Supply Chain by the Numbers

- Nov. 8, 2018 -

  Supply Chain by the Numbers for Week of November 8, 2018

Amazon HQ2 Finalists; Blockchain Platform for Ocean Shipping Struggling to Attract Carriers; Freight Giants Battle over Intermodal Revenue Split; Oil Prices Sharply Reverse from Predicted March to $100



That's how many locations appear to be in the final hunt to land the so-called HQ2 project from Amazon – a second headquarters that would involve billions in investment and ultimately employ some 50,000 workers. Those three are reported to be: Crystal City, VA, just outside of Washington, DC; the Dallas-Ft. Worth area; and an area in the Queens section of New York City. But there is a new twist – reports are now that Amazon will now actually divide the project in half, with HQ2A an HQ2B, if you will. Why? Even in these three very large metro areas, creating demand for 50,000 new workers may just be too much, Amazon is said to be thinking. Creating two new centers of 25,000 would be much less challenging. And the full scale of the project could also overwhelm local infrastructure. However, some people are complaining that picking two spots undercuts the entire point of announcing HQ2, since the locations likely won't be equals to Seattle and therefore not be HQs at all. All the excitement and attention and news stories hyping the project wouldn't have reached such a fevered pitch had Amazon instead announced plans to build two new satellite offices, critics add.



That is how many other ocean container carriers have signed up to participate in the TradeLens platform using blockchain technology delivered as part of a joint venture formed earlier this year by Maersk Line and IBM. The issue: since Maersk owns roughly 50% of the new company, it will financially benefit, maybe enormously so, when its shipping line competitors use the platform, which naturally enough they are very reluctant to do. This business model issue puts the whole company at risk, as IBM recently noted in comments to analysts. That could mean either TradeLens doesn't make it, or Maersk will have to sell its share, likely at a steep discount. In response, four carriers from The Ocean Alliance consortium of container shippers announced their own blockchain platform to track shipments and automated ocean shipping process – but the Global Shipping Business Network will ultimately have its own competitive concerns from other carriers.


$100 Million

That's how much rail carrier BNSF says it is owed by trucking firm JB Hunt, as part of the two freight companies complex formula for sharing intermodal shipping revenue. Intermodal transportation by definition requires partnership between different types of carriers or logistics service providers. Commonly, trucking firms negotiate a deal and pricing with the shippers, and share the revenue with their rail carrier partners for their piece of the pie, in a process complicated further by the constant changes in freight rates and fuel costs. BNSF said in a securities filing this week that it has provided JB Hunt with calculations for payments due "in excess of $100 million, consisting of additional revenue owed BNSF for 2016 and 2017 and certain charges…for specific services for customers from April 2014 through May 2018." Even for giants such as JB Hunt and BNSF, $100 million is a big number. The case is being handle in arbitration, and it appears that process delivered a confidential preliminary ruling in BNSF's favor.



That's how much the price per barrel of US West Texas crude oil has fallen since it hit a peak of $76.41 a barrel on Oct. 3, a nearly four-year high. Many predicted oil was once again on the march towards $100 per barrel. But with a closing price Thursday of $60.59, the price was down more than the 20% decline that signifies a bear market, in good news for shippers. That latest drops came was after a report that showed US crude oil inventories rose for a seventh straight week and US oil production soared to record levels. US oil production exploded to a record 11.6 million barrels a day last week, from 11.2 million barrels a day a week earlier, as US oil production from fracking continues to redefine market dynamics. The fall in oil prices is certainly also positive for the overall economy.