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Supply Chain by the Numbers
   
 

- Aug. 23, 2018 -

   
  Supply Chain by the Numbers for Week of Aug. 23, 2018
   
 

 Strange XPO Logistics Dispute in the UK; Brick and Mortar Retail Sales Soaring; the High Price of Chinese Belt and Road on Countries; Long Delays for New Heavy Duty Trucks Orders

   
 
 
 
 

$39 Million

That is about how much XPO Logistics was owed by British department store chain House of Fraser when it went into the equivalent of bankruptcy protection earlier this month. After tha, the iconic chain was sold to British retailer Sports Direct International. Now here comes the weird part. After the bankruptcy filing and sale, XPO stopped processing orders for Fraser at the two UK DCs it operates for the company in the country. As a result of this logistics shutdown, Fraser shuttered its website, canceled consumer orders and said it would refund all on-line purchases that had not been sent. It has been reported that XPO would not accept supplier deliveries or ship orders to stores or on-line customers at the two facilities in the dispute. "The sense is that XPO is holding the company for ransom," one insider told the Wall Street Journal. "It's very much a standoff at the moment." XPO is said to be seeking to recoup about $15.3 million from Sports Direct for services it provided before House of Fraser entered bankruptcy. XPO is working to understand who owns the inventory of goods in the distribution centers, the WSJ also reported, implying that the logistics company might seize the inventory to help settle the debt.



 
 
 
 
 

4.3%

That's by how much same-store sales at department store chain Kohl's would have seen in its Q2 results if it had not moved a promotion into Q1 versus Q2 last year, the company said in its earnings release. Even with the switch on timing of the promotion, same-store sales were up a solid 3.1%, as the good financial times continue for recently beleaguered brick and mortar – yes brick and mortar – retailers. Net income at Kohl's rose 40% to $292 million in Q2. Meanwhile, at TJX, parent of TJ Maxx stores, same store sales were up a whopping 6% in its Q2. CEO Ernie Herrman said foot traffic was up for the 16th consecutive quarter – even in the face of the ecommerce tsunami. Both Kohl's and TJX increased their guidance for the current fiscal year. Last week, Walmart said its quarterly sales rose at the fastest pace in more than a decade, while Home Depot said it is targeting sales growth of about 7% and comparable-store sales growth of about 5.3% for the year. The NRF recently increased its 2018 retail forecast to 4.5% growth, up from 3.8-4.4% previously. Who would have guessed?

 
 
 
 

$60.2 Billion

That is how much Pakistan is paying for the Chinese-Pakistan Economic corridor, a series of transportation infrastructure and energy projects. The pricy initiative has developed under China's ambitious Belt and Road program, under which China aims to build logistics connectivity to Southeast Asia, Europe, Africa, even the Arctic, to spur trade – largely meaning Chinese exports. But while China is financing the cost of the corridor with Pakistan, it is far from a gift. Rather, China is loaning the money to Pakistan, under terms the Wall Street Journal reports is said to guarantee an annual return of 34% to Chinese bond holders. How can we get in on that deal? Some on Pakistan and the IMF fear the crushing debt will put Pakistan under China's thumb, or worse. Last year, Sri Lanka had to cede control of its Gwadar seaport to Chinese creditors after it couldn't repay the $6 billion in loan used to build it.

 
 
 
 
 

9

That's about how many months a carrier or shipper can expect to wait now to receive a new Class 8 truck, about double the normal lead time. North American Truck makers are expected to get orders for about 450,000 large trucks this year, according to ACT Research. That would shatter the existing high of 390,000 trucks ordered in 2004. What's more, the 52,000 trucks ordered in July set a single month record. In an interesting situation, most carriers of course are having trouble finding enough drivers to fill new trucks to meet shipper demand, keeping a lid on capacity that makes it difficult to find someone to move each load. But one way of attracting or retaining drivers in the industry is to offer them spiffy new tractors to drive. The new trucks will also deliver improved gas mileage, a big cost cutter in a period of once again rising oil and diesel prices. So the orders are coming with or without plans to find additional new drivers. But component suppliers can't keep up with the surge, as is occurring in many manufacturing sectors, including truck makers, so the lead times remain extended.

 
 
 
 
 
 
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