The Friday Report: August 2nd, 2019

Quick wrap up of a few hot topic newsworthy stories in the supply chain logistics industry

New Plan for Safely Importing Foreign Drug Products Under Consideration

The United States Department of Health and Human Services and the FDA announced the publication of a “safe importation action plan” on Wednesday, enabling specific medications that were originally intended for foreign markets to be sold to American consumers. In the past, there has been bipartisan support for the importation of less expensive medications.  President Trump has supported the idea as well as some of the Democratic presidential candidates.

According to HHS Secretary Alex Azar, changes in the global pharmaceutical supply chain warrant a change, potentially allowing medicines from other countries to be sold in the U.S.  With enhanced regulatory frameworks implemented, he now feels that concerns about consumer safety have been somewhat abated.  The pharmaceutical industry immediately rejected the plan as the products may not have undergone stringent review by the FDA.

Coffee Growers Faced with New Trump Tariff Threat

Plagued by extremely low commodity prices and depressed incomes, Guatemalan coffee growers are concerned about American tariffs under consideration.  Last week, Guatemala backed out of an agreement to become a “safe third country”, a program planned to diminish the flow of undocumented migrants to America.  The American government is considering tariffs, remittance fees and other sanctions to take action against Guatemala.

Many of Guatemala’s small coffee growers were forced to leave the country.  Adding tariffs may end up increasing the flow of migration out of the country to the United States.   Coffee futures dropped nearly 25 percent in the past two years as supplies were abundant in Brazil, the world’s top producer and exporter.  With stiff competition and bottomed out prices, coffee farming has become unprofitable for many small growers.

Walmart Web Unit Woes Deepen 

Walmart’s digital operation is still finding integration of its money-losing online business with its retail stores to be problematic.  A second restructuring, merging the logistics and finance teams for the Walmart e-commerce unit and stores is planned, according to Bloomberg News.

Merchandising will be kept separate, at least at this point.  Walmart has found the management of both an online business which sells 75 million products, many from third party sellers to be complex and challenging.  Add to this the push to next day delivery to rival Amazon, and the horse race is on.

Facing renewed pressure to produce earnings from the online unit, Walmart recently lost key team members needed for the effort.  Although its online business has grown, it remains in the red, with losses of $1.7 billion anticipated.

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