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A Quick Glance Into The Logistics Market - June 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 decreased 1% in the first quarter of 2014 according to the second preliminary estimate released by the Bureau of Economic Analysis.

U.S. Trade Deficit: The U.S. trade deficit increased by 6.9% in April to $47.2 billion. Exports fell 0.2% to $193.3 billion and imports rose 1.2% to $240.6 billion.

Consumer Confidence: The Consumer Confidence Index increased to 83.0 in March 2014, up 1.3 points from the previous month.

Unemployment Rate: The unemployment rate in America remained at 6.3% in May 2014 as there were 217,000 net new jobs.

Leading Economic Index: The Leading Economic Index for the U.S. increased 0.4% in April to 101.4 (2004=100), following at 1% increase in March and a 0.5% increase in February. 

Retail Sales: Retail and food service sales rose in May to $437.6 billion, up 0.3% from the previous month, and up 4.3% above May 2013. Non-store retailer sales were up 7.4% from last year. 

Manufacturing & Trade Sales: Total combined sales and manufacturing shipments totaled nearly $1.34 Trillion in April 2014, up 0.7% from March and up 5.4% from the previous year. 

Manufacturing & Trade Inventory: Total value of inventory on hand is estimated at $1.73 Trillion in April 2014, up 0.6% from March and up 5.0% from April 2013. 

Housing Starts: In April, housing starts rose 13.2% to an annual rate of 1,072,000 units. Building permits (an indicator of future housing starts) rose 8.0% to an annual rate of 1,080,000. Year-over-year, housing starts and building permits in April increased 26.4% and 3.8%, respectively.  

Consumer & Producer Price Index: The consumer price index for all urban consumers increased 0.3% in April from the previous month. Over the last 12 months, the all items index increased 1.8%. The producer price index for finished goods fell 0.2% in May from the previous month. Prices for finished goods rose 2% over the previous year.

 

MULTIMODAL: 

Dow Jones Transportation Index: Dow Jones Transportation index rose 6.3% during the month of May. 

NASDAQ Transportation Index: NASDAQ Transportation Index increased 9.3% in May. 

DOT Freight Transportation Index: The USDOT's freight transportation services index rose 0.4% in April 2014. The index’s reading of 117.6 was up 4.8% from April 2013.

Cass Freight Index: The May shipments index rose 1% over the previous month and rose 3.6% year-over-year. The May expenditures index rose 1.1% for the month, and increased 11.2% year-over-year. 

Import Volumes: In April, the U.S. imported about $240.6 billion of cargo. April U.S. imports rose 1.2% in terms of value from March, and rose 5.4% year-over-year. 

Export Volumes: In April, the U.S. exported more than $193.3 billion of cargo. April U.S. exports have decreased 0.2% in terms of value over the previous month and rose 3.0% year-over-year. 

Import & Export Price Index: U.S. import prices rose 0.1% in May. Import prices rose 0.4% over the past year. The price index for U.S. exports rose 0.1% in May. Export prices increased 0.5% year-over-year. 

Multimodal News Clips: 

  • U.S. shippers on average expect their volume to rise 3.6% over the coming year, the highest forecast since 2010. Railcar and intermodal growth is expected to drive total freight volume, expanding 5% over the next 12 months. Domestic ground and ocean shipping traffic will increase between 3% and 4% during the same period.
  • Manufacturers expect sales to increase by 4.1% and their work force to grow by 1.7% over the next 12 months. They plan to increase capital investment by 2.3%. Nearly 86% of manufacturers have a positive business outlook. Attracting and retaining a quality work force was the third-biggest business challenge cited by manufacturers. However, manufacturers are most concerned with the effects of government policy like rising health insurance costs and an unfavorable business climate due to taxes and regulations. 

 

RAIL: 

U.S. Freight Rail Traffic: Railroad bulk carload freight in May 2014 rose 1.3% from April 2014. Freight traffic in May rose 6.1% from May 2013. Carloads excluding coal increased 8.2% over the previous year.

Railroad Fuel Price Index: The index of average railroad fuel prices in April was 615.1, up 2.2% from the previous month and 2.2% higher year-over-year.

Class 1 Railroad Employment: Railroad employment in April 2014 increased by 1,321 employees to 164,289 employees. Total Class 1 rail employment in April increased 0.8%, year-over-year.

Railroad News Clips: 

  • In May 2014, 17 of the 20 commodity categories saw carload gains, the most since the spring of 2010. Grain saw the biggest carload gain in May, up 29.7% over the previous year. Lumber and wood products were up 18.9%; crushed stone, gravel and sand were up 14.6%; primary metal products were up 11.5%
  • So far in the second quarter, shipments of coal have increased 9.3% for Class I railroads. During the same period, agricultural shipments have increased 14.2%. Intermodal traffic has seen a 9.4% rise so far this quarter.

