S&P: 10% list 4 tariffs more damaging than previous 3

Dive Brief:

  • The impending 10% tariffs on $300 billion of Chinese imports, set to go into effect Sept. 1, would be more damaging than the previous three tranches because it includes more intermediary and finished goods, according to a report from S&P Global emailed to Supply Chain Dive.
  • As a result, S&P expects major firms, including Cisco, Dell, HP and Seagate, to raise prices or shift production and sourcing to Southeast Asia to compensate for projected revenue losses.
  • S&P, along with the Consumer Technology Association (CTA), expressed concern that whiplash from the trade war could hamper tech companies’ ability to innovate at a time when the U.S. and China are currently racing to develop and deploy artificial intelligence (AI), machine learning and 5G technologies.

Dive Insight:

According to the CTA, the upcoming tariffs include smartphones, laptops, smartwatches, wireless earbuds, lithium batteries and more. While consumers can expect varying degrees of price increases from brands if the 10% tariffs go into effect, changes in the cost of completed goods only tell a small part of the story.

Tech companies are looking to retool and diversify their supply chains in China and Southeast Asia, which is a resource drain and means less cash is available to invest in innovation, CTA Vice President of International Trade Sage Chandler told Supply Chain Dive. Many of the companies she works with rely on cheap manufacturing in China to invest in research, new designs and high-tech AI and machine learning applications in the U.S.

“A lot of the pieces of the supply chain that the administration is trying to help are actually getting hurt because now these extra companies do not have the extra income to pay those higher paying jobs here in the U.S.” Chandler said.

When a 25% tariff on $300 billion worth of Chinese goods was under consideration earlier this year, many firms echoed this sentiment, including Apple, saying they would be forced to reduce investment in or cut high-value research and manufacturing jobs in the U.S. due to increased supply chain costs from moving out of China.

“If you take their suppliers away from them what’re they going to do?” Chandler said. “They’re going to spend their time and resources finding another chain of supply.”

Chandler said the September date for the new 10% tariffs is coming at a terrible time for American firms as many are entering into new contracts for supply for the back to school and holiday seasons. While some of the bigger tech firms can survive a margin hit midway through this process, Chandler said 80% of the CTA’s approximately 2,400 members are small to medium-sized enterprises that might not be able to withstand the extra pressure.

“They get enough capital together to get prototypes done, run it over to China to manufacture and they’re in the water on the way back and the tariffs hit and they don’t have enough money to get their cargo out of customs. That is happening to a lot of our members” Chandler said. “There’s gonna be a lot of small and medium companies that … will go out of business because they can’t survive that cycle of going back to their board or the bank to get funding.”

08 August 2019 | Morgan Forde | Supply Chain Dive


Tariff whiplash is already taking a toll on retail

Retailers and brands have been scrambling to source elsewhere besides China, but it’s not easy, quick or even possible for everyone.

Welcome to the era of trade chaos for retail.

Beginning in May, retailers lived with the official reality that a huge swatch of Chinese goods — known as “tranche four” and covering pretty much everything that hasn’t already gone through tariff increases already — would get a 25% tariff. Retailers and analysts from nearly every sector warned of price hikes for consumers, disruptions to their supply chain and margin hits. Some companies began rushing in imports to beat the tariffs.

And then the industry got a respite, as the Trump Administration hit the pause button on the tariffs and opened up trade talks with Chinese leadership. You could almost hear the collective exhale of relief from brands and retailers around the country. Maybe the tariff apocalypse wasn’t coming, after all.

And then last week, in but a moment — a tweet — the wails and teeth gnashing resumed. President Donald Trump announced the administration would move forward on a reduced — but still substantial at 10% — round of new import taxes on $300 billion in Chinese goods, set to begin Sept. 1. Higher tariffs were not ruled out, and Trump indicated they could go even higher than the previous 25% mark.

Industry response was swift and severe.

“As we’ve said repeatedly, we support the administration’s goal of restructuring the U.S.-China trade relationship,” David French, the National Retail Federation’s senior vice president for government relations, said in a statement Friday. “But we are disappointed the administration is doubling-down on a flawed tariff strategy that is already slowing U.S. economic growth, creating uncertainty and discouraging investment.”

“Tariffs are taxes on American consumers,” Rick Helfenbein, president and CEO of the American Apparel & Footwear Association, said in a statement emailed to Retail Dive. “The President’s decision to proceed with adding these additional costs for hard-working American families is truly shocking.”

