John Wagner looks at some of the latest transportation news and figures from 2014 so far
2014 is off to a fast start and there is already a lot of important news, so let’s get going.
We’ll start with a snapshot of where the country is right now. The latest GDP numbers signify a move into prerecession activity levels, with a third-quarter GDP number of 4.1 percent.
Fewer people are applying for jobless benefits, with the four-week rolling average at 349,000. Unemployment now stands at 6.7 percent, the lowest number since October 2008. Jobs in the transportation and warehousing sector fell by 600 in December to 4.54 million, signifying the expected seasonal slowdown.
The Institute for Supply Management said that the ISM reading for manufacturing in December was 57. Since any reading over 50 shows growth, these are strong numbers. By comparison, in December of 2012 the reading was 50.2, so factories are humming.
Inventories fell in December as the ISM inventory reading was 47.5, the lowest since August.
The U.S. Department of Transportation said that trade between the U.S., Canada and Mexico grew to $103.5 billion. This is the first time ever that trade has exceeded $100 billion.
The Census Bureau reported construction spending was up 1 percent in November over the previous month and that the seasonally adjusted annualized rate of $934.4 billion was the highest since March 2009. Residential construction was up 1.7 percent in November, a 16 percent increase when comparing the same month in 2012.
Mixed Holiday News
Retail sales rose 3.5 percent in the holiday season, better than originally reported. Unfortunately, deep discounting drove much of this last-minute buying. Some retailers cut apparel prices by 75 percent to clear the racks, and extended store hours became the norm. The strongest categories were jewelry and children’s clothing. Electronics stayed about the same as 2012 sales. Men’s and women’s apparel sales were lower than the previous year, according to SpendingPulse. Wal-Mart, Target and others have cut their profit forecast.
The late retail surge provided some interesting moments for FedEx and UPS. Think of it this way: Huge shipment volume + bad weather = disappointed customers. Many shoppers found empty spots under their trees Christmas morning and had to wait for those last-minute gifts they had bought online.
UPS Inc. and FedEx Corp. moved about 56 million packages combined on Dec. 16, setting a daily volume record in the 26-day compressed holiday season.
IBM Benchmark reported online retailer holiday sales were up 16.5 percent over 2012. In total, mobile sales were up 40 percent over the previous year as people turned to their tablets and smartphones to make purchases.
Truckload carriers are seeing above-average volume through the first two weeks of the year, according to Morgan Stanley. Reefer volume is very heavy and flatbeds are outperforming as well. Economic conditions are driving volume as shippers plan to add inventory.
I have been saying in this blog for a while now that when GDP rises above 3 percent there are going to be capacity challenges. That time has come, as hours-of-service (HOS) challenges combined with a severe driver shortage will make adding capacity very difficult. It’s easy to buy a truck but putting a qualified driver behind the wheel and making him/her productive is hard. Freight rates will begin to creep up accordingly.
Intermodal continues to show significant growth, according to the Association of American Railroads. A total of 12.27 million shipments were handled in 2013, with intermodal making up 47 percent of all rail shipments, for an increase of 4.5 percent year over year. Carload fell 0.7 percent.
It is no wonder that XPO Logistics wants in on intermodal growth; they just bought Pacer, the third-largest intermodal marketing company in the U.S.
Industry expert Jason Craig illustrates through the Bakken oil boom of North Dakota the impact of the oil and gas industry on freight transportation; in relation to diesel prices, driver shortage, new lanes and rail capacity.
Both confirmed to join the 3PL Summit and CSCO Forum in Singapore November 4-5
Mike Melito from Nulogy examines potential shortfalls with warehouse management systems in order to suggest how problems can be avoided or solved