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Supply
Chain by the Numbers |
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- Jan. 5, 2023
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US Manufacturing Contracts again in December; Mixed Data on Moving Imports back to West Coast; Will China overtake US Economy?; Amazon Cash Flow Headed in Wrong Direction |
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2035 |
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That’s the year that two analysts from Goldman Sachs now predict that China’s economy will overtake that of the US to move into the top global spot, according to a research note this week. But we’ll observe that in 2011, different Goldman Sachs analysts projecte China would be number one by 2025. But not so fast, say some economists in Japan. The Japan Center for Economic Research last week changed its previous forecast that China would overtake the US economy by 2033, saying the change is not likely to occur for at least several decades. Although China's economy, as measured by nominal GDP, will approach that of the US, it will be only 87% as large as that of the U.S. in 2035, according to the analysis. In the long run, China's population decline is forecast to act as a drag on growth. |
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| That was the level of the US Purchasing Managers Index for December, as reported this week by the Institute for Supply Management. That was down from a level of 49.0 in November and puts index below the key 50 mark that separates US manufacturing expansion from contraction, after 29 consecutive months of growth since the last negative reading in May 2020. Also not good, the New Orders Index remained in contraction territory at 45.2, two percentage points lower than the 47.2 recorded in November, in a negative sign for future US manufacturing activity. |
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-$21.5 Billion |
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That was the level of free cash flow less equipment finance leases generated in the 12 months ended Sept. 30, according to analysis this week by the investing web site from The Motley Fool. That compares with positive cash flow generation of another $21.5 billion in 2020, even with all that spending on fulfillment centers, for a swing in a couple of years of some $43 billion dollars – not good. “Even with AWS [Amazon’s web services unit churning out incredible profits, Amazon is now burning through cash at an incredible rate,” analysis said. This is in part why Amazon’s share price fell almost 50% in 2022. |
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That is the share of US importers that told CNBC that they had not shifted any container volumes from West Coast ports in the last year due to risk for delays and a possible strike by the dock workers union. 40% indicated they had moved container volumes to Gulf or East Coast ports. Those results from a survey sent to members of the National Retail Federation and the American Apparel and Footwear Association, among others, which generated 341 responses. Eighteen percent of respondents said they would bring back 10% of their diverted trade, another 12% surveyed said they would bring back 20% of the trade they moved away, and another 12% were more bullish, saying they would bring back 60% of their diverted trade.
