Supply Chain by the Numbers

- Feb. 9, 2017 -

  Supply Chain by the Numbers for Week of Feb. 9, 2017

Amazon Planning Highly Automoted Grocery Stores - or Maybe Not; Giant Sharp Electronics Factory in US Increasngly Likely; Containers Shipping Industry Sees Brighter Days Ahead; US Trade Deficit Rolls On



That's the max number of workers that would be needed at any time for grocery stores as large as 40,000 square feet, in a concept being evaluated by Amazon, according to a story in the New York Post this week. The model would be an extended version of Amazon's test Go store in Seattle, which uses a variety of technologies, such as RFID, to allow shoppers to simply put items in a basket or backpack and walk out the door, after signing in with a smart phone app. The bottom half of the two-story grocery outlets would be filled with items consumers want to see and touch, like produce, while the second story would be filled with packaged goods - and be picked for shoppers via robotic technology. The whole thing would operate similar to the Go stores in terms of automating the checkout process, and at times will need as few as 2-3 workers on a shift. Regular grocery stores, of course, generally employ lots of people. Amazon strenuously denied the Post story, saying that the article's claim that Amazon thinks it could see net margins as high as 20% from the concept as crazy. “If anybody knows how to get 20% margins in groceries, call me!” tweeted Amazon CEO Jeff Bezos. But the Post story seems well sourced, if anonymously, and who could make this up?



$7 Billion

That is the joint investment planned by Apple and the Sharp division of contract manufacturing giant Foxconn for a new US plant to make LCD panels for TV sets and home appliances. This is not new news, but seems increasingly to be moving towards reality. Reuters reported this week that Foxconn had given its Sharp unit - which it acquired a few years ago - the lead in developing the US plans, and comes as Japanese Prime Minister Shinzo Abe prepares to travel to the United States to meet President Donald Trump. Sharp is based in Japan. Reuters said ground breaking for the new plant could come in the first half of the year, as the plans seem to be now moving quickly. The new operation is said to potentially employ as many as 70,000 people, though that seems extremely high to SCDigest. Reuters says that according to people familiar with the matter, Abe will present a plan to Trump to create more than 700,000 jobs through U.S.-based operations in total across a variety of Japanese companies. Wow.

$502 Billion

That was the US trade deficit for all of 2016, according to new numbers from the Commerce Dept. this week, the highest level since 2012. That last time the US had a trade surplus was in the mid-1970s. With the new numbers for December, the full year trade deficit in goods with China came in at $347 billion, but that was actually down from $367 billion in 2015, meaning a new record will not be set in this measure for the first time since the recession year of 2008. The trade deficit in goods with Mexico, however, did rise 4.1%, from $60.6 billion in 2015 to $63.1 billion last year. We were surprised to find, however, that the deficit was Mexico was actually $74.7 billion in 2007 - though that was driven by high prices for oil.



That was the growth in revenue at container shipping giant Maersk Line in Q4, according to just released results. That may not sound so great, but it was the first quarterly increase in the top line for Maesk since Q4 of 2014, as container shipping prices continued to be in the tank. Maersk Line lost $155 million in the quarter. But, things are looking up, says Maersk CEO Soren Skou. "The fourth quarter of 2016 was the first quarter since 2010 where the demand outgrew supply, and actually by some margin," Skou told CNBC after its earnings release. Jonathan Roach, a container analyst at Braemar ACM, said overall container-fleet capacity growth was just 1.2% in 2016, compared with 8.0% in 2015, and last year was a record for ship recycling, with 3.5% of the global fleet scrapped. Meanwhile, Alphaliner reports 7% of global shipping container capacity is now idled. Will rates for ocean shippers really start to head up? We're heard this for the last several years and it never happens, but Maersk Line forecasts a profit improvement this year of more than $1 billion versus 2016, in which it lost $376 million for the full year.