The global economy is not a static system. There are various forces creating fundamental changes, some temporary and some very long-term. In the quest for increased efficiency, or in reaction to new trade agreement frameworks, new shipping solutions are being developed for existing and emerging supply chain requirements. This post is the first of several discussing newly emerging air logistics hubs that are being created by the continuous change in the global economy.
Much has been written about the impact of e-commerce on real estate demand and “last mile” delivery. Contrary to what we hear about struggling malls and massive retail closures, the demand for real estate to feed the growing e-commerce demand, especially in urban areas, is increasing. It is all about the need to have warehouse space strategically located near the consumer. And now the same thing is happening as production moves closer to the customer.
Recently the WSJ reported that Boeing is running out of space to store unfinished 737s as it waits for critical parts. Actually both Boeing and Airbus are experiencing production delays because of critical tier 1 suppliers that are just having a difficult time in dealing with the stress on their supply chains.
Last year Amazon was granted a patent for an on-demand apparel manufacturing system that is designed to produce apparel products after orders are placed and aggregated; in other words machines only start stitching once an order has been placed. This system means that the only inventory that the manufacturer holds is the fabric or raw material rather than higher-end finished products which will lower the value of the inventory. This frees-up cash and avoids the problem of "unfashionableness" that occurs so frequently in the apparel industry. It looks like Amazon is looking to disrupt the garment industry by aiming for a new standard- sell it, make it, ship it.
In the May 24th edition of Loadstar, Sam Whelan writes about the ways in which the e-commerce boom is creating operational challenges for the larger airlines. Everyone is aware that air cargo development in 2017 far exceeded the expectations for the industry and that E-commerce demand for air freight led that charge. E-commerce demand shows no signs of letting up, but just as e-commerce has brought disruption to the retail industry, it is also creating disruption in the air cargo industry. There is no doubt that e-commerce has been a boom to a struggling air cargo industry but with these opportunities have come challenges, challenges that some air carriers just don’t think makes good business sense.
A common misconception in the United States is that the majority of semiconductor manufacturing is done overseas, as is the case with other electronics products. However, this is not true and the fact is that US semiconductor companies do the majority of their manufacturing in the United States and semiconductors are one of America’s top manufactured exports, behind only aircraft and automobiles.
Bob Tita writes in the WSJ that Caterpillar is announcing another round of plant closings and consolidations. These actions follow on the heels of similar announcements that have affected Caterpillar plants globally over the past several years. In an effort to get ahead of the market the company made several strategic mistakes in spending billions on resizing their supply chain to meet a market demand that did not take into account the multiple sector disruptive influences that could derail their well laid plans. The good news is that the company is making progress in righting itself and will be prepared to move forward.
In the March 16 edition of the WSJ, Ester Fung writes about the “click’s and brick’s” retail trend and its impact on the disruption in retail that has been plaguing retail–space owners for years. As e-commerce continues to carve up sales at the traditional brick and mortar sites, online sellers are looking to open physical stores to complement their on-line presence. This is a new gamble for landlords but it is giving them hope and a new customer base.
For months we have been following the story of the Toys R Us bankruptcy and wondering if the department store chain could survive the perfect storm that it finds itself in. We learned last Friday from several reports that the retailer could close all of its stores as early as this week. Regardless of whether Toys R Us pulls through its challenging winter period, one thing is for certain: toy retailers, even when it comes to multinational giants, must be savvy about the way they are conducting their business or they may risk losing out to web rivals and discounters.
This week’s business news was dominated by President Trump’s announcement that the U.S. will impose tariffs on steel and aluminum imports starting next week, imposing a 10 percent tariff for aluminum and a 25 percent tariff for steel. The announcement was met by a tumble in the stock market and a chorus of voices calling the move a big mistake and very disruptive to global supply chains.