Supply Chain by the Numbers

- Aug. 29, 2019 -

  Supply Chain by the Numbers for Aug. 29, 2019

Amazon's Next Day Land Grab; Maybe It's Not a Retail Apocalypse; Aging Manufacturing Workforce; Imports not from China on the Rise



Incredibly, that is how many square miles of residences that is now able to be served by with next day or same day delivery. In 2014, it was just 12,067. Amazon added just 3207 square miles to that total in 2015, but then it was 25,172 in 2016, 473,928 in 2017, and 314, 992 in 2018. That according to recent analysis by the Wall Street Journal. Of course at the time most of those additional square miles of coverage – gained by opening up new fulfillment centers – were not at the time thought if in terms of next day – Amazon's Prime Service offered subscribers were eligible on most purchases for free two day shipping. But earlier this year, Amazon's CFO announced Prime members would eventually get free next day deliveries, in a program being rolled out in waves across the US. And that won't come cheap – Amazon spent more than $800 million to support the program in Q2 alone, with much more spending to come. Amazon has multiplied the number of fulfillment, sorting and other delivery facilities from about 65 to roughly 400, according to an analysis of data from logistics consultant MWPVL International; before 2005, it just had three fulfillment centers for the entire country.



That's about the percentage of manufacturing workers that are now age 55 years or older, according to a new report from the Manufacturing Institute, the workforce and education partner of the National Association of Manufacturers (NAM). The study noted that while an aging population will affect most business sectors, its impact on manufacturing in particular could be outsized for a couple of reasons. First, the manufacturing sector's labor force is already skewed toward the older side. The median age of a worker in the sector as of 2018 was 44.1, compared with 42.2 for the U.S. overall. Part of that problem stems from challenges attracting younger workers to the sector.Manufacturig is also facing a skills gap, resulting from an aging population and a tight labor market. The continual introduction of new technologies – like robotics and artificial – exacerbates that skills gap, requiring continuous training.



That was the rise in US imports in the first half of 2019, according to new analysis on this week. Imports from China fell 6% in the period, showing US tariffs on China are having a real impact – but not all in the way the Trump administration envisioned. Excluding shipments from China, there was a 15% increase from Asia alone, according to figures from the Port of Los Angeles. Imports from Vietnam jumped 30% compared with the same six-month period in 2018. What's more, American exports to China through US ports fell almost four times the pace of the rop in imports in the first half, dropping 22%.
"Where it goes from here is anyone's guess as tariffs rise and hit more Chinese imports in the weeks ahead," Bloomberg noted.



That is the ratio of retail chains adding physical stores to those that are closing outlets. That surprising fact comes from the report "Retail's Renaissance —True Story of Store Openings/Closings" from IHL Group. And that pattern holds true across the board: There are more companies opening stores than closing them in all retail segments - even department stores. "The reality is that the wave of store closures seen in recent times is being driven by a handful of companies," wrote National Retail Federation (NRF) Vice President Mark Matthews in a blog post analyzing the report. "Just 16 retailers are responsible for 73% of retail store closings so far this year, according to IHL." What's more, in 2018, the overall number of US retail stores actually rose by 3,100, according to Census Bureau data cited by Matthews – when the media gave the impression of a "retail apocalypse." Poorly run retailers - especially those that have had to navigate the ecommerce revolution while carrying heavy debt loads -have struggled, and many of them will eventually fail, say the analysts at the Motley Fool, but adding that "“Brands with better management that adapted their stores to today's omnichannel reality are not just surviving but thriving."

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