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Supply
Chain by the Numbers |
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- July 11, 2024
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Amazon Celebrates Birthday; Air Cargo Rates Soaring; Making Bikes in the US Again; Lthium Price Collapse |
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| That is how old Amazon.com turned last week, filing to incorporate on July 5, 1994, in the state of Washington, under the name of Cadabra. In 1995, its web site opened, selling only books on-line. In 1997, Amazon went public. The next year, 1998, Amazon said it would sell a larger variety of goods than just books, including clothing and computers. In 2015, the company launched its Prime service, which for an annual fee gave customers free two-day shipping, in a move that would ultimately transform US logistics, though it was actually slow to take off. Then in 2021, founder Jeff Bezos stepped down as CEO, though he has remained as chairman of the board. |
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That is about the current price for a metric ton of lithium, an essential material of course for making batteries that power computers, electric cars and more. That is way down from a whopping $43,000 or so one year ago and $85,000 in 2022. It is also the lowest level since Benchmark Mineral Intelligence began publishing weekly prices in early 2023. What’s going on? The slowdown in sales of electric cars, which has significantly reduced demand for lithium, with many traders expecting the price to head still lower, as miners have largely kept production running steady even at the low price. Longer term, many experts expect the price to soar again eventual ecar demand growth. |
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97.8% |
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| That unbelievably is the share of electric and traditional manual bicycles sold in the US that came from other countries. The US bike market has simply collapsed for domestic producers, whereas a few decades ago the market was dominated by firms producing in the US, such as Schwinn, Murray, Huffman and AMF. All this in the news this week because of new legislation on the matter introduced by Congressman Earl Blumenauer of Oregon. His Domestic Bicycle Production Act aims to incentivize American companies to make bicycles again through a mix of tariff suspensions, tax credits, and loans. The key provision: a 10-year tariff suspension on the importation of components needed to build a bike. That will lower costs for domestic producers. Will it get passed? Will it have an impact if it does? The odds on both questions are likely long. |
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That is about the recent rise versus a year ago in the cost to airship goods from China to the US, in a time that is usually quiet in the air freight market before the industry’s peak season. What is going on? Air cargo Industry experts attribute the spike in rates largely as the result of the rapid growth of Temu and Shein, the China-founded ecommerce upstarts that are rapidly growing their ecommerce sales in the US, often at attractive prices. The two aggressive retailers are “eating up aircraft space at a pace that is driving up freight rates and sparking fears of a capacity squeeze during the busy peak shipping season,” a report in the Wall Street Journal last week. Tim Scharwath, CEO of DHL Global Forwarding, told the Journal that the Chinese ecommerce companies have expanded so rapidly in less than two years that they consume more than 30% of cargo space on some routes out of Asia.
