Supply Chain by the Numbers

- March 12, 2015 -

  Supply Chain by the Numbers for Week of March 12, 2015

Value of Cargo Thefts Soar in 2014; Ashley Furniture Keeps Making it in the USA; Companies Likely to Continue to Shift Container Traffic Away from West Coast Ports; US Productivity Growth is Low



That's the average value of cargo theft incidents in the US in 2014, according to the latest annual report from Freightwatch International, just released. That represents a 36% increase in value per theft over 2013. That rise even as the total number of incidents actually fell 12% last year. Still, analysis of last year's incidents shows that "the threat of cargo theft continues to grow in the United States due to increased organization and innovation on the part of cargo thieves," Freightwatch says. It adds that the sharp rise in average value "suggests organized thieves offset the lack of access to a high quantity of shipments by targeting higher value merchandise." We'll cover the always interesting full report next week in our OnTarget newsletter.




The percent of the products it sells that furniture retailer Ashley Furniture still produces in the US. That according to a recent article in the Wall Street Journal noting how the company continues to successfully buck the trend of US furniture companies going completely offshore The company, with its main factory in rural Western Wisconsin, uses a number of strategies to keep producing in the US. For example, it has found that bedroom furniture for whatever reason is less under price assault from Asian manufacturers, so most of that is still made domestically. It sticks to offering fewer options in fabrics, and largely has those labor-intensive materials produced offshore. It is also investing in automation in its factories. That success coming as the rest of the US furniture industry has left the US in droves. US output in the sector has fallen from an index level of 106 in early 2006 to just 62 in February 2010 - a stunning drop. It has now recovered a bit to 78.8 in January - no doubt helped in part  by Ashley's success - but is obviously still far below its 2006 high.


That is the percent of container freight coming into the port of Los Angeles that is "purely discretionary" - meaning it could be rather easily shifted to other ports. That according to Gene Seroka, executive director of the Port of LA. In fact, "Some of that cargo has [already] moved to other port complexes. It's going to be extremely difficult to earn that business back," Seroka added. While how much cargo has been permanently shifted is not yet clear, imports fell 28% year-over-year at the port in January. The nation's biggest shippers have employed for years what is known in the industry as a" four-corner" strategy, in which they use ports at northern and southern locations on both coasts and the Gulf of Mexico, to reduce both cost and risk. Now it appears even smaller companies may decide to spread the container wealth around versus just using LA-Long Beach.



That's the slow rate of average annual growth in the US economy's total inventory of capital - equipment, software and buildings - over the past decade. That's the slowest rate of such growth in at least the past 40 years. The slow growth has two related impacts. First, it reduces GDP growth versus what it might been with more normal levels of business spending. Second, capital is key to boosting worker productivity, and slow growth in those capital resources will surely mean lower productivity growth in the future, which also will reduce economic growth. Indeed, that effect is already happening. Non-farm productivity growth has risen just 1.3% annually since 2009, far below historical standards, and shrank 2.2% annualized in the fourth quarter. Former Federal Reserve Chairman Alan Greenspan said last week that "We have zero productivity growth in the last couple of years. If you don't get productivity right, your economy is in trouble." Not good.