Matt Priest, CEO of the Footwear Distributors and Retailers of America trade group, said in a statement that his group was “dismayed” at the decision. “We will not take this news lying down,” he added. “This is one of the largest tax increases in American history and it is vitally important that we fight this action on behalf of our consumers and our industry.”

The dominant supplier

Retailers and brands have been shifting their sourcing away from China since Trump took office. A 2018 survey by the United States Fashion Industry Association (USFIA) found that a majority of companies said they are planning to cut back on the share of their product that is manufactured in China.

Even so, China remains the “dominant supplier,” accounting for 49% of total textile and apparel imports to the U.S. by quantity in 2018, USFIA said in a March report emailed to Retail Dive. The next largest supplier country is India, with a fraction of that amount at 8.1%. For just apparel, China is also the top supplier, but Vietnam grabs the second spot.

Where companies source their products would obviously determine to a large degree how they would fare when the tariffs launch.

“There are varying degrees of companies with exposure,” Mike Zuccaro, Moody’s senior analyst and vice president, told Retail Dive in June. He pointed to G-III Apparel Group, which does 86% of sales in the U.S. (where the tariffs would hit) and sources more than 61% of its products from China. “So that’s pretty hefty.”

Analysts with Cowen and Co. have also pointed out several retailers and brands that source heavily in China, among them American Eagle Outfitters (45% sourced in China), Boot Barn (44%), Target (30%), J.C. Penney (30%), J. Jill (30%), Macy’s (25%) and Kohl’s (20%).

In an ideal world, retailers and brands would shift sourcing to another country with relatively cheap and skilled labor so as to dodge the new duties.

B. Riley FBR analysts led by Susan Anderson said in a June note that many of the apparel and footwear companies they follow are working to shift their vendor base to other countries, mainly Vietnam, Cambodia, Bangladesh, Indonesia and India. In all, Anderson’s team estimates that the share of Chinese sourcing among the companies they cover went from 36% in 2017 to 29% in 2018.

The costs of moving out of China

Shifting supply chains is not easy, and doesn’t come without cost. For instance, Katie Tangman, Columbia Sportswear’s director of global customs and trade, testified in June that it would cost at least $3 million to move its remaining production operations out of China. Those costs include new machinery and training a new workforce.

Zuccaro said that it could take a year or two to find the equipment and move it into other countries. “Some companies have been able to move some things pretty quickly. But was that kind of low hanging fruit?”

“You have to look for places that can make your product in a quality manner,” he added. “You might be able to move something quicker, but if it’s a higher-end brand that really focuses on quality and craftsmanship and things like that … it might take a little while to just have to train people and build that up.”

Moreover, as the industry tries to shift to those other countries, they’re running into capacity limitations, Zuccaro also noted.

S&P Global analysts in a June report also pointed to near-term capacity constraints, especially for skilled manufacturing. “It is very difficult to replicate China’s well-developed and integrated technology supply chain elsewhere,” S&P analysts led by Jennelyn Tanchua wrote.

In some cases, replacing Chinese production might be nearly impossible, at least in the short-term. Take wedding apparel. Steve Lang, CEO at Mon Cheri Bridals and current president the industry group American Bridal and Prom Industry Association, told Retail Dive earlier this summer that his own company sources about 90% from China. The reasons for that have to do with more than cost alone.

“The Chinese have been good at embroidery and beading for 5,000 years,” he said. Moreover, factories for wedding apparel are more involved than those that make, say, T-shirts. Facilities must be air conditioned (because sweaty hands can stain white satin and other fabrics) and laborers need to be skilled. “We have a very, very technical product.”

Making things more difficult, new factories in places like Myanmar, where U.S. companies are shifting production, might prefer to take on easier-to-make products rather than wedding dresses, which could be a loss-maker for factories in the initial years, Lang added.

Eating tariffs

Costs started stacking up before tranche four had gone into effect and subsequently put on ice (only to be revived again). The National Retail Federation reported imports in May, the month after Trump announced the tranche four tariffs plans, would rise an estimated 4.2% from the previous year.

“The threat of tariffs is just about as impactful as actual tariffs, meaning people are scrambling, people are looking, people who are diversifying out of China are stepping up that process or expediting that process,” FDRA’s Priest told Retail Dive in June while the industry was preparing for the announced 25% tranche four tariffs.

