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Supply Chain by the Numbers

- Aug, 26, 2021

  Supply Chain by the Numbers for Aug. 26, 2021

US GDP Q2 Revision; Air Cargo Spend is Soaring for Many Companies; Walmart Announced New Fulfillment Service; Chinese Worker Supply is Declining



That was the level of US real GDP growth in Q2, according to the most recent estimate this week from the Commerce Dept. That was up just a tick from the 6.5% rate from the first estimate, but a little below consensus estimates from analysts. In Q1, GDP growth was 6.3%. Combined with the Q2 number, it seems almost certain the US will see full year growth of more than 3% for the first time since 2005, before which it used to be commonplace. US GDP actually fell in 2020, making the year-over-year gains easier here in 2021. In good news, however, GDP is now 0.8% higher than it was at its previous peak in the fourth quarter of 2019, before the 2020 pandemic. What will the rest of the year hold? Bank of America Securities has slashed its GDP growth estimate for the third quarter to a 4.5% pace from a 7.0% rate it forecast previously. Overall, economists expect growth of around 7% this year, which would be the strongest performance since 1984.

 $35 Million

That’s how much more apparel giant VF Corp. estimates it will spend on air freight this year than in 2020, as global ocean shipping woes push more global freight to air, according to an article in the Wall Street Journal. It’s actually a rather un-virtuous cycle. Big delays in ocean shipping and sky rocketing rates are pushing many companies to look at the more expensive air option, which in turn is helping air rates to soar as well. The global average rate for air cargo carried on both passenger and dedicated cargo flights currently is about 3.39 per kilogram, up 6% from January and 14% from a year earlier, according to Clive Data Services. But from Asia to US, rates have risen 24% over the past year, to $7.66 per kilogram. Children’s apparel manufacturer Carter’s recently said it is currently allocating “several years’ worth” of additional air freight spending in response to production delays in Asia. Wells Fargo Securities says many retailers will likely increase prices in the months ahead to compensate for the increase in shipping costs, both air and ocean, though VF says it will keep its prices steady until 2022.




That is about the number of US cities that are now served by Walmart’s house delivery platform, Spark Driver. Now, Walmart announced this week it was going to leverage that platform to make deliveries for other merchants both large and small in a program named Walmart GoLocal that will provide last mile delivery services. Walmart says other retailers can choose to use the service for a variety of delivery types, including scheduled and unscheduled deliveries, and same-day delivery. GoLocal’s last-mile capabilities will be handled by gig workers from the Spark program – the same drivers that support Walmart’s same-day grocery delivery. Also, retailers using GoLocal don’t have to sell on’s marketplace, as this isn’t a fulfillment service where Walmart both houses and delivers third-party inventory — it’s just the last-mile delivery portion.




That was the share in 2021 of 15 t0 59-year olds – the working age population – as a share of China’s total population. That was down from 70% of the total in 2010. There are actually fewer people in that demographic – 894 million – currently than the 939 million 11 years ago, as China is facing a real labor crunch that is hampering economic growth. China’s workforce is expected to drop by about 35 million over the next five years, according to official estimates. In addition to the demographic changes, the Wall Street Journal reported this week, many young Chinese workers are increasingly shunning factory jobs and more migrant workers are staying home rather than moving to urban areas and jobs in manufacturing. The trends will also “will also make it harder for China to keep supplying the world with cheap manufactured goods,” the Journal article notes. “China has long exhausted its demographic dividend,” said Shuang Ding, an economist at Standard Chartered Bank in Hong Kong.

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