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Supply Chain by the Numbers

- June 21 , 2012


Supply Chain by the Numbers for Week of June 21, 2012


US Manufacturing Wages; FedEx Sees Changing Global Transport Market; Oil Prices in Freefall; Another Suit Against Rail Carriers Says They Overcharged Billions



Average US manufacturing wages in April, 3.2% below their recent March 2009 peak and back to where they were in 2000, adjusted for inflation, according to the Bureau of Labor Statistics. Experts are saying that flat or lower wages are a key reason why manufacturing appears to be returning to US soil, as labor costs in China are rising rapidly and modestly in Mexico, while still high unemployment among blue collar workers puts strong downward pressure on wages. For example, GE announced plans to move production of electric water heaters to Louisville, Ky., from Mexico after U.S. unions agreed to a $13-an-hour starting wage for new hires, $8 to $10 or more an hour below the previous contract.




Decline in FedEx’s domestic air freight volume in its fourth quarter ending May 31, the company announced this week, as its results and that of the overall economy are starting to diverge, different from the past. International air volumes also fell 3%. Legendary CEO Fred Smith said there are fundamental changes in the global freight business occurring, including companies being more willing to go slow with ocean shipping versus air. Smith also said more companies are looking for “door to door” services versus “airport to airport.”

$6.4 Billion

Amount the American Chemistry Council says US rail carriers overcharged all shippers for fuel surcharges from 2003 to 2007, relative to a new lawsuit by eight shippers against four rail carriers -BNSF, Union Pacific, Norfolk Southern Railway and CSX – over the matter. The eight shippers alleging collusion by the rail carriers on fuel surcharges are Olin, US Magnesium, Dust Pro, Carter Distribution, Dakota Granite, Donnelly Commodities, Nyrstar Taylor Chemicals and Strates Shows – none except Olin a major name, but the lawyers are trying for class action status, which would pull virtually all rail shippers into potential remedies. There have been several related suits in the past that have not gotten very far – but we’ll keep following this one too.


Where the price per barrel for West Texas Crude ended on Thursday afternoon, continuing the incredible fall from more than $100 less than two months ago. A rising dollar combined with concerns about the global economy generally and a slowdown in China specifically are behind the sharp decrease, as the often criticized “speculator” influence is now acting in reverse to drive prices down more rapidly than supply and demand would probably dictate. Diesel prices have declined less rapidly, but should be seen at the pump soon.

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