Supply Chain by the Numbers

- Oct. 11, 2012

  Supply Chain by the Numbers for Week of Oct. 11, 2012

Bold US Steel Strategy Turns Rusty; China Shows Greece How to Move Containers; Germany's Green Energy Rules Send Electricity Bills Soaring; FedEx Announces Express Network Changes


$8.86 Billion

That's how much Germany's ThyssenKrupp AG is asking for two almost new steel mills - one in Brazil, one in Alabama - as its bold move to establish a presence in the Americas has failed. The plant in Alabama processes slabs from the Brazil facility and turns them into high grade steel sheets for the auto and appliance industries. It was to be a "virtual, integrated steel mill," the company said. Alas, the combined operation lost $1 billion for the first nine months of the fiscal year that ended a week ago amidst low steel prices. The cost to build the plants was $11.8 billion. The street whisper is they may be sold for just $1-2 billion. The company also cited "high transportation costs" as among the factors for the losses. Who would have guessed?



1.05 Million

Number of shipping containers to be handled this year at the Greece's Piraeus Port on the Chinese controlled side of the operation, up more than 100% since the Greek government sold roughly 50% of the port's operations to China's state owned COSCO shipping lines in 2010. That as the Greek run side continues to struggle, according to an article this week in the New York Times. "Everyone here knows that you must be hard-working," said Captain Fu Cheng Qiu, who runs the operation, and under whose watch the Chinese-run side of the port has lured new clients, high-volume traffic and bigger ships through tremendous gains in efficiency. Before the sales, wages for dock workers reached $181,000 a year with overtime; COSCO is typically paying less than $23,300. On the Greek side of the port, union rules required that nine people work a gantry crane; COSCO uses a crew of just four.


Number of Euros German consumers in an average three-person household will be paying next year for a green energy tax on electricity, as the announcement was just made that the assessment will rise from 3.6 cents to 5.4 cents per kilowatt hour. That all stemming from the country's Renewable Energy Act, a sort of green-energy solidarity surcharge that is automatically added to every consumer's electricity bill. The rising cost of electricity is starting to become a hot political issue in Germany, with some referring to problems with "electricity poverty" in the country. And of course, businesses are asking for and getting exemptions, and the high cost of electricity is now seen as the biggest barrier to doing business in Germany.

$1.6 Billion

That's how much cost FedEx said this week it plans to take out of its flagship Express business unit over the next three years in an effort to improve profitability and juice its struggling stock price. The custs include $400 million from efficiency of staff functions and processes; $300 million from fleet modernization; $350 million from overhauling the U.S. domestic express network by consolidating stations and routes and other moves; $350 million from international services and $150 million from targeted growth and yield management. Almost amazingly, the Express unit is struggling while its businesses in parcel ground and LTL are doing well.