[#260] Supply Chain in Numbers - Nov 18, 2024
Transformers have 3+ lead times now, Siemens acquired Aircargo business of Vanderlande, US returns at $743B, FedEx has a new hub of 1.3M sqft, Ivory Coast produced 1.5MTs of rubber last year
3 to 4 years of lead times
Hitachi Energy, the world’s largest transformer manufacturer, warns of a severe supply shortage as demand for transformers surges. Production can’t ramp up quickly enough to keep up with the rapid expansion of renewable energy projects and the power needs of AI-driven data centers, leading to delays in critical infrastructure upgrades and longer lifespans for existing equipment. With transformer wait times stretching to three to four years and prices rising by 40% since 2019, the industry faces a supply crunch expected to last until 2026. Hitachi Energy plans to invest $6B to increase production. Yet, output remains fully committed to customers amid continued high demand. [FT]
€300 million acquisition
The global powerhouse Siemens has agreed to sell its airport logistics division to Dutch firm Vanderlande in a €300 million ($325 million) deal. Vanderlande, owned by Toyota Industries Corporation, is based in Veghel and operates in the logistics sector within warehousing, airports, and parcel fields. Vanderlande operates in more than 600 airports, including 12 of the world’s top 20, and over 380 of its security lanes are installed at checkpoints worldwide. [Aerotime]
$743 billion returns
Last year, consumers in the United States returned $743 billion worth of merchandise, which was 14.5 percent of all the things they bought. That’s up an increase from 10.6 percent in 2020, according to the National Retail Federation. Given that there are costs to a business of returning an unwanted good — including shipping, sorting, warehousing, and then all the work of selling off the returned product to a discount wholesaler or the trash — based on the type of good that people are trying to return, some retailers are occasionally just refunding them and instructing the customer to dispose of the item as they see fit. Calibrating when to give a refund, when to insist on a return, and when a customer might be abusing the system is now a new area of consternation and financial modeling for retailers. [NumLock]
1.3 million sqft across 4 levels
In advance of the holiday peak season, FedEx announced the opening of a new, state-of-the-art automated facility at its Memphis World Hub. The FedEx World Hub is the largest sort facility in the FedEx global network, with 13,000 team members, spanning 940 acres with 171 aircraft gates and 84 miles of conveyor belt, and can process 484,000 packages per hour. FedEx said that this LEED-certified facility comprises 1.3 million square feet across four levels, with 11 miles of conveyor belt, a space dedicated to moving bulky, non-conveyable shipments, and sorting 56,000 packages per hour. It added that this facility can process more than half the volume from the primary sort and, in turn, result in quicker sort times and more quickly move customers’ packages to their final delivery destinations. [Logistics Management]
1.55 million tonnes of rubber
Most of the world’s natural rubber comes from Thailand and Indonesia, which make up about half the global supply. Indonesia, the second-place producer, has seen output decline 20 percent since 2019, to 2.65 million tonnes produced in 2023. Meanwhile, the West African country of Ivory Coast has seen a boom in rubber plantations, producing 1.55 million tonnes of the stuff last year, up from 815,000 tonnes in 2019 and leapfrogging Vietnam to become the world's third-largest producer of natural rubber. Lots of that comes from Ivory Coast farmers shifting away from cacao to get more stable revenue, as the country stands to benefit from European sustainability regulations that go into effect in 2025. [NumLock]