As one example, Priest spoke with one of his members that had moved in 100,000 pairs of shoes earlier than planned and was trying to figure out the logistics of pushing those to its distribution centers, he said.

Rushed imports might beat the new tariffs, but they carry risks of their own given the ramped-up modern sales cycle. “Consumers are changing, their attention spans are shorter, the desire for fresh product is strengthened,” Priest said. “And when you have to kind of adjust to these artificial political timetables, to get product in to avoid duties, then I think it can disrupt the normal kind of cadence that you’ve established in the 21st century for American consumers.”

In some cases, retailers and brands might be able to renegotiate with their vendors, and effectively share the tariff burden with them. As Moody’s senior analyst and vice president Raya Sokolyanska pointed out in a June interview with Retail Dive, the yuan had depreciated shortly after a previous tariff increase on furniture, changing the relative cost of the goods. “So it was easy to go back to the vendors” and ask for price decreases, Sokolyanska said.

Moody’s department store analyst Christina Boni noted in an interview that scale and size matter. Those that are larger and of more importance to customers have more leverage to negotiate with vendors.

“The vendor needs you just as badly as they need as you need them,” Keith Daniels, a partner with investment and consulting firm Carl Marks Advisors, told Retail Dive earlier this summer. “Retail is the vendors’ customer. So I think the retailers will have the have the majority of the leverage.”

But there are limits.

“In essence, I think the headline is that you’re not going to be able to re-engineer it at all, you’re not going to get the vendors to eat it all,” Moody’s Boni said. “The consumer is going to have eat some of it … on some level.”

05 August 2019 | Ben Unglesbee | Supply Chain Dive


10% China tariffs and the supply chain scramble

The tariffs will come as importers ramp up shipments for peak season, creating the potential to disrupt global supply chains and trade flows for the remainder of the year.

The 10% tariffs announced Thursday in a four-part series of presidential tweets sent U.S. importers into what Sue Welch described as a “scramble.”

“It’s really hard to plan for crazy,” Welch, the CEO of Bamboo Rose, told Supply Chain Dive. “And this is crazy.”

The 10% tariffs are on $300 billion worth of goods from China, also known as list four.

The announcement was not altogether out of the blue, given that such tariffs on this fourth list had been threatened before and gone through a public comment period and hearings. But the timing of the announcement was largely viewed as unexpected, after just one round of U.S.-China trade negotiations concluded.

“The swiftness with which it escalated I think is a little bit surprising,” Shehrina Kamal, product director of risk monitoring at DHL Resilience360, told Supply Chain Dive. “Now it does put in jeopardy the trade discussion that had been slated for September.”

The tariffs will also come at the start of the fourth quarter and near the beginning of peak season, creating the potential to disrupt global supply chains and trade flows for the remainder of the year.

What’s the impact of 10%?

Economic and trade impact analyses from earlier this year centered around the threat of 25% tariffs on list four goods. Some estimates predicted a 1.1% shrink in U.S. GDP with 25% tariffs on $550 billion of Chinese imports (all four lists combined), plus China’s retaliatory tariffs, in place.

While 10% may seem like a drop in the bucket compared to 25%, consultants and analysts told Supply Chain Dive the impact will still be significant, in part due to the wide range of products covered in list four.

Manufacturing sectors are particularly affected by the list four tariffs, Kamal said. In the fourth tranche, 437 product items are metals, 303 are machinery and 133 are chemicals. These three categories together amount to $77.7 billion in imports, according to Resilience360.

When tariffs impact operations and the bottom line in manufacturing, such effects ripple further down the supply chain. Chemicals listed for tariffs in the fourth round are used in the production of food products, beverages, pharmaceutical, personal care items and more.

The tranche four tariffs also garnered significant attention due to the myriad consumer products on the list, and the expectation that brands and retailers would have no choice but to push price hikes to consumers. The list includes apparel and footwear along with several types of consumer electronics.

“These additional tariffs will only threaten U.S. jobs and raise costs for American families on everyday goods,” David French, senior vice president for government relations at the National Retail Federation, said in a statement after Trump announced the 10% tariffs.

Trump: US to impose 10% tariffs on $300B in Chinese goods

UPDATE: Aug. 2, 2019: Trump told reporters outside the White House Thursday negotiators from the U.S. and China would meet again in early September. He said the reason for the Sept. 1 tariff implementation date was not to allow negotiation time, but rather because “it takes a long time for the ships to come over.”

