Key Metrics and Supply Alert
By Staff -- Purchasing, 10/4/2001
- It will take longer to receive air freight from overseas as a result of new security measures invoked after the terrorist attacks in New York and Washington, D.C. Several airlines now require shipments to arrive 24 hours before scheduled departure time, a requirement already in place at Israel's El Al airline. New documentation is also now required from freight forwarders about shippers. Air freight rates from Asia jumped 25% and more immediately following last month's terrorist attacks. The increased costs reflected big backlogs in Asian airports after U.S. air space had been closed for several days. Air carriers worldwide could lose $10 billion this year, estimates the International Air Transport Association.
- There's plenty of capacity to accommodate any move to trucks for shipments within the NAFTA region. Freight moved by truck has been off 10-15% for most of the year. "We have no problem in taking that on," says a spokesman for one major trucking firm.
- Insurance rates, including workman's compensation, will be under pressure. Insured losses could hit a staggering $15 billion—with losses at specific companies as high as $900 million. "We have every confidence companies have the financial ability to keep promises they've made to their policyholders," said Catherine Weatherford, executive vice president of the National Association of Insurance Commissioners. The American insurance industry alone has assets of $3 trillion.
- Despite all the bad news in September, a PURCHASING Magazine check of manufacturing firms shows all operating close to normal a week after the tragedies in New York and Washington. Small package and electronics shipments were disrupted briefly, causing minor problems. Companies maintained regular hours, but suffered a loss of concentration among employees. "We did receive many supportive communications from suppliers in Asia and Europe expressing sympathy, outrage, support and concern over this attack," commented a purchasing executive in Illinois.
- Look for some firming in plastic resins prices, but no big increases. Polyethylene producers are pushing for nickel price increases, but demand remains soft and capacity abounds. Also working against a price increase has been a substantial softening in natural gas prices since last winter. The strength of the dollar also leaves the door open for low-priced imports. Injection molding PE grades may be a little tight because of a plant closing.
- Forecasting problems? Check out Forecasting Basics, a book from Purchasing Magazine that identifies the essential forecasting principles every buyer needs to know. Fourteen chapters cover everything from protecting yourself against price swings to statistical concepts. To order a copy, send $41 plus $2.50 for shipping and handling to Purchasing, P.O. Box 497, New Town Branch, Boston, Mass., 02456. Or buy a copy at the online bookstore at www.purchasing.com.
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