March 27, 2023
March 2023
Editorial
This month, we shift focus away from the effects of the covid-19 pandemic on the supply chain to the broader lapses in healthcare and pharmaceuticals in general. Other discussions include the impact of inflation and global redundancies on the supply chain.
Global Freight
Idled ships, empty containers. Ocean shipping faced its biggest slump in years
- Shipping executives globally are dealing with falling exports, freight rates and suspense over the industry heading for a price war - in reversal of the soaring demand of the pandemic.
- Traffic from China’s ports has significantly slowed, there are stacks of empty containers, and trucks with no cargo.
- CEVA Logistics has set a goal, to transition all its contract logistics and freight warehouses to low carbon electricity by 2025.
- This commitment will rely on purchasing low carbon electricity (renewable and nuclear) and increasing its own production of electricity using solar panels.
- MSC, the world’s largest container line believes the ocean container market will grow in the second hand of 2023.
- MSC is perceived as a barometer for global trade, says North American and European inventory is still high but signs from china are encouraging.
- Merchant Vessel - MSC SHRISTI - has lost 45 empty shipping containers overboard due to bad weather.
- The containers were lost 350 nautical miles east of Bermuda.
- Canadian startup Relocalize, plans to launch its first automated ice factory in shipping containers in Florida in partnership with Southeastern Grocers.
- Relocalize suggests, because ice is heavy - making transporting it difficult and expensive - micro factories closer to the supermarkets are a viable alternative. It eliminates the middle mile logistic to reduce emissions, water waste and plastic pollution.
Global Fulfilment
Amazon closes, cancels more warehouses as cost-cutting persists
- Amazon’s fulfillment network cuts have bled into 2023 as it tries to reduce operating expenses.
- Amazon has cancelled, closed, or delayed 99 facilities - which has impacted 32.3 million square feet of active or planned space in 30 states across the United States.
- Maersk is looking to implement technology solutions to improve warehouse fulfillment operations and speed to customer. This software will achieve warehouse productivity gains from more picks per hour, without increasing/modifying facility size to accommodate increased output.
- This technology includes cloud-based software with industrial scanning technology providing instant scanning of items and less walking for workers.
- China e-commerce giant JD.Com is opening a third self-operating warehouse and distribution center in California as it looks to grow its presence in the United States.
- The new facility will add more than 300 jobs and grow JD.com’s warehouse footprint to 1.3 million square feet.
- The new fulfillment center in the UAE has a storage capacity of 2.1 million cubic feet, which will increase Amazon’s total storage capacity in the UAE by 70%.
- The company is gearing up for increased customer demand during Ramadan, which will allow customers access to electronic appliances, groceries, fashion, and books.
- Walmart is laying of hundreds of employees at e-commerce fulfillment centers across the United States as it anticipates flat or declining sales for the next year.
- This comes after the massive sales boom brought on by the covid-19 pandemic.
Manufacturing
iPhone maker Foxconn reportedly expands in India amid claims Apple wants to bolster manufacturing there
- Foxconn - a supplier for Apple - signed an agreement to invest $700 million to manufacture electronics as it seeks to pivot at least 25% of its manufacturing beyond China.
- The factory near Bengaluru is expected to employ around 100,000 people, making it 1/3 the size of the world’s largest iPhone factory in the Chinese city of Zheng Zhou.
- The head of the manufacturing sector’s lobby group - Stephen Phipson - has demanded a reset in the UK’s relationship with the European Union as he claims international suppliers have turned their back on the country.
- The political turmoil of Brexit and reverberations from the pandemic has exacerbated the supply chain strain on the United Kingdom.
- President Xi Jinping vowed to boost the country’s manufacturing capacity and not rely on overseas market.
- As China’s manufacturing sector has been struck by many restrictions by the United States and other Western allies - Beijing has doubled down on the need to build a self-reliant industry and shift away from imports for sectors perceived as vital to national security.
- US manufacturing activity slows for a fourth straight month in February.
- New orders are improving.
- German industrial production rose significantly in January, increasing by 3.5% on the previous month.
- Analysts had initially projected an increase of 1.4% month on month, but the strong development was driven largely by growth in the manufacturing of electronic equipment and chemicals.
Procurement & Sourcing
No current plan for the UAE to leave OPEC oil alliance, sources say
- The UAE does not intend to depart from the OPEC alliance.
- The WSJ had reported earlier this year that Abu Dhabi is internally mulling the departure.
- Automaker Stellantis expects inflation costs on raw materials to subside next year.
