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Supply Chain by the Numbers

- Sept. 18, 2015 -

  Supply Chain by the Numbers for Week of Sept. 18, 2015

Cross Border eCommerce Volumes Expected to Surge; UAW Seems Poised for Modest Contractual Win; US Truckload Rates Still Rising, but at Slowing Pace; Toys R Us Lowers Free Shipping Threshold


$1 Trillion



That will be the size of the business-to-consumer cross-border ecommerce marketsearch in 2020, according to new reseach from Accenture and AliResearch (Chinese ecommerce giant Alibaba's research arm), up from $230 billion in 2014. The practical implication: consumers in US, Europe and other markets increasingly will be able to order direct from Chinese or other low cost country manufacturers. In the related development, Cainiao, the logistics arm of Chinese ecommerce giant Alibaba, said this week that it has signed a memorandum of understanding with the United States Postal Service.The agreement is designed to "develop new international shipping solutions, and enhance the logistics service experience for both sellers and buyers involved in cross-border ecommerce," Cainiao said in a statement. The Cainiao statement also said that the USPS deal will not only speed delivery from China into the US, but also will "expand [Alibaba's] delivery networks worldwide, especially in South America."




That's the year over year increase in US truckload rates in August, according to the latest release of the Cass Linehaul Index, data produced based on some $26 billion in freight bills paid annually by Cass Information Systems. That follows year over year increases of 3.6% in both June and July. Those are not inconsequential increases, but nevertheless indicative of a decelerating trend.  Year over year rates were up at least 5% - and as much as 7.9% - every month from March 2014 through March 2015. Avondale Partners, a research firm that works with Cass on the monthly report, has also lowered its prediction for linehaul rate increases for 2015 "from a range of 4% to 9% to a range of 3.5% to 5.5%."


That is said to be about the new wage auto workers can reach over the next few years under a new tentative contact between the UAW and Fiat Chrysler, in an agreement that in general will result in similar pacts with Ford and GM, though UAW chief Dennis Williams said the union may ask for more from the other more profitable auto makers. That would  be up from the $19.28 per hour max now for workers hired in 2007 or later, versus a $28.50 max for more tenured workers. In what will be seen as a major win for the union, the agreement is also said to phase out the current two-tiered wage system that was also forged in the 2007 agreement, in which newer workers start at about $15.0 per hour, though details of this phase out are still fuzzy. The two-tiered wage system was only accepted in 2007 when the automakers were all near or at the point of bankruptcy, while most are solidly profitable currently. 45% of Fiat Chrysler's US. hourly workers were hired at the lower rate compared to about 20% of Ford and GM's hourly employees.



That's the new minimum on-line cart order from retailer Toys R Us to receive free shipping, down from $49.00 previously. "Based on current insights and a comprehensive review of the competitive landscape, we've decided to drastically lower our free shipping minimum, just in time for the holiday season," said Matt Blonder, vice president for U.S. eCommerce at the company. While that may generate more business for Toys R Us, obviously at the lower end of that range, making profits from a $20 order with free shipping will not be easy, as shipping and fulfillment costs continue to eat away from online channel profitability for most etailers. A recent study of 1,400 online shoppers by Walker Sands Communications found that free shipping was the feature most likely to get people to shop online, followed by free returns and one-day shipping.

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