With the Super Bowl two days away, many of us are thinking about food. American’s consume more food on Super Bowl Sunday than any other day except for Thanksgiving.  In the weeks leading up to the event, a truckload of avocados bound for U.S. supermarkets leaves Michoacán Mexico—the leading growing region for the fruit—every six minutes. 
This weekend’s food festivities come amid weak harvests due to dry weather in the U.S. and South America, a surge of grain and oilseed orders from China, and turmoil in ocean shipping. La Niña conditions in the Pacific—cooler water in the equatorial region—reduced corn and soybean crops between 3 and 7 percent in Argentina and Brazil last fall.  October and November saw the driest conditions in 40 years in parts of the region. At the same time demand for grains in China to feed growing livestock herds has increased almost 7 percent. Last week, the USDA reported the second largest one-day sale of U.S. corn to China. China’s total commitment to buy U.S. corn is 17.7 metric tons for the current marketing year—October through September for corn—up from 7.6 last year. 
Grain shipments move by rail, ship and truck depending on the grain and destination. Trucks have moved an increasing share in the U.S. over the last three decades growing from a 40 percent modal share in the 1990s to over 80 percent of domestic corn and soybean shipments by 2016.  Internationally, the majority of grains and oilseeds move by ship. The wave of corn and soybean orders last week is reaching Gulf state ports with over 60 bulk vessels expected to depart this week—51 percent more than last year. Compared to the container market, dry bulk rates are relatively stable.  Approximately 10 percent of U.S. grain exports are moved in containers where rates have soared to record highs in recent weeks. 
The global shortage of shipping containers is constraining food trade in many regions as well. With the rebound of manufacturing in China last year and strong demand for Chinese imports, many container lines are accelerating the shift of empty containers back from U.S. ports. Currently, 75 percent of containers leaving the ports of L.A. and L.B. are empty—compared to 50 percent normally—and Vancouver terminals shortened return times from 3 days to as little as 7 hours. The container shortage has led to plummeting exports of peas and lentils from Canada, robusta coffee beans from Vietnam, and white sugar from India. 
With the record grain orders and container shortages, at least there won’t be a shortage of chips for our guacamole this weekend. The same can’t be said of the automotive industry, which continues to struggle from a global shortage of (semiconductor) chips. Strong demand from consumer electronics has left the industry—which only accounts for roughly 10 percent of global chip orders—scrambling to find the critical parts used in everything from power steering to anti-lock braking systems.
This week we learned General Motors (GM) will shut down plants in Kansas, Ontario in Canada and San Luis Potosí in Mexico next week. GM is cutting output at its plant in Bupyeong, South Korea as well.  Ford said it is cutting production at two F-150 truck plants and furloughing 7,000 workers at a Melfi, Italy plant next week. Volkswagen, Honda and most of the other major automotive manufacturers have announced similar cuts due to the chip shortage, which some expect to last for at least six months. While the extent of the impact is still unfolding, Bosch—a major car parts supplier—believes the chip shortage and the ongoing COVID-19 crisis will weigh on global automotive production growth this year. 
Cuts in the automotive industry have not (yet?) expanded to the broader manufacturing sector. Factory orders dropped 1.9 percent in Germany last month but were still up more than 6 percent from last year.  ISM’s manufacturing index in the U.S. continued to expand in January, though at a slightly lower rate from December’s high.  IHS Market’s indices for Taiwan and South Korea rose to 10-year highs. Factory activity continued to expand in India, Indonesia and the Philippines and remained steady in Vietnam, Japan and China. 
Closer to home, while most of the world was fixated with a (peaceful) transfer of power at Amazon, the company continued expanding its transportation capacity. According to a six-pager—an internal proposal written in the form of a press release or news story—leaked to The Information, the company is launching a new “incubator” for its Amazon Freight Partner program.  The middle-mile trucking program already has over 1,100 Amazon-branded tractors run by 130 small carriers.  The incubator launches next month with a goal of building the dedicated fleet to between 2,280 and 5,700 Amazon-branded tractors by year’s end. That would bring its fleet within reach of Walmart with approximately 7,400 dedicated trucks. Amazon is expanding its air cargo capacity as well. Earlier this month it bought 11 Boeing 767s from Delta and WestJet, bringing its air fleet to more than 80 leased and owned aircraft. 
Amazon has been a clear winner in a challenging year for retail. According to a report by Yelp, over 100,000 small business have closed permanently since the start of the pandemic.  Most of these have been restaurants and retail businesses. Home, local, professional, and automotive service businesses fared better. There are signs, however, that people relocating out of New York, San Francisco and other large cities to suburbs and small towns are buying businesses, opening new ones and spending more money locally.  Whether the trend is temporary or permanent is still anyone’s guess, but it is another wedge in the shifting retail landscape. For now, I will stick to tracking avocados.
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What I’m Reading
The wind-power boom set off a scramble for balsa wood in Ecuador in The Economist
Impacts of transportation network companies on urban mobility by Mi Diao, Hui Kong & Jinhua Zhao in Nature Sustainability
The Economics of Biodiversity: The Dasgupta Review from the U.K. HM Treasury
Navigating Towards Cleaner Maritime Shipping: Lessons From the Nordic Region from the International Transport Forum