Supply Chain by the Numbers

- Dec. 5, 2018 -

  Supply Chain by the Numbers for Week of Dec. 5, 2018

Brave New World of Autonomous Cars; US Manufacturing Keeps on Rocking; Task Force Says Trump May be Right on USPS Rates being Too Low; French Say "Non" to Higher Fuel Taxes


2.1 Million

That is the number of sedans-style automobiles that will be sold annualy in the US in 2030, according to a new projection from consulting firm KPMG. Why is that news? Because that would be down dramatically from the 5.4 million sedans sold annually today. Why the dramatic change? KPMG says that will be the result of autonomous cars in urban enviroments, and coming sooner than many may think. This is a really big deal, KPMG says, predicting this change "will be transformative in the same way the smartphone and personal computer have been." It will also be a brave new world for today's drivers. Are you ready for a scenario in which consumers "can push a button and their driverless car will appear, or push another button and a mobility service will arrive. The vehicle that appears before them will accommodate their need to go to the office, go to the grocery store, spend a night on the town, or take that ski trip." With this kind of service, who will need to own a car? Not many, it would seem – and that is bad news for today's automakers. KPMG expects that at these reduced volumes, the current 10 OEMs serving the US market with more than 800,000 sedans per year will contract to only 3 or 4. But someone is going to make a fortune. While today's auto OEMs are likely to see big troubles, "A trillion dollar market will soon arise around mobility and selling miles," KMPG says.



That was the very strong level of the November Purchasing Managers Index from the Institute for supply management, an increase of 1.6 percentage points from the October reading of 57.7. That of course is well above the 50 mark that separates US manufacturing expansion from contraction, and is a surprisingly strong result given many are seeing signs of some slowdown in the US economy overall. The New Orders Index was even stronger, coming in at 62.1, an increase of 4.7 percentage points from the October reading of 57.4 in good news for future manufacturing activity.



That is the increase in prices for which the United States Parcel Service has already received Congressional approval for its popular Parcel Select service. But that may not nearly be enough. A new taskforce released an analysis last week that says the USPS is undercharging Amazon and other parcel shippers, saying the Service hasn’t priced package deliveries with profitability in mind. The task force added that it saw no reason the USPS could not charge higher market-based rates for parcel shipping. The report concludes that the Postal Service isn’t correctly assessing the costs it incurs in delivering packages for companies like Amazon because it hasn’t sufficiently updated its formula to reflect the rapid rise in package volumes and the decline in mail volumes. Higher rates on package services could hit Amazon hard, with Morgan Stanley estimating it relies on the Postal Service to deliver up to 45% of its packages.


24 Cents

That was the increase in French fuel taxes per gallon on diesel fuel – widely used in France – and an even smaller 12 cents on regular gasoline, that sent sometimes violent protests to the streets of Paris, in the so-called Yellow Vest movement. The French government led by Emmanuel Macron had planned the on the increases beginning on Jan. 1, in a move to both raise tax revenues but more importantly further reduce fossil fuels to combat global warming. That even though France has one of the lowest emissions rates in the industrial world due to its heavy use of nuclear power for electricity generation. The protest came as diesel prices had risen to an incredible $6.50 or so per gallon, the highest in the country since the early 2000s, the result partly of already very high fuel taxes. The French government has now postponed the new tax, saying the protests were tearing the country apart, but that they will still go into effect in six months. A few weeks ago, US voters in Washington state soundly rejected a carbon tax plan that would have raised gasoline and electricity prices there.