Supply Chain by the Numbers

- March 10, 2016 -

  Supply Chain by the Numbers for Week of March 10, 2016

Amazon Confirms Deal for 20 Air Cargo Planes; Scaleback of Chicago Nabisco Factory Makes Campaign News on Both Sides; Megaships Adding Supply Chain Costs to All but Carriers, Group Says; Obama Makes Controversial Payment to UN Climate Fund



That's how many Boeing 767 freighter aircraft Amazon Fulfillment agreed to lease from Air Transport Services, in a long rumored deal finalized this week. Air Transport Services (ATS) operates out of the Wilmington, OH Air Park that was previously DHL's US parcel hub before it shut down its US domestic service, and before that the hub for Airborne Express before it was acquired by DHL. ATS has been flying a few air cargo flights per day for some months for a mystery customer most assumed was Amazon, and this week an ATS executive said "Since last summer, we have been working closely with Amazon to demonstrate that a dedicated, fully customized air cargo network can be a strong supplement to existing transportation and distribution resources." Details on Amazon's exact plans are few, though clearly it wants to end its reliance on UPS and FedEx. Amazon said on the news that it expects the agreement to support one and two-day deliveries.




That's how many drayage trucks must often go into and out of the port of Hamburg – Europe's third largest – on many Monday mornings, causing huge traffic jams and delays. That according to Chris Welsh, secretary-general of the Global Shippers Forum, an industry lobby, at a conference this week. The overarching theme of Welsh's presentation: the growing size and number of container megaships is causing high costs and delays throughput the supply chain – costs paid for by shippers, terminals and others parties, not the container lines. The Monday truck jam in Hamburg comes because the average number of container moves per vessel with the larger ships has lately increased from 2,000 to 2,500 to between 6,000 and 7,000 – causing long unloading times - and trucks are not allowed on local roads near the city on Sundays. Welsh also noted that while container lines can get a new megaship in about 18 months, it can take 10 years to complete a port expansion. The deployment of megaships has led to the bunching of vessels, peaks and troughs in cargo handling, terminal congestion and void sailings, piling up costs across the supply chain, Welsh said, according to the Journal of Commerce.


That's how many jobs at a long time Nabisco plant near downtown Chicago are going to be lost, as the company – now part of Mondelez - moves much of the work to a factory it already operates in Mexico. The news was actually announced last summer, but gained fresh currency last week when workers staged a rally trying to save jobs, and both Donald Trump and Bernie Sanders weighed in against the move while on the campaign trail. About half the current jobs - which pay about $25 per hour - will remain at the bakery, first opened in the 1950s Mondelez decided to make the production switch rather than invest the $130 million estimated was needed to bring the Chicago factory - located at 73rd and Kedzie – up to competitive snuff. The first wave of 277 lost jobs will begin March 21st. Mondelez says it will save about $46 million per year from the move, and did early on say it would keep the jobs in Chicago if the union matched those cost cuts by reduced wages and benefits.


$500 Million

That's how much the Obama administration contributed this week to a controversial United Nations climate fund set up in 2010 to help developing countries invest in clean energy and offset the negative impacts of global warming. Developed countries promised they would contribute $100 billion to the fund by the year 2020. In November, 2014, Obama committed the US to contribute $3 billion in total to the fund, the first installment of which was made this week - even though no Congressional appropriations have been passed for this spending, and the Anti-Deficiency Act seems to prohibit such executive action. The fund is at best one-tenth of the way there to its $100 billion goal, with no real path to reach the target, and there are more controversies, such as which nations (China?) get how much of the funds, and where that money will really go once disbursed. Meanwhile, many developing countries have said even that unattainable $100 billion goal is not nearly enough.