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A Quick Glance Into The Logistics Market - August 2014

Georgia Logistics compiles a monthly set of facts and figures regarding the Logistics Markets. We selected a few facts to share with you :-

U.S. Market

Gross Domestic Product: The U.S. GDP increased 4% in the second quarter of 2014 according to the first estimate released by the Bureau of Economic Analysis. 

U.S. Trade Deficit: The U.S. trade deficit decreased by 7% in June to $41.5 billion. Exports rose 0.1% to $195.9 billion and imports fell 1.2% to $237.4 billion.

Consumer Confidence: The Consumer Confidence Index increased to 90.9 in July 2014, up 4.5 points from the previous month and the highest since October 2007(The consumer confidence index is based on a monthly survey of 5,000 U.S. household. It is designed to gauge the financial health, spending power, and confidence of the average U.S. consumer.)

Unemployment Rate: The unemployment rate in America rose to 6.2% in July 2014 as there were 209,000 net new jobs

Leading Economic Index: The Leading Economic Index for the U.S. increased 0.3% in June to 102.2 (2004=100), following a 0.7% increase in May and a 0.3% increase in April. (The LEI is a composite of 10 economic indicators that together create an analytic system designed to signal peaks and troughs in the business cycle. The LEI reveals patterns in economic data in a clearer and more convincing manner than any individual component alone.)

Retail Sales: Retail and food service sales in July remained the same from the previous month, and increased 4.3% above July 2013. Non-store retailer sales were up 6.7% from last year.

Manufacturing & Trade Sales: Total combined sales and manufacturing shipments totaled nearly $1.35 Trillion in June 2014, up 0.3% from May and up 4.7% from the previous year.

Manufacturing & Trade Inventory: Total value of inventory on hand is estimated at $1.74 Trillion in June 2014, up 0.4% from May and up 5.8% from June 2013. 

Housing Starts: In June, housing starts fell 9.3% to an annual rate of 893,000 units. Building permits (an indicator of future housing starts) fell 4.2% to an annual rate of 963,000. Year-over-year, housing starts and building permits in June increased 7.5% and 2.7%, respectively. 

Consumer & Producer Price Index: The consumer price index for all urban consumers increased 0.3% in June from the previous month. Over the last 12 months, the all items index increased 2.1%. The producer price index for finished goods rose 0.1% in July from the previous month. Prices for finished goods rose 1.7% over the previous year.

 

Multimodal:

DOT Freight Transportation Index: The USDOT's freight transportation services index fell 0.9% in June 2014. The index’s reading of 120 reached an all-time high and was up 2.8% from June 2013.

Import Volumes: In June, the U.S. imported about $237.4 billion of cargo. June U.S. imports fell 1.2% in terms of value from May, and rose 4.6% year-over-year.

Export Volumes: In June, the U.S. exported nearly $195.9 billion of cargo, the highest on record. June U.S. exports have increased 0.1% in terms of value over the previous month and rose 2.9% year-over-year.

Multimodal News Clips:

  • Overall freight tonnage in the U.S. is expected to grow 23.5% from 2013 to 2025. Freight revenues are projected to increase 72% during the same period. Trucking’s share of freight tonnage will grow from 69.1% in 2013 to 71.4% in 2025. 

  • Oil production in North Dakota hit more than 1 million barrels per day in April and May, becoming the second-largest oil producing U.S. state, beating out California and Alaska. North Dakota produces 12% of total U.S. oil production. North Dakota’s oil output is expected to climb to 1.5 million barrels per day by 2017.

  • The U.S. Postal Service experienced a net loss of $2 billion during the 3Q 2014. Operating revenue ended the period at $16.5 billion, a 6.6% increase on mail price increases. Operating expenses increased by $1.5 billion, year-over-year to $18.4 billion. 

 

Rail:

U.S. Freight Rail Traffic: Railroad bulk carload freight in July 2014 rose 2.4% from June 2014. Freight traffic in July rose 6.3% from July 2013. Carloads excluding coal increased 11.7% over the previous year. (Report includes rail car-loadings by 19 different major commodity categories as well as intermodal units)

U.S. Intermodal Rail Traffic: Intermodal rail traffic in July 2014 was 5.5% higher than in July 2013, and fell 0.9% from June 2014.  Intermodal loadings have experienced year-over-year gains for 56 straight months. (Report includes rail car-loadings by 19 different major commodity categories as well as intermodal units)

Railroad Fuel Price Index: The index of average railroad fuel prices in June was 594.0, down 1.1% from the previous month and 0.4%  higher year-over-year. (Average monthly price for gallons purchased by freight railroads; Includes federal excise taxes, transportation, and handling expenses)

Railroad News Clips:

  • Norfolk Southern generated a record $562 million in net income during the 3Q 2014, a 21% increase year-over-year. Income from railway operations experienced a 22% increase to $1 billion. Overall operating revenues rose 9% to a record $3 billion. The company’s intermodal revenues rose 11% year-over-year to $650 million, and coal revenues increased 7% to $672 million.

  • U.S. carload gains were led by motor vehicles and parts, increasing 35.9% over the previous year. Automotive carloads averaged 16,648 in July 2014, their highest for July since 2002. Other commodities  showing carload growth in July included metallic ores (+31.9%); petroleum and petroleum products (+19.9%); grain (+18.7%)

  • Carloads of crushed stone, sand, and gravel increased 15.9% year-over-year. Much of the growth in this category comes from frac sand. Frackers are expected to use nearly 95 billion pounds of sand this year, up 30% over 2013. In 2013, Class I railroads originated nearly 381,000 carloads of industrial sand, more than double the 181,000 carloads originated in 2010.

