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Supply Chain by the Numbers

- April 23, 2015 -

  Supply Chain by the Numbers for Week of April 23, 2015

Caterpillar Predicts 2015 Global GDP Growth; Are Printable RFID Tags Finally Coming? Werner Says Length of Haul Declining; Union Pacific Keeps Profit Margins High



That's what equipment giant Caterpillar is projecting for global GDP growth this year, in its recently released 2015 outlook document. That would actually be up a tic from the 2.6% increase it says we saw in 2014, but is an important percentage point below the 3.5% global economic growth the IMF is projecting for 2015 versus 3.4% for last year. The reasons for the differences between CAT and the IMF aren't clear. Perhaps surprisingly, Caterpillar expects that this modest total growth will mostly come from developed countries, and that economies in developing countries will, overall, grow at a rate slightly below their growth rate in 2014, probably due to the collapse of global commodity prices.



0.1 Cents

About what it would cost to put a printed RFID tag on a consumer product - if the technology works. That's a level that could compete with the basically free GTIN (formerly the UPC) code used in retail now, where even the cost of a one cent RFID tag is unaffordable, and we are nowhere near that level currently. While firms have been trying to develop such printable and/or chipless RFID tags for years, researchers at Monash University in Australia claimed something of a breakthrough this week, saying they have developed fully printable tags that will work on water bottles and soft drinks cans. Until now, this hasn't been possible because the metal and liquids interfere with the RFID signal. "The fact that chipless tags be printed directly on to products and packaging means they are far more reliable, smaller and cost effective than any other barcoding system," Dr. Nemai Karmakar of Monash says. Is it real? We hope to let you know soon.


The average length of haul has fallen to a little over 500 miles, from 700-800 a few years ago at truckload carrier Werner. That according to company president Derek Leathers last week at an executive panel discussion at the NASSTRAC annual conference last week in Orlando. The trend is being driver by shippers interested in positioning inventory closer to customers, especially in the eCommerce arena. This trend has many implications, including the return a carrier gets on its investment in a truck, how much a driver is paid on a daily basis, and more, so this is a big deal.



That was rail carrier Union Pacific net income as a percent of revenues in Q1, the company recently announced in its Q1 earnings report. That is an impressive number, far higher than most companies can achieve, and coming even in a somewhat lackluster Q1 environment, where volumes were down 2%. By way or comparison, Procter & Gamble profit was equal to just 11.8% in the latest quarter. It wasn't that many years ago that the rail industry struggled to make profits. Union Pacific by the way was able to improve its operating ratio - operating expense divided by operating revenue - down to 64.8%, a decrease of 2.3 percentage points from Q1 2014.

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