MOVE OVER PHIL! On February 2, Punxsutawney Phil, the seer of seers, saw a shadow on his stage and thus predicted 6 more weeks of winter weather. Well, I refuse to accept his prognostication. This is one case where I search not for the truth, but for the answer I seek (Afterall, Major League Baseball pitchers and catchers report to Spring Training next week). There must be an alternative to Phil’s gloomy prognostication. With a little effort I can find it. And find it I did. Right in my own backyard (figuratively… although I do have a groundhog living in my side yard, but I digress). Our very own Ms. G, the official groundhog of Massachusetts made her 16th annual Groundhog Day forecast at Drumlin Farm in Lincoln, MA. Ms. G did not see her shadow, predicting an annual Spring! She may have less experience than Phil, but she is closer to my location. And location is everything in weather forecasting. P.S. I will take any recommendations on ways to keep groundhogs from digging burrows in my side yard that collapse the lawn. And now on to this week’s logistics news.
Turkish port “Iskenderun” severely damaged
Gap and Ware2Go offer SMB Fulfillment Services
McCormick to cut supply chain workforce
GM Signs exclusive deal with GlobalFoundries
January 2023 Logistics Manager’s Index up 3.0 to 57.6
Worst January US Intermodal in 10 years
Our thoughts and prayers are with those in Turkey and Syria impacted by the recent earthquakes. The port of Iskenderun in the southeast of Turkey was severely damaged by the earthquakes. Some of the containers were thrown on top of each other, and containers that were at the very bottom were deformed. Some overturned containers caught fire and were reportedly extinguished. There is also significant damage on the railway. Railway service in the south and southeast of the country has been suspended. In addition, logistics within the country and in international traffic are complicated by heavy snowfalls in Turkey, said Georgy Vlastopulo, head of the Optimalog company: “As for maritime transport, it is worth saying that due to difficult weather conditions since last week, ferries have been unable to land on the Turkish coast.”
Gap’s GPS Platform Services and UPS-owned Ware2Go are teaming up to provide an asset-lite co-warehousing solution. Ware2Go and GPS Platform Services will now offer SMBs access to world class fulfillment centers, where advanced technology, automation and robotics can deliver a scalable network that provides as fast as one-day click-to-door fulfillment. The combined footprint includes more than 35 warehouses and distribution centers as well as advanced machine learning and data science capabilities.
McCormick & Co stated in its fourth-quarter earnings call that it intends to cut 10% of its supply chain workforce in the Americas as part of a cost-reduction program meant to save $75 million in 2023. The company incurred additional costs above inflation over the past several years as it responded to demand volatility. The workforce reduction comes as the spices and seasonings manufacturer pursues more automation in facilities to add efficiencies. The company also stated that it expects continued volatility in its global supply chain, but it has strengthened its resiliency over the past few years.
GM has signed a long-term agreement with GlobalFoundries to establish exclusive production capacity of U.S.-produced semiconductor chips. Semiconductor chip shortages were a significant supply chain bottleneck during the peak of the pandemic – disrupting automotive production, requiring manufacturing delays and some vehicles to be produced without standard features. The chip manufacturer will establish dedicated production capacity exclusively for key auto suppliers of the Detroit automaker at its semiconductor facility in upstate New York, according to the companies. The deal is a win for the Biden administration, which has been pushing for companies to reestablish American production of semiconductor chips, including the CHIPS Act that was signed into law in August.
The Logistics Managers’ Index came in at 57.6 in January, up 3.0 from December’s reading. This represents the second consecutive increase after declines in seven of the eight months prior. Inventories are much lower now than they were in Q3 of last year, and it seems the supply chains are coming back to life with the goal of replenishment. Once again warehousing metrics are the primary driver of logistic activity. Warehousing Capacity is declining for the 30th consecutive month, driving up both utilization and price. This is partially due to an increase in Inventory Levels and Inventory Costs – which may be evidence that firms are finally beginning to restock after nine months of doing everything in their power to reduce inventories.
US intermodal traffic rolled into 2023 with the brakes on: the sector was down last year and things got worse in the first weeks of the new year, producing the worst January since 2013. “It was the worst January for intermodal since 2013, with major retailers cutting back on inventories and consumer spending – especially on goods – having contracted,” commented AAR SVP John Gray. The Intermodal Association of North America (IANA) reported a 16.2% decline in Q4. While international container traffic actually eked out a 0.9% gain, US domestic trailers slumped 29.7%, while domestic container count sank 4.2%.
That’s all for this week. Enjoy the weekend and this week’s video of Punxsutawney Phil’s prediction.