AMR Research – Top 25 Supply Chains

It’s that time of year again. AMR Research recently released their list of the top 25 global supply chains and for the second year in a row Apple Computer has claimed the top spot.

The methodology for ranking the top 25 is based on something AMR calls Demand Driven Performance. Which, according to their website, “means global supply chains built to serve customers with both operational and innovation excellence”. The Demand Driven Performance is made up of various financial metrics including inventory turns, revenue growth, and the opinions of AMR analysts and company peers.

The Supply Chain Top 25 ranking comprises two main components: financial and opinion. Public financial data gives us a view into how companies have performed in the past, while the opinion component provides an eye to future potential and reflects future expected leadership, a crucial characteristic. These two components are combined into a total composite score, with the financials accounting for 60% of the total score and the opinion piece 40%.

Dell took the second spot for 2009 up one place from last year’s rankings. 2008’s number two, Nokia, fell four spots to number six.

Spots 3 through 10 are as follows:

3. Procter & Gamble
4. IBM
5. Cisco Systems
6. Nokia
7. Wal-Mart Stores
8. Samsung Electronics
9. PepsiCo
10. Toyota Motor

For a full report of the AMR Research top 25 click here.

To compare how the companies performed in prior years click here.

Delta Airlines is back in the all cargo business…

…thanks to a recently announced joint venture with the Air France KLM group. The terms of the 10 year agreement will allow the carriers to jointly operate their trans-Atlantic business by “coordinating operations and sharing revenues and costs of their trans-Atlantic route network”.

Via Delta.com:

“This strategic partnership puts us in a good position compared with other major alliances, which are extremely active on the world’s leading long-haul market. By integrating our trans-Atlantic operations, we will give our passengers what they desire: more choice, more frequencies, more convenient flight schedules and superior customer service,” said Pierre-Henri Gourgeon, president and CEO of Air France KLM. “By optimizing the use of our pooled resources, this joint venture will help us weather the current economic situation and protect our product offering.”

News of the joint venture came just weeks after Delta announced the grounding of the entire Northwest freighter fleet. The new JV will provide Delta with access to the freighter equipment of Air France, KLM and Martinair.

Here are the highlights of the JV from Delta’s official press release:

* More than 200 daily transatlantic flights (100 roundtrips)
* The joint venture represents approximately 25 percent of total trans-Atlantic capacity.
* Over 400 destinations in Europe and in North America
* Annual revenues estimated at more than US$12 billion (approximately 9.3 billion euros, reference year 2008/09).
* Over 100,000 employees at Air France KLM
* 70,000 employees at Delta
* The venture is a long-term, evergreen arrangement that can only be cancelled with a three year notice, after an initial term of 10 years.

ATA Reports Decline in Air Cargo

The Air Transport Association of America (ATA) reported today that both passenger and cargo demand were down in March compared to the same month last year.

Compounding the softening demand for travel, U.S. airlines[2] saw cargo traffic – as measured by revenue ton miles – decline 21 percent year over year in March 2009, matching the decline measured in January and February and marking the eighth consecutive month of declining cargo traffic. Notably, cargo traffic in the Pacific region fell 28 percent. April 2009 cargo data is not yet available.

The ATA is the nation’s oldest and largest airline trade association, representing the nation’s leading airlines.

Ocean rates continue to drop

Ocean rates are continuing to drop especially on the Eastbound Transpacific trade lane.

According to an article on the JOC, the latest data from Drewry Shipping consultants shows that the average spot rate from Hong Kong to Los Angeles is now at $986 for an FEU. This represents a decrease of 51.6 percent compared to one year ago.

We are definitely seeing a race to the bottom in terms of ocean rates. With volumes down substantially and thousands of empty containers sitting on idle vessels all over the globe, many carriers are scrambling to fill vessels. From an NVOCC perspective, I am seeing many importers testing the waters in terms of what rate levels the current market will bear. Unfortunately (for many 3PL providers), with the economic downturn, I am seeing many customers using pricing as the main deciding factor when choosing new freight forwarding service offerings.

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