Supply Chain by the Numbers for Week of Aug. 31, 2017

Supply Chain by the Numbers

- Aug. 31, 2017 -

Houston Chemical Factory Set to Explode after Flooding; New Drone and RFID Inventory System from MIT; Things Looking Up for Container Carriers for a Change; New Amazon FC from Ruins of Huge Cleveland Mall



1.5
That is radius in miles around a chemical plant in Houston that is being evacuated – because the flood-damaged plant is going to explode and there is apparently nothing that can be done about it. We don't think we have ever heard a story quite like this one. "We have an unprecedented 6 feet of water at the plant," Arkema CEO Rich Rowe said Wednesday. "We have lost primary power and two sources of emergency backup power. As a result, we have lost critical refrigeration of the materials on site that could now explode and cause a subsequent intense fire. The high water and lack of power leave us with no way to prevent it." Residents within a 1.5-mile radius of the facility 20 miles from downtown Houston have been told to leave, according to the Harris County Fire Marshal's Office. Rowe said the explosion is likely to occur in the next six days. The French company said it lost power early Sunday, which it needs to refrigerate volatile chemicals. Those chemicals ignite if they get too warm. The flooded site prevents Arkema workers from getting in to do something about it, and back-up generators to run the refrigeration have failed in the weather disaster. Wow. UPDATE! A pair of explosions were heard early Thursday morning and black smoke was seen rising from the Arkema plant. More as we get it.

That is the rate of global container growth in the first half of 2017, as the ocean container shipping sector starts to see some relief from several years of bleak economic times – even if that means rising rates for shippers. That according to the analysts at Drewry shipping. What's going on? The world economy is holding its own, Drewry notes, with the International Monetary Fund recently modestly upping it forecasts for 2017 and 2018 world GDP growth – a change from the past few years when the forecasts were almost always revised downward, not up. And trade growth relative to GDP also seems to be rising. Volumes so far into and out of US ports are strong. Through the first half of 2017, volumes for West Coast ports have been up 4.3%, and in East Coast ports a very robust 8.6%, both driven largely by rising imports. Rates as measured by the China Containerized Freight Index are up some 30% from the bottom in 2016, and have been pretty stable over several months. Will it hold? Depends on whether the carriers can maintain asset discipline and limit supply – something they have done lately, though that is a change from recent years, so we will see.



8
That is the positional accuracy in inches from a new drone and RFID-based inventory system that has been developed at MIT. The RFly system goes beyond current drone inventory-taking systems for distribution centers that are using imaging systems to capture product and location bar codes, including one such test system Walmart demonstrated to the press in mid-2016. But that imaging approach requires "line of sight" – something of a challenge in most DCs, and something that can only work for full pallets, not case-level inventory. The MIT system instead relies on RFID reads of passive tags on pallets and cartons, with the claim that system can read RFID tags from more than 50 feet away and identify objects on shelves within 8 inches of their location. " This is a new technology that swallows drones to find missing and hidden objects using wireless signals," Fadel Adib, whose group at the MIT Media Lab developed the new system. Adib added that the system's location-finding algorithm is inspired by how airplane radars map the surface of the Earth.



855,000
That is the size in square feet on a new fulfillment center being built by Amazon – on a property that once housed the largest mall in the US. The Randall Park Mall on Cleveland's Southeast side was the largest in the country in terms of square footage when it opened in 1976. But the mall started to decline in the late 1990s, well before the recent woes that have been facing mall owners, with numerous anchor stores leaving the property, with the last inside store shutting down in 2009. When Burlington Coat Factory close its store outside the mall in 2015, that was it, leaving a depressing eyesore totally empty of retail tenants. Now the entire mall is going to be flattened, and up will go the Amazon FC – something of an irony, as Amazon is certainly a key factor in mall troubles, though probably not so much at Randall Park. The new FC is scheduled to open in the second half of 2019 and is expected to create 2,000 job. This scenario is hardly unique – Amazon and others are acquiring empty malls across the US to build facilities that can power rapid delivery to metro markets for on-line orders.