Supply Chain by the Numbers

- Sept. 30, 2016 -

  Supply Chain by the Numbers for Week of Sept. 30, 2016

Amazon is Building Out a Parcel Network; Global Trade Volumes Continue to Shrink; Ford Says it is Adding US Workers Even as Mexican Investments Soar; Nike Says Future is More Consumer Direct



Incredibly, that is how many distribution facilities pf one kind or another that Amazon now has in the US, according to data from MWPVL and our blogger Marc Wulfraat. That data point was cited in an article in the Wall Street Journal this week that said that despite denials in the past few years, is indeed investing heavily to build out its own parcel delivery capabilities. Under the mysterious code name of "consume the city, the project is said to envision Amazon not only performing its own last mile deliveries, but also doing deliveries for other etailers, even for consumers wanting to ship non-Amazon parcels some place (to put at least some freight onto a truck headed back to a fulfillment  center after deliveries are done). FedEx and UPS continue to say the investment in a network is just too big for Amazon to succeed, but those 180+ facilities - including a couple of dozen new "sortation centers" built to sort parcels by zip code, and 40 new airplanes for Amazon Prime Air, in our view give Amazon a real opportunity to do its own deliveries in high volume markets. This is a very important arc in the future of logistics.




That's the revised forecast for the growth in global trade volumes for 2016, according to a new report from the World Trade Organization this week. If accurate, that would be the lowest level of growth since the Great Recession. The WTO sees week growth lasting through 2017 as well, forecasting growth in global trade of just 1.8% that year. Those numbers are down substantially from the 2.8% and 3.6% growth in global trade the WTO had forecast for 2016 and 2017, respectively, back in April. What's more, the WTO says the 2016 growth rate will be below the level of global GDP growth - the first time that has happened in 15 years. The long run averages is for trade to grow 1.5 times as fast as global economic growth. What is going on? Overall global economic weakness, falling commodity prices, regional manufacturing strategies, and some level of growing protectionism.


That's how many hourly workers auto OEM Ford now has in the US. That number came up after news of a Ford orchestrated campaign to to have its own shop floor employees to support its decision to move all small car production from the US to Mexico, drawing sharp criticism from Donal Trump and others. The good news: Ford has created 28,000 new jobs in the US since 2011, part of $12 billion worth of investments. The bad news: those 53,000 current jobs are down 40% from the total a decade ago. Meanwhile, Ford employs 8,400 hourly workers in Mexico - a number that is surely headed higher, as Ford and other OEMs continue to pour investment into Mexico. Since Nafta in 1994, US foreign direct investment in Mexico’s transportation-equipment sector ballooned from around $2 billion annually to $8 billion in recent years.


$16 Billion

That's the level of direct to consumer sales that athletic gear maker Nike hopes to attain by 2020 - a number that it says would represent 33% of its total sales. That compares to $7.8 billion in direct to consumer sales currently, or about 25% of revenue. All that according to a quarterly earnings report Nike released this week. Those direct to consumer sales would include both sales from Nike's own retail outlets, as well of course its on-line and mobile sales. Interestingly, at the CSCMP conference this week, a presentation from a Nike manager said that a key goal of Nike is to win in key cities acrosss the globe, the key to which will be the ability to deliver same day in those markets, and perhaps also the ability to replenish its retail partner stores directly, without going through their distribution networks. ecommerce continues to dramatically change the supply chain landscape.