A Quick Glance Into The Logistics Market - November 2016

By editor on Nov 24, 2016

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 at an annual rate of 2.9% in the third quarter of 2016 according to the advance  estimate released by the Bureau of Economic Analysis in late October.  In the second quarter, real GDP  increased 1.4%.  The latest GDPNow model forecast for real GDP growth (seasonally adjusted annual rate)  in the fourth quarter of 2016 is 3.3%. (Source: US BEA, Federal Reserve Bank of Atlanta)  (The GDPNow forecast  aggregates statistical model forecasts of 13 subcomponents that comprise GDP.)
 
U.S. Trade Deficit:  The U.S. goods and services trade deficit decreased 10.1% in September to $36.4 billion. Exports of goods increased 0.47% to $126.1 billion and imports of goods decreased 1.07% to $183.7 billion.  (Source: US DOC  & Census Bureau)  
 
Consumer Confidence:  The Consumer Confidence Index decreased to 98.6 in October 2016, down 4.7% from September.  
 
Consumers’ assessment of current business and employment conditions softened, while optimism  regarding the short‐term outlook retreated somewhat. However, consumers’ expectations regarding their  income prospects in the coming months were relatively unchanged. Overall, sentiment is that the  economy will continue to expand in the near‐term, but at a moderate pace (Source: The Conference Board)    (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 decreased to 4.9% in October 2016. A preliminary 161,000 net new  jobs were created in October 2016, 15.7% less than September, but still a solid number.  The  unemployment rate in Georgia was 5.1% in September. (Source: US DOL)
 
Workforce Participation Rate:  The workforce participation rate decreased 0.15% to 62.8 in October. (Source: U.S. Bureau of Labor Statistics) The Workforce Participation Rate measures the share of Americans at least 16 years old who are either employed or actively looking for  work)
 
Leading Economic Index:  The Leading Economic Index for the U.S. increased 0.2% in September to a reading of 124.4. Housing  permits, unemployment insurance claims, and the interest rate spread were the main components lifting  the index in September.  (Source: Conference Board) (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.)
 
Industrial Production and Capacity Utilization:  The Industrial Production Index was 104.3 in October, a decrease of 0.2% from the previous month and  0.9% lower year‐over‐year.  Capacity utilization for the industrial sector decreased 0.1% from the previous  month to 75.3%.  (Source:  Federal Reserve) (The industrial production and capacity utilization rates cover manufacturing,  mining, and electric and gas utilities.  The industrial detail provided by these measures helps illuminate structural developments in the  economy)
 
Retail Sales:  Advanced estimates of retail and food service sales in October were $465.9 billion, an increase of 0.8% from the previous month, and up 4.3% from October 2015.  Non‐store retailer sales were up 12.8% from  last year, and includes internet‐only sales outlets as well as other direct‐to‐customer channels.  (Source: US  Census)
 
Manufacturing & Trade Sales:  Total combined sales and manufacturing shipments totaled nearly $1.31 trillion in September 2016, up  0.7% from August and up 0.8% from September of the previous year. (Source: US Census) Manufacturing & Trade Inventory  Total value of inventory on hand is estimated at $1.81 trillion in September 2016, up 0.1% from August  and up 0.6% from September of the previous year. (Source: US Census) 
 
Housing Starts:  In September, housing starts were an annualized 1,050,000 units, down 9.0% from the previous month  and the lowest amount since March 2015.  The majority of the decline came from multi‐family housing  starts, which plummeted to an annualized 250,000 in September from 409,000 in August and were the  lowest they’ve been since June 2013.  The index of pending home sales (sales that haven’t closed yet but  contracts have been signed) was 110.0 in September, up 1.5% from the previous month.  (Source: U.S.  DOC)
 
Consumer & Producer Price Index:  The consumer price index for all urban consumers rose 0.4% to 241.7 in October on a seasonally adjusted  basis from the previous month. The producer price index for final demand was 110.7 in October,  unchanged from the previous month. (Source: US Bureau of Labor Statistics)
 
MULTIMODAL:
 
Dow Jones Transportation Index:  Dow Jones Transportation Index decreased 0.5% in October 2016, ending at a reading of 8,058.     (Stock performance of twenty large, well‐known U.S. companies in the transportation industry, average of October 1st thru October  31st)
 
