Victoria Kickham started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for DC Velocity.
The U.S. economy will remain strong in 2019, but the longer term outlook is questionable due to uncertainties surrounding trade and other global economic issues, economist Dr. Don Ratajczak told attendees during a transportation industry conference in Atlanta January 30.
Ratajczak, a consulting economist at Georgia State University, said he expects U.S. economic growth of 2.7 percent this year despite moderating conditions and a worsening outlook among consumers and business leaders. He spoke to a crowd of transportation industry professionals at Jump Start 19, an educational conference sponsored by Atlanta-based freight-pricing firm SMC3. The conference was held January 28-30 at the Renaissance Waverly Atlanta.
"The economy is in okay shape, but there is a lot of uncertainty," Ratajczak said, pointing to tariffs and trade concerns, a slowing Chinese economy and Brexit, among other issues. "These are the problems we are facing."
Much of the 2019 outlook hinges on trade concerns, especially a potential new round of tariffs on $200 billion worth of Chinese goods. The latest round was supposed to take effect January 1, but in December the Trump administration delayed their implementation for 90 days as it continued trade talks with China. Although business leaders in transportation and logistics remain anxious about the new March 1 tariff deadline, Ratajczak said he is "60 percent" optimistic that the United States and China will reach a trade deal and the tariffs will not take effect. That's largely because China's slowing economic conditions are likely to put it in a position to negotiate, he added.
"Their economy is struggling [so] they are in a position that they may wish to deal," Ratajczak said. "I'm optimistic, but not terribly optimistic."
Trade issues continue to top transportation industry leaders' economic concerns. Nearly 57 percent of attendees said the United States' trade dispute with China has affected their supply chain at least "a little bit," according to a poll of audience members during the final sessions of Jump Start 19. A quarter of respondents said the dispute has not affected their supply chains at all, and 17 percent said the dispute has had a considerable effect.
Such issues may dampen the longer term U.S. outlook as well, Ratajczak said. He pointed to the potential for a very "questionable" second half of 2020 in particular—especially, he said, if tariffs continue to rise. Slowing conditions in China and elsewhere around the world, as well as moderating growth here at home, will also play a part.
In a separate audience poll, SMC3 asked attendees to gauge the risk of a recession over next few years. Fifty percent of attendees said they expect the U.S. economy to enter a recession in 2021 or later, 40 percent said they expect a recession in 2020, and just 10 percent said they see a risk of recession this year.
Container imports at U.S. ports are seeing another busy month as retailers and manufacturers hustle to get their orders into the country ahead of a potential labor strike that could stop operations at East Coast and Gulf Coast ports as soon as October 1.
Less than two weeks from now, the existing contract between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance covering East and Gulf Coast ports is set to expire. With negotiations hung up on issues like wages and automation, the ILA has threatened to put its 85,000 members on strike if a new contract is not reached by then, prompting business groups like the National Retail Federation (NRF) to call for both sides to reach an agreement.
But until such an agreement is reached, importers are playing it safe and accelerating their plans. “Import levels are being impacted by concerns about the potential East and Gulf Coast port strike,” Hackett Associates Founder Ben Hackett said in a release. “This has caused some cargo owners to bring forward shipments, bumping up June-through-September imports. In addition, some importers are weighing the decision to bring forward some goods, particularly from China, that could be impacted by rising tariffs following the election.”
The stakes are high, since a potential strike would come at a sensitive time when businesses are already facing other global supply chain disruptions, according to FourKites’ Mike DeAngelis, senior director of international solutions. “We're facing a perfect storm — with the Red Sea disruptions preventing normal access to the Suez Canal and the Panama Canal’s still-reduced capacity, an ILA strike would effectively choke off major arteries of global trade,” DeAngelis said in a statement.
Although West Coast and Canadian ports would see a surge in traffic if the strike occurs, they cannot absorb all the volume from the East and Gulf Coast ports. And the influx of freight there could cause weeks, if not months-long backlogs, even after the strikes end, reshaping shipping patterns well into 2025, DeAngelis said.
With an eye on those consequences, importers are also looking at more creative contingency plans, such as turning to air freight, west coast ports, or intermodal combinations of rail and truck modes, according to less than truckload (LTL) carrier Averitt Express.
“While some importers and exporters have already rerouted shipments to West Coast ports or delayed shipping altogether, there are still significant volumes of cargo en route to the East and Gulf Coast ports that cannot be rerouted. Unfortunately, once cargo is on a vessel, it becomes virtually impossible to change its destination, leaving shippers with limited options for those shipments,” Averitt said in a release.
However, one silver lining for coping with a potential strike is that prevailing global supply chain turbulence has already prompted many U.S. companies to stock up for bad weather, said Christian Roeloffs, co-founder and CEO of Container xChange.
"While the threat of strikes looms large, it’s important to note that U.S. inventories are currently strong due to the pulling forward of orders earlier this year to avoid existing disruptions. This stockpile will act as an essential buffer, mitigating the risk of container rates spiking dramatically due to the strikes,” Roeloffs said.
