Article
First Things First
The Fastest Five Recap - August Edition
August 10th, 2022 · By Callum Berry
We hope you all enjoyed Mercado’s First Things First live show that aired yesterday. Our CEO and host Rob Garrison had an insightful conversation with Dan Gardner (founder of Trade Facilitators) about his experience in the supply chain industry.
If you missed it, don’t worry—you can still watch it here.
As with every show, Rob gave us the latest updates on some of the hottest goings on in the world of supply chain industry in a segment we call ‘The Fastest Five’. If you’re looking for a little bit more, look no further! We’re here to give you an in depth breakdown of what he discussed, this month focusing on the theme “What’s up and what’s down”.
And there’s certainly a lot to discuss…so let’s get started.
If you missed it, don’t worry—you can still watch it here.
As with every show, Rob gave us the latest updates on some of the hottest goings on in the world of supply chain industry in a segment we call ‘The Fastest Five’. If you’re looking for a little bit more, look no further! We’re here to give you an in depth breakdown of what he discussed, this month focusing on the theme “What’s up and what’s down”.
And there’s certainly a lot to discuss…so let’s get started.
Pressure Relief From the Fed
Author: Nathan Bofo
Article: Supply Chain Bottlenecks Clearing Up – Axios
Article: Supply Chain Bottlenecks Clearing Up – Axios
Supply chain issues are beginning to clear up as consumer spending returns to a more standard mix of goods and services.
The New York Fed's Global Supply Chain Pressure Index (GSCPI) fell for the third straight month in July, hitting its lowest point since January 2021. For those less familiar with the role of the index, supply chain pressure essentially refers to how much the economy relies on the supply chain to manage the macro and micro economic landscape.
Right now, the index is 184 points above “normal” levels, but down from an all time high of 432 in December. The supply chain industry isn’t out of the woods yet, but there remains some cooling down that is needed from the hectic past two years.
The New York Fed's Global Supply Chain Pressure Index (GSCPI) fell for the third straight month in July, hitting its lowest point since January 2021. For those less familiar with the role of the index, supply chain pressure essentially refers to how much the economy relies on the supply chain to manage the macro and micro economic landscape.
Right now, the index is 184 points above “normal” levels, but down from an all time high of 432 in December. The supply chain industry isn’t out of the woods yet, but there remains some cooling down that is needed from the hectic past two years.
Black & Decker Move From Black to Red
Author: Sarah Zimmerman
Article: Stanley Black & Deckers to slash SKUs, footprint in $1.5B savings plan – Supply Chain Dive
Article: Stanley Black & Deckers to slash SKUs, footprint in $1.5B savings plan – Supply Chain Dive
Stanley Black & Decker is transforming its supply chain as it works “with a sense of urgency” to generate cash flow, according to vice president of business development and interim CFO, Corbin Walburger.
The power tool specialist plans to slash its manufacturing footprint and product portfolio by 40%, as part of an effort to generate $1.5 billion in cost savings. Like many companies, the toolmakers found themselves struggling in the last year or so with too much inventory, accounting for $6.6 billion in total.
The power tool specialist plans to slash its manufacturing footprint and product portfolio by 40%, as part of an effort to generate $1.5 billion in cost savings. Like many companies, the toolmakers found themselves struggling in the last year or so with too much inventory, accounting for $6.6 billion in total.
Make Room For Excess
Author: Liz Young
Article: Surging Retail Inventories Are Swamping U.S. Warehouses – Wall Street Journal
Article: Surging Retail Inventories Are Swamping U.S. Warehouses – Wall Street Journal
Retailers and logistics operators are struggling to find space to store the flood of goods that have swamped warehouses.
Prologis Inc., the world’s biggest owner of warehouses in terms of square footage, stated in a recent market analysis that they expect an additional 800 million square feet of warehouse space to be needed beyond earlier projections to handle the excess inventories.
Retailers from Walmart to Bestbuy have attributed this to a host of reasons, from shrinking consumer demand, high inflation, and elongated buying cycles. The optimistic view would be that retailers will get a handle on this issue and there will somehow be enough space for all of the excess inventory…but as always, only time will tell.
Prologis Inc., the world’s biggest owner of warehouses in terms of square footage, stated in a recent market analysis that they expect an additional 800 million square feet of warehouse space to be needed beyond earlier projections to handle the excess inventories.
Retailers from Walmart to Bestbuy have attributed this to a host of reasons, from shrinking consumer demand, high inflation, and elongated buying cycles. The optimistic view would be that retailers will get a handle on this issue and there will somehow be enough space for all of the excess inventory…but as always, only time will tell.
Scheduling Reliability is More Reliable
Author: Jack Donelly
Article: Evergreen rallies as schedule reliability reaches 40 per cent for June – Port Technology
Article: Evergreen rallies as schedule reliability reaches 40 per cent for June – Port Technology
In some much needed good news, schedule reliability is on the up! Analysis by Sea-Intelligence noted that the reliability uptick marked the first time since the start of the pandemic that schedule reliability improved year-on-year.
Nine of the top-14 carriers have recorded an improvement in schedule reliability in June 2022, with Evergreen notably recording the only double-digit improvement of 16.2 %, up to 40% reliability. Whilst this of course is less than ideal, the upwards trend of reliability is certainly a positive after the tumultuous few years the industry has experienced, with bottlenecks and container congestion affecting importers big and small.
Nine of the top-14 carriers have recorded an improvement in schedule reliability in June 2022, with Evergreen notably recording the only double-digit improvement of 16.2 %, up to 40% reliability. Whilst this of course is less than ideal, the upwards trend of reliability is certainly a positive after the tumultuous few years the industry has experienced, with bottlenecks and container congestion affecting importers big and small.
Maersk's Profits Sailing Away
Danish shipping company Maersk has seen its Q2 revenue profits rise from 3.7 billion, to an incredible 8.59 billion.
Revenue at Maersk’s shipping unit also surged by 57% to 17.41 billion, driven largely by significantly higher freight rates as a result of bottlenecks and congestion across global supply chains.
Freight rates have risen by 64% in the quarter, more than offsetting a 7.4% drop in shipping volumes that were weighed by congestion as well as lower consumer confidence as a result of the war in Ukraine.
Given the longer than expected continuation of supply chain congestion, Maersk has stated that it expects to see growth in global container demand this year at the lower end of its +/- 1% range.
Revenue at Maersk’s shipping unit also surged by 57% to 17.41 billion, driven largely by significantly higher freight rates as a result of bottlenecks and congestion across global supply chains.
Freight rates have risen by 64% in the quarter, more than offsetting a 7.4% drop in shipping volumes that were weighed by congestion as well as lower consumer confidence as a result of the war in Ukraine.
Given the longer than expected continuation of supply chain congestion, Maersk has stated that it expects to see growth in global container demand this year at the lower end of its +/- 1% range.
Catch-up on the live show
To watch the full episode of First Things First, head over here.
To subscribe to the podcast (available wherever you listen to yours), click here.
To subscribe to the podcast (available wherever you listen to yours), click here.