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Supply Chain by the Numbers

- March 13, 2020 -

  Supply Chain by the Numbers for March 13, 2020

Toilet Paper Supply Chain Breaks; Truckload Rates Heading Down, Down; Massive Shipments of Empty Containers to West Coast Ports; Many Companies have No Plan for Disruptions from China



That is how much one seller on eBay was asking this week for a pack of 12 double rolls of Quilted Northern toilet paper, as the great US bathroom tissue crisis is causing consumers to panic. As customers stock up big time, many stores are simply out of TP, or have implemented rationing systems. Amazon is out of most toilet paper offerings, and SCDigest heard of an example in which a Costco was loading fresh store deliveries right from the truck trailer into shopping carts. This week, a writer for noted that "Browsing Amazon here in the American South, I still had a few options. Through Prime, I could for example, purchase rolls of compressed toilet tissue tablets. It's a tube of compressed TP that rides in your pocket until you're ready to use them. "Just add a tablespoon of water and you've got a luxurious and hygienic wipe ready to use," said the description. Just $14 for 50 wipes. Only 10 left in stock as of this writing." SCDigest hopes you are all stocked up.



That rather amazingly the share of companies that say they do not have a plan in place to address supply disruptions from China. That according to a new survey of manufacturers from the Institute for Supply Management. It is possible, we suppose, that many of that 44% do not source anything from China, and that's why they have no plans – but maybe not. Other data from survey include: 57% said there are longer lead times for tier 1-sourced components from China, with the average lead times more than doubling compared with the end of 2019. Manufacturers in China report operating at 50% capacity with 56% of normal staff. 62% of respondents are experiencing delays in receiving orders from China. 53% are having difficulty getting supply chain information from China. 48% are experiencing delays moving goods within China. And 46% report delays loading goods at Chinese ports.



That is the TEU capacity of the container ship MSC Mia, which currently holds the joint record as the world's largest container vessel. That ship, as well as the 23,656 TEU MSC Nela, will be soon making their first journeys into US west coast ports. Why? To deliver fresh supplies of empty containers, the lack of which have been constraining US exports of agricultural and other products and other Asian destinations. The supply of empties has shrunk dramatically, as there has been a big drop in imports from China due to curtailed production as a result of the coronavirus. With fewer full containers coming in, there are fewer empties to come back out. However, "This container imbalance is however expected to be short-lived as Chinese exports are picking up again," the maritime analysts at Alphaliner predicted, adding: "Volumes might even peak in April, as European and US importers will sooner or later have to replenish their stocks of products made in China."



That was the drop in US per mile truckload rates in February before any fuel surcharge or accessorials, according to the latest Linehaul Index from Cass Information Systems. That was actually not quite as bad as the 6.3% drop seen in January, but the measure is likely to see a steep drop in March as the coronavirus crisis pounds the economy. In fact, per mile rates have been falling year-over-year almost every month since late 2018. In the report from Cass partner Stifel, analysis David Ross notes that "At the Stifel Transportation & Logistics Conference last month, the common outlook from industry executives was that supply and demand should find equilibrium around mid-year, at which point spot rates should resume their premium to contract rates and give contract rates room to rise again in 2021." But that was before coronavirus, which will certainly decrease demand substantially.

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