed with luxury, high-tech features. Consider the $110,000 Jeep Grand Wagoneer I drove recently.

This is the largest, fanciest Jeep ever, with a spectacular interior bathed in dark walnut and supple leather that's outfitted with every tech gizmo you could want. 

It's hard to imagine off-roading in this luxury yacht — though it has a 10-inch ground clearance and can ford two feet of water. 

But that's not the point: this SUV is about exploring the reaches of American opulence. 

The big picture: The Stellantis-owned brand known for its iconic and rugged Jeep Wrangler has already mined the low end of the SUV market with the Cherokee, Compass and Renegade. So now it's pushing the other end of the spectrum, taking on premium full-size SUVs like the Cadillac Escalade and Lincoln Navigator. 

Details: The stately, upright Grand Wagoneer is massive and hard to maneuver — though the 360-degree, bird's-eye camera helps — yet it's still surprisingly refined and comfortable on the highway. 

It's powered by a 6.4-liter V-8 engine which gets an EPA-rated 13/18 mpg city/highway.

It comes in five trim levels, ranging from about $90,000 to $110,000. (A slightly less grand model — the similarly sized Jeep Wagoneer — starts around $69,000.)

There are screens everywhere — including a 10-inch front passenger screen that has a special privacy filter to prevent distraction for the driver.

Second-row passengers have a 10-inch touchscreen between the captain's chairs, and individual screens mounted on the seatbacks in front of them.

Are we there yet? The Grand Wagoneer and Wagoneer are the first in the industry to come with Amazon Fire TV for Auto, which lets passengers stream content from Amazon Prime, Netflix, Hulu and YouTube, among others.

When you sync the system to an existing Amazon account, you can even pause programming in your home and resume watching in the car.

A fun feature lets kids track the trip's progress, and the time to destination, just as airline passengers can. 

There's also a rear-seat monitoring system that lets drivers see passengers seated behind them on a video feed.

There are some surprises too, like an optional cooler in the front center console or a touchpad-controlled safe to stow valuables under the split front armrest.

The bottom line: You have to wonder if it's worth spending $110,000 on a Jeep, but if you've got the money, the Grand Wagoneer won't leave you asking for anything more. 

What we're driving: The $110,000 Jeep Grand Wagoneer

It's the fanciest Jeep ever, with a spectacular interior and every tech gizmo you could want.

Luxurious interior of 2022 Jeep Grand Wagoneer, as shown from above. 

The interior of the 2022 Jeep Grand Wagoneer. Photo: Stellantis

Automobiles

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

A federal grand jury on Thursday indicted a former top Boeing pilot who is accused of deceiving the Federal Aviation Administration when the company sought the regulator’s approval for its 737 MAX plane.

Why it matters: A malfunction with the jet's flight control software, known as Maneuvering Characteristics Augmentation System (MCAS), had a hand to play in two crashes that killed 346 people. 

Context: MCAS, which automatically pushes the plane's nose downward, appeared to activate based on faulty readings from a flight sensor.

Worth noting: Many 737 MAX pilots were unaware the MCAS system existed.

Driving the news: Mark A. Forkner faces charges for allegedly deceiving the FAA during the agency’s evaluation and certification of Boeing’s 737 MAX plane. 

Forkner is accused of giving the FAA "materially false, inaccurate, and incomplete information" about MCAS, and "scheming to defraud Boeing’s U.S.‑based airline customers to obtain tens of millions of dollars for Boeing," according to the Justice Department.

What they're saying: "In doing so, he deprived airlines and pilots from knowing crucial information about an important part of the airplane’s flight controls," Kenneth A. Polite Jr., assistant attorney general of the DOJ’s Criminal Division, said in a statement. 

"Regulators like the FAA serve a vital function to ensure the safety of the flying public. To anyone contemplating criminally impeding a regulator’s function, this indictment makes clear that the Justice Department will pursue the facts and hold you accountable."

Former top Boeing pilot indicted for "scheming to defraud" airline customers

Mark A. Forkner allegedly deceived the FAA about the Boeing 737 MAX plane software, which contributed to two fatal crashes.

Photo of grounded planes lined up and waiting on the ground

Boeing 737 MAX airplanes are seen parked on Boeing property on Aug. 13, 2019, following two fatal jetliner crashes. Photo: David Ryder via Getty Images

Boeing 737 MAX

President Biden has made the COVID-19 crisis and a post-Trump return to national unity and traditional democratic ideals his top priorities. From vaccinations to stimulus to schools, Biden is seeking bipartisan compromise while showing a willingness to use executive authority and bare Democratic majorities in the U.S. House and Senate to implement his policies. Republican leaders are navigating deep party divisions over if and how to move beyond former President Trump.

