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Latest News – June 17, 2013

Energy & Diesel Fuel & Other Commodities

TODAY IN ENERGY: Tuesday, June 4, 2013

Bulk chemicals industry uses 5% of U.S. energy

The industrial sector is responsible for nearly a third of total energy use in the United States, consuming an estimated 31 quadrillion Btu in 2012. Much of this consumption is in energy-intensive manufacturing, including the manufacture of bulk chemicals, which require a lot of energy to produce high volumes of basic chemicals, plastics, and agricultural chemicals. In 2010, bulk chemicals accounted for about 5% of the nation’s energy use and were estimated by the Bureau of Economic Analysis to provide the nation’s economy with 1.4% of the nation’s gross domestic product..

TODAY IN ENERGY: Friday, June 14, 2013

U.S. crude oil production could reach 10 million barrels per day by 2040

Projected crude oil production in the United States ranges from 6 to 8 million barrels per day (bbl/d) over the next 30 years in the Annual Energy Outlook 2013 (AEO2013) Reference case projection. However, under greater supply assumptions, crude oil production is sustained at a higher level of about 10 million bbl/d between 2020 and 2040.

Commerce – Regulatory & Compliance

May retail sales show growth, according to Department of Commerce and NRF

Logistics Management | June 13, 2013

Retail sales showed positive momentum to varying degrees in May, according to data released today by the United States Department of Commerce and the National Retail Federation (NRF).
Commerce reported that May retail sales at $421.1 billion were up 0.6 percent over April and up 4.7 percent compared to May 2012. Total sales for the March through May period were up 3.7 percent annually.

The NRF reported that May retail sales, which exclude autos, gas stations, and restaurants, rose 0.6 percent on a seasonally-adjusted basis from April and were up 4.3 percent on an unadjusted basis annually. NRF officials said that improving consumer confidence and spending helped spur the sequential and annual gains.

“Stronger employment data and increasing home and equity prices lifted confidence and spending this spring,” NRF Chief Economist said in a statement. “The economy is improving, albeit slowly, but we still have a long way to go. Stagnant salaries continue to constrain further economic acceleration. While sequester and tax increases dampened sales growth in the first quarter, it appears that the economy absorbed most of the blow.”

US Customs

Customs brokers report: “Over the past several months we have seen and heard a lot of chatter from US Customs about their new initiative to make sure all documentation is in full compliance and we want to make sure you are aware of this change so you can carefully review your current import documents and work with your suppliers to ensure the proper information is listed.”

Logistics: Carriers, All Transportation Modes & International

Con-way Freight announces mid-year rate hike

Logistics Management | June 12, 2013

Another day, another less-than-truckload carrier announcing a general rate increase (GRI), or so it seems anyhow. The most recent one comes with today’s announcement that Con-way Freight, the LTL subsidiary of transportation and logistics services provider Con-way Inc., will implement a 5.9 percent GRI for non-contractual business that will take effect on June 24.

Con-way said that this GRI will be geared towards customers on its CNW 599 tariff and will apply to general LTL rates, minimum charges and accessorial or supplemental fees for special services associated with LTL shipments moving within the United States and Canada, as well as cross-border shipments moving between the United States, Puerto Rico and Canada.

Carrier Financial Results – First Quarter

Supply Chain Digest

Carrier Financial Results

Logistics News: Q1 2013 Rail Carrier Review

SCDigest Editorial Staff

Profits Generally Soar on Modest Volume Growth; Evolution at JB Hunt Continues On

For the rails, the story in Q1 was that despite flat or even slightly declining carload volumes for the quarter, the rail carriers were mostly able to drive up profits and improve their operating ratios (operating expenses divided by operating revenues) nevertheless, driven by continued pricing power and a relentless focus on network efficiencies. Operating revenues were up among the four just over 1%, and carload volumes ranges from a +3% gain at Norfolk Southern to negative 2% at both Union Pacific and CSX, as a slow economy, continued steep drops in coal shipments, slow agricultural shipments for most of these carriers resulting from the Midwest drought last summer combined to offset growth in intermodal cars.

Nevertheless, net income from the four in aggregate was up 9.6%, led by Kansas City Southern’s 34% gain, while Union Pacific and Norfolk Southern saw net income grow in the 10% range.

That’s not surprising given that in general operating ratios continue to fall, down in an unweighted average of 71.2 in Q1 from the average in Q1 2012 of 71.5. The drop would have been still more except for Norfolk Southern’s 1.5 percentage point rise in OR. Union Pacific broke below the 70% level in Q1.

The 3PL & 4PL World

Armstrong & Associates report cites 6.6 annual gain percent in 2012 3PL revenue. Supply chain consultancy Armstrong & Associates said this week that total United States 2012 third-party logistics (3PL) gross revenue-at $141.8 billion-were up 6 percent over 2011.

Supply Chain News

Gartner Supply Chain Executive Conference | May 23, 2013

Dan Gilmore

Conference insights …

L’Oreal’s VP of corporate supply chain Barry Stewart and colleague Bin Zheng gave an interesting presentation on another form of supplier collaboration, but what intrigued me at the outset was how L’Oreal thinks about its supply chain. Its three-step model is: Plant -> Market -> Customer. Under Customer are processes such as demand planning, order-to cash-cycle, and trade services. Under Market are areas such as S&OP, and distribution requirements planning. Very interesting way to organize supply chain thinking.

After laboring under very manual processes for interaction with suppliers, L’Oreal a couple of years ago adopted a new collaborative platform (E2Open) that automated many of the existing steps, but more importantly allows L’Oreal and its 700+ vendors to share and see demand and supply response capability in real-time. It has cut days out of the cycle, and enabled L’Oreal’s supply chain to respond much faster as data comes in relative to new product introduction. This is the type of integration and blurring of planning and execution we have been writing about for the past three years.

Gartner analyst Simon Jacobson used the good analogy that it used to be each plant was sort of its own universe, whereas now the global supply chain is the center of the universe, with plants orbiting around that as satellites. If you haven’t vigorous started this process yet, please do so with urgency.