735 Idle Ships Off Singapore: The Economy of Abundance

Yesterday's NYTimes has an article about the massive amount of ocean shipping capacity sitting idle off Singapore.  Apparently daily rates for a bulk freighter are down from $300,000 last summer to $10,000 earlier this year.  The cause is a massive drop off in global trade (23% down for China from last year).  The ships' Captains are supposedly waiting for orders to go collect stuff from Chinese ports as soon as demand picks up again.  They will have a long wait.

Forget about whether credit loosens up again, or stock markets rebound, the thing that will hinder any return to our gluttonous ways is what I have in the past called our new Economy of Abundance.  The idea is that productivity growth worldwide is far faster than population growth leading at some point (I think before 2050) to a world with essentially no scarcity for any manufactured goods.  This thesis is why I like to believe Supply Chain can Save the World.

Realistically we'll probably see plenty of renewed demand for stuff (some of it junk, some not) as the US economy perks up, but we will never again see the surging McMansion-fest that has kept so many factories humming in southern Asia.  Between a sustainability itch we seem compelled to scratch and an obvious need to save and invest more than we borrow and consume, Americans will soon cease to be the wide-eyed fetishists the rest of the world believes us to be.

The good news for all these empty ships is that they can go anywhere, including Lagos Nigeria, Santos Brazil, or Kolkata India all of whom serve hundreds of millions of consumers still eager for some affordable shoes, appliances and prosthetics. 

Africa Still Rising

Last week, I had the pleasure of closing SAPICS’ 30th anniversary conference in Sun City, South Africa. What I saw and heard there renewed my faith that the African continent promises growth opportunities that are still badly underestimated by the outside world. Back in December, I wrote a bullish piece on Africa as an emerging business hot spot. The madness in Zimbabwe and Kenya earlier this year, however, drew out the perennial cries that the continent is somehow beyond redemption and maybe we were falling into the same trap of false hope that bedeviled Afrophiles for hundreds of years. Sorry, but I’m still optimistic, and 1,293 attendees from Africa and the wider world at the SAPICS event make me more confident than ever that this time it is different. I wrote up why in this article for our sister publication (complimentary subscription here) and blog, First Thing Monday. You can read what some are doing to help build tomorrow’s supply chains in Africa, today here: “Africa Opportunity: Building Supply Chain Foundations.”

Desperate in Zimbabwe: Africa Still Rising?

We get away from China in this week's Chain Reaction and over to Africa. The past week’s election in Zimbabwe pits notorious 28-year “President” Robert Mugabe against the apparent will of his people in a closely watched contest between democracy and chaos. With inflation of 100,000% and people crawling under barbed wire fences to get out, chaos looks like its already winning.

Coming on the heels of a scary breakdown of one of Africa’s more stable countries, Kenya, last month, due doubts about election fairness led to tribal violence, this Zimbabwe election could signal that Africa is not ready to join the global business community after all.

 

Last December, I wrote an optimistic article about the prospects for Africa to become the growth engine of the 21^st century. I believe this in part because of the basic demographics and economics of almost 1 billion people hungry for the trappings of our modern consumer economy. Having spent 20 years studying the technology and mechanics of the global supply chain, to me it seems obvious that great companies like Caterpillar and Nokia can easily push their demand-driven supply networks into even the most challenging of markets. Companies like Unilever, Coca-Cola, and SABMiller have been doing it for decades.

 Reactions to the December article were largely sympathetic but more than a few readers confessed that they didn’t see Africa ever really changing. We are republishing the article here in its entirety and ask supply chain and business people: can Africa become the growth engine of the 21^st century?. Let me know your thoughts.