Supply Chain by the Numbers

- Sept. 30, 2017 -

  Supply Chain by the Numbers for Week of Sept. 30, 2017

Alibaba Investing Big in Logistics Capabilities; Truck Drivers in Run on Less Event Produce Impressive Mileage Levels; Prospects for Global Trade Suddenly Brightening; Terminal Operators in LA/Long Beach Oppose Latest Emissions Proposal




That is about how much Alibaba, the Chinese ecommerce giant, said this week it will invest over the next five years to build up its global logistics infrastructure and development of robots sorting and fulfilling merchandise. That includes announcing an $800 million investment this week to increase its ownership share in Cainiao Smart Logistics Network Ltd – its primary logistics arm – to 51% from 47%. Cainiao helps Alibaba's on-line merchants choose from among 15 delivery firms by providing information on cost and delivery time. About 70% of Cainiao shipments are routed by algorithms to ensure the network's two million couriers get packages to customers as efficiently as possible - though we will note Cainiao is losing a lot of money, while Alibaba is profitable. Alibaba says it aims to fulfill orders in China within 24 hours, and within 72 hours anywhere in the world. Watch for the looming global battle between Alibaba and Amazon.



That was the combined market share of the ports of Los Angeles and Long Beach in 2016 – down from 35.5% the year before. Why is that in the news? Because terminal operators at the ports are opposing new environmental regulations - Clean Air Action Plan (CAAP) - they say will cost billions of dollars for little gain that could cause further market share erosion. The Pacific Maritime Shipping Association, which represents terminal operators, says that particulate matters emanating from the two ports has already been reduced 96%. Now, the PMSA says that the CAAP program proposes to reduce the remaining 4%
" at a cost of $14 billion; a cost that undoubtedly understates the true costs of the CAAP." The PMSA remains critical of the CAAP for pursuing a goal of zero-emissions by electrification: "The CAAP seems focused on driving a single technology outcome: zero-emissions by electrification. This is a mandate that is not necessary to achieve the ports', regions', or State's air emission reduction goals,” the PMSA said. Port authorities say they are listening to this feedback before issuing final rules.



That is how many miles per gallon seven truck drivers were able to achieve on average in the just completed Run on Less fuel event, sponsored by the Carbon War Room and the North American Council for Freight Efficiency. The contest involved the seven drivers hauling freight over 17 days and 50,000 miles. The results proved that 10 mpg is possible using technologies that are available on the market today, the sponsors said, with the results exceeding the original 9 mpg goal set by CWR and NACFE. Those technologies included 6x2 axles, trailer and tractor aerodynamics, engine accessories, tire pressure systems, automated transmissions, low viscosity oils, and more – assisted by expert drivers. Mileage today is more in the 7 mpg range, so 10.1 is actually a dramatic increase. If the 1.7 million trucks on North American highways today achieved the same level of efficiency as the trucks in the contest, they would save 9.7 billion gallons of diesel fuel, $24.3 billion and 98 million tons of CO2 each year, the sponsors estimated. The drivers used trucks from three different manufacturers. The highest mpg achieved in a single day was 12.8, and three different trucks had days over 12.5 mpg.



That is the new estimate for global trade growth in 2017 from the World Trade Organization (WTO), as economic conditions around the globe are improving. The 3.6% forecast if met would be a significant increase from the weak 1.3% trade growth seen in 2016, well below the growth in global GDP, when for many years trade growth exceeded increases in GDP. The new forecast is a revision from the 2.4% growth the WTO predicted earlier this year. The stronger growth in 2017 was attributed to a resurgence of Asian trade flows as intra-regional shipments picked up and as import demand in North America recovered after stalling in 2016. Global trade growth should equal about 1.3 times GDP growth if the WTO forecasts hold. Container shipping lines are no doubt celebrating some good news for a change.