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Supply
Chain by the Numbers |
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- April 23, 2020 -
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Walmart Sales Soaring; US Steel Production Falling Fast; the UK almost Out of Warehouse Space; Now You have to Pay to Get Someone to Take Oil Off Your Hands |
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20% |
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That's been the rise in Walmart's US store sales in the past four weeks, according to an internal document reviewed by the Wall Street Journal. What's more, sales on Walmart.com rose over 30% over the past eight weeks. But results at Target stores, more dependent on non-food sales than Walmart, showed the positive and negative for retailers in its recent results. While grocery and other staples sales have soared, higher margin apparel sales fell sharply, leading Target to withdraw its financial guidance for the quarter and full year. Interestingly, Walmart has laid out several phases of consumer buying behavior as the crisis unfold. As the coronavirus first emerged, customers started "proactive health-minded buying," such as hand sanitizers. Then shoppers prepared for life mostly at home, starting what Walmart dubbed "quarantine living preparation." The next phase, what Walmart called "restricted living," means shoppers are preparing to home-school and work from home. The next phase, what Walmart called "restricted living," means shoppers are preparing to home-school and work from home, in which consumers will severely restrict store visits and favor online fulfillment.
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That is the rate of factory utilization at US steel mills right now, down from 80% last year, as demand for steel falls steeply as with most everything else except groceries and face masks. US steel production has fallen by about one-third in just three weeks. Demand for steel of course is collapsing as automakers and other manufacturers close their own factories or dramatically reduce output. One steel company says its "pipe inventory is now massive" after a slew of cancelled orders, the Wall Street Journal reports. The spot-market price for hot-rolled coiled sheet steel is $485 a ton, off 18% from a month ago and down nearly half from a recent high in July 2018. And its likely to get worse. The analysts at Credit Suisse expects sheet-steel demand to slump 50% in the second quarter from a year ago. |
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90% |
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That is the share of third-party warehouses in the United Kingdom that are now at full storage capacity, according to a new report by the UK Warehousing Association (UKWA). The report suggested the overall market had just 10% capacity available. According to the UKWA, that remaining capacity is likely to be full by early May. "With outbound flows severely reduced or stopped altogether, as stores and factories are closed, inbound flows have become a mounting problem," he said. "Inbound supply chains continue towards destination, arriving at ports, requiring receipt, handling, onward distribution and storage." UKWA currently estimates there are around 1.5 million pallet positions available across the country, largely in third-party warehouses, to which UK retailers are increasing having to turn for storage as their own distribution centers are full. This weekly volume is likely to require storage of some 750,000 pallets until lockdown is eased and retail stores reopen, meaning a crisis is imminent.
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That was price of a barrel of US oil early this week, meaning if you wanted someone to take a tanker of oil from you, you had to pay them for the privilege, as the price of near-term contracts actually went negative for the first time. The key issue: with rapidly falling demand, there literally is no place to park oil taken out of the ground. With demand down 30% worldwide due to the coronavirus pandemic, and the main US storage hub in Cushing, Oklahoma expected to fill up in a matter of weeks, very few oil traders want to be stuck with oil barrels that they have to take delivery on at some point during May. Apparently, they can find some storage space somewhere if you pay them $37 per barrel for privilege. And just think that in July of 2008, oil was at $144 per barrel. The storage hub in Cushing was only half full four weeks ago - now it is 69% full, according to U.S. Energy Department data, and heading higher. Some oil is being stored in giant tankers parked in the ocean outside of oil processing ports, awaiting prices to rise to a level producers find acceptable. Good luck to them.
