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Supply
Chain by the Numbers |
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- Oct. 6, 2022
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Container Lines Cancelling Sailings in Peak Season; New Manufacturing Orders Now Declining; Inventory Levels Soaring at Nike; Amazon Workers in New York Walk out Over Safety Issue |
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That is how many scheduled sailings to the US West Coast from Asia have been cancelled by ocean container shipping lines for the two weeks starting October 3. That according to shipping data providers Xeneta and Sea-Intelligence and the Wall Street Journal. There have been an additional 21 sailings to the East Coast from Asia voided. All this in what is supposed to be peak season for importers and carriers. “The downturn pace in recent weeks has been very fast and it looks like carriers misread the low volumes of a nonexistent peak season,” says Peter Sand, chief analyst at Xeneta. After a number of voided sailings to the US West Coast, Mediterranean Shipping Company said in a letter to customers that this was “due to significantly reduced demand” during the past few weeks. Rates are sinking as a result. It now costs about $3,900 to move a 40-foot across the Pacific on the spot market, compared with $14,500 at the start of the year and more than $19,000 in 2021, according to the Freightos Baltic Index. |
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| That was the level of the important New Orders Index in September, in data released this week from the Institute for Supply Management. That was down 4.2 percentage points from the 51.3 recorded in August, but more critically put it below the key 50 mark, meaning on average new orders were falling. The overall Purchasing Managers Index (PMI) came in at 50.9, down 1.9 percentage points from the August number, but still barely above the key 50 level that separates US manufacturing expansion from contraction. And the trajectory is not good, with declines in the PMI in June and July, followed by a flat score in August but now another fall in September. It was also the lowest level of the PMI since May 2020, when it registered 43.5. |
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50+ |
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| That is how many workers at an Amazon fulfillment center in Staten Island, NY, were suspended this week, after roughly 100 warehouse associates on the night shift refused to work for several hours on Monday evening. Why the brief work stoppage? It was related to a fire that broke out in a trash compactor used on corrugate, according to Amazon Labor Union (ALU) officials. This is the same FC where earlier this year workers voted to become the first FC to unionize. “The workers didn’t feel safe going back to work. They were engaging in rights that have been protected for 85 years under the National Labor Relations Act,” said Seth Goldstein, an attorney for the ALU. But it should be noted the workers were suspended with pay while Amazon investigates. The suspensions took place less than 10 days before warehouse workers at a separate Amazon warehouse near Albany, New York, are slated to vote to become the second Amazon workforce to join the makeshift ALU. |
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That was the huge rise of North American inventory at Nike in its most recent quarter, the company reported this week. Overall global inventories were up 44%. So you can add Nike to the list of brands and stores discounting excess merchandise to clear it off shelves – news which caused Nike’s stock price to tumble about 10%, before regaining a few points the last couple of days. “We effectively have a few seasons landing in the marketplace at the same time, creating a glut", Nike CEO John Donahoe said on a call with analysts. Donahoe explained that when Nike factories in Vietnam and Indonesia had to close after Covid-19 outbreaks, goods arrived late for this year’s spring, summer and fall seasons. Then Nike’s upcoming holiday season orders arrived earlier than planned. Meanwhile, the brand still has merchandise orders in transit.
