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Supply Chain by the Numbers

- Jan. 28, 2021

  Supply Chain by the Numbers for Jan. 28, 2021

UPS to Exit LTL Market; Hundreds of Ocean Containers Fall into the Sea; Global Economic Forecast for 2021 is Raised; Tensions in the South China See are Escalating




That's how much Canadian carrier and logistics firm TFI International is paying to acquire UPS Freight, the parcel giant's LTL business. That's not a lot of money for a business unit that had revenues of $3.1 billion in 2020, or about four times the sell price for the business. However, the Freight business was slow growing and barely broke even. UPS Freight is estimated to be the fifth largest US LTL carrier, with less than half the revenue of number 1 FedEx Freight. The sale will allow UPS to concentrate its attention and more importantly capital investments in its parcel business, which has seen volumes soar with huge growth in ecommerce, and its logistics unit UPS Supply Chain Solutions. TSI – little known in the US – gets instant access when the deal closes to the US market – and its CEO has already warned that many LTL customers of UPS can expect rate hikes to improve the units profitability in the months after the change in control.




That is the estimated number of ocean containers full of inventory that fell off a cargo ship last week operated by Maersk Line, the sector's largest carrier. The Maersk Essen lost the containers while sailing through turbulent seas from China to Los Angeles, in the latest in what has been a number of incidents in which containers carrying goods worth millions have gone overboard. The containers were lost about halfway through the Essen's voyage to LA. No crewman were injured in the incident, and the ship continued on to LA after a safety check. In November, a ship operated by Singapore-based Ocean Network Express lost as many as 2,000 containers after encountering a storm near Hawaii on its way to Long Beach, CA from China, with the lost goods having an estimated value of $220 million. Historically, failures in lashing systems that hold containers together caused the accidents. But as container ships grow in size, boxes stacked extremely high come under great pressure from pitching and rolling on the seven seas - and sometimes wind up in the drink.




In good news, that is the new forecast for global GDP growth in 2021 from the International Monetary Fund (IMF), up from a projection of 5.2% it issued in October. A key factor in the forecast revision is that the IMF says the decline in economic activity in 2020 wasn't as steep as the organization's economists first thought. The IMF now says global GDP fell 3.5% last year, a significant improvement from the 4.4% decline it expected in October. The IMF also said the better prospects now for mass vaccinations against the coronavirus played a role in its more positive outlook. The IMF also increased its forecast for US economy to 5.1% growth. By the end of 2022, the IMF also forecasts that US GDP will be less than 1.5% below its projected level before the pandemic.





That is how many Chinese aircraft penetrated Taiwan's "air defense identification zone" on Saturday, at the same time a US aircraft carrier group was entering the South China Sea and ultimately passing small islands far from the China coast but which the country claims as its own, a claim rejected by the US and most other countries. On Sunday, China flew another 15 planes into Taiwanese airspace. Stirring things up, a statement from the US StateDept. noted that "Our commitment to Taiwan is rock-solid," adding "The United States maintains its long-standing commitments as outlined in the Three Communiques, the Taiwan Relations Act, and the Six Assurances” – all stating US intention to defend Taiwan from military attack by China. As we have said many times, this is not likely to end well.

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