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Supply Chain by the Numbers

- Aug. 1, 2013

  Supply Chain by the Numbers for Week of Aug. 1, 2013

Amazon on DC Hiring Binge; US Truckload Carriers Operating Ratios OK in Q2 - but Blown Away by Rail Carriers; US Economy Lukewarm as Usual; the Chinese Dragon Starting to Look Out of Shape



Number of new fulfillment center workers announced this week that it will soon be hiring. Amazon said it is looking to fill those new full-time jobs at 17 of its fulfillment centers across the United States. That's roughly a 25% increase in full-time fulfillment center staff, which currently number more than 20,000 in the country. The move is notable in that Amazon seems largely committed to full-time positions, which also include stock grants it says have added about 9% to DC workers' base pay over the last five years. Amazon will also pre-pay up to 95% of tuition for workers for courses related to in-demand fields, regardless of whether the skills are relevant to a career at Amazon.




Growth in US economy in Q2, according to the first GDP estimate by the Commerce Dept. this week. That is very weak growth, but in this case it was greeted warmly, as expectations had been pushed down of late to estimates of an increase of just 1% or so. But wait - it appears some of that modestly good news comes from pushing some of what was considered Q1 growth into Q2, as the Q1 number was revised down from 1.8% to just 1.1% - very slow growth, and a major drop for a revision. The new normal for the economy continues, it seems clear, unable to get to the higher levels of growth seen in past recoveries.


The drop in China’s export levels in June, the biggest monthly decrease since the financial crisis, according to the government there last week. China’s manufacturing and related export sector continue to be weak, blamed in part on rising wages and currency values, eroding China’s cost advantage. As one example, investment in China from Taiwan declined 17% last year as companies found better bargains in Southeast Asia and in a few cases even at home. There are some interesting dynamics going on here that companies need to stay on top of.



Average operating ratios (operating expense divided by operating income) at the seven publicly traded truckload carriers we follow, up a little from the 87.2% they achieved in Q2 of 2012, according to SCDigest analysis this week. That is an unweighted average, meaning revenue size for each carrier. That is decent but not great performance, as overall net profits were up 6.2% for the group and net income was about 6.8% of revenues, about the same as 2012. By comparison, the ORs for the four publicly traded US rail carriers averaged an amazing 68.4% in Q2 - meaning they make some 21 cents more per dollar of revenue than TL carriers in operations. See Mixed Q2 for US Truckload Carriers, as Evolution Continues for Many.

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