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Supply Chain by the Numbers

- June 10, 2022

  Supply Chain by the Numbers for June 10, 2022

Target, other Retailers Cutting Inventories; World Bank Lowers Growth Forecast; Gas Prices Reach New Record; CSX Labor Woes




That was the decline in profits seen by Target in its most recent fiscal quarter, according to the company’s earnings report this week. Target said sales of big TVs and small kitchen appliances that Americans loaded up on during the pandemic have faded, leaving Target with a bloated inventory that it said must be marked down to sell. In response, Target is canceling orders from suppliers, particularly for home goods and clothing, and is slashing prices further to clear out amassed inventory ahead of the critical fall and holiday shopping seasons. Shoppers are also focusing more on non-discretionary items like groceries as inflation soars. Target rival Walmart said at its annual shareholders’ meeting last Friday that 20% of its elevated inventory were items the company wishes it had never procured.



That incredibly was the average price for a gallon of gasoline in California on Thursday, according to the daily tracker from AAA. The average price of a gallon of gas nationwide also exceeded $5 on Thursday for the first time. In all 50 states, the average price of a gallon of gas stood above $4.40, but costs ranged considerably across different regions, as drivers in the West and Northeast suffered the highest prices and drivers in the Southeast saw the lowest. In all 50 states, the average price of a gallon of gas stood above $4.40 But on average, it now takes US consumers $95 to fill up their tanks. Diesel prices of course have been soaring too, pushing up the cost of everything.




That is the revised forecast for global economic growth for 2022, according to a new report this week from the World Bank. That would be down from the 5.9% growth seen in 2021, coming off weak 2020 numbers, and it is also down sharply from the previous World Bank forecast for 2022 of 4.1% global growth issued in January. It could get ugly, the report says. “Several years of above-average inflation and below-average growth are now likely, with potentially destabilizing consequences for low- and middle-income economies. It’s a phenomenon – stagflation - that the world has not seen since the 1970s,” the report warned. On a more positive note, The United States is unlikely to suffer an economic downturn, despite sky-high inflation, US Treasury Secretary Janet Yellen said Thursday. We’ll see.




That is the current attrition rate for railroad crew at CSX, up from 7% recently. That may not sound like much, but this week CSX CEO Jim Foote said the company like so many others is facing a significant labor shortage, so much so that the company has recently been forced to turn away freight business. The labor shortage for most carriers is resulting in delays, with dwell times for intermodal containers at terminals on the west coast rising over the past months. At the Los Angeles and Long Beach complex, for example, they rose from 7.7 days in March to 9.6 in April. At CSX, a recruitment campaign added in 1,000 new rail workers last year, but that just about covered the number of employees who left the company over the same period.

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