Supply Chain by the Numbers for Week of March 22, 2012

Supply Chain by the Numbers

- March 22 , 2012

Amazon Hopes the Robots Deliver; No End if Sight for Oil Prices? We Need More Trucks, Got Fewer in 2011; NAFTA Volumes Soar - and in Favor of the US



$775 Million
Amount of money that e-commerce giant Amazon.com is paying to acquire warehouse automation vendor Kiva Systems, to the surprise of almost everyone in the industry. Kiva makes a robotic picking systems, in which AGV-like robots deliver inventory to workers in pick stations, and then move back into a stationary storage position or on to another pick station as needed. Amazon-owned on-line retailers Zappos, Soap.com, and Diapers.com have already installed the Kiva system, which can easily cost $10 million or more for a large facility, depending on the number of robots used. Amazon will have some 70 distribution centers around the world in 2012.

$200

Where we may be headed in terms of the price for a barrel of oil, according to an increasing number of market observers. That includes the well-known economist Nouriel Roubini, who said this week that if there is an attack by Israel on Iran's nuclear capabilities, we will likely see oil at "$170, $180, $200 a barrel" for a prolonged period, which would drive the global economy back into recession. Part of the issue is that the global market has barely any buffer - just some $2.6 million spare barrels of oil production capacity per day, versus consumption somewhere around 86 million barrels per day.



	$904 Billion
The amount of NAFTA trade in 2011 between the US and Canada and Mexico, the US Bureau of Transportation Statistics reported this week. That was up a whopping 14.3% over 2010 levels and an all-time record. From DOT charts, it appears this puts current levels back on the same path we would have been on if not for the 2008-09 recession, when volumes took a tumble. The numbers look balanced across all three trading partners, and with respect to Mexico specifically, the value of imports into the US carried by truck was 12.4% higher in 2011 than 2010, while the value of exports into Mexico carried by truck was 14.9% higher, a 2.5% net increase in the US' favor for the year.




-2.1%
Change in the overall level of truck tractors in 2011, according to recent reports from the US Department of Transportation. That, despite the fact that freight volume in the US was up 5.9%, according to the American Trucking Associations' freight tonnage index, and that sales of new tractors were up almost 60% during the year. Obviously, truckers are primarily using the more fuel-efficient new tractors to replace older equipment, not to add to the size of their overall fleets. Given the decline in the quantity of tractors on the highways as freight volumes grow, it's no wonder the market continues to see tighter capacity.