 

TRUCKING:

Truckload Freight: The spot market for truckload freight in May fell 2.1% compared to the previous month, and was 48% higher year-over-year. Truck capacity rose 6.4% for the month, and was up 1.4% year-over-year

Diesel Prices: U.S. average diesel prices fell 2.6¢ to $3.89 per gallon last week. The U.S. average diesel price was 4.3¢ higher than the same week last year. The average price of diesel in the lower Atlantic states was $3.89 per gallon. 

Truck Orders: Orders for heavy-duty Class 8 trucks in North America are expected to total 26,605 units in May 2014. May orders were 6.2% higher than the previous month and 14% higher year-over-year. Class 8 truck orders have now had 16 consecutive months of year-over-year increases.

Trucking News Clips: 

  • Trucking and logistics company Schneider reported its seventh straight year of declining cargo thefts and a 20% drop in truckload thefts. Since 2006, Schneider says it has seen a 91% decline of truckload thefts. Nationwide, the number of stolen freight incidents decreased 9% last year, the first industry-wide decrease since 2009. 
  • Available truck capacity will increase between 1.0% and 1.5% this year, the first increase since 2007. Retail sales of heavy trucks are projected at 222,000 units in 2014, with about 190,000 tractors directly replacing older equipment. The number of Class 8 trucks currently in service is estimated at approximately 2 million tractors. 

 

Air Freight:

Atlanta Air Cargo Traffic: In April, Hartsfield-Jackson Atlanta International Airport transported 48,675 metric tons of cargo, an 8% decrease from the previous month and a 3.3% decrease year-over-year. 

Air Freight Price Index: In April, the index of East-West air cargo rates rose 1.5% from the previous month, and was 5.5% higher year-over-year. The average price of air cargo leaving the United States in April stood at $3.38 per kilogram.

Air Freight News Clips: 

Air freight volumes at airports around the world rose 4.8% in April, year-over-year. North American air freight experienced the largest regional increase, rising 6.1% over the previous April. Global air cargo activity has increased 3.7% YTD

 

OCEAN FREIGHT: 

Import Volumes: Import volume through major U.S. container ports is expected to surge 7.5% in June over the same month last year as retailers prepare for potential disruptions surrounding the expiring West Coast Port’s labor contract. In April, the latest month for which numbers are available, U.S. container ports handled 1.43 million TEUs, a 9.9% increase from the previous month and a 10.3% increase from the same month last year. Total U.S. containerized imports are expected to increase 6.5% in the first half of 2014. 

Shanghai Containerized Freight Index: The June 6th SCFI comprehensive reading was $1,088 per FEU; up 10.8% year-over-year. The spot rate for shipments to the U.S. East Coast was $3,286 per FEU, up 5.9% from the previous year. 

Ocean Bulk Freight Rates: The Baltic Dry Index remained steady in May, ending at 934. The BDI has risen 7.5% during the first half of June.

Ocean Freight Business News: 

The president’s signing of the Water Resources Reform and Development Act of 2014 has authorized construction for the Savannah Harbor Expansion Project. The State of Georgia will develop an agreement with the U.S. Army Corps of Engineers to define how the costs of the project, estimated at $706 million, will be shared between the state and federal government. Georgia has already set aside $266 million towards construction and will be able to begin construction this year. 
The number of idle containerships is decreasing. There are currently 45 containerships of over 5,000 TEUs that have been idle for more than six months, including 31 units idle for over 12 months. At least 20 ships that have been idle for over four months are to be reactivated soon, amounting to 80,000 TEUs.
The Georgia Ports Authority agreed to an $86.5 million purchase of four new ship-to-shore cranes and 20 new rubber-tired gantry cranes. The four new cranes should arrive in February of 2016, bringing the number of super post-Panamax and post-Panamax cranes to 29

 

WAREHOUSING & DISTRIBUTION:

Warehouse Rent Rates: In Q1 2014, warehouse and distribution rental rates in the US averaged $5.40 per square foot, equal to the rent rates in the previous quarter. Rental rates for warehouse space averaged $3.77 per square foot in Atlanta. 

Industrial Absorption: Net absorption in the US during Q1 2014 totaled nearly +45.7 million square feet. Atlanta’s overall absorption during the 1Q was +2.7 million square feet

W&D Business News: 

  • Surya, an India-based textile company, has announced plans to build a new corporate office and distribution facility in Cartersville, Georgia. The state-of-the-art 1,000,000 square-foot facility will represent a $30 million investment and create 200 new jobs over the next few years.
  • Southern Ionics, a Mississippi-based chemical manufacturer will create 125 jobs and invest more than $100 million in Georgia over the next two years. The company will complete its two new mines and a new mineral sand processing plant by mid-2015. 
  • Dasan Machineries, a Korea-based defense manufacturer, will invest $30 million in a new manufacturing plant in Gwinnett County, Georgia. The facility will be the company’s first headquarters in the United States. The project will create 150 new jobs over the next three years. 
  • Hanil E Hwa Interior Systems will expand its existing LaGrange, Georgia facility, creating 80 new jobs and investing $5.5 million over the next two years. The Korea-based auto supplier provides a variety of auto parts to Kia Motors Manufacturing Georgia, including interior systems, panels, and bumpers.
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