In addition, forecasts for a fairly modest winter peak shopping season could take the edge off the impact of a strike. “With no significant signs of peak season demand strengthening, these strikes might not have as intense an impact as historically seen. However, the overall impact will largely depend on the duration of the strikes, with prolonged disruptions having the potential to intensify the implications for supply chains, leading to more pronounced bottlenecks and greater challenges in container availability, " he said.
The Owner-Operator Independent Drivers Association (OOIDA) says the bipartisan legislation—called the Household Goods Shipping Consumer Protection Act—is needed because motor carriers are victimized through unpaid claims, unpaid loads, double brokered loads, or load phishing schemes on a daily basis.
The proposed act, which was introduced by Congresswoman Eleanor Holmes Norton (D-DC) and Congressman Mike Ezell (R-MS), offers a solution, OOIDA says. If passed, the bill would restore and codify FMCSA’s authority to issue civil penalties against bad actors. The legislation also requires that brokers, freight forwarders, and carriers provide a valid business address to FMCSA in order to register for authority.
According to Rep. Norton, the bill “would clarify that FMCSA has the authority to assess civil penalties for violations of commercial regulations, and crucially, to withhold registration from applicants failing to provide verification details demonstrating they intend to operate legitimate businesses. Americans moving across state lines need to be able to have confidence in FMCSA-licensed companies transporting their physical belongings. I'm thankful for Rep. Ezell’s partnership in co-leading this bill with me and look forward to the bill’s progress in the Senate.”
The bill has been endorsed by the Transportation Intermediaries Association (TIA), American Trucking Associations’ Moving & Storage Conference (ATA-MSC), Owner-Operator Independent Driver Association (OOIDA), the National Association of Small Trucking Companies (NASTC), Commercial Vehicle Safety Alliance (CVSA), Institute for Safer Trucking (IST) and Road Safe America.
OOIDA is now calling for the bill to get a swift vote before the full U.S. House of Representatives.
"Freight fraud committed by criminals and scam artists has been devastating to many small business truckers simply trying to make a living in a tough freight market,” OOIDA President Todd Spencer said in a release. “OOIDA and the 150,000 small-business truckers we represent applaud the House Transportation & Infrastructure Committee for its bipartisan approach in providing FMCSA better tools to root out fraudulent actors, which are also harmful to consumers and highway safety. Because of the broad industry support for these commonsense reforms, we hope this legislation will move to the full House of Representatives for a vote without delay.”
A coalition of freight transport and cargo handling organizations is calling on countries to honor their existing resolutions to report the results of national container inspection programs, and for the International Maritime Organization (IMO) to publish those results.
Those two steps would help improve safety in the carriage of goods by sea, according to the Cargo Integrity Group (CIG), which is a is a partnership of industry associations seeking to raise awareness and greater uptake of the IMO/ILO/UNECE Code of Practice for Packing of Cargo Transport Units (2014) – often referred to as CTU Code.
According to the Cargo Integrity Group, member governments of the IMO adopted resolutions more than 20 years ago agreeing to conduct routine inspections of freight containers and the cargoes packed in them. But less than 5% of 167 national administrations covered by the agreement are regularly submitting the results of their inspections to IMO in publicly available form.
The low numbers of reports means that insufficient data is available for IMO or industry to draw reliable conclusions, fundamentally undermining their efforts to improve the safety and sustainability of shipments by sea, CIG said.
Meanwhile, the dangers posed by poorly packed, mis-handled, or mis-declared containerized shipments has been demonstrated again recently in a series of fires and explosions aboard container ships. Whilst the precise circumstances of those incidents remain under investigation, the Cargo Integrity Group says it is concerned that measures already in place to help identify possible weaknesses are not being fully implemented and that opportunities for improving compliance standards are being missed.
Dexory’s robotic platform cruises warehouse aisles while scanning and counting the items stored inside, using a combination of autonomous mobile robots (AMRs), a tall mast equipped with sensors, and artificial intelligence (AI).
Along with the opening of the office, Dexory also announced that tech executive Kristen Shannon has joined the Company’s executive team to become Chief Operating Officer (COO), and will work out of Dexory’s main HQ in the United Kingdom.
“Businesses across the globe are looking at extracting more insights from their warehousing operations and this is where Dexory can rapidly help businesses unlock actionable data insights from the warehouse that help boost efficiencies across the board,” Andrei Danescu, CEO and Co-Founder of Dexory, said in a release. “After entering the US market, we’re excited to open new offices in Nashville and appoint Kristen to accelerate our scale, drive new levels of efficiency and reimagine supply chain operations.”
The deal will create a combination of two labor management system providers, delivering visibility into network performance, labor productivity, and profitability management at every level of a company’s operations, from the warehouse floor to the executive suite, Bellevue, Washington-based Easy Metrics said.
Terms of the deal were not disclosed, but Easy Metrics is backed by Nexa Equity, a San Francisco-based private equity firm. The combined company will serve over 550 facilities and provide its users with advanced strategic insights, such as facility benchmarking, forecasting, and cost-to-serve analysis by customer and process.
And more features are on the way. According to the firms, customers of both Easy Metrics and TZA will soon benefit from accelerated investments in product innovation. New functionalities set to roll out in 2025 and beyond will include advanced tools for managing customer profitability and AI-driven features to enhance operational decision-making, they said.