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Supply
Chain by the Numbers |
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- March 30, 2023
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Continued Collapse of Ocean Container Rates; Tesla Energy Credit could be Gone; Walmart Robot Floor Scrubbers Take Inventory Too; Parcel Volumes Fell in 2022 |
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$75% |
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| That is about by how much ocean container rates are being discounted in contract negotiations right now versus the same time last year. That according to an article this week in the Wall Street Journal. Importers and container lines traditionally reach agreements for the fall shipping season by mid-April, for contracts that take effect May 1. Spot market rates have collapsed more than 90% from pandemic-era highs, as shipping demand has declined. The average spot rate to ship a container from Asia to the U.S. West Coast as of Thursday was $1,289, according to transportation data specialist Xeneta, about $668 lower than contract pricing – but also dragging contract rates down too. Some shippers say they aren’t clamoring to sign contracts because they have no fear of not being able to securing space on ships in the coming months, as supply far exceeds demand. |
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| That is the current tax credit buyers of the base version of Tesla’s cheapest car, the Model 3, are likely to lose when rules are soon finalized for the Inflation Reduction Act, signed into law last year. Why? Because its battery cells are made in China, while the new law tries to aggressively promote electric vehicles to be produced in the US. Now, a new report from a group called Securing America’s Future Energy says China’s dominance in the battery supply chain is a result of the failure to account for the toll that the extraction and processing of critical minerals, including lithium, nickel and cobalt and so-called rare earth minerals, are taking on workers and the environment, often in lower-income countries. The report urges the US to band together with the European Union and Japan and agree to only source these minerals if produced with high standards. If that happened, the rest of the world would be forced to follow suit, the report says. |
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2% |
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That was the decline in parcel volumes in 2022, as the slowdown in ecommerce is impacting the sector. That according to a new report this week from Pitney-Bowes. That compares to a 6% rise in 2021 and a record 33% jump in 2020. The decline last year took US parcel volume down to 21.2 billion in 2022, from 21.7 billion in 2021. But that decline didn’t put much of a hit on parcel carrier profits, which the report says were $198 billion in 2022, an increase of 6.5% from $186 billion in 2021. Volumes down and profits up? Sounds like rates were way higher last year. By revenue, UPS generated the highest carrier sales at $73 billion, followed by FedEx ($65 billion), USPS ($31 billion), Amazon Logistics ($24 billion), and the combined revenue from smaller carriers reaching $4 billion. However, Pitney-Bowes forecasts modest annual parcel volume growth in 2023 and through 2028. |
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That incredibly is how many photos mobile robots across 600 stores in Walmart’s Sam’s Club warehouse stores take each day to capture inventory levels on the shelf. More on that in a second. Here’s the funny part: these robots, according to a story on CNBC, are also the machines that autonomously clean the floor at night – one per store. These robot scrubbers are equipped with inventory intelligence towers that take photos of everything on the shelves every day. But there are challenges. Inventory could be in the back of a shelf and hard to see, and there are also shadows to deal with. That’s where AI/ML comes to the rescue. Walmart has trained its algorithms to discern across different brands and their inventory positions, taking into account how much light there is or how deep the shelf is, with more than 95% accuracy. When a product gets to a pre-determined level, the stock room is automatically given a task to execute a replenishment. Clean floors and inventory accuracy - what a combination.
