Supply Chain by the Numbers for Week of Feb.18, 2016

Supply Chain by the Numbers

- Feb. 18, 2016 -

Google Joins the Fresh Foods Delivery Wars; Container Ship Operators Increasingly Taking the Long Way Around; Euro Workers Say Enough of Low Priced Chinese Steel; Macy's Now "Picking to Last Unit"



$5.00
That's how much Google will be charging for its new same-day delivery service for fresh, perishable groceries in an expansion of its Google Express offering. If you're a member of Google Express ($95.00 annually), that charge will be just $3.00 per delivery. Google has been operating the service for non-fresh food items in many parts of the country, but the food delivery will initially operate just in areas of San Francisco and Los Angeles. As with its regular Express program, Google will pick up food from retail partners, such as Costco and Whole Foods for groceries, rather than maintaining its own warehouses, as Amazon and Fresh Direct do. Customer delivery for food orders will operate with a two-hour time window, versus four hours for non-food items. Also, the minimum amount for an order that contains fresh foods will rise from $15.00 to $35.00. With that $15.00 minimum for non-food orders Google Express actually delivers now for free - a tough way to make any money, though it's not clear the $5.00 fee will much change that dynamic.

5000

That's how many protesters marched through Brussels, Belgium this week. What caused this major political action? A strong push back against what steel workers and exectutives say is blatant dumping by Chinese companies of low priced steel into the European market. The European Commission is scheduled to decide this year whether to grant China "market-economy" status, which would further lower barriers to imports to the region, which Beijing says it deserves 15 years after joining the World Trade Organization. "We export in the long term our jobs and we import our CO2,” said Karl-Ulrich Köhler, chief executive of Tata Steel Europe, Britain's largest steel maker, which has laid off 5000 workers in recent months, blaming low cost Chinese steel exports. The Commission last week opened three anti-dumping investigations into Chinese steel products and imposed new duties for another grade of steel in an attempt to reverse the tide.



15-20%
Perhaps surprisingly, that's how much of Macy's in-store inventory is comprised of "single units" - meaning there is only one of that item in a given store. That according to Peter Longo, president of logistics and operations at Macy's. The related news is that Macy's is now operating under a program it calls "Pick to the Last Unit" (P2LU) for Omnichannel order fulfillment. With its aggressive roll out of item-level RFID tagging over the last couple of years, in parallel with a bold move to do ecommerce fulfillment from about 200 of its physical stores, under the P2LU program Macy's system will allocate such single items for incoming orders. Most retailers wouldn't risk that, fearing that the one item the system shows isn't really there. But with RFID and resulting accuracy, Macy's says it now can confidently allocate those low quantity items, increasing its sales.



$465,000
That's about how much it costs on average in fees for a container ship to pass through the Suez Canal one way on trips from Asia to the East Coast and Northern Europe. We had no idea. That high cost, combined with huge drops in bunker fuel prices, is leading a growing number of container ship carriers to take the long way around the the bottom of Africa on their trips back. It's many more miles that way, of course, but with fuel costs so low, the shipping analysts at Copenhagen-based SeaIntel Maritime Analysis said last week that the net savings from eliminating the canal fee is about $380,000 per voyage. Carriers generally go through the Suez or Panama canals on the cargo-laden headhaul trip because that cuts a week off of transit times, but with the container shipping industry bleeding red ink and seeming shipper acceptance of so-called "slow steaming," SeaIntel says carriers may be looking at the long way around on the Asia to either the US or Europe sailings as well as the return.