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Supply Chain by the Numbers

- Sept. 24, 2020 -

  Supply Chain by the Numbers for Sept. 24, 2020

Soaring Trade Credit Insurance Rates an Issue; Big Robots Stalking Shelves in Tokyo; US Truck Volumes and Rates Rising; Container Carriers Pressured to End Blank Sailings



That is about how much payments are up year over year from trade credit insurance companies, a huge spike that is leading to rate increases that threaten global trade and the overall economy. Exporters take out insurance to get covered in case customers don't pay, while banks use it to insure trades they are financing. That estimate of the growth in payment outlays by the insurers comes from Kim Sturiano-Cordero, a senior vice president at insurance broker Marsh LLC, as quoted in the Wall Street Journal this week. Payouts are increasing due to economic weakness across the globe, leaving a growing number of companies unable to pay their bills for products they ordered. The situation is sending rates for credit insurance soaring, with Sturiano-Cordero estimating prices have increased between 15% and 30% generally and as much as 60% in some cases. That may be too much for some exporters to swallow, impacting global trade. The metals sector is said to be especially affected, with insurers reluctant to underwrite shipments to troubled buyers in the automotive and aviation industries, major metals users.



That is how many feet tall a Japanese robot that is being used restock shelves at a Tokyo convenience store stands, according to news of the deployment this week. The kangaroo-inspired robot, called Model-T, comes from a company called Telexistence and has been stocking food on shelves at FamilyMart, Japan's second-largest convenience store chain. The plan is to use these robot workers at 20 stores around Tokyo by 2022. The robot is actually connected to a human operator, who is able to manipulate the Model-T's movements remotely using virtual reality. The seven-foot tall Model-T has a wide range of motion, necessary for lifting and moving products, with a lag time of only 50 milliseconds between operator and robot. FamilyMart hopes use of artificial intelligence will eventually eliminate the need for the human controller. The convenience store has said it wants to create "a completely new store operation" by making restocking work automated and remote, saving a large amount of labor hours.




That was the year-over-year decline in the Cass Linehaul Index for August, according to the latest numbers from the logistics payment processor this week. The index tracks per mile US truckload rates before fuel surcharge and other accessorials. Still, at a level of 132.1, the index reached a 2020 high, above even pre-pandemic levels. It was also up 1.8% over the index in July, the first month-over-month increase since March. At a value of 132.1, it means rates are up 32.1% versus the baseline month of January 2005. The Cass Shipments Index was down 7.6% versus a year ago – but up 8.0% versus July, as the freight market is making a solid recovery.




That is about the spot rate currently to ship a 40-foot container from Asia to the US West Coast, way up from the beginning of the year, as low supply and rapidly recovering demand are pushing balance in favor of the carriers. That hasn't happened often in recent years. The rate jump caused the Chinese government to demand carriers add more capacity on the lane and ease price increases. The US Federal Maritime Commission (FMC) in Washington also met last week to take a look at the situation. That in turn led to all three east-west container shipping alliances to commit to reinstating blanked (canceled) sailings come October. The industry's largest provider, Maersk Line, said it would bring back the blanked services next month, citing enormous pent-up demand, adding it anticipates strong import volumes to North America to carry on until at least November.

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