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Supply Chain by the Numbers

- Oct. 12, 2017 -

  Supply Chain by the Numbers for Week of Oct. 12, 2017

The Marketing World Now Revolves Around Millenials; Walmart Expects On-Line Sales to Soar, Automates Returns; Panama Canal Expansion Seems to be Paying Off; Australian Billionaire Investing Big in US Manufacturing



That is the age that currently comprises the largest "cohort" in the US, numbering some 4.8 million people. That age is followed in population size by ages 25, 27 and 24. This fact, naturally, means such millennials in their mid-20s have become the key target demographic for many companies. There just one problem – this latest generation is very, very different from their parents at the same age. Case in point: Scotts Miracle-Gro is finding that 20-somethings often know little or nothing about gardening, having in many cases not been put to work helping with the vegetable or flower garden the way many of their parents were. They were more likely to be at soccer practice or dance recital instead. So Scotts, Home Depot and other companies are racing to put together classes, on-line videos and other educational tools they hope will bridge the knowledge gap – and lead to more sales of their products to the clueless millennials, according to an article this week in the Wall Street Journal. But a JC Penney executive is quoted as saying of millennials that "They're much more of a 'Do-It-for-Me' type of customer than a 'Do-It-Yourself' customer," which is why Penney's has moved aggressively into home service offerings. With millennials soon moving into their prime spending years, the stakes are high.



That's the growth in container volumes going through the Panama Canal so far this year, the result obviously of the expansion of the Canal that allows much larger ships through it locks. The expanded Canal opened in June of 2016, and allows ships of up to nearly 15,000 TEU to traverse the Canal, up from about 5000 before the expansion – though the existing locks are still in operation. Most of that volume increase comes from container lines moving freight from Asia to US East coast ports through the Canal rather than stopping at West Coast ports and using rail and trucks to get to Eastern destinations. Some lines are also choosing to go the Panama route rather than going through the Suze Canal, which takes about a week longer. Meanwhile, several East Coast ports such as Savannah and Charleston are spending big bucks to deepen waterways to the ports to handle the larger Panamx ships. But the divergence may not be as great as you might think: the Boston Consulting Group estimated in 2015 that the Canal route will take just 10% of container volumes away from West Coast ports.



That is the growth in its on-line sales that Walmart this week said it expects to see in 2018. That likely would far outpace Amazon's growth rate - of late generally in the 20+ percent range – but comes off a much smaller base. Walmart said it expects on-line sales to hit about $11.5 billion for the fiscal year ending January 2018, less than 10% of Amazon's revenue. Still, Walmart appears to be on the move, also announcing this week that it planned to roughly double the number of stores it uses for shipping local on-line grocery orders. On Monday, Walmart said it would speed up the process for in-store returns of items bought on its website to just 30 seconds, using a mobile app – a capability many consumers may find much easier than packing up a product to return to Amazon. It promises to be a real battle royal between Amazon and Walmart – which will be fun to watch, with supply chain at the forefront of the competition.



That's how many additional jobs Australian billionaire Anthony Pratt says will be created in the US over the next 10 years as a result of his planned $2 billion in US manufacturing. Pratt, who is the executive chairman of Visy Industries and Pratt Industries - the world's largest privately owned packaging and paper company - says an improved climate for US manufacturing is a key driver of his bullish bet the sector in the US. In May, Pratt made a commitment to double America's food production industry to $1.8 trillion and in the process create millions of new jobs. Since then, he has opened a multimillion-dollar factory in Texas and currently has another under construction in Stockton, California. Overall he has 68 factories in America and employs 7,000 people in manufacturing. "I think there is actually a lot of on shoring going on, from China back to places like Ohio, of people actually moving their business back from China to America," Pratt said. We hope he is right.

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