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Supply Chain Snapshots Week 2

September 16, 2022

Supply Chain Snapshots - News & Trends You Should Read This Week

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Friday, September 16, 2022

Looking for a quick summary of the top supply chain and logistics news and trends making waves this week? Read our weekly "Supply Chain Snapshots" for helpful summaries and commentary to get you up-to-speed on the news you need to know.

#1 NRF and Commerce Data Highlights Retail Sales Growth in August

Read the full article from Supply Chain Management Review here

  • U.S. retail sales unexpectedly went up in August as Americans increased spending on back-to-school supplies, vehicles, and dining out amid lower gasoline prices (dropped 20% from a record peak in June).
  • August retail sales—at $683.3 billion—rose 0.3% compared to July, while showing a 9.1% annual increase despite ongoing 40-year inflation highs.
  • Non-store retailers, including ecommerce sales, posted an 11.2% annual gain, while retail trade sales rose 8.9% annually.
  • According to NRF Chief Economist Jack Kleinhenz, household spending remains constant even as cost continues to rise, likely because of wage growth and the use of pandemic savings. “This retail sales report comes amid mixed signals from the broader economy that show the headwinds against the consumer are strengthening.”

#2 We Haven’t Completely Dodged a ‘Disastrous’ Rail Strike

Read the full article from FreightWaves here

  • After 20+ hours of negotiations, The White House announced that an impending rail strike by 125,000 freight-rail employees was averted. President Biden announced that rail companies and rail workers’ unions had come to a tentative agreement avoiding a work stoppage, but troubles on the railroads have not let up fully.
  • There are still risks, as the deal has to be approved by union members by September 29. This is a similar outcome to rail strikes in 1982, 1986, and 1992, which were ended within a few days by Congressional action.
  • Around 78% of union members surveyed in August rejected a previous version of the agreement, which did not include time off.
  • Despite the agreement, there will still be friction in the rail network, which had already started closing from September 9 in anticipation of the action. Volumes of backlogs built up at rail ramps and mispositioned equipment needs to be dealt with.
  • Did you know that 20-30% of U.S. imports move on rail (including 35-40% of all ocean containers)? There just isn’t enough trucking capacity to make up for this loss of surface lift. Simply put, there’s very little we can do to “get around” a railroad shutdown. Learn more in this new post by our Supply Chain Economist Chris Rogers.

#3 Supply Chain Automation Technologies are Here to Stay

Read the full article from BizTech here

  • Retailers, logistics firms, and other companies are increasingly turning to artificial intelligence, process automation, and robots to make supply chains more efficient in response to the impacts of the pandemic and high inflation.
  • Supply chain automation tools can improve and optimize decision-making, reduce costs, streamline operations, and make the delivery of goods more reliable by taking humans out of the decision-making process.
  • Simon Ellis, who leads IDC’s global supply chain strategies practice, believes that supply chain automation technologies will become increasingly popular. “For one, robots picking and sorting products on warehouse floors don’t require health insurance or experience a learning curve, reducing costs, and increasing productivity.”

#4 World's Largest Container Line is Rerouting its Fleet to Avoid Collisions with Endangered Blue Whales, the Largest Animals on Earth

Read the full article from Business Insider here

  • The Mediterranean Shipping Company, the largest container line in the world, has rerouted its ships near the coast of Sri Lanka after research proved it will help reduce collisions with endangered blue whales.
  • The action was taken in response to research conducted by the International Fund for Animal Welfare (IFAW) along with other groups, scientists, and universities.
  • The vessels passing through Sri Lanka’s coastal waters will now travel about 15 nautical miles to the south from the previous route, reducing the risk of a ship striking a whale by 95%.
  • Advocates hope their decision could help lead to permanent changes to the official shipping lane that would impact all vessels.

#5 Ocean Freight Survival Guide with Nathan Strang

Read the full article from The Logistics of Logistics here

  • The past few years have sprung unprecedented challenges on the ocean freight market with increased consumer spending, supply chain disruptions, labor shortages, a war in Europe, and high fuel costs to name a few.
  • In the podcast interview, Flexport’s director of Ocean Trade Lane Management, Nathan Strang, discusses current shipping challenges and why logistics teams need an ocean freight survival guide. Here are some key tips included:
    • Continuously assess your supply chain plan to understand volumes, transit times, assumptions, carriers, ports, and risks.
    • Work with an NVO (Non-Vessel Owning Common Carrier) like Flexport to understand potential options that will reduce costs, transit times, and mitigate risks.
    • Leverage technology and data insights from your NVO. If your NVO doesn’t provide that edge, perhaps you should call Flexport. (Flexport provides customers a strategic operating model that powers transparent, agile, efficient, and profitable global supply chains all in one place.)

#6 Santa Claus is Coming to Town Early - Toy Inventory Strategies

Read the full report from Flexport Research here

  • How have toy makers reacted to supply chain disruptions over the past two years? Is there evidence of a shift in activity patterns for this highly seasonal industry?
  • Using corporate financial data, this report finds there’s been a surge in toy inventories. A review of corporate earnings calls finds the inventory build-up is the result of deliberate actions by manufacturers and retailers, who are seeking to avoid the shortages which bedeviled holiday shopping in 2020 and 2021.
  • Q3 (i.e. the three months to Sept. 30) represents peak revenues as toy wholesalers book their revenues to end-retailers—general retail stores and e-commerce platforms—that are outside the sample group. Retail sales of toys to consumers peak in November and December.
  • Toy and video game manufacturers and retailers have also increased their prices, citing confidence that toy buyers won’t want to disappoint their recipients. The continued increase in revenues suggests that price rises may not have deterred shoppers during the off-peak season.
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