The Friday Report: September 7th, 2018

Pfizer Reports Brexit Will Cost $100 Million for UK Breakup

With Brexit looming, the breakup with the EU threatens to decrease transit speed of goods across borders and possibly duplicate regulatory efforts.  Pfizer reported that costs for dealing with Brexit are anticipated to reach $100 million due to transferring product testing and licenses to other countries, altering clinical trial management procedures and other preventative measures.

Dealing with issues to comply with EU legal requirements following Brexit and is especially cognizant of issues involving regulations, manufacturing and the supply chain.  In 2017, Pfizer reported that approximately 2% of its $53 billion revenues were from the UK.    Other pharmaceutical companies are faced with similar challenges.  AstraZeneca, GlaxoSmithKline and Merck are also preparing for a worst case scenario.  According to an industry expert, pharma companies report that millions of pounds are being spent to prepare for Brexit, monies that could have bene spent in developing new treatments. Pharma industry companies have been advised to build up a six-week stockpile of products in preparation for potential shipping delays.  Across the pharmaceutical industry, companies have already begun hoarding drug products or investing in new facilities to release pharma products.

U.S. Factory Activity Booms:  Hits 14 Year High in August

With the American economy booming and orders flowing in, bottlenecks in the supply chain are causing snags.  Add to that the imposition of tariffs and there are concerns about restraint on future growth.

Recent surveys point to a slowdown in regional factory activity. Export orders have been waning due to the increase in the value of the U.S. dollar over the past several months.’

The robust manufacturing sector is also showing the impact of the struggle with American employment resources and supply chains,.  According to a survey by ISM, respondents voiced their concern about the impacts of tariffs, including that of reciprocal tariffs on company revenues and current manufacturing locations. According to Markit, a data firm, part of the slowdown in factory activity indicated widespread shortages of hauliers, inputs and labor.  Tariffs were reported to have exacerbated supply shortages and had driven prices higher.  Two-thirds of companies explicitly blamed tariffs for the increased costs.

Innovation in Last Mile Logistics Boosted by E-Commerce

According to MIT, there has been increased interest in the study of supply chain logistics, especially as it is focused on global and regional networks. There has been an increase in the amount of research into last mile logistics for delivery of goods in urban environments.  Issues such as increased congestion in cities, rapid expansion of home delivery from e-commerce orders have taken center stage.

The issue of congestion has had a strong impact on last mile logistics, even before the advent of e-commerce but e-commerce has dramatically increased these problems.  Typical home delivery routes of e-commerce shipments consist of 50-150 stops per day, depending upon the vehicle as compared to beverage distributors which have routes of 10-15 deliveries.

As compared to dealing with businesses, consumer deliveries have an increased incidence of delivery failures, adding to complexity of delivery and cost.