NASDAQ Transportation Index:  NASDAQ Transportation Index increased 1.06% in October 2016, ending at a reading of 3,517.  (Averaged share weights of NASDAQ‐listed companies classified as transportation companies, average of October 1st thru October 31st)
 
DOT Freight Transportation Index:  The USDOT's freight transportation services index decreased 0.6% in September, to a reading of 121.5.   The decrease was due to declines in trucking, pipeline, and rail intermodal, while air freight, water, and rail  carloads rose.  (Source: US DOT)
 
Cass Freight Index:  The September shipments index decreased 0.4% from the previous month to 1.111 and decreased 3.1% year‐over‐year.  The September expenditures index increased 5.2% for the month to 2.396, and  decreased 3.8% year‐over‐year.  (Source: Cass Information Systems | Cassinfo.com)  (Based upon transportation dollars and shipments of Cass clients comprised of over 400 shipping companies)
 
Import Volumes:  In September, the U.S. imported $183.7 billion of cargo, decreasing 1.1% from August.    (Source: US  Census)
 
Export Volumes:  In September, the U.S. exported $126.1 billion of cargo, increasing 0.5% from August.  The September  exports of goods were the highest since July 2015 ($127.6 billion).   (Source: US Census)
 
Import & Export Price Index:  U.S. import prices increased 0.5% in October.  The October advance was driven by higher fuel prices which  more than offset declining nonfuel prices.   U.S. export prices increased 0.2% in October, as rising  agricultural and nonagricultural prices both contributed to the overall advance.  (Source: Bureau of Labor  Statistics)
 
Shippers Conditions Index:  The Shippers Conditions Index for August moved marginally up from July to a low positive reading of 1.1.   FTR expects that this trend will not be maintained, as shipping rates are expected to increase as available  capacity is negatively affected by both improved economic conditions and by new regulations that will  affect the trucking industry in 2017.  (Source: FTR Transportation Intelligence | ftrintel.com) (Figures below zero  indicate a less‐than‐ideal environment for shippers)
 
E‐Commerce:  E‐Commerce revenue was up 10% in October compared to October 2015.  Mobile shopping (phones and  tablets) accounted for 33% of online shopping, up from 28% in October 2015.  The estimate of U.S. retail  e‐commerce sales for the second quarter of 2016, adjusted for seasonal variation, was $97.3 billion, an  increase of 4.5% from the first quarter of 2016.  (Source: Custora E‐Commerce Pulse, US Census)
 
Multimodal News Clips: 
 
  • U.S. light vehicle sales were a seasonally adjusted and annualized 17.9 million in October 2016, their  highest level so far this year.  Sales were down 5.7% from October 2015, but last October was close to the highest‐volume sales month in a decade.  (Source: AAR)
  • Purdue University has received a $5 million grant from the U.S. Department of Energy (DOE) to study  fuel savings and vehicle‐to‐vehicle (V2V) communications for truck platooning.  The project is part of DOE’s Next‐Generation Energy Technologies for Connected and Autonomous On‐Road Vehicles  (NEXTCAR) program. Its goal is to boost the fuel economy of tractor‐trailers by 20% through platooning  and connected powertrain management. (Source: Fleet Owner)
RAIL:
 
U.S. Freight Rail Traffic:  Originations of carloads in October 2016 totaled 1,066,994, a decrease of 5.1% from October 2015 and  the 21st straight year‐over‐year monthly decline.   The 5.1% decline in October was the smallest  percentage decline since September 2015.  Four of the 20 traffic categories tracked by AAR had higher  carloads in October 2016 than in October 2015, including grain, waste & nonferrous scrap, and motor  vehicles & parts. (Source: AAR.org) (Report includes rail car‐loadings by 20 different major commodity categories as well as  intermodal units)
 
U.S. Intermodal Rail Traffic:  Intermodal rail traffic totaled 1,075,820 units in October 2016, a decrease of 1.2% from October 2015.   This is the eighth straight year‐over‐year monthly decline for intermodal.  However, average weekly  intermodal volume in October (268,955 units) was the highest weekly average for this year.  Since 2000,  October has been the highest‐volume intermodal month in 13 times, as retailers stock up for the holiday  season. (Source: AAR.org)  (Report includes rail car‐loadings by 19 different major commodity categories as well as intermodal units)
 
