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Supply
Chain by the Numbers |
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- May 6, 2021
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US PMI for April Falls but Still Very Strong; Rolling Up Amazon Resellers; Maersk Line Sees Big Q1 Profits; US Birth Rate Continues to Fall, with Major Ramifications |
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6.7 |
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That was the level of the US Purchasing Managers Index for April, according to data released last Friday from the Institute for Supply Management. That was a decrease of 4 percentage points from the March reading of 64.7, but still left the index well above the 50 mark that separates US manufacturing expansion from contraction. This April reading indicates expansion in the overall economy for the 11th month in a row after contraction in April 2020. The New Orders Index registered 64.3, a declinine of 3.7 percentage points from the March reading of 68, but still a strong number in a bullish sign for future US manufacturing activity. But watch out! The Prices index came in at a red hot level of 89.6, meaning nearly 9 in 10 companies are seeing rising material and input costs, as supply chain inflation seems to be here again for the first time a long time. |
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| That is how much on average container freight rates at giant Maersk Line were up in Q1 versus the first quarter of 2020, according to its parent company’s earnings report this week. Those frothy rates combined with a surge in volumes saw Maersk revenues rise 30% to $12.44 billion, while profits jumped to a $2.7 billion, up from just $197 million in the first quarter of last year, boosted by major retailers rebuilding inventories that were pulled down in the first half of 2020 due to the coronavirus pandemic. The ocean carrier also said container volumes rose 5.7% year-over-year in Q1. Maersk CEO Soren Skou said he expects the great economic times for container ships that began late last summer will continue until the end of 2021 at minimum. |
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4% |
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That was the decline in the US birth rate in 2020, according to the US Centers for Disease Control in a press release this week. That after the US has been seeing 2% year over year declines in birthrates from 2014 to 2019. The US birth rate in 2020 was the lowest since 1979, and was once again, as with 2019, below the replacement rate, meaning more people died in the year than the number of babies that were born. Declining birth rates are an issue across the globe, with significant declines in both rich and poorer countries almost everywhere except in many parts of Africa. The changing demographics will have a huge impact on business, the economy and society as a whole, and thus on supply chain. Perhaps the most important question: How will a shrinking number of younger workers support a growing elderly population? |
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That is one estimate of the number of third-party sellers using Amazon’s Marketplace today, and their ranks are growing rapidly, with more than 1 million sellers joining the platform in 2020 alone. This in turn has created a new industry of companies looking to “roll up” small third party sellers and leveraging technologies, business savvy and scale to help those businesses growth faster. Just this week German-based company Razor Group, a startup acquiring Amazon sellers and growing them into bigger, multichannel businesses – announced it has closed financing of $400 million to scale its own efforts in the space. $375 million of that money will be used to buy businesses typically already with annual sales of between $1 million and $15 million. Founded in August 2020, Razor has already acquired some 30 Amazon sellers. Competitor Thrasio, one of the older players in this new market, was founded in 2018 and has 100 brands in its portfolio. Thrasio has in the past estimated to Ingrid Lunden of TechCrunch.com that there are probably 50,000 businesses selling on Amazon via Fulfilled by Amazon reaching $1 million plus in revenues.