Supply Chain by the Numbers

- Jan. 22, 2016 -

  Supply Chain by the Numbers for Week of January 22, 2016

Robots and More will be Devastating to Jobs; Oil Now Costs Less than Two Large Pizzas in Most Areas; Maersk Modestly Optimistic about Container Volumes for 2016 - Others Disagree; The Stunning Demographic Changes in Japan


7.1 Million

That's the number of jobs worldwide that are likely to be lost by 2020 to new generation technology, such as robots, advanced analytics, and 3D printing, according a report this week at the World Economic Forum in Davos, Switzerland. But that estimate might be on the low side, the WEF report noted. "These predictions are likely to be relatively conservative and leave no room for complacency," the WEF warned. The millions of jobs lost will be modestly compensated for by about two million new jobs that will be created by these advanced technologies, putting the net loss at about 5 million jobs, the number seen in many headlines this week. The job elimination will be especially brutal for lower level office workers, who will be replaced by machines of one kind or another in mass quantities, the report noted. Where all this will lead are huge social and economic questions.




That was the amazing price per barrel for West Texas Intermediate that was reached this week, before rallying a bit after that. Gas and diesel prices keep falling with the oil slump, with the price for a gallon of gas reaching $1.50 or so in many areas of the US, while diesel price also continuing to head south, reaching a national on-the-road average of about $2.11 last week, down 81 centers from a year ago in the 10th consecutive weekly decline. We liked the raft of comparisons that came popping out this week relative to the cost oil versus other goods , such as those noting that in most major metros areas a full barrel of WTI now costs less than two large pizzas, or that a barrel of oil is now about one-third the cost of an actual metal barrel that would hold it. The price per barrel for some low quality crude is approaching almost zero in the US, Bloomberg reported, with pipelines backed up due to the oil glut, so no one wants the oil.


That is the optimistic level of growth in ocean container volumes that Nils Andersen, CEO of Maersk Lines' parent company A.P. Møller-Mærsk, said the company expects to see in 2016 - triple the weak 1% growth that was achieved in 2015. But that may be optimistic - an analyst at Braemar ACM Shipbroking said this week he expects demand to grow 1.5% at most this year, the lowest since 2009. With Maersk and other carriers continuing to receive new giant megaships from orders placed two or three years ago, shipping costs are likely to stay at rock bottom levels for much if not all of the coming year. Rates from Asia to Europe were as high as $1,765 at the start of 2014, but fell to fell to an average of just $620 per container in 2015. Rates to the US from Asia have held up slightly better, but not by much. The carnage is even worse in the bulk ocean transport sector, with the Baltic Dry Bulk Index, which tracks bulk rates, falling to just 358 this week, compared to a peak just before the 2008 financial crisis of 11,000 points. "It's Armageddon," one industry executive said.



That is the percentage by which the population of Japan is likely to decrease over the next 45 years, in what would be staggering demographic change. Population decreases are now a big issue in many nations, especially in Europe, but so far nothing else compares with Japan's situation. There are a myriad of complicated issues behind the trend, but according to a new survey of never-married people by the National Institute of Population and Social Security Research, 27.6% of single men and 22.6% of single women in Japan have no interest in engaging in a relationship with the opposite sex. They are simply too busy, the singles told the pollsters. What's more, 41.6% of Japanese males in their 20s have never dated anyone. That augurs poorly for Japan's birthrate, which at 1.4 children per adult woman over a lifetime is one of the lowest in the world. In 1985, it was 1.8, the same as the US rate then; now the U.S. rate has inched up to 1.9 - still below replacement rate. This is a real problem.