Supply Chain by the Numbers for Week of Nov. 10, 2016

Supply Chain by the Numbers

- Nov. 11, 2016 -

Topsy-Turvy World of ecommerce Illustrated in Razor Market; Rail Carriers See Strong Margins Even in Weak Q3; China Come Down Hard on Tianjin Explosions; How Big Can Container Ships Go?



10%
That was the share of razor blade cartridge sales at Target stores that was quickly achieved by formerly only on-line only manufacturer Harry's Razor Co. when a new promotional display was rolled out in August. Harry's also grabbed some 50% share of razor handle sales. That according to an article this week in the Wall Street Journal, in which it says this story illustrates the topsy-turvy world of ecommerce. First, you have Harry's, with a claim to fame from its on-line model, moving into brick and mortar retail. Then you have Target perhaps taking a shot at Procter & Gamble and its Gillette brand, a with dominant 60% US market share - but which angered some retailers when it responded to the threat from Harry's and others by launching its own on-line shave club and selling direct to consumers. "Going to the store to buy blades is so 2014," a Gillette ad read when the program was launched. Since then, P&G has moved into the number 2 spot in on-line razor sales, behind Dollar Shave Club but now ahead of Harry's.

19.7%

That was the net profit margin - net income divided by revenue - for the group of four major publicly traded rail carriers we follow in our quarterly reviews of results and trends across various freight transportation modes in Q3. That was down a bit from the 20.1% seen in Q3 2015, but that is still evidence of a now highly profitable industry that kept margins high even in a soft quarter during which freight volumes were down 4-8% for the four that we track. By way of comparison, the same metric averaged just 5.9% in Q3 for our truckload carrier group, and was 8.0% at GM and 5.0% at consumer products giant Kimberly-Clark in the quarter. Not all that long ago, railroads were highly unprofitable - now they are where the money is, as Warren Buffet knew when his Bershire Hathaway acquired Burlington Northern in 2009. Even in a weak quarter, CSX said it saw "strong pricing" in the quarter, but did not provide details, while Union Pacific said core pricing was up a modest 1.5% - while truckload rates are falling.



20,000+
That's how much TEU capacity the next generation of Triple E megaships that are going to be delivered to Maersk Line are likely to have, breaking the 20,000 TEU barrier for the first time in the industry, as ships continue to get larger and larger, chasing operational cost efficiencies. 11 of the new Triple E's are scheduled to be delivered to Maersk next April. One principal difference from the 18,340 TEU Triple-E predecessors is that the new ships sit deeper in the water and thus enable an extra tier of containers to be stowed on deck, from 11 to 12. When the new generation Triple E's were first announced, Maersk said they would be have a capacity of 19,630 TEU, but this week the analysts at Alphaliner wrote that "First images from the shipyard suggest that Maersk Line has extensively modified the design of the ships to further increase container intake." How much bigger can these ships get? We're not sure, but we have heard designs already exist for 22-23,000 TEU vessels.



49
That's how many people the Chinese government is sending to prison for allegedly having a role in enabling the deadly explosions at a warehouse complex in the port city of Tianjin that killed at least 165 people in August 2015 and caused widespread supply chain disruptions. The people sentenced include 25 government officials and 24 staffers of the companies involved, according to China's state-run Xinhua news agency. The most serious sentence was handed to Yu Xuewei, the chairman of the 3PL that owned the warehouses (Ruihai Logistics). He was sentenced to "death with a two-year reprieve," Xinhua reported, after a court found him guilty of bribing port administration officials with cash and goods worth $23,333 to obtain a certificate to handle hazardous chemicals at the port. Under such sentences with temporary reprieves, the sentence is often reduced to life in prison, Chinese sources say. Others sentenced to prison time include staff from Ruihai and another company that provided Ruihai with "counterfeit safety evaluations." That's one way to discourage lax safety in the supply chain for sure.