QAD Precision News Round-Up: 7 January 2022

In the QAD Precision News Round-Up: 7 January 2022,  supply chain pressures may be peaking; IKEA to raise prices; Walmart to hire 3,000 workers; electric vehicle sales high in the UK; UPS holiday returns break records; plus preparing for the 2022 supply chain and more. 

Global Trade

INDEX PREDICTS PEAKING SUPPLY CHAIN PRESSURES

The New York Federal Reserve unveiled a new index, the Global Supply Chain Pressure Index (GSCPI). It uses 27 variables to show global supply chain pressures beginning in 1997. The index shows that supply chain disruptions including the slow flow of goods and inflation may be peaking. Furthermore, the GSCPI shows current supply chain pressures at 4.5 standard deviations above normal. Although this is a high level, analysts advise that pressures may be peaking and will moderate going forward. 

The index’s 27 variables include: cross-border transportation costs and country-level manufacturing data from the Purchasing Managers’ Index surveys. For more details, please click here.

Auto 

CAR MAKERS REPORT HIGH SALES OF ELECTRIC VEHICLES IN THE UK 

The Society of Motor Manufacturers and Traders (SMMT) reported carmakers sold 190,000 battery electric cars in the UK last year, accounting for approximately 11.6 percent of total sales. This is an increase compared to 2020, when consumers bought 108,000 battery-powered cars, making up 6.6 percent of new cars purchased in the UK. In addition, in December 2021, electric cars accounted for 26 percent of total sales representing a record for a single month. According to the SMMT, consumers purchased more electric cars in the UK in 2021 than in the previous five years combined.

Amid disruption to global supply chains and chip shortages, overall car sales in the UK increased 1 percent from 2020 to 1.65 million. However, sales remained almost a third below sales in 2019. For more details, please see The Guardian.  

Carriers 

UPS HOLIDAY RETURNS TO REACH NEW RECORD  

According to a UPS spokesperson, the peak holiday shipping season is still in effect due to the record-breaking number of holiday returns the company is handling. UPS expects to handle over 60 million return packages this peak season which represents an increase of 10 percent compared to holiday returns in 2020. 

UPS has released data points focused on holiday returns. According to the company, one in four Americans expect to make a return during peak season, while one in five Americans made a return before Christmas. Furthermore, over 35 percent of respondents said they would pay more for a return if the process was more sustainable and 84 percent expected retailers to provide a cost-free return option. For more information, please see Logistics Management.  

Retail 

WALMART TO HIRE 3,000 NEW WORKERS

Walmart will hire an additional 3,000 drivers in 2022 for its InHome Delivery service. The new positions are full time and drivers will receive $1.50 more per hour than most store employees providing advancement opportunities to current Walmart employees. InHome Delivery’s current territory covers more than six million potential customers with plans to expand to 30 million potential customers by the end of this year. 

InHome Delivery delivers groceries and essential items to customers' garages, front doors, kitchens and even straight into the refrigerator. InHome Delivery is $148 annually or $19.95 a month. Walmart is using InHome Delivery to further expand its last-mile delivery offerings. For more information, please click here.

IKEA TO RAISE PRICES

IKEA, the world’s largest furniture retailer, is raising its prices in 2022. The price increase is an average of 9 percent across all categories. The price increase is as a result of increasing transportation costs as well as rising raw material costs. 

IKEA previously had absorbed the additional costs from leasing additional ships and containers, as well as rerouting goods to avoid shortages. Despite these measures, the furniture giant now needs to pass the additional costs onto its customers as supply chain issues continue. IKEA’s price increase reflects the current inflation and supply chain disruptions many retailers are currently facing. For more information, please visit CNBC.

WALMART & FEDEX TO BUY GM ELECTRIC DELIVERY VANS 

On Wednesday, Walmart and FedEx announced plans to add thousands of electric delivery vans produced by General Motors to their fleets. Walmart has signed a new deal with the automaker for 5,000 BrightDrop vans. In addition, FedEx, BrightDrops first customer, is adding more vans to an initial order of 500 vehicles that GM began delivering last month. FedEx said it has signed an agreement for a further 2,000 vehicles over the next few years. Furthermore, this could potentially increase to an additional 20,000 vehicles. For more information, please see CNBC.  

QAD Precision News 

GLOBAL TRADE RECOVERY: PREPARING FOR THE 2022 SUPPLY CHAIN

With homes being transformed into makeshift offices, gyms, and screen-reliant classrooms, and businesses adapting to growing demand and changing regulations, it is no surprise that COVID-19 completely changed how the world operates. In 2021, we witnessed a dramatic shortage in shipping containers, chips required for electronics production, truck drivers and general laborers, and more. All of which caused severe bottlenecks in the supply chain.

The common denominator of these disruptions is the fractured supply chain. Demand is exceeding supply while inflation skyrockets. No industry has been immune to the impacts of the exhaustive disruptions, and band-aid solutions simply aren’t enough. 

All is not lost, however. As we look to the year ahead, there are many ways companies can prepare to navigate unpredictable supply chain logistics. In this QAD Precision Report, we look at what’s to come for global trade and transportation and how to prepare for the unknown in 2022 and beyond. Read the full report here. 

PLANNING FOR SURVIVAL IN THE NEW NORMAL

The COVID-19 pandemic is forcing companies to become more agile, reassessing every element of their existing supply chains in preparation for the “new/next normal”. In addition to these pressures, “Industry 4.0” — the next industrial revolution — is the result of the substantial transformation that is occurring through the digitization of manufacturing.

In this article, QAD Precision’s Jerry Peck discusses supply chain disruption caused by both the pandemic and technology-driven innovation. He argues that companies will be forced to change business models at unprecedented rates of speed in order to survive and thrive in the “new/next normal.” For more details, please see Global Trade Magazine.