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Supply
Chain by the Numbers |
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- May 31, 2019 -
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The Warehouse Robots are Coming Rapidly; Amazon May be Pruning Thousands of Sellers; US Economy May be Slowing; US Freight Rates Heading Down at Last |
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225 |
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That's how many mobile robots efulfillment 3PL Verte is deploying in its new distribution center in McDonough, Georgia when it goes live in a few weeks. The robots are from Singapore-based GreyOrange but made in nearby Alpharetta. Like the mobile robots from Kiva, acquired in 2012 by Amazon and since deployed by the tens of thousands, the "Butlers" move to pick up carts with inventory and take them to stationary workers who pick the required quantities into shipping containers. The robots then either move to another picker or place the inventory cart back into storage. There are 6,000 of the refrigerator-size carts or shelving units lined up in rows 85 deep between the receiving and shipping doors. Verte's founder, Julian Kahlon, thinks others which invested in mobile robots within the last few years should have waited. "Anybody who built five or 10 years ago was too early," he says. Will the robots kill DC jobs? Absolutely, but there are large shortages of warehouse workers. "On the one hand, we can be concerned about the job loss, but on the other hand, many of the jobs are not great jobs," said Nancey Green Leigh, a Georgia Tech professor. |
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That is the expected decline in US truckload rates by year's end, according to the analysts ACT Research, as the fat times for freight haulers seem to be finally ending after about 18 months of substantial rate gains. While the May numbers will be out in a few weeks, April was not a good month for carriers, with truckload spot rates down 16%, according to DAT Solutions, and the Cass Linehaul Index, which tracks US per mile truckload rates, down 3.2% in the month. Whether the US-China trade war will further depress freight volumes is one question. Another big one is if the slowdown in freight is as usual a sign of a weakening US economy. However, some experts note that the 2018 freight market set an unusually high bar for growth in 2019. Compared with freight volumes and prices in 2017, "the 2019 data isn't nearly as bad as people are making it out to be," Cowen & Co. analyst Jason Seidl said in a May 22 research note. |
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1% |
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That is the new forecast for real US GDP growth in Q2 from the economists at JP Morgan. That's way down from their prior forecast of 2.25% and much below the latest estimate of 3.1% growth in the first quarter. Somewhat better is the estimate Atlanta Fed's GDP Now tracker, which see GDP growth for Q2 at a still weak 1.3%. The JP Morgan economists said the key risks they see for US growth include the uncertainty from the trade war, impacting business sentiment, and global economic slowing. The downgrade also comes after weak durable goods sales data for April, and last week's mediocre April retail sales report. Meanwhile, container shipping giant Maersk Line warned investors that trade tensions and slowing economic growth constitute "considerable uncertainties" for its results for the rest of the year – though it still expects overall container volumes to grow, if slowly, by 1%.
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That apparently is the cut off line for sales on Amazon.com that will determine if a given vendor's products are actually bought and resold by Amazon – or must be pushed through its Marketplace platform instead. The stakes are huge – tens of thousands of vendors that now sell to Amazon in bulk and ship to Amazon DCs would now have to sell one consumer at a time. According to Bloomberg, which broke the story, Amazon denies the plans, with a spokesperson saying that "any speculation of a large-scale reduction of vendors is incorrect." But Bloomberg notes that Amazon didn't renegotiate annual terms with many smaller vendors, a usual springtime ritual. It adds that the vendor purge is the latest step in Amazon's "hands off the wheel" initiative, an effort to keep expanding product selection on its website without spending more money on managers to oversee it all. The project entails automating tasks such as forecasting demand and negotiating prices which were predominantly done by Amazon employees. It also involves pushing more Amazon suppliers to sell goods themselves so Amazon doesn't have to pay people to do it for them – or hold the inventory.
