The Friday Report: July 19th, 2019

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

Uptick in Data Breaches:  Manufacturers Brave Cybersecurity Threats

According to the 2019 Manufacturing and Distribution Report, half of the companies surveyed reported that they had experienced a cyberattack or data breach within the past twelve months, with 11 percent reporting “major” breaches.  Cyber criminals are now searching for companies with IT weaknesses to generate payouts from ransomware, malware, phishing attacks and other forms of cyber extortion.

310 companies were surveyed across the industry.  Company executives believe that a change in mindset is in order, one more focused on the increased likelihood that cyber attacks will occur. Companies with less than $500 million in revenue reported being less confident in cybersecurity efforts at their respective companies.

Larger companies surveyed were more likely to engage in proactive cybersecurity efforts including conducting cyber audits, performing phishing exercises on employees and hiring internal professionals with cybersecurity expertise.  According to the Verizon Data Breach Report, the highest incidence of cyber attacks originates with an employee clicking on a link or opening a file from a cyber attacker.

U.S. DOT Full Steam Ahead to Relax Hours-of-Service Rules for Truckers

According to a recent Associated Press report, the United States Department of Transportation is preparing to “relax” current hours-of-service rules, designed to help ensure highway, auto and driver safety.  This would alter the current regulation passed in 2013 which stipulated, in part that:

  • The maximum number of hours that a truck driver can work within a week is 70 hours, reduced from 82 hours
  • Truck drivers must take a minimum of a 30 minute break after working eight hours and can take a 30 minute break at any time during the eight hour window when they need rest
  • There is an 11-hour daily driving limit

According to the Federal Motor Carrier Safety Administration (FMCSA), there was a 10 percent increase in large truck fatal crashes in 2017 over that of the previous year.  Capacity has loosened in mid-2019 and demand has decreased from the heightened levels of mid-2018.  More data and study is needed in order to determine the impact of the regulations.

Trump Tariffs on Foreign Steel Impact U.S. Mills

As the global economy was cooling, diminishing demand, steel prices dropped.  Companies that rely on electric-arc furnaces to recycle scrap into steel products now have an advantage when competing against others that utilize more costly legacy blast furnaces.  Such was the case with U.S. Steel.  Since the announcement of the tariffs 16 months ago, U.S. Steel has lost nearly 70 percent of its market value, $5.5 billion.

The decrease in demand has resulted in companies that use the older blast furnaces struggling to compete, despite the fact that foreign steel has been pushed out of the market.  The tariffs did reduce steel imports, created more demand and boosted steel industry profits.  Although domestic steel producers added capacity, this year, the global economy cooled and prices have fallen. 

U.S. Steel announced to investors that it is planning to start construction on an electric-arc furnace (EAF) facility in Alabama.  Cheaper to run, steel companies using EAF are thriving and more competitive in winning new business.  U.S. Steel also promised to spend $1 billion upgrading its Pennsylvania facilities to produce more high-strength steel for the automotive industry.

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