Trump also alluded to the possibility the 10% duty rate could increase or decrease, depending on the outcome of negotiations. “It can be lifted up to well beyond 25%,” he said. “But we’re not looking to do that necessarily.”

Hua Chunying, spokesperson for the Chinese foreign ministry, said China is prepared to retaliate with “necessary countermeasures,” according to multiple news reports.

Dive Brief:

  • The U.S. will impose a 10% tariff on the remaining $300 billion worth of imports from China, known as list four, beginning Sept. 1, President Donald Trump tweeted Thursday afternoon.
  • The series of tweets came after U.S. representatives returned from trade talks with Chinese officials. Trump described the talks as “constructive,” but said China had agreed to buy agricultural products from the U.S. “in large quantities, but did not do so.”
  • Trump said the negotiations between the two nations will continue. Further details were not immediately available from the White House, the Office of the U.S. Trade Representative (USTR) nor the Chinese government.

Dive Insight:

Starting at the beginning of next month, every good coming into the U.S. from China, except those with exemptions, will have an import tax, ranging from 10% to 25%.

The tranche four tariffs on $300 billion worth of goods has been in limbo for several months, first as a repeated threat from Trump, via speeches and twitter.

The threat came closer to reality in May when USTR released a 136-page list of products to face tariffs up to 25% and held a comment period plus seven days of public hearings on the matter. In late June, Trump said he wouldn’t impose the list four tariffs “for the time being.”

Executives on earnings calls have warned about the effects of tranche four tariffs on their businesses, noting the potential for eroding margins and higher costs being passed on to consumers. Macy’s called this round “the big one.” The National Retail Federation said tariffs at 25% would be “too large” for retailers to absorb, though it did not specify at the time how 10% tariffs would affect retailers.

02 August 2019 | Shefali Kapadia | Supply Chain Dive


Analysis: One-third of Class 8 truck miles are driven empty

Dive Brief:

  • The number of miles trucks drive empty is widely underestimated, according to an analysis from trucking startup Convoy, due to a lack of measurement standards and natural human biases. While industry estimates are typically around 20% for empty miles, according to Aaron Terrazas, director of economic research at Convoy, the figure is closer to 33%.
  • The share of empty miles driven varies by type of carrier. Convoy’s analysis shows for private fleets, in which the shipper owns or leases trucks to carry its own goods, empty miles are around 40% of total miles driven.
  • Terrazas wrote the data suggests “remarkably little progress on reducing empty miles since at least the 1990s,” although he noted the number of miles driven empty has decreased since the 1970s.

Dive Insight:

Convoy’s analysis points to two major efficiency problems in freight transportation: The trucking industry as a whole doesn’t have a good sense of how many miles are driven empty, and the empty miles issue has seen little to no improvement over the last 20 years.

The two go hand in hand. Without knowledge of how many miles a truck is driving empty, it’s difficult to get to the root of the problem and implement solutions.

Trucks driving without a container contribute to existing capacity challenges and inefficiencies in the industry. In addition, empty miles mean greater fuel costs, more carbon emissions and more traffic congestion.

“Everyone from shippers down to end consumers — and, of course, the environment — ultimately pay the cost of empty miles,” Terrazas wrote.

A number of players have popped up in the digital freight matching space in recent years, one being Convoy, seeking to solve the empty miles problem. Others include Uber Freight and Transfix, which use algorithms to match available carriers with loads through a digital interface.

In June, Convoy added automated reloads, enabling carriers to book multiple loads at once on their route. TMS provider Kuebix introduced FleetMAX in February to match loads with fleet backhauls.

Several of the digital freight brokerage startups have raised millions in a series of funding rounds, and established brokers are entering the digital space as well.

The challenge is finding enough trucks and drivers to match loads, Kevin Abbott, vice president of truckload services in North America for C.H. Robinson, previously told Supply Chain Dive. He said digital freight matching hasn’t created any additional capacity, but rather is using the same pool of existing trucking capacity. Yet if digital brokers can reduce the number of empty miles, it could make existing capacity more efficient.

1 August 2019 | Shefali Kapadia | Supply Chain Dive


Toyota looks to develop ways to disaster-proof its supply chains

Toyota Motor Corp. has been applying its kaizen (continuous improvement) principle to the management of its parts suppliers so that it can maintain or swiftly resume production in the event of natural disasters.

