Thailand flooding impacts automobile supply chain
A recovering auto supply chain may have been dealt another major blow in the recent weeks, as flooding in Thailand has reached epic levels.
The country, which serves as a major automobile production hub for Asian carmakers, is witnessing its worst flooding in 50 years, and logistic problems caused by the flooding could affect automobile production.
The automobile supply chain in the region has become a mess, and hundreds of cars that are scheduled for delivery are submerged in water stemming from the Thailand floods.
VIDEO FOOTAGE OF THAILAND FLOODING
About 270 people have died since the Thailand flooding began in late July, and almost 200 factories have flooded. Arguably the most important of those is Honda’s Ayutthaya production plants, which are capable of producing 240,000 vehicles each year.
With floodwaters approaching the area, Honda halted production and evacuated workers from the Ayutthaya plants on Thursday.
“(Flooding) will affect all original equipment manufacturers (OEMs) as suppliers in Ayutthaya and in Pathum Thani (Navanakorn) supply all major suppliers,” Hajime Yamamoto, Thailand director for Colorado-based research firm IHS Automotive, told Reuters.
“Honda will be hit hardest due to its location but others will nonetheless feel the disruption.”
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One industry source said that there were 20 car plants in the Rojana and Saharat Nakorn industrial regions that were disrupted by the floods, which makes up about 10 percent of total automobile parts production for Thailand.
The Rojana Industrial Park, located in the Ayutthaya province, about 45 miles from downtown Bangkok, also has big-time companies like Canon and Nikon, which could see their own supply chain problems caused by the flooding.
The only good news stemming from the developments in Thailand at this point is that eastern province Rayong, the center for most automobile assembly operations, has been relatively unscathed to this point.
UPS Posts Record Second Quarter with Revenues of $23.4bn
Growth across each of its core segments resulted in record results for UPS in the second quarter, with group revenues climbing 14.5% year on year to $23.4bn.
The global logistics outfit achieved consolidated operating profit of $3.3bn, up 47.3% compared to the same period in 2020. It is the second consecutive quarter of record profit, and a significant rise on Q1’s $2.9bn.
UPS Q2 Revenues in Brief
- Consolidated revenues: $23.4bn (+14.5% yoy)
- Domestic: $14.4bn (+10.2%)
- International: $4.82bn (+30%)
- Supply Chain Solutions: $4.2bn (+14.3%)
The US company’s domestic segment performed steadily with 10.2% revenue growth to $14.4bn. But it was its international and supply chain solutions segments where UPS saw the biggest gains. Strong demand in Europe led an increase in international revenues of 30% to $4.82bn. UPS’ supply chain solutions division saw revenue growth of 14.3% to $4.2bn, driven, the company said, “by strong demand in nearly all businesses”.
UPS’ steady growth throughout the pandemic has been led by the overarching vision of its chief executive Carol Tomé to do “better not bigger”, focussing on efficiency and high margin deliveries through its network over pure scale and volume.
“I want to thank all UPSers for executing our strategy and delivering high service levels, which fuelled record financial results in the second quarter,” she said. “Through our better not bigger framework, we are moving our world forward by delivering what matters.”
UPS Completes Sales of UPS Freight
The second quarter also saw UPS complete the divestiture of UPS Freight in a deal worth $800m - with a surprise result for the division, now called TForce Freight, under new owner TFI International.
“The second quarter was historically significant for TFI International, with the closing of our UPS Freight acquisition and record performance across the board,” said Alain Bédard, chairman, President and Chief Executive Officer, TFI International. “Particularly gratifying is the performance of TForce Freight, which has exceeded our operating ratio targets far ahead of schedule, and we have only just begun our work.”
In it first two months of ownership TFI reported that adjusted operating ratio (OR) was 90.1% for TForce Freight, far outperforming its forecasted OR of 96-97%.
“I wish to thank our entire team for their hard work and remarkable efforts, and officially welcome aboard our new TForce Freight colleagues who have seamlessly come under the TFI umbrella and are already making stronger than expected contributions,” Bédard added.