- The spiking cost of raw materials have been largely offset by record pricing of new vehicles.
- Canada has one of the largest deposits of minerals that are essential to the manufacturing of electric cars.
- Canada is offering itself as a solution to many countries that are currently largely dependent on China. Right now, China produces 98% of Europe’s supplies of rare earths.
- Fuji Electric’s India boss Shivaji Waghmare suggested that the semiconductor shortage will not end in the foreseeable future. The average wait time is 6 months to one year.
- The current shortages will not be felt in the supply chain for some time.
- VW investing up to 15 billion euros in batteries and raw materials.
- 2/3 of VW’s 5-year budget is allocated for electrification and digitalization.
Technology & Automation
U.S. cyber official praises Apple security and suggests Microsoft, Twitter need to step it up
- A U.S. cybersecurity official urged businesses to take on more of the burden of securing their services for customers and suggested that new legislation should hold them accountable.
- Jen Easterly, the director for the Cybersecurity and Infrastructure Security Agency held up Apple as a positive example of accountability and transparency for its security practices.
- Chinese smartphone maker Realme launched the GT3 smartphone for international markets at the Mobile World Congress in Barcelona.
- The phone can be fully charged in 9 minutes and 30 seconds.
- The arrival of human-level artificial intelligence may be a lot closer than previously thought to the point that artificial general intelligence far exceeds human intelligence.
- The outcome of these advances would be that most, or all, knowledge work may be automatable in the not too distant future
- Microsoft is adding an AI-powered image creator to its Bing search engine today; letting users create images by simply describing what you want to generate.
- The description of an image, providing context (i.e., location/activity), or a specific art style - image creator will generate an image from your own imagination.
- OpenAI’s ChatGPT has captured the world’s attention for its ability to create compelling sentences; but the cost to develop and maintain this software is extremely high.
- Analysts and technologists estimate the process of training a large-scale language model such as GPT-3 could cost over $4 million.
Sales & Operations
Ford sales jump as supply chain issues improve
- Ford Motor’s February sales increased more than 20% from a year earlier.
- There were 157,606 car sales in February, a 7.7% increase from January.
- Walmart’s store fulfilled delivery sales have tripled over the last two years and is seeing $1 billion per month from it.
- The retailer has been expanding its store-based delivery capability in recent years amid the e-commerce boom.
- Apple is reshuffling management of its international businesses to put a greater focus on India.
- This shift will mark the first time India becomes its own sales region for Apple, as demand in the nation increases.
- The UK government has struck a last-minute deal for HSBC to buy Silicon Valley Bank’s UK operations - saving thousands of British tech startups and investors from big losses after the biggest bank failure since 2008.
- The acquisition cost HSBC £1.
- According to the Office of National Statistics, electricity prices in the UK have increased by 67% in January 2023 compared to the same period in 2022.
- Solar power installations have doubled from 2021 to 2022.
Company Focused
Lego sales leap 17% as fans buy bigger, more complicated sets
- Lego’s revenue jumped 17% in 2022, reaching 9.28 billion USD.
- The toymaker faced disruptions with the war in Ukraine and increased costs; but Lego was able to offset these costs due to strong demand.
- Google’s cloud unit has told employees it will transition to desk-sharing workspaces in its five largest locations (Washington, New York City, San Francisco, Seattle and California).
- Employees are also encouraged to modify the days in which they are in the office.
- According to Mark Zuckerberg, Meta will fire 10,000. This is in addition to the 11,000 people that were layed off last year, and leave 5,000 roles that are currently empty: unfilled.
- These layoffs are part of an internal restructuring - the company will become flatter with fewer levels of management.
- Tim Cook is developing a mixed-reality headset, which will be Apple’s first new computing platform to have been developed entirely under Cook’s leadership. The iPhone, iPad, and Watch were all conceived under Steve Jobs.
- These headsets are expected to cost around $3000.
- Virgin Orbit has begun drawing up contingency plans for is insolvency after halting its operations and furloughing its workforce.
- Sir Richard Branson’s Virgin Group is working with Alvarez & Marsal and Ducera, two restructuring firms on fallback plans in the event that it cannot find new funding.
Country Focused
Xi vows to boost high-end manufacturing in face of US pressure
- China will make a greater push to support the development of high-end manufacturing locally.
- Xi declared the manufacturing industry must always be a pillar of strength for China. This comes after the U.S has placed many sanctions on China, and companies like Apple are pulling out of manufacturing in the nation.