 

Trucking:

Trucking Volume The ATA’s seasonally adjusted cargo index fell 0.8% in June. The for-hire truck tonnage index rose 2.3% from June 2013.

Truckload Freight: The spot market for truckload freight in July fell 11% compared to the previous month, and was 40% higher year-over-year. Truck capacity rose 16% for the month, and increased 7.3% year-over-year.

Diesel Prices: U.S. average diesel prices fell 1¢ to $3.84 per gallon last week. The U.S. average diesel price was 5.3¢ lower than the same week last year. The average price of diesel in the lower Atlantic states was $3.80 per gallon. (Reflects the costs and profits of the entire production and distribution chain.) 

Trucking Employment: The trucking industry workforce added 2,300 employees in July. The trucking workforce increased 2.1% over the previous year. 

Trucking News Clips: 

  • The truck driver shortage has been a limiting factor for the trucking capacity in the U.S., causing trucking rates to increase at a faster pace. To combat this, trucking companies may need to raise driver wages as much as 15% to 25% over the next few years. Swift Transportation, the nation’s largest truckload carrier, will give drivers the largest pay increase in the company’s history sometime during the current quarter. 

  • Saia, the 10th –largest LTL carrier, saw a 6.9% increase in LTL tonnage driven by a 5.5% gain in shipments and a 1.4% increase in weight per shipment. The company increased revenue 12.9% to $330.4 million during the 2Q 2014.

 

Air Freight:

Air Cargo Traffic: Global air freight traffic in June increased 2.3% from one year ago, and rose 0.1% from the previous month. North American air freight in June rose 2.3% year-over-year. (Global air freight covers international and domestic scheduled air traffic.)

Jet Fuel Prices: As of August 1, 2014, the global average jet fuel price was $120.5 per barrel; down 1.4% from the previous month, and 4.1% lower year-over-year. (The weekly index and price data shows the global average price paid at the refinery for aviation jet fuel)

Air Freight News Clips:

  • During the first half of the 2014, the air freight industry experienced a 4.1% increase in volume as capacity rose by 3.6%. Middle Eastern air cargo saw the highest growth in volume with a 10% increase year=over-year. North American volume grew 1.6%. Airline companies are optimistic about state of the industry with 56% of airlines expecting higher volumes over the next year.

 

Ocean Freight: 

Import Volumes: Import volume through major U.S. container ports is expected to hit an all-time record 1.54 million containers in August. In June, the latest month for which numbers are available, U.S. container ports handled 1.48 million TEUs, a 0.4% decrease from the previous month and a 9.1% increase from the same month last year. Total U.S. containerized imports are expected to increase 3.6% in 2014. 

Shanghai Containerized Freight Index: The August 8th SCFI comprehensive reading was $1,172 per FEU; up 2.7% year-over-year. The spot rate for shipments to the U.S. East Coast was $4,187 per FEU, up 21.5% from the previous year.(The Shanghai Containerized Freight Index is a weekly reported average export spot rate from Shanghai for 15 different trade lanes.)

Ocean Freight Business News:

  • A recent report has announced that Samsung will build a minimum of three 19,200-TEU ships for Scorpio Group, which will charter the ships to Mediterranean Shipping Co. If true, these would be the largest 
  • containerships ever constructed. The report stated that the ships would cost about $153 million each, be delivered in 2015, and that there is an option for three additional sister ships. 
  • Capacity for refrigerated cargo on containership fleets is expected to increase by 22% over the next five years. Reefer box capacity is expected to grow from 1.6 million FEU slots in 2013 to 1.9 million slots in 
  • 2018. Reefer container volumes are forecast to rise by 20.5 million tons over this same period. 
  • Russia has imposed a ban on imports of fruits and vegetables, beef, pork, poultry, fish, and dairy products from the U.S., European Union, Canada, Australia, and Norway — countries that have recently imposed 
  • sanctions on Russia — for 1 year. In 2013, the U.S. exported over $650 million worth of dairy, meat, fruit, vegetables, poultry, and fish. This accounts for 1.3% of all U.S. food exports in those categories.

 

Warehousing & Distribution:

Industrial Vacancy: The U.S. average industrial vacancy rate was 8.2% during Q2 2014, down from 8.3% in the previous quarter. Overall vacancy was 11.5% in Atlanta and 9.5% in the South during the first quarter. 

Warehouse Rent Rates: In Q2 2014, warehouse and distribution rental rates in the US averaged $5.14 per square foot, up from $5.13 per square foot in the previous quarter. Rental rates for warehouse space averaged $3.60 per square foot in Atlanta and $4.74 per square foot in the South. 

W&D Business News:

  • Valmiera Glass will locate to Dublin, Georgia to establish its first U.S.-based headquarters. The Latvia-based fiberglass manufacturer will invest $20 million in a new 80,000 square-foot manufacturing facility  and create 150 new jobs.
  • Beaulieu International Group will establish its U.S. headquarters in Cartersville, Georgia. The Belgian textile company plans to create 350 jobs over the next five years. In the first phase, the manufacturing plant will design and produce 47 million square-yards of cushion vinyl for commercial and residential applications.