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Supply Chain by the Numbers
   
 

- Oct. 21, 2016 -

   
  Supply Chain by the Numbers for Week of Oct. 21, 2016
   
 

Amazon's On-Line Share is Even Bigger than We Thought; US Truckload and Intermodal Rates Down Yet Again; Container Shipping Industry May have Hit Bottom; Drones Take Yard Inventories in Minutes

   
 
 
 

30%

That's the share of US ecommerce business that may be flowing through Amazon, according to new estimates from the investment analysts at Piper Jaffray. That would be almost double the 15% share that most analysts have calculated, based on Amazon's reported sales numbers and Dept. of Commerce data on on-line sales. But those Amazon sales numbers do not include the retail sales value of items moving through Amazon's marketplace services, in which consumers buy products on Amazon's site from third-party retailers, for which Amazon makes a small commission, generally about 10%. So the total value of merchandise purchased on Amazon's site in the US could be as much as $125 billion already. An article in the USA Today newspaper says some 49% of total sales through Amazon.com come from such third-party marketplace vendors. The simple question: can Amazon be stopped?

 
 


 
 
 

$143 Billion

That's how much revenue the global container shipping sector is likely to achieve in 2016, according to new estimates from the analysts at Drewry Shipping. That may sound like a lot - except that in 2012, industry revenues were $218 billion, or 52% more. That drop comes as volumes have basically flatlined and rates have fallen precipitously. Drewry estimates the industry as a whole will lose about $5 billion in 2016, and of course this disastrous financial environment led to the recent bankruptcy of South Korea's Hanjin Shipping, causing chaos across the globe as hundreds of thousands of containers were stuck at sea. Drewry sees better news for carriers next year, with total sector profits estimated at a modest $2.5 billion on small gains in volumes. But expect more mergers and perhaps other bankruptcies, Drewry says, noting that "While average freight rates are expected to improve next year, this will follow several years of negative returns and will still leave pricing well below the average for 2015," which in turn was below previous years.
 
 
 
 
 
3.5%

That was the level of year-over-year decrease in US truckload rates in September, according to the just released Cass Linehaul Price Index for the month. That makes it seven consecutive months of year-over-year rate declines, as a weak freight environment continues to take its toll on carriers. Cass also cites carrier bankruptcies at historic lows, truck counts up by single digit percentages, and the relaxation of the 34-hour restart rule as contributing to the continued shift in the supply-demand balance in shippers' favor. The last time the market saw seven months or more of rate declines was in the recession year of 2009. Meanwhile, the Cass Intermodal Price Index fell in September for an amazing 21st consecutive month.

 
 
 
 

30

That's about how long it takes to execute a complete inventory of what trailers are stored in a large outdoor yard using drone technology and RFID tags on trailers. That according to Matt Yearling, CEO of PINC Systems, during a presentation at the MHI annual conference this week in Tucson, AZ, noting such drones can fly in crosswinds at some 40 miles per hour. While such a drone-based system for yard management generally only makes sense for large yards with densely stored trailers, there are many other distribution center-oriented applications that can benefit from drone technology, Yearling said. That includes taking physical inventories in large outdoor warehouse areas ("lay down yards"), and taking physical inventories inside the DC, an application Walmart has said it is testing. In that app, a drone flies the aisles (usually during off-shifts), using imaging systems to read location labels and license plate bar codes on stored pallets. This takes just a fraction of the time it does to use humans to take such inventories, allowing some companies to execute the process every day, Yearling noted. He added that 100% inventory accuracy can be achieved from the technology n pallet storage areas. However, work still needs to be done on technology to determine the number of cases stored on partial pallets.

 
 
 
 
 
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