Inside The Numbers and Insight From CSCO Forum, Chicago
John Wagner from Wagner Logistics gives his insights on the Chief Supply Chain Officer Forum which happened in Chicago, June 16th-18th.
We’re seeing some ups and downs in the economic data this week and I have thoughts from the Chief Supply Chain Officer Forum in Chicago. Here’s the rundown on what’s happening.
Industrial production in the U.S. dropped in May, with weak manufacturing and mining slipping 0.2 percent after a 0.5 percent drop in April. The blame lies in the strong dollar and continued lower prices for oil and gas.
On the upside, automotive, computer, machinery and electronic product production all increased but just couldn’t overcome the drop in other categories. Manufacturing accounts for 12 percent of the U.S. economy and with no sign of a weakening dollar or energy prices going too far up, expect to see this trend continue.
Homebuilders are feeling good, and it’s no wonder as new home sales are up 24 percent for the year. A confidence index hit an eight-month high in June.
A growing housing market would help offset the decline in manufacturing, propping up the nation’s GDP.
Apple StoreConsumers are also contributing some pop to the economy as they started to spend in May. Retail sales jumped 1.2 percent, led by auto sales (up 2 percent), gas station receipts (up 3.7 percent), building and garden stores (up 2.1 percent), clothing stores (up 1.5 percent) and furniture (up 0.8 percent). Excluding autos, retail sales were up 1 percent for the month.
Year over year in May retail sales gained 2.5 percent, which is very good news. The only area of real concern is the Census Bureau saying that the total supply chain inventory-to-sales ratio remains high and unchanged in April. Stockpiles were up 0.8 percent in April at the retail level.
Considering the higher retail sales numbers, I believe this inventory metric will improve going forward as inventories are sold, triggering increases in manufacturing and providing freight for the carrier industry.
The bottom line is that the long-lost consumer has now shown up with cash and credit cards just in time to salvage the economy. A sustained economic recovery will rely on consumers’ willingness to continue to spend.
Consumers feel better and secure about opening their wallets when they hear good news about employment. The Department of Labor said nonfarm payrolls bounced up by an impressive 280,000 net jobs. Year to date we are up 1.1 million employees.
Transport and Warehouse News
May employment jumped up 13,100 jobs. For-hire trucking added 8,600 alone as the industry ramps up for a growing economy. On top of this good news, average hourly wages increased 2.3 percent from May of last year, suggesting that the competition for qualified workers is driving increases in pay.
The recruitment and retention of drivers relies on increased pay. Carriers are turning to weekly pay guarantees and revamping their mileage pay formulas. Average pay for drivers increased 8.1 percent in the first quarter.
Covenant Transport rolled out a $1,000 weekly minimum pay guarantee for experienced hazardous-materials team drivers. Other carriers, like Transport America, have raised pay twice in three months to keep up with the rising tide of driver compensation and get the drivers they need.
Getting more drivers is critical, as shipment volume has jumped. The May Cass Freight Index outperformed seasonality by rising 2.3 percent from April to May, the fourth straight month of shipment growth. It’s still down 1.3 percent year over year for the month, though.
DAT and Internet Truckstop numbers confirm this bump in shipment activity. DAT’s national average spot market freight rates remained at high levels last week, holding steady after a large increase in the first week of June. The average spot van rate was unchanged at $1.90 following the 5 percent increase the previous week.
On the Rails
The Association of American Railroads (AAR) reported U.S. rail traffic for the week ending June 13, 2015, at 554,461 carloads and intermodal units, down 1.9 percent compared with the same week last year.
Total carloads for the week ending June 13, 2015, was 271,098, down 8.1 percent compared with the same week in 2014. U.S. weekly intermodal volume was 283,363 containers and trailers, up 4.9 percent compared to 2014. This marks the highest week on record for intermodal units. Coal and oil shipments were down.
For the first 23 weeks of 2015, U.S. railroads reported a cumulative volume of 6,384,231 carloads, down 3.4 percent from the same point last year; and 6,052,558 intermodal units, up 2.3 percent from last year. Total combined U.S. traffic for the first 23 weeks of 2015 was 12,436,789 carloads and intermodal units, a decrease of 0.7 percent compared to last year.
Caught Up From the Strike
In port news, it looks like the West Coast ports are caught up to pre-strike levels.
Here At Wagner
At Wagner Logistics, I am attending the annual Chief Supply Chain Officer Forum in Chicago, listening to speakers address trends for the future. If you are like me and dismissive of talks about drone deliveries and other technology, the future is now and a tidal wave of change is coming in technology. I was very impressed with the new augmented reality demonstration by DHL’s innovation team using smart glasses for order selection.
The technology for load matching and other shared drivers for productivity are all equally impressive.
Back home at Wagner’s home office I know that our teams are also looking at technology to differentiate our service offerings. It was nice to see Joe Johnson, Wagner’s director of IT, interviewed by Inbound Logistics.
We are continuing to work with our business intelligence tool to drive our use of dashboards to monitor our performance internally and externally. Continual improvement is a critical part of any organization and Wagner Logistics is doing its part to get better every day.
If you are gearing up for a big fall season and need help with carrier capacity or growth in your distribution center network, please consider including Wagner in your process. As we say all the time, Bring it!
Have a great day,
John Wagner Jr.
About Wagner Logistics
Wagner Logistics is a leading supply chain management provider offering distribution center, fulfillment and transportation services across the United States. Current offices include Jacksonville FL, Cleveland OH, Pine Bluff AR, Dumas AR, Dallas TX, and Clinton, IA, Kansas City MO and KS. Wagner combines high-tech tools with high-touch product pampering to ensure that inventory is where it needs to be, when it’s needed, in the condition customers expect. From product displays to complex fulfillment to vertical supply chains for fragile products, we want to tackle your challenges!