DC VELOCITY readers who responded to a survey asking about their outlook for the next 12 months are of two minds. While one-third are pessimistic and 29 percent are unsure about what the future holds, 38 percent say they're optimistic about the coming year.
Or then again, maybe not. DC VELOCITY readers who responded to a survey asking about their outlook for the next 12 months are of two minds. While one-third are pessimistic and 29 percent are unsure about what the future holds, 38 percent say they're optimistic about the coming year.
When it comes to the U.S. economy's prospects for growth, however, the survey respondents are significantly less optimistic. Only 19 percent expect strong growth, 44 percent expect the economy to be flat, and 37 percent expect growth will be weak.
As it turns out, economists don't see much cause for optimism either, at least until the second half of the year. That much was clear during Global Insight's World Economic Outlook Conference in Boston in late October, when economists and invited speakers cited several risks to the economy.
In his top 10 economic predictions for 2008, released after the conference, Global Insight Chief Economist Nariman Behravesh essentially sided with the pessimists. "The U.S. economy is now in the danger zone," he wrote.
Behravesh predicted that the pace of economic growth in the United States would be the slowest since 2002, when the nation was recovering from the 9/11 terrorist attacks and the dot-com implosion. He said he expects growth of no more than 1.9 percent and that it could be even lower. Growth in the first half of the year will be particularly sluggish, he predicted, inching upward at an annual rate of 1.3 percent.
Could the nation slide into recession? Though Behravesh stopped short of saying that, he did warn that the risk is there. "The combination of the housing/subprime crisis and higher oil prices could be enough to push growth into negative territory," he wrote in his post-conference predictions. (Global Insight places the probability of a U.S. recession at 40 percent.)
Behravesh believes the housing slump could slow real growth in the U.S. gross domestic product (GDP) by a full percentage point. And he expects the slowdown to have repercussions for economies in other parts of the world.He also said he believes that the housing slump will bottom out at mid-year, when housing starts will be just half of what they were in 2005. Housing prices, though, will continue to fall through 2009, he predicted.
The second major risk to the economy is the price of oil, which stood at more than $91 a barrel in mid-December. Behravesh told conference attendees that he expects oil prices will ease to somewhere around $75 to $80 a barrel, but that he does not foresee prices falling much below $75. He added the proviso that in an era of tight supply, any sort of disruption could send prices soaring again.
Will exports save the day?
Exports may be the only saving grace for the U.S. economy. Behravesh predicts exports will contribute 0.9 percent to the U.S. economy's growth—accounting for almost half of the expected total increase. Nigel Gault, managing director of Global Insight's North American Macroeconomics Group, said at the conference that his firm expects exports to grow by 9.5 percent this year,more than double the 3.4 percent rate expected for imports.
The strong export outlook may help explain why respondents to DC VELOCITY's survey are essentially bullish about their own companies' prospects, yet bearish about the U.S. economy as a whole.Nearly half (47 percent) of the respondents say they expect their employers will see strong growth.
Furthermore, half of those surveyed expect to increase their spending on material handling products, freight transportation, information technologies, and other logistics-related products and services this year. In fact, 65 percent anticipate that their spending on those areas will increase by 3 to 9 percent. Not all of that money will be channeled into new equipment and technology, of course: Fully 92 percent say the cost of fuel has been a significant factor in rising freight expenses.
Meanwhile, Behravesh expects that rising exports (a result of the weak dollar) combined with slowing imports (a result of the sluggish economy) will help shrink the nation's current-account deficit. That net flow of capital out of the country—a consequence of the nation's longstanding pattern of importing far more than it exports—has long worried economists. Even with some correction coming, Global Insight expects the deficit will be $659 billion in 2008, compared to $755 billion in 2007.
The current-account deficit for the second quarter of 2007—the latest number available at press time—was $190.8 billion, or about 5.5 percent of GDP. To be considered healthy, Behravesh said, that number should not exceed 3 percent.
The economy's relative weakness is likely to keep inflation in check, Behravesh continued. He anticipates it will fall from 2.0 percent in 2007 to 1.8 percent this year for the "core personal consumption deflator" (a measure of the average increase in prices for all domestic personal consumption), and from 2.3 percent to 2.1 percent for the Consumer Price Index (a measure of prices for a fixed basket of goods). He also believes the Federal Reserve will continue to cut interest rates.
Looking beyond U.S. borders, Behravesh foresees a difficult year for Europe, resulting from the overall global slowdown, a strong euro, the international credit crunch, its own housing crisis, and high oil prices. Meanwhile, China's economy will grow at a 10.8-percent clip, though the Chinese government is expected to tighten credit after next year's Beijing Olympics, which could lead to a "hard landing" there. Still, he noted, when you consider the nation's current rate of growth, a hard landing for China would still mean growth in the range of 5 to 6 percent.
Back in October, Behravesh characterized the risk of a U.S. recession as relatively low. But the odds of a recession have certainly increased since then. As he told the conference audience in what could turn out to be an understatement: "There are a lot of risks out there."
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.