Intermodal Competitive Index:  The Intermodal Competitive Index increased to a reading of 2.16 in August.  Most of the gain can be  traced to slightly tighter over‐the‐road trucking capacity.  (Source: FTR Transportation Intelligence | ftrintel.com)  (Index includes factors like relative rates vs. truck, industry capacity vs. demand, fuel prices, and intermodal service levels.  Figures above  0 indicate favorable conditions for intermodal to compete with truck) 
 
Railroad Fuel Price Index:  The index of average railroad fuel prices in September was 299, up 1.28% from the previous month and 5.76% lower year‐over‐year. (Source: AAR.org) (Average monthly price for gallons purchased by freight railroads; Includes federal excise taxes, transportation, and handling expenses)
 
TRUCKING:
 
Truck Tonnage Index:  The ATA’s seasonally adjusted For‐Hire Truck Tonnage Index decreased by 5.8% to 132.7 in September.  Compared with September 2015, the SA index fell 0.7%, the first year‐over‐year decline since October  2015. The changes in typical seasonal trends are making it difficult to discern any real or clear trend in  truck tonnage.  The ATA expects a weaker than normal freight environment, which is likely to continue  until the inventory correction is complete. They also expect that significantly stronger truck tonnage  numbers are not in the near term, either due to the slow‐growth economic environment.    (Source:  American Trucking Association | Trucking.org) 
 
Truckload Freight:  The spot market for truckload‐freight available for pick‐up in October increased 2.8% compared to the  previous month, and was 52% higher year‐over‐year. Truck capacity increased 3.4% for the month, and  decreased 4.2% year‐over‐year. (Source: DAT Trendlines | www.dat.com) Trucking Conditions Index 
 
The Trucking Conditions Index: was 6.76 in August, an increase over July’s reading of 5.99.  The July and  August increases were led by positive changes in capacity utilization and fuel prices.  The TCI is continuing  a steady rise that is expected throughout 2017, as FTR anticipates increased regulations over the next 18  months may increase pricing. (Source: FTR Transportation Intelligence | ftrintel.com) (Figures below zero indicate a less‐ than‐ideal environment for trucking)
 
Diesel Prices:  As of November 14, 2016 the U.S. average diesel price was $2.44 per gallon.  The U.S. average diesel price  was $0.03 lower than the same week last year. The average price of diesel in the Southeastern Atlantic  states was $2.36 per gallon, 3.2% less than the national average price.  (Source: U.S. DOE)  (Reflects the costs  and profits of the entire production and distribution chain.)
 
Trucking Employment: The trucking industry workforce increased by approximately 3,000 employees to 1,463,900 employees  total in October. The trucking industry workforce increased 0.20% over the previous month and increased  0.54% over October 2015.  (Source: U.S. Bureau of Labor Statistics)
 
Trucking Earnings and Hours:  The average earnings of truck transportation employees were $21.26/hour in September, up 1.04% from  the previous month.  The average weekly hours totaled 42.1 in September, up 0.23% from the previous  month. (Source: U.S. Bureau of Labor Statistics)
 
U.S. Truck & Trailer Orders (Class 8):  Preliminary data for heavy‐duty Class 8 trucks net orders in North America were 13,800 units in October  2016, a decrease of 0.1% from the previous month. The reported net order number for the month was  negatively impacted by a clearing of backlogged orders.  With this backlog adjustment factored out, net  orders would have been closer to approximately 21,300 units, much above industry expectations and  would have been the best monthly order activity since December 2015.   Final September net trailer  orders came in at 11.800 units, down 16% from August and down 66% year‐over‐year.    (Source: FTR  Transportation Intelligence | ftrintel.com)
 
NAFTA Trade:  Surface transport‐related trade between the U.S. and its NAFTA partners, Canada and Mexico totaled  $93.1 billion in August 2016, increasing 0.7% year‐over‐year. August was the first month since December  2014 where the total value of U.S. freight with NAFTA partners Canada and Mexico increased  from the same month of the previous year, (Source: US DOT)
 
Trucking News Clip:  
 
  • A federal mandate requiring nearly all U.S. truck operators to use electronic logging devices (ELDs) to  track duty status has been upheld in court, meaning the December 18, 2017, compliance date  remains effective.  The 7th Circuit Court of Appeals, the federal court overseeing the case, ruled to  keep the mandate in place.  Its decision was issued Oct. 31, following oral arguments made in Chicago  on September 13. (Source: Overdrive Online)
AIR FREIGHT:
 
