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A Quick Glance Into The Logistics Market - July 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 2.9% in the first quarter of 2014 according to the third estimate released by the Bureau of Economic Analysis.  

U.S. Trade Deficit: The U.S. trade deficit decreased by 5.6% in May to $44.4 billion. Exports rose 1.0% to $195.5 billion and imports fell 0.3% to $239.8 billion. 

Consumer Confidence: The Consumer Confidence Index increased to 85.2 in June 2014, up 3 points from the previous month. 

Unemployment Rate: The unemployment rate in America fell to 6.1% in June 2014 as there were 288,000 net new jobs

Leading Economic Index: The Leading Economic Index for the U.S. increased 0.5% in May to 101.7 (2004=100), following at 0.3% increase in April and a 1.0% increase in March. 

Retail Sales: Retail and food service sales rose in May to $439.9 billion, up 0.2% from the previous month, and up 4.5% above May 2013. Non-store retailer sales were up 8.1% from last year.  

Manufacturing & Trade Sales: Total combined sales and manufacturing shipments totaled nearly $1.34 Trillion in May 2014, up 0.4% from April and up 4.6% from the previous year.  

Manufacturing & Trade Inventory: Total value of inventory on hand is estimated at $1.73 Trillion in May 2014, up 0.5% from April and up 5.6% from May 2013.  

Housing Starts: In May, housing starts fell 6.5% to an annual rate of 1,001,000 units. Building permits fell 6.4% to an annual rate of 991,000. Year-over-year, housing starts and building permits in 

May increased 9.4% and decreased 1.9%, respectively. (Source: U.S. DOC) 

Consumer & Producer Price Index: The consumer price index for all urban consumers increased 0.4% in May from the previous month. Over the last 12 months, the all items index increased 2.1%. 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:

Import Volumes: In May, the U.S. imported about $239.8 billion of cargo. May U.S. imports fell 0.3% in terms of value from April, and rose 5.1% year-over-year.

Export Volumes: In May, the U.S. exported nearly $195.5 billion of cargo, the highest on record. May U.S. exports have increased 1.0% in terms of value over the previous month and rose 4.1% year-over-year. 

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

Multimodal News Clips: 

  • CNBC has named Georgia as the No. 1 place for business in the nation. Georgia’s best category, its workforce, was tops in the nation for the third year in a row. Georgia ties for first in infrastructure with America’s busiest airport and one of its busiest ports. Georgia has ranked among the top 10 states in CNBC’s business climate rankings over the last 10 years, and moves up from No. 8 last year. 
  • The U.S. 3PL market gross revenue grew 3.2% in 2013, year-over-year. The 3PL market is expected to grow 5.2% in 2014. Net revenues will rise 4.3% to 67.4 billion and Domestic Transportation Management is expected to increase 7.5% this year. 
  • Light vehicle sales in June 2014 rose 1.2% to an annualized 16.9 million, the highest since July 2006. June sales bring total U.S. light-vehicle deliveries for the first six months of 2014 to 8.12 million, up 4.2% over the same period last year. 

 

Rail:

Railroad Fuel Price Index: The index of average railroad fuel prices in May was 600.6, down 2.4% from the previous month and 0.6% higher year-over-year. 

U.S. Intermodal Rates: For the week of June 25, intermodal rates fell 1.7% to $2,117 per 53-foot container. Average intermodal spot rates are up 5.3% YTD and have increased 5.0% year-over-year

Short Line Rail Traffic: In June 2014, short line railroad shipments across North America rose 0.9% compared to the same month last year. A sampling of about 428 small railroads in the U.S. and Canada loaded 586,653 railcars and intermodal units during the month of June.

Railroad News Clips: 

  • Railroads were using 79.1% of overall capacity in May 2014, up from a revised 78.9% in April and the highest capacity utilization since March 2008. Railroad utilization for manufacturing increased to 77% in May. 
  • The cost for rail transportation increased 4.9% in 2013. Class I freight revenue per ton-mile increased 5.3% to 3.961 cents. Overall rail traffic was up 9.2%. Total carloads and intermodal volume for the year increased 8.1% and 10.6%, respectively

 

Trucking:

Trucking Volume: The ATA’s seasonally adjusted cargo index rose 1.0% in May. The for-hire truck tonnage index rose 3.4% from May 2013. 

