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Wintry Weather Delaying Shippers

By APICS staff | 14 | 4 | February 18, 2014

The icy temperatures and snowstorms that have characterized much of the United States in the past six weeks have been stalling shipments, forcing shutdowns and delivery delays by some manufacturers, USA Today reports. The US government reported that factory production fell sharply in January, and several workers are getting hours reduced and taking pay cuts. Meanwhile, some trucking rates are increasing, and these costs can get passed on to consumers.

The rough weather “has a massive ripple effect through the supply chain and the economy,” says Bob Costello, chief economist at the American Trucking Association. Shipping delays can cause a domino effect as trucks are late making pickups in destination cities. Also, in a normal winter, truckers can clear backlogs after each storm—however, this year, one storm seems to follow the other closely. “You can’t catch up,” Costello says.

In New Jersey and New York, some ports have been hit especially hard, says Evans Papantourous, owner of EP Transportation and Logistics, a trucking services firm in Toms River, New Jersey. Many days, lines spanning miles lead into ports in Newark and Elizabeth, he says, and store and factory deliveries have been up to 10 days late. “I haven’t seen it this bad in 30 years in the business,” Papantourous says. “This is killing us.”

Apple Pushing Suppliers to Be Conflict-Free 

Apple’s recently released supplier responsibility report states the company does not use any tantalum sourced from war-torn areas of the world, the New York Times reports. Apple says that it verifies through third parties its suppliers’ tantalum smelters are conflict-free. It also is pushing its suppliers of tin, tungsten, and gold to adhere to the same standards.

Tantalum, tin, tungsten, and gold (3TG) are elements essential to many modern technology applications and, while available from other parts of the world, are known to finance various war activities in and around the Democratic Republic of the Congo. More companies are being pressured by lawmakers and customers alike to report the sources or reduce the presence of 3TG elements in their supply chains.

Apple’s supplier responsibility statement also reveals the company is trying to end excessive workweeks for its suppliers’ employees. Last year, Apple supplier compliance with a 60-hour workweek was at 95 percent, up 3 percent from the previous year.

Weakening Japanese Manufacturing Casts Doubt on Abenomics

Core machinery orders in Japan dropped steeply in December, and even more declines are expected when first-quarter results come in,
Reuters reports. Orders fell 15.7 percent, significantly worse than the projected 4.1 percent and the largest drop since comparable data collection began in 2005. This is a worrying sign for those looking to see a recovery in the world’s third-largest economy.

The decline also may be fueling skepticism of the economic policies of Japanese prime minister Shinzo Abe, collectively referred to as “Abenomics.” These include attempts to increase capital spending to help recover from a decades-long slump and create virtuous cycles of job creation, higher wages, and consumer spending. Japanese firms have been hesitant to make investments in plants and equipment for many years, with the fear of long-term deflation ever present.

Yasuo Yamamoto, senior economist at the Mizuho Research Institute, says that many Japanese companies are exercising caution before an upcoming sales tax hike. Capital expenditures still may contract in the second quarter of 2014, as well. If they don’t recover, people will expect the government and the Bank of Japan to respond, Yamamoto says.

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