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Supply Chain by the Numbers

- Sept. 3, 2015 -

  Supply Chain by the Numbers for Week of Sept. 3, 2015

US Trade Deficit Rising Again, as China Exports Surge; US Steel Makers May Take Tough Stance on New Labor Contract; US Manufacturing Growth Positive but Slowing; 10 More Mega-Mega Ships Coming


$301 Billion

That was the level of the US trade deficit in goods in the first half of the year, up 19% from the $253 billion seen in the first half of 2014. Meanwhile, despite supposed economic troubles, China's trade surplus in goods was an incredible $486 billion, up 14% from the same period last year. The reshoring phenomenon, to the extent it ever really existed, would seem to be fading. Interestingly, exports in the 1H in China were actually only up 1%, but its imports were down 8%, a trend likely to increase with the recent 3% or so devaluation of the Yuan currency. According to the analysts at MAPI - The Manufacturing Alliance, the $48 billion US deficit increase in the first half of the year equates to a loss of 300,000 trade-related American manufacturing jobs, and the deficit is on track for a loss of 500,000 or more jobs for the calendar year. This is the sixth consecutive year of soaring trade deficits and very large job losses, which from 2009 to 2015 will total 2.5 million, or 25% of the sector labor force.




That's how much steel giant ArcelorMittal is asking union workers with family coverage to make in monthly contribution towards health care costs , up from the zero contribution workers make today, in a new labor contract currently being negotiated. The old one expired this week. US Steel is taking a similar stance, as the steel makers seem to be taking a hard line in the face of a lousy market. Steel prices are down 20% since the  beginning of the year, and steel companies have been laying off some workers and suffering quarterly losses. "We cannot base our 2015 contract on a hope that a return to a new steel and commodities boom is ahead," said Bill Steers, a spokesman for ArcelorMittal last week. So, with givebacks on their mind, the steel makers could play hard ball - and it appears the union will hadly take it lying down. Rallies were held at US steel plants this week rallies to "show management that we’re strong and united and ready to do whatever it takes to win a fair contract,” the union said.


That was the level of the US Purchasing Managers Index for August, as released this week as always by the Institute for Supply Management. That makes it the 32nd consecutive month of US manufacturing growth- a score above 50 - but the rate of expansion continues to trend down, certainly a sign for some modes economic concern. The August score was 1.6 percentage points below the level seen in July, which in turn was down a bit from June. The PMI has certainly settled in to a lower band of late, coming in between this month's 51.1 and 53.5, the level reached in June, over the past six months. By contrast, the PMI was over 55 for the last four months of 2014. Also not good news: the New Orders Index registered 51.7 percent, a decrease of 4.8 percentage points from the reading of 56.5 percent in July. New orders is a strong indicator of future PMI performance.



That's the number of new megaships capable of carRying about 20,000 twent-foot equivalent units (TEU), that China Shipping Container Lines Co.  (CSCL) is looking to acquire, according to reports this week from the Wall Street Journal. Total cost will be around $1.5 billion for the 10 ships, will be close to the largest ships ever built when they hit the water. The move in part will be to fulfill capacity commitments in CSCL's Ocean Three alliance with France’s CMA CGM SA and the United Arab Emirates' United Arab Shipping Co., but of course will simply add to the capacity glut seen and getting worse in most global container shipping lanes - good news for shippers, as rates continue to stay very low. The order, which is to be announced by the end of the year, would add to an estimated 30% excess capacity in the water between Asia and Europe. The glut has led to falling freight rates that often do not even cover the fuel cost of vessels. But the ocean container lines keep adding on, hoping to eventually benefit from the lower operating costs of the megaships per container.

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