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Supply
Chain by the Numbers |
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- Aug. 6, 2015 -
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Macy's Seeks to Outgun Amazon.com in Same-Day; Commodity Prices Continue to Plunge; GM, Foxconn Banking on India; Container Shipping Rates Seeing Mostly Tough Times |
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549
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That's how low the weekly Shanghai Containerized Freight Index (SCFI) sank to on July 24, the lowest level since its official launch in October 2009 at a 1,000 baseline. That means spot rates two weeks ago were an astounding 42% or so lower than in October, 2009 - not exactly fat times for ocean carriers either. The overall index, which is a composite of 15 individual trade lanes, did rebound to about 800 last week, but the trend over the past couple months has been sharply down, as the new, ever larger ships keep coming and demand remains lukewarm, sending rates falling. The index for shipping from Shanghai to the US West coast was at a healthier 1607 level on July 31– 60.7% above October, 2009 – up from 1123 the prior week, as US imports from China at least largely keep humming along. Still, Drewry Shipping says overall ship utilization rates on East-West routes (both to US and Europe) are running right now at about 86%, down from 96% in peak season of Q3 2014, so there is plenty of slack on the supply side.
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$1 Billion |
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That's how much General Motors recently said it will invest over the next few years to turn India into a global car export hub, even as it cuts production capacity in the country in the short term due to sluggish demand. It turns out GM India's investment is part of its plan to invest $5 billion over several years to develop a global family of Chevrolet vehicles with Shanghai Automotive Industry Corp (SAIC), the state-owned Chinese automaker. Others are looking at India's potential too. This week, contract manufacturing giant Foxconn of Apple iPhone and iPad fame said it is looking for manufacturing sites in India. So far it hasn't been able to settle on any in particular, Foxconn Chairman Terry Gou told a news conference in New Delhi. "India is a big, big country. Too many places, too many states, too many cities. The choice is difficult," he said. This after saying India was not a good location a few years ago. Now, "We want to bring the whole supply chain here," Gou added. India will likely be the new China over the next 20 years. |
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That's the number of commodities out of 22 total in the Bloomberg Commodity Index that have dropped at least 20% from recent closing highs - and many have dropped even further, as input costs are falling at a faster pace than any time since right after the financial crisis began in late 2008. Copper, silver, sugar, gold, coffee and nickel are all down more than 40%. That may be good for procurement costs at many companies, but obviously not a bullish sign for the global economy, especially in many emerging countries that depend on commodity sales for much of their GDP. The strong US dollar - in which commodities are priced - and continued weak demand from China are cited as the two most direct causes for the free fall, but overall weak global demand is a big factor too. The overall Bloomberg index itself has been touching 13-year lows over the past month. Wow.
