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Supply Chain by the Numbers

- Dec. 15, 2022


Supply Chain by the Numbers for Dec. 15, 2022


Ocean Container Volumes Shrinking; Amazon Sued by Equipment Supplier; Inflation Remains a Major Issue; Percent of Retail Retuns Stays Same in 2022



That was the decline between August and November in the volumes of containers coming into the US from China, as global trade continues to shrink rather dramatically. Meanwhile, the monthly analysis from Descartes Systems found November 2022 overall US container import volumes declined 12.0% from October, and were down 19.4% versus 2021. That put volumes only 2.8% higher than pre-pandemic levels in November 2019 now three years later. While some of the fall from October volumes was due to the impact of the Thanksgiving holiday week in the US, Descartes noted that November 2022 had the greatest October-to-November decline since 2016. According to a report on CNBC, Asia-based global shipping firm HLS recently told clients it is predicting a further 2.5% decline in container volumes and a nearly 5-6% increase in capacity in 2023, which will continue to pressure rates next year, as spot market rates have now collapsed below break-even levels for the carriers.




$280 Million

That is the level of damages being sought by Vietnamese warehouse equipment manufacturer Gilimex Inc., against Amazon, claiming that the ecommerce giant reneged on promises made early in the Covid-19 pandemic to support the supplier with millions of dollars in new purchases. That according to a story this week in the Wall Street Journal. Gilimex, which makes steel and fabric storage containers for use in automated warehouses, says in the lawsuit filed Tuesday in New York that it dramatically expanded its operations over eight years to accommodate Amazon’s rapid growth, adding sites and workers and walking away from business from other retailers, such as IKEA. The suit alleges Amazon promised to help guard Gilimex against business downturns by giving it advance notice of changes in Amazon’s demand forecast and by scaling down purchasing gradually in case of a downturn so the manufacturer could gradually ramp down production. Gilimex claims Amazon pulled back its forecast for the year sharply in May, to far lower levels than projected and refused to compensate the supplier. The result: “the immediate and virtually total destruction of Gilimex’s business.”




That is the new estimate for the rate of inflation in the US in 2023, according to the Federal Reserve Bank this week. That is surprisingly up from the Fed’s previous forecast for prices to rise 3.1% next year. We say surprising because the Consumer Price Index for November from the Bureau of Labor Statistics found this week that inflation rose only 0.1% in November from October, and fell to a rate of 7.1% versus 2021, down from a 7.7% rise last month. But 7.1% inflation is still dangerously high, even if the rates is coming down, and even the milder 3.5% projected now for 2023 is still almost twice the Fed’s target of 2%, and capable of really damaging the economy.




That is the percent of retail purchases being returned in 2022, according to a new survey from the National Retail Federation (NRF). That was in a statistical tie with the 16.6% return rates for 2021, as reported in the same NRF survey a year ago. But as total retail sales continue to grow, that means the value of returned goods has risen apace, and is now on track to hit $816 billion this year. That is a problem because for every $100 in returned merchandise accepted, retailers lose $10.40 to return fraudulent returns, the NRF estimates. Examples of fraud include returns of used, non-defective merchandise, and the return of shoplifted or stolen merchandise. One-fifth (20%) attributed return fraud to organized retail crime. Surprisingly, the data also showed that on-line return rates have fallen and are now consistent with the overall rate of returns, for the first time since on-line data has been captured as part of the survey in 2019. On-line return rates decreased from 20.8% in 2021 to 16.5% in 2022.

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