Pass the Guacamole
Congrats to the Rams and Bengals for reaching the Super Bowl but the real winner is the avocado industry.
A record-breaking 140,000 tons of Mexican avocados are expected to be shipped to the United States in the lead-up to the Super Bowl on February 13. José Luis Gallardo, president of the Mexican Association of Avocado Producers, Packers and Exporters, told the newspaper Milenio that about 25,000 tons of avocados are currently being shipped to the U.S. per week, while exports will ramp up in early February. A total of 140,000 tons would represent a 4% increase year over year.
Axios reports that the cost of guacamole is going up as well. “The problem is truck and labor shortages,” Melissa Reeves of the USDA’s Agricultural Marketing Service says. “The prices are higher due to standard supply and demand issues.”
It’s the Bomb
Last week’s bomb cyclone prompted blizzard warnings from Virginia to Maine, dumped record amounts of snow in the Northeast and reminded truckers and brokers that a little knowledge of meteorology can help in rate negotiations. What is a bomb cyclone, anyway? An atmospheric scientist explains what happens when a storm undergoes “bombogenesis” and why they’re more likely to happen on the Eastern seaboard. When a big storm is in the forecast, freight flows take predictable patterns. Schneider offers this explainer on how inbound shipments and network capacity are affected both locally and in more widespread ways.
Strong Finish to 2021
The U.S. economy accelerated at its fastest pace in 37 years in 2021, capped off by a Q4 in which annualized GDP grew 6.9% (much higher than the 5.3% projected). Even with this blistering recovery, the economy remains about 1% below levels that had been predicted before the pandemic hit. One reason: congested supply chains. Combined inbound volume fell 14% in December at the ports of Los Angeles and Long Beach as the queue of vessels waiting to unload surpassed 100 ships.
BJ’s Buys DCs
BJ’s Wholesale is buying four distribution centers and their associated truck and trailer fleets from Burris Logistics, the latest deal in a series of moves by retailers to bring more logistics operations in-house. BJ’s CEO Robert Eddy says the company expects supply chain issues to persist “for the foreseeable future,” and that acquiring assets and logistics expertise can alleviate some of that uncertainty.
American Eagle Outfitters last year bought Quiet Logistics and AirTerra, the company’s only two publicly known acquisitions that did not involve clothing brands. AirTerra’s system aggregates packages from multiple shippers through its own network in major metropolitan areas, which allows it to ship parcels across long zones faster and with a greater degree of control than offered through legacy shippers. Companies selling goods online see the time from “click to deliver” reduced along with costs for those deliveries.
How tight is new-truck inventory? A Wichita Kenworth dealership won’t need sales staff during 2022 to close deals on new tractors because it sold out of new models for the entire year. “When we’re allocated the trucks, we have to call our customers and say they wanted 10, we have to tell them, ‘Sorry, we want to get you trucks, but we can only get you five this year,’” WKI Kenworth sales representative Gary Wenke told KSN, a local NBC affiliate in Wichita.
Class 8 U.S. retail sales in December rose 15.5% compared with a year earlier, and reached the high point for the year. Sales hit 24,716 compared with 21,402 in the 2020 period. December also was the best sales month since September 2019. Used truck inventories are just as tight and no less of a stretch on the budget: the average retail price for a used Class 8 vehicle in December topped $82,300, a new record and almost $37,000 more than a year earlier, according to ACT Research.
Robotics, automation and artificial intelligence have matured at the right time to become more widely adopted in manufacturing and logistics operations, writes Jen A. Miller at Supply Chain Dive. A confluence of factors—including the pandemic, labor shortages and technology maturing at the right time—is pushing robotics ahead in 2021 and beyond.
In a recent MHI report, 53% of the more than 1,000 supply chain professionals surveyed said they were increasing or substantially increasing their investment in robotics and automation to make the supply chain more resilient. The study also found that 38% have robotics and automation in use today and an additional 38% predict it will be in use within five years. Annual installations of industrial robots will jump from 450,000 a year in 2015 to 600,000 in 2022, according to a McKinsey study.
The firm also predicted that 10% of today’s manufacturing processes will be replaced by additive manufacturing by 2030. These technologies can free up human workers for other tasks while building supply chain resiliency, Miller writes.
Speaking of Resiliency
Building resilience, options and flexibility into supply chains is vital for addressing the “pinch points” most likely to crop up this year, says Eric Jones of FM Global. Spend Matters reports on six resilience threats to prepare for include cyberrisk, floods, chip shortages and port backlogs.