The Friday Report: March 11th, 2022

Target to Invest $5B in New Distribution Centers  

Target recently announced its plan to continue investing in its future growth.  To continue scaling operations in 2022, Target will invest up to $5 billion.   

Over the past few years, Target invested billions of dollars into its online operations as well as into its stores and has enjoyed a substantial payoff, $27 billion in sales over the past two years.  Today Target retail stores function as hubs and fulfill the vast majority of its offline and online sales, this includes providing curbside pickup and buy online pick up in store (BOPIS) services. 

Target announced plans to remodel 200 stores from top-to-bottom and also plans to open stores in 30 new locations.  In addition, Target plans to invest $4-$5 billion annually in capital spending and a return on invested capital up to 30%. 

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No Relief for Shippers in 2022 from Ocean Transportation Challenges 

With many structural issues involved with ocean transportation yet to be resolved, transportation experts have conveyed that it is unlikely that shippers will enjoy much if any relief in 2022.  Labor constraints, high demand, reduced capacity, and infrastructure challenges are some of the problems that continue to challenge the industry. 

Industry experts have indicated that the problems seen by U.S. shippers are global, impacting numerous ports across the world.  For example, U.S. West Coast ports have a lack of space for ships, shifting shippers to instead shift their business to East Coast trade lanes.  The 60% forecasted increase in vessel volume on the Asia-North America East trade lane is the result of this shift. 

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Ukraine Russia War Shifts Focus on Food Supplies 

With the Ukraine Russia War spreading, it is unlikely that Russia will be able to export fertilizer, wheat, corn, and soybeans and Ukraine exports of wheat, corn and other products will suffer as well.  Over the past two years, commodity prices have been rising due to uncertainty in the global marketplace.   

After the fall planting of wheat, Ukrainian farmers need to feed their crops with fertilizer to encourage “tillers’ to sprout up on the main stems of the wheat.  As it grows, each stalk can have three or four tillers.  This exponentially increases the yield per wheat stalk. 

Despite the fact that last year, Ukraine produced a record crop of wheat, today the country is in short supply of fertilizer, pesticides, and herbicides as well as fuel.  The Russian invasion is preventing work on the crops.  This undoubtedly will significantly impact consumers, causing a ripple effect across Africa and the Middle East as well as in other locations. 

For more information, please continue reading here.