As it took the firm weeks to confirm the damage to its suppliers following the 2011 Great East Japan Earthquake, forcing it to reduce production for months, Toyota has developed a supplier database to quickly grasp the effects of disasters on its supply chain and mitigate the impact of disruptions by securing alternative suppliers.

When a major earthquake hit Niigata Prefecture on June 18, registering an upper 6 on the Japanese seismic intensity scale of 7, the firm managed to confirm in half a day — thanks to the risk management database — that no damage was caused to its parts supply system.

Since a vehicle is made up of some 30,000 parts, Toyota’s complex network of suppliers across various tiers is spread widely like the branches of a tree.

At the time of the 2011 disasters, although Toyota employees worked day and night, it took three weeks to identify the damage to the supply chain. The automaker had to halt production for two weeks and reduce production for another six months.

The delay in the initial response forced the firm to reduce its planned vehicle production up to June 2011 by 760,000, although it managed to make up for much of it after production returned to normal later in the year.

Learning from this experience, Toyota in 2013 worked with tier one suppliers to develop the Rescue System, a database to visualize supply networks according to each component. In the case of car lights, for instance, suppliers of lenses and companies in charge of treating the lens surface, resin materials, paints and additives are shown in a diagram along with information such as the location of their production facilities.

Currently, as many as 400,000 parts suppliers are registered on the system. If a disaster occurs in a certain area, Toyota can immediately identify parts at risk.

Visualizing the supply chain also helps identify components that are supplied by only one manufacturer and are difficult to replace with alternatives.

Toyota is working to decrease dependence on such components by reducing unique designs and sharing information on equipment specifications among its in-house parts production facilities and suppliers.

In doing so, Toyota has succeeded in securing alternative supply chains for most of its parts, except for some components such as semiconductors that need complex processing, but which Toyota would stock up on.

Establishing this backup system means suppliers have to disclose some of their know-how, which might include industrial secrets, but cooperation went smoothly because of the longtime tradition of Toyota group firms and suppliers supporting each other — including rival firms — during disasters and emergencies.

Still, concerns remain for Toyota’s suppliers, many of which are concentrated in Aichi Prefecture, as a massive earthquake is predicted to occur within the next 30 years along the Nankai Trough, which extends southwest along the Pacific coast of central Japan.

Moreover, the supply chain itself is constantly evolving along with changes in consumer needs, such as the growing popularity of hybrid vehicles and electric cars.

“There is no end to efforts to prepare for disasters, in the same way as everyday kaizen activities,” said Toyota’s senior employee in charge of procurement. “We will continue identifying new challenges and take measures to cope with them.”

26 July 2019 | CHUNICHI SHIMBUN | Japan Times


Despite the camo, Mercedes’ flagship EV can’t hide its striking shape.

The rumors were true – Mercedes is indeed planning a range-topping EV that will likely go by the EQS moniker once it will be launched early next decade. Spotted up close and personal by our spies, the heavily camouflaged prototype was trying to hide its dramatic shape underneath the disguise, but it’s pretty obvious we’re dealing with something quite special. With a low roofline and a swoopy shape – this isn’t your typical Mercedes as it looks sleeker even than two of the company’s most attractive cars, the CLS and the AMG GT Four-Door Coupe.

It might have a few things in common with the next-generation S-Class (W223), but it seems it’ll eschew the traditional sedan body style for a more practical five-door liftback judging by the prototype’s derrière. Speaking of the rear end, those oval cutouts in the camo at the rear bumper might suggest the car had exhausts, therefore a combustion engine, but our spies are confident we’re dealing with a pure electric vehicle.

The basic taillights that stick out like a sore thumb are obviously temporary clusters used only during the early testing phase as the real ones are either missing or hiding beneath the camo. Like we said before, it appears to have a hatchback opening rather than the trunk lid of a typical S-Class, which should improve practicality in the cargo compartment.

Moving at the side profile, the car’s shape somewhat reminds us of the radically styled 2015 IAA concept pictured below. Notice anything unusual? The door handles don’t stick out from the body, and that’s because the EQS (name not confirmed) will be getting pop-out handles like the next-gen S-Class. Both rear fenders appear to have a cap for refueling, which would indicate the test vehicle is a plug-in hybrid, but we have a feeling one of them is simply there just to throw us off.