Politics & Policy

Delta Air Lines’ biggest concern for the fourth quarter isn’t “the variant” — as CEO Ed Bastian refers to it — it’s fuel costs. 

The big picture: Warnings like Delta's are a natural result of the global fuel chaos.

Driving the news: Delta reported earnings Wednesday, booking its first quarterly profit (without federal aid) since the start of the pandemic. 

The company has a number of tailwinds. For one, bookings have increased — including for business travel — since COVID cases started receding last month. 

Overall revenue is expected to hit 75% of pre-pandemic levels by the end of the year, from just 25% at the start (and that’s without most international travel). 

But, but, but: Just how much the cost of jet fuel rises, and how long it stays there, will determine whether the airline turns a profit in Q4, Bastian told CNBC. 

Fuel is Delta’s second-largest individual cost, after labor. “It's up 60% this year, and almost 20% just in the last month or so,” he said. 

The bottom line: Higher energy costs are likely to show up as risk factors in more companies' Q3 earnings comments.

Go deeper: Southwest, American Airlines to require workers to be vaccinated despite Texas ban

Delta Air Lines CEO warns fuel costs could dig into profits

Warnings like Delta's are a natural result of the global fuel chaos.

 Photo: Nicolas Economou via Getty Images 

Delta Air Lines

Technology can be a big seller in new cars, but it turns out that many digital features go unused — assuming owners even know their car has them. 

Why it matters: High-tech features are driving up vehicle prices. But if consumers don't use them — or are frustrated because the stuff doesn't work properly — then both automakers and car buyers are wasting their money. 

Driving the news: For more than 1 in 3 advanced technologies, most owners didn't even use the feature during the first three months of ownership, a J.D. Power tech study found.

Usually, owners say it's because they don't need the feature, but sometimes it's because they don't know about it or find it difficult to use. 

BMW's gesture control technology is a great example. It's supposed to let you wiggle a finger or wave your hand to perform tasks like adjusting the radio volume or answering a call — as opposed to touching a screen or button.

But the tech had the lowest overall satisfaction score in J.D. Power's annual U.S. Tech Experience Index for the second year in a row, with owners reporting 41 problems — meaning complaints — per 100 vehicles.

My thought bubble: I drove a BMW X6 last year that had gesture control as part of a $2,300 Premium package. I concur with BMW owners. It was easier to just use the buttons. 

Other built-in technologies often go unused, despite big investments by automakers to add them. Some examples:

Digital marketplace: General Motors was the first to equip millions of cars with an in-car commerce platform called Marketplace that lets you order food, make restaurant and hotel reservations, and find gas stations from your dashboard. 

But 61% of owners say they've never used their car's digital marketplace, and 51% said they don't need it. 

Driver/passenger communications: Honda, Hyundai and Toyota are among carmakers that let drivers talk more easily with rear-seat occupants via a microphone or camera.

52% say they've never used the system, and 40% say they don't need it. (Who needs a mic when you can just turn around and yell at your kids?)

Between the lines: Consumers are more likely to use emerging technology if the car dealer does a good job of demonstrating how it works, J.D. Power found.

But a lot of car salespeople aren't fully trained to explain all the features of the cars they sell — and often buyers don't ask, aren't interested, or can't take it all in. 

Some dealers encourage buyers to schedule a follow-up visit to the dealership for a refresher. 

When a buyer does get a lesson from their dealer about how to use an advanced feature, they use it more, the study found.

Examples of these features include "safe exit assist technology" — which warns parked drivers to wait for traffic before opening the door — and trailer assistance technology, which helps drivers maneuver a boat or RV, for example.

Yes, but: Owners are more than twice as likely to learn about such technology from an outside source (71%) than from a dealer (30%), the study found.

What car owners love: cameras, cameras and more cameras. 

The top-rated technologies all provide an extra set of eyes: backup cameras with trajectory guidance, rear-view mirror cameras that enhance visibility, and 360-degree ground view cameras.  

Electric vehicle owners also love one-pedal driving technology — which allows a driver to lift their foot off the accelerator to slow or stop without having to brake. 

The bottom line: In-car technology has to be simple to use — and well-explained to the driver ahead of time — or it's not worth the money.

Car owners pay dearly for tech they don't use

Gesture controls and in-car microphones are a waste of money for many buyers

Sections

Axios Local

Axios gets you smarter, faster with news & information that matters.

About

Subscribe

All Transportation stories