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Supply Chain by the Numbers
   
 

- May 18, 2017 -

   
  Supply Chain by the Numbers for Week of May 18, 2017
   
 

Congestion Costs US Carriers and Shippers Big Bucks; First Autonomous Container Ship Said to be Ready to Sail Soon; US Manufacturing Output Starting to Edge Up; Rail Carriers Once Again have Strong Profits

   
 
 
 

$63.4 Billion

That is how much traffic congestion added to the operational costs of the trucking industry in 2015, according to the American Transportation Research Institute's 2017 Cost of Congestion update released this week. This number represents a significant jump from ATRI's 2016 report, which quantified added operational costs at $49.6 billion in 2014. In 2015, the trucking industry experienced more than 996 million hours of delays on the national highway system, up from 728 million hours the year before. To put it in perspective, this lost productivity is equivalent to 362,243 truck drivers sitting idle for an entire working year, according to ATRI. As much as 91% of congestion is in urban areas, with that issue made worse by increased ecommerce, which translates into more trucks on roads in urban areas. Urban congestion made up 76% of the $13.9 billion increase in congestion costs from 2014-2015. In the end of course, those higher transportation costs are not borne just by carriers but also shippers and in the end consumers as well. "We are getting to a point where there is high consumer demand,” said Rebecca Brewster, president and chief operating officer of ATRI. “When the infrastructure can't handle the increased traffic, we have the situation that we have now."
 
 


 
 
 

40,000

That is the number of current truck deliveries that Swedish chemical company Yara says will be taken off the road when it launches what promises to be the first autonomous container ship. What's more, the ship will be battery powered, with zero C02 emissions. The animations of the ship show a much smaller vessel than today's large containerships, and it will travel a relatively short distance from northern to southern Sweden carrying fertilizer. Still, the initiative is impressive. The company developed the Yara Birkeland in partnership with technology company Kongsberg, which is responsible for development and delivery of all the key enabling technologies, including the sensors and integration required for remote and autonomous operations, in addition to the electric drive, battery and propulsion control systems. The new ship is expected to be released as a manned ship next year before moving to remote operation (controlled by a human on land) a year later, then full autonomous automation in 2020. "With this new autonomous battery-driven container vessel we move transport from road to sea and thereby reduce noise and dust emissions, improve the safety of local roads, and reduce NOx and CO2 emissions," says Svein Tore Holsether, CEO of YARA.

 
 
 
 
 

103.8

That was the US manufacturing output index in April, as announced this week by the Federal Reserve Bank. That is up a full percentage point from March, in the sharpest increase in many months, and putting the index at its highest level since - get this - July of 2008. That is the good news. The not good news is that current US manufacturing output is still well below pre-Great Recession peaks, with the index for example reaching 110 in December of 2007. What's more, at 103.8, that means output is up just 3.8% versus baseline year 2012 levels, so that average annual growth since then has been well under 1%. However, this latest data is positive, and perhaps an indicator of a strengthening US manufacturing sector. Manufacturing capacity utilization was also up in the month, to 75.9% from 75.2% in March.

 
 
 
 

18.0%

That was the yet again impressive net profit margin (net income as a percent of revenues) in the US rail sector in Q1, up from 17.5% in Q1 2016, as reported in our quarterly reviews of results and trends in rail and other freight modes that are being published over three weeks. The rail carriers broke a string of several very soft quarters in terms of volumes (even though profits had remained fairly strong) in Q1, led in part by a surprising resurgence in coal shipments, up in double digit percentages for several carriers after strong declines most quarters recently. To get a sense of that profit margin, consider that in Q1 consumer products company Colgate-Palmolive came in at 15.1%, Walmart at 2.9%, and Nike at 13.5%. After years of being highly unprofitable, rail carriers are now where the money is. The big rail news in the quarter was Hunter Harrison taking over as CEO of CSX, after having previously turned around Canadian Pacific in a big way. Harrison says key will be implementing what he calls Precision Scheduled Railroading - more on that soon.

 
 
 
 
 
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