Supply Chain by the Numbers

- Nov. 21, 2019 -

  Supply Chain by the Numbers for Nov. 21, 2019

Maersk Line Continues its Logistics Transformation; Game Changing Battery Breakthrough? China Getting Old Fast; Truckload Rates Down Again


$1.6 Billion

That was the level of Q3 revenue seen by container shipping giant Maersk Line from its growing logistics business, which provides end-to-end logistics services beyond the port-to-port container moves the company is known for. The Logistics & Services unit saw profits grow 13.4% in the quarter, and Maersk CEO Soren Skou said during its earnings call that he wants half of the company's income to come from non-ocean services over the next three years. We need to grow in acquisitions on land warehouses and customs house clearing services, Skou said, adding that "We have invested around $1 billion already on the land side supply chain and we are looking to put in hundreds of millions more over the next year." Maersk has about 100 such facilities currently, far below new rivals such as Kuehne + Nagel, DHL supply chain and others. As part of an overall cost cutting initiative, Maersk also said it was done for now from buying any new container ships, including the giant megaships it has until now invested heavily in. The company's CEO said that "there are no intentions now to invest in any large vessels."



That's how many miles heavy duty trucks may be able travel on a single battery charge, using new technology from Nikola Corp., according to the company's announcement this week. It comes as Nikola announced it entered into a letter of intent to acquire a world-class battery engineering team to help bring to pre-production the new battery technology. That would increase the range dramatically versus electric trucks batters now, which can power a truck for maybe 300 miles. If accurate, this has the potential be a breakthrough development that could revolutionize the truck sector, which is very interested in electric trucks. It is also interesting because Nikola, known for its hydrogen fuel cell research, has in the past said was doubtful a pure electric truck would ever be viable (the fuel cell trucks charge battery). The new battery uses a different design than the lithium ion batteries that are now primarily used in electric cars and truck, and is said to be comparable in size and lower in weight. "Nikola is in discussions with customers for truck orders that could fill production slots for more than ten years and propel Nikola to become the top truck manufacturer in the world in terms of revenue. Now the question is why not share it with the world?," a company executive said this week. The company describes this this new battery technology as "free-standing/self-supported electrode with a cathode that has 4x the energy density of lithium-ion," but it is several years from commercialization


340 Million

That's how many Chinese will be over 65 by 2040 – up from 135 million in 2015. It would represent about 21% of the country's population then. This is a problem. Though Japan has more than 26% of its population above age 65, Japan is a wealthy country. China overall is not – domestic product per capita is lower than in Mexico. And it currently has a retirement age of just 60 for men and 55 for women, making the worker-to-retiree problem even worse. And many retirees there are not covered by any benefits – so how are those tens of millions to be fed and housed? And all that as China is losing some of its competitive advantage as a result of higher wages. Take it all together, and it could be some interesting times for the country and its social contract. Avoiding significant unrest or troubles in its economy would seem likely. Demography is destiny, as the axiom goes.



That was the year over year change in October in per mile US truckload rates before fuel surcharges and other accessorial charges, according to the latest Cass Linehaul index. That makes it three consecutive months of rate declines versus 2018, with decreases of 2.6% in August and 2.0% in September. Those declines came after 22 months in the measure prior to August, though rates were up 1.6% in October versus September. Meanwhile, the American Trucking Associations' advanced seasonally adjusted For-Hire Truck Tonnage Index declined 0.3% month-over-month in October after rising 1% in September, providing more evidence of a weak freight environment. Compared with October 2018, the SA index increased 1.7%, the smallest year-over-year gain since June. The index is up 3.9% year-to-date compared with the same period last year – not great but not horrible.

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