Supply Chain by the Numbers

- Feb. 1, 2018 -

  Supply Chain by the Numbers for Week of Feb. 1, 2018

Now China Looking at Polar Silk Road; US Manufacturing Sector Keeps Humming Along; Foxconn's New Wisconsin Factory will be Thirsty; Gas and Diesel Prices Keep Marching Higher, especially in the Golden State



That's on average about how long it takes a container ship to sail from Northern China to the port of Rotterdam on the Netherlands – one of the most popular containers routes there is. But China has an idea to cut out quite a bit of that time, to maybe 30 days – by sailing ships across the artic. In a new report, China Beijing has outlined plans for what is calls a "Polar Silk Road" in the Arctic, adding intrigue into what is already a slow-motion race for control of the Artic region, as climate change allows for the expansion of shipping routes over the top of the world. This Polar Silk Road is simply another dimension to the broad – and highly ambitious - Belt and Road initiative, which seeks to build transportation lanes from Chinese manufacturer to customers across the globe by truck, train or ship. While expensive ice breakers are generally still required for the trip most of the year, that could change a bit – and China is also said to be very interested in mineral and energy resources in the Artic. Though it has no border on the Artic zone, the UK's Financial Times says China is increasing its efforts to build relations with Scandinavian countries and Greenland to gain a regional advantage.



That was the strong level of the US Purchasing Managers Index from the Institute for Supply Management for January, in data just released on the first of the month as always from ISM. That was actually down just a bit from December's reading of 59.3, but still well above the 50 mark that separates manufacturing expansion from contraction, and a sign of a very healthy overall economy and manufacturing sector. The index has been above a score of 58 for six consecutive months. In equally good news, the new order index came in at a very robust level of 65.3, in a bullish sign for future manufacturing activity. Of the 18 manufacturing industries, 14 reported growth in January, with only printing; wood products; furniture and nonmetallic mineral products failing to join the party.



That could be the price of gasoline in California by early June, according to Patrick DeHaan, head of petroleum analysis at Boston-based GasBuddy, which monitors fuel prices across the U.S. It would be the first time the state has seen $4 gasoline since July 2014. Right now, gas in the Golden state is about $3.30 per gallon, up about 47 cents since this time last year. That $3.30 price is quite above the US average of about $2.60 per gallon, but the price could be headed up for everyone, which will take the price of diesel fuel along with it, as oil prices continue to rise. US WTI crude is now up to $65 per barrel and at levels not seen since 2014 as well. The price in California is partly the result of two new tax hikes, 12 cents more per gallon for gasoline and 20 cents more for diesel. This was the second of two increases in the last year, following a another gas tax hike in July. However, the trend is clearly up for motorists and truckers everywhere, and with a strengthening economy and recently weak US dollar, the summer of 2018 could get interesting.


7 Million

That, apparently, is how many gallons of water per day that Taiwanese manufacturing giant Foxconn will need for its upcoming giant flat screen panel display being constructed near Racine, WI. That water apparently will come from nearby Lake Michigan, according to a petition this week from the city of Racine to the state Department of Natural Resources for permission to divert water from the lake. The Milwaukee Journal Sentinel reported the permission is needed under an interstate agreement that guides water use in eight states that border the Great Lakes. Under the compact, all water shipped out must be returned to Lake Michigan minus what's lost to evaporation or what's incorporated into Foxconn's manufacturing process  - and estimates now say that will be about 40% of the water taken out of the lake, as it is used primarily for power generation in the form of cooling towers. That may be a lot of water, but the company says it could invest up to $10 billion on the display panel factory that could employ up to 13,000 people - so no doubt the request will be granted.