Supply Chain by the Numbers

- May 25, 2016 -

  Supply Chain by the Numbers for Week of May 25, 2016

US Retailers Awash in Inventory; Panama Canal Route to/from Asia will be Much Shorter; Nike Says it is Committed to Going Circular; Confusion about Meeting New Container Weight Rules



That is now the revised expectation for US import volumes in the first half of the year according to consensus estimates by economic analysts, down from a lackluster 1.8% predicted at the beginning of the year. What's happening? Retailers appear to be awash in inventory, and are slowing down offshore purchases. Inventory is "just climbing and climbing and climbing," said Daniel Hackett, a partner at Hackett Associates. Weak consumer demand, not surprisingly, seems to be at the heart of the issue. Retailers themselves are noting the situation, warning that resulting markdowns to move the excess inventory are likely take a toll on profits. "Many of our competitors are sitting on meaningful excess inventory, which we expect will extend the very intense promotional environment into the months ahead," said Target CEO Brian Cornell this week. That after Target missed Q1 sales forecasts and saw its stock price drop to a 52-week low. Macy's stock fell another 15% as well on weak sales.




That's the approximate number of days it will take for a container or bulk ship to sail from US Gulf ports to Northern Asia or the reverse when the expanded Panama Canal opens in late June.  That versus about 31 days if going the other way through the Suez Canal, or 34 days around Africa's Cape of Good Hope, as an increasing number of vessels are doing to avoid rising Suez transit fees. Of course, a ship can tavel through the Panama Canal now - but only if it is a small vessel, on the container side just for ships with capacity of 5000 TEU or under. That will change with the Canal expansion and its new third set of locks, a $5 billion+project that will support ships of 14,000 TEU. This now long delayed opening could be a real global logistics game changer - and a threat to West Coast US ports, which could seen cargo headed to the East Coast go through the Canal rather be moved  via rail from say LA/Long Beach.


That's how many components that athletic gear giant Nike says are in a "palette" of high-performance materials made from its own manufacturing waste that are now available to its designers. That according to the company's just released sustainability report for 2016. In that report, Nike says it has fully embraced "circular economy" thinking, which focuses on re-use and sustainability management across the full product lifecycle. "We envision a transition from linear to circular business models and a world that demands closed-loop products - designed with better materials, made with fewer resources and assembled to allow easy reuse in new products," Nike says, adding that materials left over from producing Nike shoes are already being reborn as tennis courts, athletic tracks and new shoes. Nike also discussed its “Manufacturing Revolution,” which involves in part working with fewer contract manufacturers that are more in sync with its views on sustainability and valuing workers.



That is the percent of shippers which basically said they are still confused about how their exports out of US ports will comply with the new requirements for accurate “gross vehicle mass” weighing information that needs to be communicated to carriers before a container is loaded, according to a new survey by Drewry Shipping Consultants. That with the deadline for this process set to be required starting July 1, according to rule changes by the International Maritime Organization's Maritime Safety Committee, an arm of the UN that regulates ocean shipping safety. With potential disaster looming - containers for export perhaps could not be loaded – just this week the IMO said it would delay the requirements for up to three months to give shippers time to get processes right. The rules are designed to allow ships to better balance loads and avoid collapses of stacks of containers that sometimes comes from very heavy containers being stacked on lighter ones. The need for the change is generally accepted, but where the weighing will be done in the process, and who will bear the cost, remain uncertain.