|
|
|
|
|
Supply
Chain by the Numbers |
|
|
|
- Nov. 1, 2019 -
|
|
|
|
|
|
|
|
Amazon Profit Falls on Shipping Investments; Q3 US GDP Lukewarm but Beats Expectations; Renting Mobile Robots for Peak Season Distribution; US Steel Industry Adding too Much Capacity |
|
|
|
|
|
|
24% |
|
That was the growth in revenue for Amazon in Q3, as overall the machine keeps humming along. That took Q3 sales to $70 billion, meaning Q4 revenues will be knocking on the door of $100 billion. Amazon again made money in the quarter, with profits of $2.1 billion, but that was down from $2.9 billion in Q3 2018 and represents just 3% of sales. A key factor in the drop in profits was continued heavy spending to enable its new one-day free shipping service for Prime members announced earlier this year, saying it spent more than it projected in the third quarter on the initiative. Amazon also said it plans to spend around $1.5 billion more on the program in Q4. The profit Amazon did make in Q3 came all from AWS, its cloud-services division. AWS brought in $2.3 billion in income for the quarter – more than the total profit of $2.1 billion, meaning US ecommerce is roughly break even, with international posting a loss.
|
|
|
|
|
|
|
That is the amount of capacity that will be added in the US steel sector over the next 2-3 years – and that is bad news for the industry. The more than 50 projects or restarts of parts of factories behind that capacity addition comes largely as the result of the US tariffs against much imported steel. Add in low interest rates and corporate tax cuts, and US steel companies went on a spending spree that added production capacity to a domestic market that didn't need it. And now steel prices are falling - benchmark steel prices have fallen well below their level before the tariffs took effect and are now about half their peak in July 2018. The industry has responded with production cutbacks even as capacity is being added elsewhere. Overall employment at steel mills is little changed from two years ago. "It's absolutely shocking that we're adding capacity," said Timna Tanners, a steel industry analyst at BofA Merrill Lynch Global Research. Falling demand and higher capacity are a "toxic combination," she said, adding that the industry faces a painful reckoning — a "steel-maggedon." We say the global economy is a tangle web, and predicting all the consequences from changes in policy is virtually impossible. |
|
|
|
|
|
1.9% Million |
|
That is the rate of real US GDP growth in Q3, according to the first estimate from the Commerce Dept. While that is at one level very lukewarm growth, it in fact is being treated as good economic news, as economists polled by Dow Jones had expected on average growth to come in at 1.6%. The 1.9% figure compares to growth of 2.0% in Q2. The US consumer was once again the driver of the decent number, with spending by American households rising at a 2.9% annualized rate. But spending by US business remains weak. Business spend on buildings continuing to decline, dropping 15.3%. Spending on equipment fell 3.8%. "For manufacturers, the biggest challenges remain finding skilled labor and trade uncertainties, which make it difficult to hire and expand business operations," said Chad Moutray, chief economist at the National Association of Manufacturers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|