@ Supply Chain Management


Two conflicting reports : Who decides?

The first report is from March 3rd of this year:

Panjiva cites decline in global shipments to U.S. from January to February. From the article,

There was a 3 percent decline in the number of global manufacturers shipping to the United States from January to February, according to data from Panjiva, an online search engine with detailed information on global suppliers and manufacturers.

This comes on the heels of a 3 percent decrease from December to January, a 3 percent gain from November to December, and a 1 percent decline from October to November. The 3 percent decrease from January to February is considerably better on a year-over-year basis, when there was a 10 percent decline.


Panjiva also noted that there was a 4 percent decrease in the number of U.S. companies receiving waterborne shipments from global manufacturers. This follows a 7 percent decline from December to January and a 2 percent gain from November to December.

Panjiva CEO Josh Green commented in a blog posting that some caution needs to be exercised when viewing this data, as they are "somewhat misleading" due to global trade being in free fall last year at this time, coupled with the fact that "the absolute level of global trade activity remains well below where we were prior to the 2009 recession."
In an interview with LM, Green said that while it is a positive thing that global trade has emerged from the depths of the recession, Panjiva’s data suggests that global trade is following a seasonal path, although it is not returning to pre-recession levels. This, said Green, raises the question of whether or not what is currently happening is the new normal.

"We are moving sideways now and are not truly in a robust recovery," said Green. "The signs [of a true recovery] are not there yet. But we are not in panic mode anymore either."

Now, here is a report from yesterday from the New York Times: From the Mall to the Docks, Signs of Rebound

The docks are humming again at this sprawling Pacific port [Oregon], with clouds of golden dust billowing off the piles of grain spilling into the bellies of giant tankers.

In Portland, Ore., Kevin Weldon prepared soda ash for export. Exports rose in the first two months of the year by nearly 15 percent compared with a year earlier.

“Things are looking up,” said Dan Broadie, a longshoreman. No longer killing time at the union hall while waiting for work, instead he is guiding a mechanized spout pouring 44,000 tons of wheat into the Arion SB, bound for the Philippines.


Exports swelled in the first two months of the year by nearly 15 percent compared with a year earlier, according to the Commerce Department.

Now, that’s two reports from two different sources that could be reconciled by some neat trick but what is that trick? Animal spirits? No, something more shocking – Imports are down and exports are up? Huh, what? Now, that’s a welcome change, one would think.

But Animal spirits are everywhere,

“I’m certainly interested in spending now that the stock market seems so relaxed,” said Dan Schrenk, an information technology consultant, as he stood outside a Best Buy store in the Portland suburb of Beaverton.


On the other side of the country, at the Garden State Plaza mall in Paramus, N.J., Marie Bauer, who sells clothing for a living, was feeling similarly emboldened.

“I’m working more now,” she said. “I bought myself a watch.”

If that ain’t Animal Spirits, what is? One is boldly buying a watch. (a watch, mind you!!) while the other is calmed by the current state of the stock market. I suppose, I could be charitable and envision that it is not a Timex but a Rado but those are still imports in my book. As for the calm in the markets, that’s exactly how a sucking out of volatility from the market sounds and feels like. Look at the chart below:


When volatility is sucked out, there is much complacency in the market and the above quote is a good example of it. As the left side of the above chart shows, complacency can last quite a long time and so cannot be read to indicate that something altogether violent and volatile is impending.

At the cross-roads, which fork do you believe, let alone take?


Consumer Credit in U.S. Fell by Most in Three Months

The troubles continue despite the barrage of good news that is announced from any and every media outlet. The latest blow (or rather non-boost) to the story of good times are around the bend is: Consumer credit in US fell by most in three months.

From that article,

Consumer credit in the U.S. declined in February more than anticipated, indicating Americans are reluctant to take on more debt without further improvement in the labor market.


The drop was the 12th in 13 months and shows consumer purchases, which account for about 70 percent of the economy, will be limited until households become more optimistic about the recovery. Confidence to finance spending may be restored if employment keeps rising after a March payroll gain that was the biggest in three years.

“I don’t think we’re going to have the credit-fueled spending we had in the past,” said Gary Thayer, chief macro strategist at Wells Fargo Advisors LLC in St. Louis. “A lot of consumers are deleveraging. They see excess borrowing as threatening.”

and lastly,

In 2009, credit-card write-offs increased 59 percent to $89 billion from $56 billion in the previous year, according to R.K. Hammer Investment Bankers, in Thousand Oaks, California. Write- offs and delinquencies typically track the unemployment rate.

Remember that the biggest boost from the stimulus as far as job creation was concerned was slated to be towards the end of 2009 and then tapers off into the first quarter of 2010 (Romer: Impact of stimulus will wear off and The end of the Great Recession). That means that this is the best consumer related effect that we should see – at least from the point of view of job creation filtering back into consumer demand. After that, the expectation will be that the economy grinds on under its own powers.

The masters of our fates seem wedded lock, stock and smoking barrels to the idea that all that needs be done is to rouse the animal spirits (that’s us folk, never mind the implied condescension). And like a bunch of wildebeests, we shall run off to our jolly lives, never mind the fire on the savannah. But there’s nothing left to spend except what one possibly brings in every paycheck and that is key. You haven’t been hearing the term jobless recovery (for a time, that was being used) – but a jobless recovery is a failed stimulus and that will be the tell.

However, there is something poignant about the term animal spirits for our masters use the term to really mean : enslaved spirits, blinders on and doing whatever they command without actually commanding us. The few of us who might be familiar with animals know that an animal, even a domesticated one, can be quite an unpredictable beast and a herd of animals can summon quite an unpredictable spirit. Wildebeests are easily spooked and they can set off on a gallop thither but they can also turn and run straight back at you and trample you underfoot. That’s animal spirits for you.

David vs Goliath for Web 2.0

I was forwarded a note about a series of short clips, the first of which has been posted online. The purported intent of these clips is to give voice to the small (or smaller) ERP/SCM players in the face of the mammoths. Or as some marketers might have it – the Davids vs. the Goliaths with a Web 2.0 twist.

It’s refreshing to see the battle spread to the Web 2.0 infrastructure and done in a clever way as well.

Here’s the link: Suitemates.com

About me

I am Chris Jacob Abraham and I live, work and blog from Newburgh, New York. I work for IBM as a Senior consultant in the Fab PowerOps group that works around the issue of detailed Fab (semiconductor fab) level scheduling on a continual basis. My erstwhile company ILOG was recently acquired by IBM and I've joined the Industry Solutions Group there.

@ SCM Clustrmap

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April 2010