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Supply Chain by the Numbers

April 25, 2014

  Supply Chain by the Numbers for Week of April 25, 2014

Massive Strike at China Shoe Factory Runs On; Diesel Prices have Lost Volatility; Extended Payment Terms Putting Pressure on Suppliers; US Logistics Infrastructure Woes Likely Coming



The surprisingly tight band that weekly on the road US diesel fuel prices have averaged between April 25, 2011 and the present, according to US Energy Information Administration data. Current prices of about $3.97 per gallon are in fact little changed over that three-year period, with prices that rose to that $4.09 level in late April 2011 (the peak after the recession) and which have been basically flat ever since. The low end of the range was seen in July 2012. While many may consider current prices high, the volatility has clearly diminished dramatically.





The rise in the dollar value of receivables that US companies are currently "factoring," or selling off at a discount to specialty financial firms, since 2007. Why the sharp increase? While there is no hard data, experts cite the pattern of large companies extending payment terms for suppliers to 90-120 days as a key "factor," as well as the still very hard time smaller companies have securing bank loans. All this is leading to many large companies increasingly lending money to key suppliers for working capital needs or investment opportunities in things like equipment, according to an article this week in the Wall Street Journal.


8 Billion

Number of new tons of freight per year that will be placed into the US market by 2050, according to Peter Rogoff, Undersecretary of Transportation Policy in the US DOT, at last week's NASSTRAC conference in Orlando. That growth in freight volumes will be driven largely by an increase in US population of an amazing 100 million by then versus current levels, Rogoff said, citing US Census Bureau estimates. Will current US logistics infrastructure support such an increase in freight traffic? Not even close.



Approximate number of worker on strike at a massive athletic shoe complex in China, threatening product disruptions for the many of the world's leading brands, including Nike, Adidas, New Balance and more. The workers at Yue Yuen Industrial say the company has underpaid funds for social security and housing fund payments required by Chinese law, and are also demanding a 30% increase in wages, which are as low as $1.67 per hour currently. The action has become one of the largest strikes ever in China's private sector. The labor dynamics in China continue to change rapidly.

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