Supply Chain by the Numbers

- Oct. 11, 2018 -

  Supply Chain by the Numbers for Week of Oct. 11, 2018

Amazon Reinstates a Bonus Program Cut with FC Wage Increase; Changing HTS Codes to Evade Tariffs; UN Panel Sets Lower Goal for Temperature Increase; US Driver Turnover on the Rise


$1500 to $3000

That is now the bonus range per year that tenured Amazon fulfillment center workers can receive, after it was announced most incentive pay programs would be cancelled in favor of an increase in the minimum hourly pay to $15.00 per hour. Amazon also initially said it was ending a stock options program for FC workers as well, leaving many critics wondering if Amazon workers were really better off under the new compensation scheme. But it appears the new bonuses announced are not available every year, but rather at employment milestones at five, 10, 15 and 20 years. Workers with good attendance in the month of December will also get a $100 bonus, according to the company. "All hourly Operations and Customer Service employees will see an increase in their total compensation as a result of this announcement," Amazon said in a statement. Amazon said any workers already earning $15 will receive $1.25 per hour increases. It added that it will be rolling out a direct stock purchase plan in 2019 for FC employees, with details still being worked out.



That, it turns out, is how many so-called HTS codes the US uses to identify the product or commodity types for goods being imported in the US. This classification is important under normal times, but ever more so in the growing tariff war and resulting levies on Chinese made goods – as some brokers and Chinese suppliers are the changing codes used to identify goods to ones not subject to tariffs. So said a recent article in the Wall Street Journal, which noted that "As trade conflict grows between the two largest economies, these professionals say, code misclassification is starting to compete with transshipment—the rerouting of goods through third countries—as a way to duck tariffs." The paper cited a wood importer in Oregon got a call from a supplier asking if he would like to get some Chinese plywood tariff-free. How could that be, the wood importer asked? "Don't worry about it," the supplier said - the plywood would be stripped of its Chinese markings, and "we'll ship it under some other code." In China, exporters even swap information about tariff codes on web sites such as Yishanghuiyou, which means "Friends Through Commerce."


0.9 Degrees F

That is the new target for the rise in global temperatures, according to the latest massive report from the United Nation's Intergovernmental Panel on Climate Change. That's down from the previously globally agreed-upon goal of 1.8 degrees F, which was the basis for the 2015 UN Climate Accord in Paris, in which most nations in theory agreed to reduce emissions by amounts that models said would meet that goal. With many saying the 2015 commitments were really not sufficient and/or almost impossible to monitor, the new lower target for the acceptable rise in temperatures will require even more draconian steps to get there, the report says, such as the world largely abandoning its use of coal for electricity and use of more solar and wind power. The IPCC said greenhouse gas emissions must fall 45% below 2010 levels by 2030 to reach the new goal. Emissions must then decrease 100% - virtually eliminated - by 2050, according to the report. That transformation would require with a carbon tax that would need to be as high as $5,500 per ton of emissions - equivalent to something like a $49 per gallon gas tax – by 2030. We're guessing that would spur adoption of electric vehicles just a tad.



That was the truck driver turnover at large truckload fleets (greater than $30 million in revenue) in Q2, according to the latest report this week from the American Trucking Associations. That was up a modest four percentage points versus Q1, but puts the Q2 rate as the highest level since the fourth quarter of 2015. So far this year, turnover is averaging 96%, on pace to be the highest annual rate since 2013. Turnover also increased at usually more stable less-than-truckload fleets, also jumping four percentage points to 14%, the highest level since the first quarter of 2013. Turnover rates at smaller truckload carriers was up just one percentage point to 72% in Q2 and down 14 points from Q2 2017. As always, we note that the 98% turnover rate doesn't mean truckload carriers are replacing their entire driver pools each year. Rather, it largely reflects very high turnover rates for new drivers, though more tenured drivers leaving the profession, moving to easier LTL or private fleet jobs, or going to a carrier offering higher pay are certainly factors as well.