Supply chains are constantly changing as new rules, technologies, resources and market trends transform operations. Here's a skim of the week's indexes, technology announcements, expansions and M&As from around the web.
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Market Snapshot
Economic growth does not come without its challenges, as evidenced by recent reports.
IHS Markit's JPMorgan Global Manufacturing PMI revealed March's manufacturing growth slowed down to its lowest level in six months, although the outlook remains sunny. Production continues to rise, although production forecasts were less positive in March than previous months.
Several explanations exist for the slowdown. Previous indices showed how suppliers were struggling to keep up with new orders and inventory backlogs were growing. This, added to higher supply prices, may have caused manufacturers to better align S&OP and increase efficiency.
Another explanation may be based in weather, as Winter Storm Stella hit the U.S. Northeast heavily in the middle of the second week of March. Some economists predicted this would create an artificial drop in indices during March, as much information is collected during the second week where, in this case, many companies were operating under exceptional circumstances. (Similarly, tepid weather in January and February may have led to unseasonably high numbers due to increased production).
Only time will tell whether the drop was due to specific market challenges in March or a general trend, but in the meantime the economy continues to thrive. In fact, the number of new jobs again grew beyond expectations last month, according to The Wall Street Journal.
However, some troubling signs exist. In the auto industry, lower sales in March have left dealers with an excess in cars (the highest level since 2004), forcing many to increase discounts and potentially slow orders.
Meanwhile, a recent report found the supply of raw minerals — used greatly in the technology, auto and utility industries — may "soon" reach a shortage as new mines are not being found in pace with new demand. Such is a long-term threat, but worth keeping an eye out for nonetheless.
Technically Speaking
Revolutionary technology has a way of making its way through each industry, albeit at varied speeds. From e-commerce to blockchain, the supply chain is no exception. Now, an old-school revolutionary known as RFID is making its rounds through the logistics space.
A few weeks back, Michelin announced it would begin placing RFID tags on its tires to facilitate vehicle tracking. Last week, many of India's ports joined the club as the government asked each port to introduce the system by the end of March. At various stages of deployment, the initiative is expected to reduce operational costs and congestion, Marine Link reports.
Speaking of industries ready to adopt new technology, the life sciences industry is increasingly innovating ways to improve transparency and efficiency.
Matternet, Supply Chain Dive's 2016 Most Valuable Logistics Startup, recently announced it would be flying its drones around the Swiss Alps. Switzerland recently cleared the company's vehicles to deliver at any time, and the company has already inked a partnership with Swiss Post to help deliver blood samples to hospitals in the city of Luongo as early as next year.
Science can be used to improve the food business, too, as was recently shown by Ireland-based IdentiGEN. The company is helping retailers verify food quality by DNA. The concept is simple: take a product's DNA upon harvest, place it in a database, and allow retailers to match "nature's barcode" upon receipt, Supply Management reports.
While on the topic, Hershey's recently recognized the value of transparency and launched a "Sourcemap" showing customers where all its ingredients are produced. Turns out, milk fat comes from New Zealand, sugar and almonds are sourced in the U.S., and most of the cocoa is harvested in Guatemala, Peru or the Ivory Coast.
Breaking Ground
With a rising economy and continued need for distribution facilities, real estate developers are not slowing down, especially in regions known as logistics hubs.
The Rockefeller Group announced it would begin construction on a $110 million, 1.45 million-square-foot warehouse project in Riverside County, CA to accommodate both inbound and outbound demand for the Los Angeles area. The Los Angeles Times reports the group has yet to secure a tenant for the facility, slated for completion mid next year, but is hardly concerned given the need for "ultra-large" space in the region.
The real estate group is also expanding its presence in Allen Township, PA, with a 1 million-square-foot distribution center, just across the street from FedEx's own facility. There's no word yet whether the space has a tenant, but the expected increase in traffic has the Rockefeller Group spending another $3.5 million to improve a local intersection and avoid congestion, Transport Topics reports.
Not one to fall behind on new investments, UPS announced it would build a $200 million distribution facility in Arlington, TX, which would employ 1,400 workers.
In fact, industrial demand is so high at the moment cities frequently compete for new developments (and the jobs they bring), often offering large tax breaks to secure long-term operations. Amazon recently received two incentive offers from the cities of Katy, TX and Aurora, CO.
Incentives come with conditions, however, such as length of contract, number of employees and salary requirements. In Katy, Amazon would sign a 20-year contract on a one million-square-foot warehouse. In Aurora, the e-commerce giant would commit to hiring 900 or more full-time employees earning at least $30,297, The Denver Post reports. Such conditions help avoid situations wherein taxpayers incentivize new buildings for more jobs, only to end up with a fully-automated facility.
In other news, a new container port is being planned between miles 50 and 55 on the Mississippi River to help facilitate increased container transport to the Memphis, TN and St. Louis, MO region, American Shipper reports. Perhaps under the same expectations, CMA CGM announced it would expand operations to the Port of New Orleans starting April 21.
Mergers & Analysis
The Florida East Coast Railway will soon have new owners based in Mexico, pending customary approval. Mining, transport and construction conglomerate Grupo Mexico purchased the Class II railroad for $2.1 billion from Fortress Management Group.
The acquisition will further expand the Mexican group's presence in the U.S. and provide it direct access to the U.S. East Coast through the railroad's connections with various Florida ports as well as the two major East Coast railways. Grupo Mexico owns a stake in Union Pacific, already.
Schneider Trucking fulfilled in 2016 promise this week, raising $550 million in capital stock through its initial public offering. The event marked the first time since 2010 a trucking company had gone public, and encouraged investors in the freight sector through its success.
In the shipping world, the Japanese shipping lines' merger received its first approval in Singapore and Hanjin successor SM Lines' parent company, SM Group, is is considering taking over Korea Ship Finance, a state-owned ship financing firm, Splash 24/7 reports.
In other news, as new startups enter the market, LTL freight marketplace provider FreightorGator is merging into its parent company and seeing two top executives depart after the company failed to raise satisfactory venture capital, DC Velocity reports. MyFreightWorld, the parent, will take over the company and offer the platform as part of its 3PL suite of solutions to customers.