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Supply
Chain by the Numbers |
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- August 8, 2024
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Amazon Fulfillment, Shipping Costs Continue to Rise; Trucking Slump Continues; East and Gulf Ports want a Big Wage Hike; Maersk Hedges Green Ship Bet |
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| That is the share of Amazon’s Q2 online sales revenue that went to a combination of fulfillment (42%) and shipping (39%). That according to the company’s Q2 earning report released last week. The shipping cost and percentage are somewhat overstated, as they do not include offsetting revenue from Prime annual memberships that provide the usually free shipping, and those customers that actually pay some shipping expense. Amazon used to provide data on net shipping costs (expense minus revenue), but no longer does. Another interesting number from the report: In Q2, services were 58.4% of total Amazon sales of $148 billion in Q2, a number that continues to increase. |
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| That was the year-over year drop in the number of truck shipments in Q2, while shipping spend by companies dropped 23.5%. That according to the quarterly US Bank Freight Payment Index. With transportation spend dropping faster (albeit not by much) than shipments, it implies trucking rates were down slightly versus 2023. With a month-over-month decline in shipments of 2.2%, what many have turned a trucking recession continues on. With dropping rates and rising costs, “current spot and contract rates are not sustainable over the long term, says Uber Freight economist Mazen Danaf. |
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800,000 |
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| That is about how much in TEU capacity container shipping giant Maersk Line has placed on order across 50-60 ships, the company announced this week. But Maersk, which has set aggressive goals relative to carbon emissions, is hedging its bets on this one. The order includes carrying capacity that will be able to run on methanol. A spokesperson for Maersk said that using LNG to fuel these vessels isn’t the firm’s intention, but it couldn’t be ruled out. The ships will also be able to use a cleaner version of the fuel, so-called bio-LNG. And they will be able to run on conventional oil-derived bunker fuel as well. |
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That is the level of wage hikes for East and Gulf Coast dock workers over life of the next six-year contract currently being negotiated by the International Longshoremen’s Association (ILA) and port and terminal operators. That according to a report from the Journal of Commerce this week. That compares to the 32% hike over six years won by West Coast port workers in their new contract signed last summer. The ILA is said to be after more – much more. This along with adoption of port automation could be huge issues both sides, with the current contract set to expire Sept. 30, and currently stalled. A strike is certainly possible.