Up front, the EQS might’ve had the final headlights or at least that’s the shape we should see on the production car. What looks to be like a closed-off grille points towards an EV that doesn’t need to cool off a combustion engine like a conventionally powered vehicle. There’s some thick camo on the hood and in other places, but the car itself looks like it has the production body.

The Mercedes EQS is expected to ride on a dedicated electric vehicle platform known as “MEA” from “Modular Electric Architecture.” Aluminum-intensive, the hardware will accommodate a flat floor structure to maximize the amount of space available inside. Power will reportedly come from dual electric motors – one on the front axle and the other at the rear – to enable an all-wheel-drive layout. We’re expecting more power compared to the EQC, which offers 402 hp (300 kW) and 564 lb-ft (765 Nm).

Inside, just about everything remains hidden under pieces of black fabric. Perhaps we will get an idea about the EQS’ cabin once the revamped S-Class will debut at some point next year. Considering the positioning of the two models, we’re expecting nothing but the best in terms of technology and materials. After all, the car will have to face some fierce competition coming not just from the Tesla Model S, but also the upcoming Porsche Taycan and Audi E-Tron GT. An all-electric Jaguar XJ has also been confirmed, so the battle is heating up in the high-end EV segment.

See pics here:


25 July 2019 | Adrian Padeanu | Motor 1


All Aboard America’s Oldest Operating Railroad

RONKS, PENNSYLVANIA – Coal-fired steam train number 90 takes off on the Strasburg Rail Road, spewing black smoke as its big wheels turn and clank on the tracks. The powerful locomotive, built in 1924, pulls old fashioned wooden passenger cars, as it takes tourists on a 45 minute ride through tranquil farms in Lancaster County, Pennsylvania.

“I like the train,” said a little boy who was staring at the huge locomotive.

The Strasburg Rail Road keeps the feeling of yesteryear alive.

“We really desire for people to experience early 20th Century steam railroading, like they would have back then,” said Station Master, Steve Barall.

Coal-powered trains worked the rails in the United States for 175 years, starting in the 1830’s, and were an integral part of America’s westward expansion and industrial revolution.

The Strasburg Rail Road is the oldest operating railroad in the United States. Founded in 1832, it is known as a short line and is only seven kilometers long. Short lines connected passengers and goods to a main line that traveled to bigger cities.

“Back then this was Strasburg’s connection to the outside world,” explained Barrall.

The railroad does not have any of the original trains. It currently operates five steam engines and the largest fleet of historic wooden passenger coaches.

Passengers can pay to sit in an open air car with wooden seats, or a luxurious first class accommodation with windows, dark green velvet chairs and polished wood walls. It reflects the opulence some people could afford during the era.

The locomotive actually travels in reverse for the first part of the trip and then is uncoupled at the end of the line. Then it is re-coupled at the opposite end of the train for the return trip. The trains travel up to 40 kilometers per hour.

Trains travel through time

Husband and wife Robert and Carol said the trip reminded them of the allure of steam train travel.

“Trains are such a (part of the) fabric of this country, in fact a lot of nations in the world, so it’s nice to go back and see how the trains operated,” Robert said. “It was fun to feel the sway back and forth and the slow pace,” his wife added.

“It’s fun and I enjoy it because the scenery is so different,” remarked rider Polly Campbell. “Just takes you way back in time,” said Campbell who is in her 80’s.

Another gateway to the past is the nearby Railroad Museum of Pennsylvania.  It is one of the largest U.S. train museums that focus on the story of railroading in the northeast with collections from the 1830’s to the present day.

“We have around 100 pieces of full-size railroad equipment, passenger cars, steam locomotives, and freight cars,” said Patrick Morrison, the director of the museum. “But we also have smaller objects like tools, tickets, uniforms that were worn by railroaders, and dining car china and silver.”

He said the big steam locomotives captivate people as much today as they did in the past when bystanders watched them pull out of the station.

“Just the idea of something that powerful pulling many freight and passenger cars, it always fascinated folks.”

So did the caboose at the back of the train which onlookers waved at as the train passed by.

At the Red Caboose Motel, which passengers can view from the steam train, guests can stay in 38 cabooses, a baggage car, and a mail car from the 20th century that were converted into rooms.

“It’s almost like sleeping in a museum,” owner Tyler Prickett said. “This is the largest caboose motel, the largest privately owned collection of cabooses in the country, according to the Guinness Book of World Records.”

Keeping the nostalgia of the old trains alive.

