With this posting, the Supply Chain Matters blog resumes our weekly capsule of news reports that have implications for various industry supply chains. With COVID-19 coronavirus news once again on the rise, we provide this feature to assist our readers in their efforts to keep updated on noteworthy developments.

COVID-19 Industry Supply Chain News

Companies and institutions included in this capsule update include:

Boeing to Accelerate Job Reductions

U.S. Postal Service Planning Peak Surcharges for Domestic Parcels

Amazon Delivering Nearly Two-Thirds of its Own Packages

McKesson to Distribute Coronavirus Vaccine Across the U.S.

U.S. Automakers Completing COVID-19 Ventilator Production

U.S. and China Phase One Trade Deal Review Postponed

U.S. and European Firms Face $1 Trillion in Costs to Relocate Current Chinese Centric Supply Chains

 

Boeing to Accelerate Job Reductions

Bloomberg reports that aerospace manufacturer Boeing is preparing to offer additional buyouts to existing employees for a second time. The move is believed to be an extension of previous announced workforce cuts in the range of 10 percent announced in April.

The termed “voluntary layoff” will reportedly be offered largely to staffers in the commercial aircraft business, services and corporate units. More details are to available to workers beginning August 24.

Boeing CEO David Calhoun is noted as indicating that as the company initiates additional painful cuts, it is further “engaging in a full-scale enterprise transformation effort, evaluating every aspect of our business for opportunities to improve.”

 

U.S. Postal Service Planning Peak Surcharges for Domestic Parcels

The Wall Street Journal reports that the USPS plans to add new surcharge fees on commercial packages staring in October as the agency looks to offset the increased expenses from the coronavirus and ongoing surge in volume expected from the holiday peak fulfillment period. The surcharges are expected to be in-effect from October 18 through December 27 and are expected to range from 24 cents upwards to $1.50 per parcel.

Reportedly, this represents the first time that the postal service has implemented surcharges during the holiday season.

Readers can reference our prior Supply Chain Matters commentary, Carriers Putting an Added Cost Squeeze on Online Commerce and Retail Providers for added industry perspectives as UPS and FedEx are similarly planning additional holiday surcharges.

 

Amazon Delivering Nearly Two-Thirds of its Own Packages

Business Network CNBC reports that according to data produced by ShipMatrix, Amazon shipped upwards of 415 million packages in July compared with a monthly average of 389 million packages shipped between April and June. The data indicate that the online provider delivered 66 percent of its own packages in July, compared with 61 percent between April and June.

The report cites Satish Jindel, founder of ShipMatrix as indicating that Amazon will potentially reach a level of 80 percent of self-delivery by 2021 with the implication that UPS and the USPS will be seeking more business to offset Amazon’s volume increase.

Further reported was that UPS experienced a 26 percent parcel volume increase in July while FedEx volume increased 22 percent tin the same July period.

 

McKesson to Distribute Coronavirus Vaccine Across the U.S.

Various business media outlets report that drug wholesaler McKesson Corp. has been tapped to distribute COVID-19 vaccines across the United States when they become available.

Reportedly, the U.S. Centers for Disease Control and Prevention (CDC) will exercise an option on an existing 2016 contract for such distribution. This distributor has a track record for being one of the largest distributors of seasonal-flu and children’s vaccines, especially those that require high-volume distribution with temperature control and storage logistics infrastructure. Irving Texas based McKesson has reportedly established a track record for direct distribution of vaccines to hospitals, pharmacies, public health clinics, nursing homes and other facilities in rather large numbers.

 

U.S. Automakers Completing COVID-19 Ventilator Production

The Wall Street Journal reports that after President Trump’s invoking of the Defense Production Act in early Spring, both General Motors and Ford Motor are near completion of their federal contracts to produce the expected thousands of additional human ventilators needed to treat critical COVID-19 patients. Earlier this Spring, the Trump Administration had invoked the Defense Production Act to order companies to manufacture such needed devices.

GM is reportedly on-track to complete the production of 30,000 ventilators with a partnership arrangement with Seattle based Ventec Life Systems.  GM has plans to turn over the converted Indiana factory to Ventec for future production needs.

Ford has reportedly produced upwards of 43,000 ventilators in conjunction with product design partner General Electric at a factory in suburban Detroit. The companies expect to reach the 50,000 contracted delivery by the end of this month.

 

U.S. and China Phase One Trade Deal Review Postponed

The United States and China have delayed a planned review of their Phase I trade agreement initially scheduled for this past weekend, according to a published Reuters report. Scheduling conflicts and the need to allow time for additional Chinese purchases of U.S. exports were cited as reasons for this delay.

At this point there is no clear sense as to what date the trade pact review will be re-scheduled.

 

U.S. and European Firms Face $1 Trillion in Costs to Relocate Current Chinese Centric Supply Chains

A Bank of America Research study indicates that manufacturers and retailers face an estimated $1 Trillion in costs over a five-year period to move their manufacturing processes outside of China. However, the study reportedly argues that such moves would likely be beneficial for companies over the long term. According to the new study, COVID-19 has catalyzed the reversal of decades-long shift in manufacturing from U.S. and Europe sources toward China. The report indicates that the pandemic caused 80 percent of global sectors to face supply chain disruptions, forcing over 75 percent to widen the scope of existing re-shoring plans.

 

This concludes our August 19, 2020 COVID-19 Industry Supply Chain News Capsule. As the news cycle warrants we will continue such updates initially on a bi-weekly cycle.

 

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