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Showing posts with label Tax. Show all posts
Showing posts with label Tax. Show all posts

Saturday, July 29, 2017

The Week in Review - ELDs, Amazon (again), Foxconn, Border Adjustment Tax - Dead, and Drivers

Another week down in 2017 and amazingly just a few more weeks before those in the retail supply chain will be going crazy getting ready for black Friday.  A lot of topics to discuss from this week so let's get going:


  1. Foxconn - Beside being a great job growth engine what does this really mean for those in the supply chain?  As you probably heard, Foxconn, the mammoth supplier for Apple and other electronics companies has decided to put a large plant in SE Wisconsin.  This will clearly generate jobs, will bring sub suppliers to the region and will make the drive from Chicago to Milwaukee a nightmare given the number of trucks that will move from the Chicago intermodal yards North.

    But, the real finding here is that the cost of production in the US is starting to come in balance with the equation of foreign manufacturing.  The "equation of foreign manufacturing" includes the following components:  Cost of MFG + Cost to move to port + cost of ocean / air + Cost to move from Port inland + GLOBAL GEOPOLITICAL RISK + SPEED + INVENTORY CARRYING COST.  The last few I have capitalized because these are normally considered "soft costs" (and therefore get ignored by many at their own peril).

    More will come and the "heartland" of America is where they will go due to transportation and now labor costs.  If you are a cartage company and haul boxes out of the Chicago rail yards, this is a happy day for you!
  2. The Border Adjustment Tax is Dead - This was sold and designed to adjust the cost of goods coming over the borders to be roughly equal to the cost of manufacturing in the US.  It was to penalize those companies who move out of the US for the purpose of evading items such as labor laws, environmental laws etc.  When it was first proposed the stocks of those supply chain companies benefiting from cross border activity tanked.  Well, as they say, if you wait long enough good things will come.  The border adjustment tax is dead.  If you make your money moving products across borders and from the ports your money is safe.
  3. ELDs are Dead, No They are Alive, No They Are Dead...    This continues to be a back and forth.  For the the life of me, I cannot understand why the industry is against this as it will level the playing field between those who cheat and break the law and those who try to run a lawful company.  But, alas, it appears a lot of people are against it.  Despite 21 Congressman co-sponsoring a bill to delay the mandate for one year,  the prevailing wisdom this week is the delay is dead and ELDS will go in as mandated.  
  4. Amazon Files Patent for Underwater Warehouses -   I am going to leave this alone and just say nothing amazes me anymore.  I will need to have a lot more thought about this and conversation before I fully understand why you would want to put stuff underwater.  Is land that expensive?  Are the rich going to start moving to offshore locations which will need to be serviced from the sea?  Who knows.
  5. Drivers - Hire Felons?  -  My guess is when you first saw this you figured I had lost my mind and this is the craziest thing you have heard of.  I now ask you to take your emotion hat off and put on your thinking cap.  Forget the social arguments, the fact is we have millions of non violent felons in this country who are no longer incarcerated.  There is a shortage of almost 200K drivers.  The solution seems like a match made in heaven.  That courier driver you had who just delivered a package to your door?  Today, he could absolutely be a prior felon.  Why not allow a non violent felon deliver to a warehouse dock?

A lot going on in logistics and I will be writing shortly about the growth of silicon valley's influence in the logistics and supply chain world.  Just as Detroit has learned their "center of gravity" is moving West, so too is the supply chain industry.