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Supply Chain by the Numbers

- June 16, 2022

  Supply Chain by the Numbers for June 16, 2022

Retail Sales Fall in May; Amazon Delaying FC Openings; FedEx getting Shareholder Friendly; Thieves Steal 10 Valuable Ocean Containers Near Mexico City




That was the decline in US retail sales in May versus April, according to seasonally-adjusted data from the Commerce Department this week. The drop in retail sales is another sign that the US economy is losing momentum as the Federal Reserve takes action to raise interest rates in face of soaring inflation. A sharp decline in vehicle sales, due to still high prices, low inventory and rising interest rates for car loans, was an important factor in the decline. Consumers also reduced spending on goods such as furniture, electronics and online purchases, the Commerce Department data says, confirming reports from retailers such as Walmart and Target. But even stripping out auto sales and gasoline, retail sales rose just 0.1% in May, well behind the pace at which prices increased last month. As a result of this new data, JPMorgan Chase reduced its forecast for US gross domestic product growth to an annual rate of 2.5% in Q2 from 3.25% previously. Data firm IHS Markit cut its growth estimate more severely, to just 0.9%. SCDigest believes there is a good chance we will see a second straight quarter of negative growth.



That is when a large Amazon fulfillment center in Davenport, Iowa scheduled to open in September may now start shipping orders – if then. That news from a report this week on web site. That isn’t the only delay in previous plans for Amazon FC goes lives. Another fulfillment center in Alcoa, Tennessee, had its opening delayed from last month to June 2023. A $200 million fulfillment center in San Antonio's East Side neighborhood has also been delayed. And Amazon has also reportedly canceled plans to build fulfillment centers in Churchill, Pennsylvania, and Austin, Texas – with the company needing to tell local communities that all the expected new jobs from the Amazon facilities are not going to materialize at least for some time. That after recent reports Amazon is looking to walk away from leased properties or sublet warehouse space of as much as 30 million square feet, as it just has too much capacity right now with slowing sales growth.




That was the rise in FedEx’s stock dividend for the current quarter, the company announced this week, among several moves made to improve returns for its shareholder. That after rival UPS had lifted its quarterly dividend 49% in February. FedEx also said it is tying executive compensation as well as investment levels to shareholder returns. Capital expenditure is going to be viewed in terms of the percentage of revenue, with revenue forecast having been reduced from previous budgets for fiscal years 2023 through 2025, meaning a reduction in planned capital investment. The moves comes barely two weeks after founder Fred Smith handed over the reins of FedEx to his anointed successor, Raj Subramaniam. Shareholders liked the news, sending FedEx’s stock price up about 15%.




That’s how many ocean shipping containers laden with valuable cargo were stolen on June 5 near Mexico City, with the news being reported in the US just this week. According to local press reports, about 10 armed thieves forced their way into a private container yard near the port of Manzanillo, subdued employees and then took several hours to search for the shipping containers they wanted – implying they had inside information. The targeted containers incredibly held in part partially refined gold and silver ore, as well as television sets. After identifying the containers they wanted, the thieves then apparently hooked them up to trucks and drove way, with no sign of the containers, or their contents, ever since. Horacio Duarte, the head of Mexico's customs service, confirmed the robbery and said organized crime was involved.

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