Air Cargo Traffic:  Global air freight traffic in September increased 6.1% from one year ago, and increased 2.0% year‐to‐ date.  This is the fastest pace since the disruption seen at U.S. west coast seaports during February 2015. The strong pick‐up in September may relate in part to a number of one‐time factors, including the rushed  replacement of Galaxy Note 7 devices during the month. (Source: IATA.org) (Global air freight covers international and  domestic scheduled air traffic.)
 
Atlanta Air Cargo Traffic:  In September, Hartsfield‐Jackson Atlanta International Airport transported 56,016 metric tons of cargo, a  4.4% increase from the previous month and a 9.6% increase year‐over‐year. (Source: HJAIA)
 
Air Freight Price Index:  The latest Drewry East‐West Airfreight Price Index increased 4.4 points to 91.9 in September, the highest  level this year, but below the 97.2 reached in September 2015. (Source: Drewry)  (The Drewry East‐West Air Freight  Price Index is based on the average of rates ($US per kg) for air freight services on 21 major East‐West routes.) 
 
Jet Fuel Prices:  As of November 11, 2016, the global average jet fuel price was $55.30 per barrel; down 11.6% from the  previous month, and 5.5% lower year‐over‐year.  (Source: IATA.org, platts.com)    (The weekly index and price data shows the global average price paid at the refinery for aviation jet fuel)
 
Air Freight News Clips:  
  • The Global Shippers Forum  (GSF) signed a memorandum of understanding with IATA interest group  Cargo iQ  to  improve  quality in  the industry at TIACA’s Air  Cargo Forum in  Paris.   The  two  partners  pledged  to  implement  the  Cargo  iQ  quality  management  system  and  promote  sustainability  in  airfreight.    The  MoU  outlines  six  areas  where  the  two  groups  will  work  together  towards  a  more  efficient,  quality‐driven,  and secure  air  cargo  supply  chain,  and  explores  methods  for  industry  and  shippers to better communicate to better meet customer needs. (Source: Air Cargo News)
OCEAN FREIGHT:
 
Import Volumes:  In September, the latest month for which after‐the‐fact numbers are available, U.S. container ports  handled 1.6 million TEUs, a 6.6% decrease from August, the busiest month of the year and a 1.6%  decrease from September 2015.   (Source: NRF/Hackett Associates)
 
Shanghai Containerized Freight Index:  The November 11th SCFI comprehensive reading was $825.10 per FEU; up 6.3% from last month. The spot  rate for shipments to the U.S. East Coast was $2,671 per FEU, up 4.2% from the previous month.    (Source:  Shanghai Shipping Exchange | www1.chineseshipping.com.cn/en, American Shipper) (The Shanghai Containerized Freight  Index is a weekly reported average export spot rate from Shanghai for 15 different trade lanes.)
 
Baltic Dry Index:  The Baltic Dry Index decreased 0.8% in October, ending at 857.  (Source:www.bloomberg.com/quote/BDIY:IND)  (The Baltic Dry Index is an index that tracks and averages worldwide international shipping prices of various dry bulk cargoes.)
 
TSA Bunker Surcharges:  Between October 1 and December 31 2016, the bunker fuel surcharge will total $264 per FEU for  shipments to the West coast ocean ports and $525 per FEU for shipments to the East coast and Gulf ports.   (Source: Transpacific Stabilization Agreement) (The Transpacific Stabilization Agreement is a research and discussion forum of  major ocean container shipping lines that carry cargo from Asia to ports in the U.S.)
 
