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Supply Chain by the Numbers

- Jan. 14, 2016 -

  Supply Chain by the Numbers for Week of January 14, 2016

Amazon Looks Increasingly Serious about Flying Own Air Cargo Planes; US Frackers in Deep Financial Troubles; Supply Chain Demography is Destiny; Dematic May Move Factory South of the Border



That's the number of air cargo flights per week that is continuing to fly in Europe even after the Christmas season rush, with the flights linking Poland, the UK, and Germany. The flights are being carried out by a single B737 chartered on behalf of Amazon by DB Schenker from ASL Aviation France, according to a report this week from the UK's Lloyd's Loading List web site. As we reported earlier, Amazon is also said to be negotiating the possible lease of 20 Boeing 767 jets for its own air delivery service in the US, according to a report in The Seattle Times, with a decision likely by the end of January. Amazon is also thought to be behind the 4-5 air cargo flights per week now operated by a third party carrier out of the former DHL/Airborne Express air cargo hub in Wilmington, OH. Will Amazon try to reduce its dependence on UPS/FedEx, and maybe even directly compete for business with these parcel giants for shipments by other companies? It increasingly looks like Yes.




That is the number of current US shale oil producers that may go bankrupt in 2016, according to a report this week on cable television's CNBC. That of course is due to the almost unimaginable collapse of global oil prices, with the price for a barrel of US West Texas Intermediate (WTI) falling briefly below $30 per barrel this week for the first time since 2003. US frackers "need $70 oil to survive," one oil industry expert told CNBC, while others are predicting oil could fall to $20 per barrel or even lower sometime in 2016. Amazing. Of course, surging US oil production in 2014 and 2015 was a key factor in the fall of oil prices starting in the second half of 2014, as the huge increase in output changed global supply and demand dynamics that led to a significant over supply. Will US producers be permanently sidelined, giving market control back to OPEC and leading to high price again? Place your bets.

1.4 Million

That has been the gain in population in the 16 states plus Washington DC defined as the South just between 2014 and 2015, according to new data from the US Census Bureau. The 13 states defined as the West grew by about 866,000 people over the same period. The report says the migration of people in the US from the Northeast and Midwest to these other regions has picked up again after pausing for a bit during and after the Great recession. In comparison, population growth in the Northeast and the Midwest remained sluggish, rising by only about 258,000 residents combined. As they say, "Demography is destiny," and that applies to the supply chain as much as any other area. These changes will also have political implications, in terms of Electoral College votes for US president and the number of Congressional seats per state. Texas is likely to gain three seats, for example, after the 2020 census.



That's the number of manufacturing employees materials handling equipment maker Dematic says are employed at its main North American factory in Grand Rapids, MI that could soon be out of their jobs. That's because manufacturing operations could soon be moved to Mexico, local news sources reported last week. The factory makes conveyor and sortation equipment primarily for distribution center automation. "We are a market leader in our space and to position ourselves and maintain our market leadership, it's important that we always monitor and control our costs," a company spokesperson said. The Grand Rapids plant is unionized as part of the United Auto Workers. Dematic added that it will be entering into discussions with the union that will include "a side-by-side comparison of wages, productivity targets [between Grand Rapids and Mexico], total cost of ownership and all other business model elements." A move to Mexico could actually be concluded by September of this year, Dematic said. "Viva el conveyor."

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