“Historically, what we want people to take away from their stay is the importance of railroads in building America,” said Prickett.

“I think the train is amazing. It’s fun watching the scenery go by,” said 11-year-old Richard Prindle who was enthralled after his first ride on a steam train.

2 July 2019 | Deborah Block | VOA News


77% of procurement professionals expect a recession by 2021

Dive Brief:

  • 77% of procurement and finance professionals expect a recession to hit in one to two years, and 30% said they are mostly or completely unprepared for one if it occurs, according to a survey of 104 procurement and finance pros from finance analytics firm Suplari.
  • 82% of the companies represented in the survey are focusing on cost savings this fiscal year compared to 76% last year. The majority of respondents said they plan to reduce costs by scrutinizing office supply and travel spending, renegotiating contracts, consolidating vendors, implementing cost-saving technologies and delaying project expenditures.
  • “Finance and procurement professionals … are likely to be the first in their organizations to perceive and deal with the impact of a recession,” Nikesh Parekh, co-founder and CEO at Suplari, said in a press release. The report encouraged procurement leaders to ready themselves for the potential downturn not only by reigning in costs but ensuring they are proactive about gaining visibility into their suppliers’ stability and operational continuity risks across multiple tiers.

Dive Insight:

Despite a decade of sustained economic growth since the 2008 recession, analysts are increasingly worried that a tight employment market, credit market risks, trade uncertainty and other factors are pushing the economy toward a decline.

Respondents feared a recession would lead to budget cuts on procurement spending, layoffs in their departments and the loss of suppliers and contract partners.

To hedge against this, most procurement managers are setting savings goals of between 5%-14%, with potentially more cost-sensitive small and mid-size firms setting higher goals than their larger counterparts.

As procurement managers work to reduce spend, the report analyzed where that additional cash is going. 67% of respondents choose to reinvest in “longer-term and expansion projects,” 61% put the funds into strengthening their bottom line and 52% focused on reinvesting within individual department budgets.

These priorities shifted somewhat depending on the size of the company, with 74% of large companies ($1 billion or more in revenue) preferring to reinvest in their bottom line and 64% of small companies (with revenues under $250 million) preferring to invest in specific departments.

While there is yet to be a definitive indicator that proves a recession is imminent, the report respondents stressed a “better to be safe than sorry” approach that they hope will ensure they come out on top.

18 July 2019 | Morgan Forde | Supply Chain Dive


Toyota to partner with world’s largest electric car battery supplier

Dive Brief:

  • Toyota will enter a comprehensive partnership with Contemporary Amperex Technology (CATL), the world’s largest supplier of electric vehicle (EV) batteries, the automaker announced this week.
  • The deal includes the production of EV batteries and new energy vehicle (NEV) batteries for plug-in hybrids, the development of new battery technology and the reuse and recycling of spent batteries, according to a press release.
  • The move comes after Toyota launched EV battery partnerships with Chinese supplier BYD and Panasonic, one of Tesla’s current suppliers and CATL’s competition for largest battery supplier.

Dive Insight:

Like many of its competitors, including BMWFord and Volkswagen, Toyota is working to accelerate the development of its electric and hybrid vehicles. Partnering with CATL will help the automaker secure supply in an increasingly competitive race to scale up EV production in the next five to 10 years.

Currently, EV batteries remain one of the most difficult components to manufacture in-house and the vast majority of the raw materials and suppliers are based in China. As a result, Toyota, Volkswagen and other firms are focusing on forging partnerships and joint ventures to get operations up to scale quickly and ensure supply is in place as overall manufacturing ramps up.

The additional benefit of sourcing in China is proximity and access to the country’s own growing market for consumer EVs. Toyota announced the launch of its first two all-electric vehicles for the Chinese market earlier this year which will be available starting in 2020. In the announcement, the company said this expansion is part of a global strategy to encourage greater EV/NEV adoption worldwide.

In addition, Toyota is expanding into the Indonesian market, first with hybrid models and eventually all electric ones, according to a Reuters report from June. The automaker plans to invest $2 billion in the venture. “Because the Indonesian government already has an electric vehicle development map, Toyota considers Indonesia a prime EV investment destination,” Toyota President Akio Toyoda said in a statement.

According to Bloomberg, Toyota forecasts global annual sales of 5.5 million EVs by 2025.

17 July 2019 | Morgan Forde | Supply Chain Dive


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