Truckload Freight: The spot market for truckload freight in June rose 11% compared to the previous month, and was 54% higher year-over-year. Truck capacity fell 20% for the month, and was down 2.8% year-over-year

Trucking Employment: The trucking industry workforce added 3,300 employees in June. The trucking workforce increased 1.9% over the previous year

Trucking News Clips: 

  • UPS is joining FedEx in the shift to dimensional pricing for ground shipments. UPS plans to start using dimensional weight to price shipments starting December 29, a few days before FedEx makes the shift on January 1, 2015. The use of dimensional pricing in ground shipments is projected to boost package shipping costs 5-25%, unless shippers make adjustments to reduce package size to match the size of the products they ship. LTL carriers are expected to make the switch to dimensional pricing next. 
  • LTL terminals nationwide are having a good year, despite the winter weather. Average tonnage per day is forecast to rise 6.7% year-over-year. Along with more freight that comes from increased manufacturing activity, carriers are getting better at pricing by lane and using technology to recoup transportation costs. LTL pricing is projected to rise 3% to 4% in 2014 to take advantage of increased pricing power

 

Air Freight:

Air Cargo Traffic: Global air freight traffic in May increased 4.7% from one year ago, and rose 0.4% from the previous month. North American air freight in May rose 2.4% year-over-year

Air Freight Price Index: In May, the index of East-West air cargo rates fell 4.7% from the previous month and was 2.2% higher year-over-year. The average price of air cargo leaving the United States in May stood at $3.22 per kilogram.

Jet Fuel Prices: As of June 27, 2014, the global average jet fuel price was $124.3 per barrel; up 2.2% from the previous month, and 5.7% higher year-over-year.  

Air Freight News Clips: 

  • Global spending on temperature-controlled pharmaceutical shipping will approach $8.4 billion in 2014, a 12% increase year-over-year. Approximately $5.6 billion will go to transportation services and storage, with the remainder spent on packaging, containers, sensors, and other devices. Spending on commercial cold chain pharmaceutical shipments is projected to reach $10.3 billion by 2018, a 37% increase over 2013

 

Ocean Freight:

Import Volumes: Import volume through major U.S. container ports is expected to total 1.5 million containers in July as retailers prepare for potential disruptions surrounding the expiring West Coast Port’s labor contract. That’s the highest monthly volume in at least five years. In May, the latest month for which numbers are available, U.S. container ports handled 1.48 million TEUs, a 3.7% increase from the previous month and a 6.6% increase from the same month last year. Total U.S. containerized imports are expected to increase 4.1% in 2014

Ocean Bulk Freight Rates: The Baltic Dry Index fell 9% in June, ending at 850. The BDI has fallen 1.6% during the first half of July.

Ocean Freight Business News: 

  • The widening of the Panama Canal could eventually lead to a 90% increase in cotton exports for U.S. South Atlantic and Gulf Coast ports, and a 66% reduction in cotton exports through West Coast ports. Larger Post-Panamax vessels will reduce ocean shipping freight rates from the U.S. to China by 28% compared to current Panamax-sized vessels. 
  • Ocean freight rates are slowly increasing despite increasing capacity. Costs for ocean freight transport rose 4.5% in 2013. Carriers are retiring older, smaller container ships in favor of the larger container ships to improve operating costs.  
  • Spot prices for high- and low-sulfur bunker fuel have declined steeply for the past several weeks following political unrest in the Middle East. The price of bunker fuels in Rotterdam, the Netherlands, a global indicator of bunker prices, has fallen more than $27 per metric ton in two weeks

 

Warehousing & Distribution:

Industrial Vacancy: The U.S. average industrial vacancy rate was 7.9% during Q1 2014, down from 8.1% in the previous quarter. Overall vacancy was 11.0% in Atlanta and 8.9% in Savannah during the first quarter 

Warehouse Rent Rates: In Q1 2014, warehouse and distribution rental rates in the US averaged $4.91 per square foot, up from $4.84 per square foot in the previous quarter. Rental rates for warehouse space averaged $3.22 per square foot in Atlanta and $3.95 per square foot in Savannah

 

W&D Business News: 

  • Keurig will open a manufacturing facility in Douglas County, Georgia to support the production of pods for the company’s new Keurig Cold beverage platform. The new 585,000 square foot manufacturing center will represent an investment of $337 million over the next five years and will create approximately 550 new jobs
  • Kroger has planned to relocate to a new 1 million square foot distribution center in Forest Park, Georgia. The company will invest more than $175 million over the next five years in the project, creating 120 new jobs. The new distribution center will service existing operations in Alabama, Georgia, South Carolina, and Tennessee. 
  • Toppan Printing Co. will create 80 new jobs and invest $100 million into a new facility in Georgia’s first eco-friendly park located in Griffin, Georgia. The 127,000 square foot facility will provide unique packaging solutions for the U.S. market, with future plans to serve European markets