- The Netherlands has now become involved in the tensions between the US and China.
- The Dutch foreign trade minister started the existing framework for specific equipment needs to be expanded for the interests of national and international safety
- Japan and Canada are discussing collaboration on building strong supply chains for battery metals.
- The Japanese industry minister - Yasutoshi Nishimura - stated Canada is an important country for Japan, as it has an abundance of battery metals and has good market access to the United States.
- Since 2019, Elon Musk has stated Neuralink will start human trials of a revolutionary brain implant to treat paralysis and blindness.
- The company, founded in 2016 has never sought permission from the FDA until 2022 and the agency rejected the application.
- Singapore will focus on stockpiling essential medical goods beyond its current effort to ensure key supplies.
- Stockpiling is one part of Singapore’s three-pronged approach to ensure resilient supply chains in a key sector, the other two prongs are diversifying its import and export markets, and ramping up local production.
Health & Wellness
NHS’ supply chain security 15-20 years behind other sectors
- The national chief information security officer for health and care at NHS England stated the NHS supply chain does not have the attention it requires, and there is a lot of work required to improve its security.
- The advanced cyber-attack on August 4th impacted clinicians across the healthcare system.
- The senate published a report that stated the US experienced 295 drug shortages at the end of 2022 - a five year high. The average drug shortage lasts about 1.5 years.
- Notable examples of drug shortages are antibiotics, common pain relievers, Ozempic, Adderall and albuterol sulfate
- A Pharmacist in Ireland - Sheena Mitchell - is warning that the nations medicine shortage Is extremely concerning, the Medicine Shortage index shows that 248 prescription medications are not available on the Irish market, 48% increase from last year.
- Medicines like antibiotics, epilepsy medication, breast cancer treatment and pain medication are proving difficult to import.
- The Drug Information Centre of the Spanish Agency for Medicine and Health Products (CIMA-AEMPS) states there are supply issues with more than 740 different medications in Spain currently.
- The LUDA system keeps track of drug stocks in pharmacies and if one store runs out of a particular treatment, they direct patients to an alternative store: this system foresees various antihistamines and other anti-allergy medication being a cause for concern in the upcoming weeks.
- Singapore will not be able to completely utilize older COVID-19 vaccine stocks that is has purchased; the expired vaccines are about 10% of Singapore’s stock.
- Singapore has taken steps to minimize wastage, by swapping and donating stocks with nations that have a greater need for vaccines.
Miscellaneous
Turkey-Syria earthquake this fashion supply chains - and four more updates from global freight
- The earthquakes that have struck Syria and Turkey have caused major devastation to both nations, and its repercussions are now impacting the supply chains of fashion companies that operate in Turkey.
- Hundreds of textile plants in Kahramanmaras have ceased operations, and could take 6 months to restart.
- Steam Logistics is offering employees $2000 to quit the company to avoid the cost of layoffs.
- Zappos initially pioneered the cash-for-quits option in 2009.
- There is a the focus of digitalisation of the supply chain, according to a survey by PwC, 83% of executives have not seen their investments deliver expected results.
- 21% of results suggest the implementation process is not yet finished and therefore too early to judge results.
- A shoe recycling project in Singapore will be subject to surprise inspections following a Reuters investigation that found footwear it donated to the scheme was not recycled.
- Using location trackers hidden inside the soles of the shoes found sneakers donated by Reuters in Singapore had been exported to Indonesia for resale.
- Peta is calling on H&M to be more transparent with their supply chain, specifically on their sourcing of down feathers.
- Peta is claiming that H&M is aware that the sourcing of these materials is extremely unethical and cruel.
Sources
- https://edition.cnn.com/
- https://news.sky.com/
- https://spanishnewstoday.com/
- https://www.aircargonews.net/
- https://www.barrons.com/
- https://www.bloomberg.com/
- https://www.channelnewsasia.com/
- https://www.cnbc.com/
- https://www.cnbctv18.com/
- https://www.digitalhealth.net/
- https://www.euronews.com/
- https://www.export.org.uk/
- https://www.forbes.com/
- https://www.freightwaves.com/
- https://www.ft.com/
- https://www.independent.co.uk/
- https://www.maersk.com/
- https://www.newstalk.com/
- https://www.peta.org/
- https://www.porttechnology.org/
- https://www.reuters.com/
- https://www.supplychaindive.com/
- https://www.supplychainquarterly.com/
- https://www.theguardian.com/
- https://www.theverge.com/
- https://www.wsj.com/
- https://www.zawya.com/