Logistics Report: Shifting Supply Chains; Forging Factory Hurdles; Escorts for Tankers

Date: Monday, July 15, 2019
Source: The Wall Street Journal

The push by U.S. manufacturers to shift production out of China looks increasingly like it will reorder global supply chains for the long term. Companies that make Crocs shoes, Yeti beer coolers, Roomba vacuums and GoPro cameras are among those that have moved work from China to other countries to avoid tariffs on imports. The decisions show the migration is spreading across a wide range of industries, and the WSJ’s Austen Hufford and Bob Tita write that companies aren’t treating the moves as temporary measures. Instead, executives expect to keep new supply chains in place for some time because of the investment needed to set up new facilities and shift shipping arrangements to other low-cost operations sites, such as Vietnam and Malaysia. That outlook suggests companies will expect suppliers and shipping companies to build supporting logistics operations for the long haul.

The experience of one entrenched American footwear maker shows the difficulty U.S. manufacturers face in building up production at home. Minnesota-based Red Wing Shoe Co. says its rollout of a new line of premium work boots took more than two years from concept to manufacturing, the WSJ’s Ruth Simon writes, a process slowed by the search for workers with the skills needed for the company’s high-end goods. Company executives say that’s the result of the decadeslong move of most footwear manufacturing from the U.S. It’s also a sign of the complex challenges behind rebuilding U.S. production, with even domestic manufacturers like Red Wing dependent on components from abroad while they struggle to keep costs down. Red Wing minimizes some domestic production expenses with shorter lead times that require less inventory and an integrated supply chain that includes a fleet of trucks that deliver to job sites.

Transportation

Tanker transport in the Persian Gulf region is starting to look like a military operation. Naval vessels are increasingly protecting oil tankers as they carry crude through the Strait of Hormuz, the WSJ’s David Hodari and Benoit Faucon report, amid escalating tensions between Iran and the West. A British-flagged tanker transited the Strait of Hormuz under naval escort and a tanker owned by Japan’s Mitsui OSK Lines appeared to cancel crude-loading at the Saudi port of Ras Tanura and was seen taking a last-minute diversion. Another Mitsui-owned ship was shadowed by the British Royal Navy as it sailed into port. Shipowners from the several countries saythey would welcome additional naval escorts even though the increased military activity appears to be slowing some crude transport operations in the region.

 

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