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Supply Chain by the Numbers

- Aug, 5, 2021

  Supply Chain by the Numbers for Aug. 5, 2021

July US PMI Down but Still Strong; Driver Shortage has Carriers looking Outside of US; Almost No Warehouse Space Left Near Los Angeles; Amazon DSP Drivers told to Ignore Truck Safety Issues?



That was the level of the July Purchasing Managers Index for July, as released Monday by the Institute for Supply Management (ISM). That was was down 2.4 percentage points compared to the June. Even so, it still means the index is well above the 50 mark that separates US manufacturing expansion from contraction. It also means there has expansion in the overall economy for the 14th month in a row after the contraction in April 2020. The PMI has been well above 50 for each of the past 12 months. The New Orders Index also dropped in July, falling a small 1.1 percentage points to a still robust 64.9, in good news for future US manufacturing activity. Supply chain inflation remains a big issue. The Prices Paid Index was 85.7, down 6.4 percentage points compared to the June figure of an almost unheard of 92. Still, that mean that in July 85.7% of companies saw on average rising prices for commodities, components and other inputs.


That is the growth in business since before the pandemic for a company called Visa Solutions, an immigration agency with a focus on the transportation industry and drivers. The current US driver shortage is so severe right now it has carriers and others looking internationally to recruit drivers for work in the US, with the net spreading from Canada to South Africa. That according to an article this week in Bloomberg. Use of foreign workers involves several major hurdles, such as visa limits and complicated immigration rules. Bloomberg cites an exec at gasoline delivery firm Petroleum Marketing Group as saying that of the 24 drivers the company has tried to hire through a federal immigration program, only three have gotten through all steps of the verification process. However, some in the trucking industry now see an opening to overcome those barriers, with the Biden Administration creating a new task force to address the supply chain problems holding back economic growth, which likely could include the driver shortage. If the drivers can speak English, it makes the process somewhat easier, experts say. Canada already has an expedited process for bringing in foreign drivers.




That’s how many years warehouse owners in the Los Angeles area are now requiring companies to commit to in new leases for space, down from the long-time standard of 3 to 5 years. That according to Carl DeLuca, head of real estate in the Americas for DHL Supply Chain, as quoted this week in the Wall Street Journal. They reason landlords can demand such commitment: it’s supply and demand, and demand is overwhelming supply. “You can literally count on your hand at best how many spaces are available in that entire region,” DeLuca added. There is a space issue around major ports across the country, but is especially acute now near the giant Los Angeles/Long Beach complex. Real-estate group CBRE said in a recent report that warehouse lease rates in the Inland Empire, the industrial zone east of Los Angeles, are up 24.1% year-over-year. Vacancy rates in Q2 fell to a record low 1.7% in the area. Part of the issue is retailers wary of ocean shipping delays are bringing in Christmas merchandise extra early, starting in June for some.




That is how many delivery drivers are employed by some 2000 independent companies to handle Amazon deliveries as part of the on-line giant’s Delivery Service Partners program. Why is that in the news this week? Because CNBC reported that many of the private firms are instructing workers to bypass daily inspections intended to make sure vans are safe to drive, after it interviewed 10 drivers working in several states. Amazon requires contracted delivery drivers to inspect their vehicles at the beginning and end of their shift as a safety precaution. But some drivers say they’re pressured to ignore damage and complete the inspections as quickly as possible, so that delivery companies can avoid taking vans off the road. If delivery companies take a van off the road, they risk forfeiting valuable package routes and drivers may lose a shift, the CNBC report found. “When safety protocol is broken, we take various actions including ending our relationship with a DSP [delivery service partner] if warranted,” Amazon said in response to the CNBC report.

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