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Supply Chain by the Numbers

- Oct.23, 2015 -

  Supply Chain by the Numbers for Week of Oct. 23, 2015

Amazon Keeps Building New Logistics Facilities; OPEC Strategy Hurting US Oil Producers; 18 Year Olds Should Drive Trucks on Federal Highways, ATA Says; Walmart Pulls Back on Made in USA Labeling



That was the approximate number of items that consumer group Truth in Advertising claimed were falsely labeled as Made in USA on Walmart's web site in June, ultimately leading to a Federal Trade Commission (FTC) investigation. The FTC announced it was dropping the probe this week, but only after it said Walmart had removed the Made in USA image from its web site, and is revamping its label on physical merchandise sold in stores to reflect the percentage of US made content and offshored content – however you calculate that. Of course, two years ago Walmart announced its Investing in American Jobs Program, which promised to increase the amount of US-made goods by $250 over ten years. But as Walmart is finding out, how Made in the USA is defined can be a real challenge, as there are no clear standards. In California, if one screw in a product comes from offshore, a Made in USA label is not allowed.




That is how much US oil output is down currently in barrels per day from the three decade high of 9.1 million barrels per day seen in June. The US Energy Information Administration is also forecasting an average drop in production by another 390,000 barrel per day in 2016. Why the big decline? An article in Bloomberg Business this week says in short that OPEC's strategy to keeping pumping oil last fall to hurt the huge spike in US oil production from fracking has in fact mostly worked. OPEC's fortunes will improve as the US output declines, with the IEA predicting demand for the group's crude will climb to 31.1 million barrels a day next year from 29.3 million in 2014. But the move to regain market share has been costly to OPEC. The average price of a selection of OPEC's crudes has been about 46% lower this year than in 2014, equivalent to a loss of export earnings of roughly $370 billion – but great for US consumers at the pump.


That's the age at which the American Trucking Associations would like to see truck drivers be able to get behind the wheel on US highways. With the ATA a proponent of the change for a long time, at an ATA convention this week its safety policy chief Rob Abbott identified lowering the minimum age for interstate truck-drivers from 21 to 18 as a key priority for the group's lobbying efforts. There are in fact two bills in Congress right now that propose pilot programs that would allow age 18-plus drivers on the road, a plan trucking companies say would bring more drivers into the business in the continued face of severe driver shortages. Highway safety advocates fiercely oppose the programs, citing higher risks of fatal accidents for young drivers, and one says the programs would make "the motoring public into guinea pigs in a very dangerous experiment." It should be noted that 48 states already allow younger commercial drivers to operate within their boundaries.



That's how many new logistics facilities that has added globally in the past 12 months, according to new data by the e-commerce software maker ChannelAdvisor this week. That is up 14% from last year, bringing the total to an amazing 173 facilities worldwide. Of the 173 facilities, 104 are in the North America region, with the rest spread across Europe and Asia. The 173 logistics facilities include the large fulfillment centers; sortation centers, where packages get presorted for shipping; and Prime Now hubs, generally in urban areas to store one-hour delivery items. Of course, this continued massive build out is a key reason that Amazon just can't seem to turn a profit despite very high sales growth. Meanwhile, a new report from the analyst at Baird say there are growing signs Amazon will do more of its own deliveries and cut out UPS and FedEx, even offering a name suggestion, Amazon Transportation and Logistics (ATL).

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