Port of Savannah:  Despite the short‐term effects of Hurricane Matthew that disrupted channel navigation, the Port of  Savannah moved 310,393 TEUs in October 2016, a 0.66% increase from the previous month and a 3.3%  decrease from October 2015.  (Source: GPA)
 
Port of Brunswick:  Logistec, an international terminal operating company, recently opened two new warehouses totaling  221,675 square feet for wood pellet storage in the East River Terminal, along the Brunswick River. The  facilities are expected to handle more than 600,000 tons of wood pellets annually. The wood pellets are a  renewable biomass fuel source shipped largely to Northern Europe, where they are used in energy  production. The pellets are sourced mainly from the Georgia forestry industry.   (Source: Maritime Executive)
 
Ocean Freight Business News: 
  • With the holiday shopping season officially under way, imports at the nation’s major retail container  ports are expected to be up 4.4 percent this month over the same time last year and should see a  slightly larger increase next month, according to the monthly Global Port Tracker report released by the  National Retail Federation and Hackett Associates. Retailers are importing more during the holidays this  year than last year and that can only mean one thing – they expect to sell more,” NRF Vice President for  Supply Chain and Customs Policy Jonathan Gold said. “Most of the holiday merchandise is already here,  but retailers are still restocking to be sure shoppers will have a broad and deep selection as they hit the  stores over the next several weeks.”
 WAREHOUSING & DISTRIBUTION:
 
Industrial  Vacancy:  The nationwide vacancy rate was 5.8% at the end of the third quarter in 2016, a 16‐year low.  It is down  from 6.1% in Q2 and 6.5% in Q3 of 2015.  The decline from the second quarter is notable this late in the  cycle, when construction has already ramped up; it demonstrates the magnitude of demand that is driving  the market.    (Source: NGKF) 
 
Warehouse Rent Rates:  In Q3 2016, the average asking rent across the U.S. was $5.96/SF triple net, up 1.8% from the prior  quarter and up 5.9% from a year ago.  It was the strongest four‐quarter rent gain in the current cycle.  The  average asking rent in Atlanta was $4.63/SF.  (Source: NGKF)
 
Industrial Absorption:  Net absorption in the US during Q3 2016 totaled 76.5 million square feet, setting an all‐time record  nearly 7 million square feet above the previous record set in Q4 2015.  Year‐to‐date, 24 mega‐big‐box  projects with at least 1 million square feet have been delivered, including four in metro‐Atlanta.  (Source:  NGKF) (Absorption is the net change in occupied space between two points in time. Positive absorption means that previously  unoccupied space is being occupied.)
 
Warehouse Employment:  The warehousing industry workforce increased by 3,300 employees to 873,900 employees total in  October.  The warehouse industry workforce increased 0.37% from the previous month and increased  5.25% year‐over‐year. (Source: U.S. Bureau of Labor Statistics)
 
Warehouse Earnings and Hours:  The average earnings of warehousing & storage employees were $18.96/hour in September, down 0.05% from the previous month.  The average weekly hours totaled 42.2 in September, up 0.23% from the  previous month. (Source: U.S. Bureau of Labor Statistics)
 
Purchasing Managers Index: The National PMI increased to 51.9% in October 2016, an increase of 0.4% over the previous month.   New orders decreased 3.0% to 52.1%. Production increased 1.8% to 54.6%.    (Source: Institute for Supply  Management) (The PMI combines data on new orders, inventory, production, supplier deliveries, and employment.  A reading above 50  indicates that the manufacturing economy is generally expanding.)
 
Purchasing Managers Index in Georgia: Georgia’s PMI increased 4.1% during October, to 53.5.  New orders in Georgia increased 3.1% to 50.0 and  production decreased 3.3% to 52.9.  Georgia’s PMI is now 3.08% above the national PMI.  (Source:  Kennesaw State University)  (The PMI combines data on new orders, inventory, production, supplier deliveries, and employment.  A  reading above 50 indicates that the manufacturing economy is generally expanding.)
 
W&D Business News: 
  • United Parcel Service Inc. (UPS), a package delivery company, will create 1,250 jobs and invest more  than $400 million to establish a regional sorting and distribution hub in Atlanta by the end of 2018.   UPS will create supervision, administrative, and warehouse positions for the new sorting and  distribution hub. (Source: Georgia.org)
  • Daniel Defense, a manufacturer of firearms and accessories, will create 75 new jobs and invest $29.5  million to expand existing operations in Bryan County. In 2009, Daniel Defense scaled operations and  moved into the present facility in Bryan County. As a result of a continued increase in production  demand, Daniel Defense will consolidate the Bryan County facility and Ridgeland, S.C., facility into a  single operation. The facility expansion is set to be finished by the end of summer 2017.  (Source:  Georgia.org) To sign‐up to receive these free monthly snapshots, visit: www.Georgia.com 

 

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