Supply Chain by the Numbers

- July 20, 2018 -

  Supply Chain by the Numbers for Week of July 20, 2018

CO2 Back on the Rise in 2017; Productivity Gains All Going to Largest Firms; DC Space gets Even Tighter in Q2; UPS will US AI to Predict Parcel Flows



That was the rise in global carbon emissions in 2017, according to the just released BP Statistical Review of World Energy 2018, a sort of almanac of all manner of energy related data, now in its 67th year, and as always it is quite an interesting and educational read. That rise in CO2 comes after little or no growth for the three years from 2014 to 2016. BP says that emissions growth was the result of several factors, including string economic growth, driven by industrial activity, which is more energy-driven, causing gains in energy intensity to slow. And the turnaround in coal consumption, from the substantial falls seen in the previous three years to a small rise last year, meant the improvement in carbon intensity was more muted. BP notes that there has been no improvement in the mix of fuels feeding the global power sector over the past 20 years. For example, the share of coal in 2017 in terms of energy consumption for power was exactly the same as it was in 1998.



That is how much the 5% most productive global manufacturers improved their productivity between 2001 and 2013, according to research from the Organization for Economic Cooperation and Development. The other 95% improved productivity just 7% over the same period. That disparity is actually representative of a broader trend in which the very largest firms are making big productivity gains, while mid-sized and smaller firms are not able to keep pace, according to an article in the Wall Street Journal this week. That's one reason why overall US productivity has grown just 1.2% annually since the Great Recession, less than half the levels seen in the 1970s and just one-third of the progress in the 1950s and 1960s. What's going on? It's not completely clear, but globalization is providing multi-national manufacturers the scale to invest in automation the non-giants just can't match. Some are even calling this out as a factor in growing wage disparity, smaller companies can't increase pay at the same rates if there productivity is far less. Interesting issue.



That was the overall availability of US industrial space – primarily warehouse locations – in Q2, the lowest rate since 2000, when the first dot com boom started and imports from China were surging. That according to a new quarterly analysis from real estate firm CBRE. The report said strong demand means that new warehouse space is getting gobbled up as soon as it's completed. In Q2, demand for industrial space exceeded the 49 million square feet that came on-line in the quarter. The industrial availability rate - which includes properties that are vacant or will soon be vacant - has now fallen for a record 32 consecutive quarters, according to CBRE, the longest stretch of declines since the firm began tracking the data in 1988. All that of course continues to push rates higher, though the cost of space varies widely, even across major distribution areas.



That's how many data points a new artificial intelligence being developed by UPS will consider daily when it is at full scale, helping the company to better predict the flow of parcels across its network, according to an article this week in the Wall Street Journal. UPS calls the system the "harmonized enterprise analytic tool." It is being built by an in-house team of developers, and is expected to be deployed by the end of the year. It will give staff more accurate forecasts about the package volume that needs to be processed at UPS facilities on any given day, a company executive said. That is expected to give employees enough lead time to determine whether they need more resources at package and sorting facilities in the event of a higher than expected volume day. The system will integrate forecast, capacity, customer and package data, previously housed in different applications.