Supply Chain by the Numbers

- Dec. 19, 2019 -

  Supply Chain by the Numbers for Dec. 19, 2019

Amazon to Rule the Parcel World; Boeing Production Stoppage to Hit Overally Economy; Ford Investing in Factories and Jobs in Michigan; US Truckload Rates Fall Again in December


6.5 Billion

That's is how many parcels Amazon will deliver using its own network in 2022, according to new estimates from the analysts at Morgan Stanley. Not only is that a giant number, it will mean that at that time Amazon will deliver on its trucks far more packages in the US than either UPS or FedEx, even given those carriers' large B2B business volumes. Morgan Stanley expects Amazon parcel volumes in-house handled to grow at an astounding 68% annual rate through 2022, to reach that 6.5 billion level. In comparison, if Morgan Stanley is correct, Amazon's number will compare to 5 billion packages in the US in 2022 for UPS and 3.4 billion packages for FedEx. Amazon is using "density and technology to drive efficiency," Morgan Stanley said, noting it is picking off dense urban deliveries from its former parcel partners. As a result of all this, Morgan Stanley lowered its price target on UPS shares to $78 from $85 — about 33% below its current price, as Amazon simply continues to change the face of logistics.



That as a percentage point that the move by Boeing this week to halt production of its troubled 737 Max aircraft could reduce US GDP growth according Wall Street firms such as JPMorgan Chase and Wells Fargo this week. In other words, real growth could say fall from 2% to 1.5%. That is how important the aircraft and aerospace giant is to the economy, as the US' top exporter. Critically, not only will Boeing's production halt, it will also put a significant – and in some cases total – hit on the hundreds of suppliers for the new 737. And many/most of those suppliers will have to cope with the immediate list business with perhaps substantial layoffs. Companies affected range from giant aircraft engine maker GE to many small manufacturers. Prior to the announcement, Boeing was producing 40 737 Max airplanes per month, even as many airlines had stopped buying the planes over safety fears and two terrible crashes.



That's how many new factory jobs will be created from a $1.5 billion investment by Ford in two existing Michigan assembly plants. First, Ford will overhaul a plant in Wayne, MI, just west of Detroit, to build a new Bronco sport-utility vehicle, starting in late 2020, as well as continue production of the Ranger pickup truck. Those plans will add about 2,700 employees, the company said. Some of the investment is also retooling a factory in Dearborn, MI to build battery-powered versions of its top-selling F-150 pickup truck. The auto maker said it also will begin a battery-assembly operation at the factory, which will add about 300 jobs. Ford announced last month said it would spend $6 billion in the US and add or retain 8,500 jobs as part of its new four-year labor agreement with the United Auto Workers. The moves continue the trend of car makers focusing US production on trucks and SUVs, and moving smaller car and sedan production offshore. Last year, Ford idled the Wayne plant and laid off roughly 2,000 workers for several months as it overhauled the facility to build the Ranger instead of the Focus and C-Max small cars that were being produced there.



That was the change in the Cass Linehaul Index for November, as announced this week by Cass Information Systems. The index measures US per mile truckload rates before fuel surcharge and other accessorials. That makes it four consecutive months of year-over-year declines in a soft freight market after a record 29 straight months of increases versus the previous year. New index partner Stifel and its analyst David Ross said that "We believe we have a couple more quarters of downward rate pressure ahead due to soft demand and excess supply." Ross added that "Assuming no significant tightening from these factors, TL rates should remain fairly stable in 2020." Ross also said the Cass Shipments and Freight Expenditures indices were again down in November from their peaks in May and September of 2018, respectively, but both appear to be getting " less bad."