Respondents to DC Velocity 's 2012 Outlook Survey were evenly divided on where the U.S. economy was headed this year. But most are still upping their budgets for transportation services.
James Cooke is a principal analyst with Nucleus Research in Boston, covering supply chain planning software. He was previously the editor of CSCMP?s Supply Chain Quarterly and a staff writer for DC Velocity.
Three years after the official end of the Great Recession, there's no clear consensus among DC VELOCITY's readers on where the economy is headed in 2012. Respondents to our annual Outlook reader survey were almost equally divided in their opinions: positive, negative, or simply not sure. That same uncertainty is reflected in their views of their own companies' revenue prospects and in their overall logistics budgets. In fact, there was only one thing almost all of the 189 respondents to this year's survey agreed on: Oil prices will head up in 2012.
Just 39 percent of the respondents to the online poll, which was conducted in November, said they were optimistic about the direction the U.S. economy would take in 2012. That's the lowest percentage since our 2009 survey, when just 23 percent expressed optimism about the economy. It's also a significant drop from the percentage of respondents who were upbeat about the economic outlook for 2011 (52 percent) and 2010 (56 percent).
Meanwhile, about one-third of this year's survey respondents (34 percent) said they were pessimistic about business conditions in 2012, up from 22 percent last year. And here's that nagging sense of uncertainty: 27 percent said they were unsure what would happen, about the same as last year's 26 percent.
When it came to their own companies' prospects for 2012, opinion was once again almost evenly divided among survey takers. Thirty-four percent said they anticipated strong sales growth, while 35 percent foresaw flat revenues. Another 25 percent thought company sales would be weak. Six percent said they simply didn't know.
Survey respondents held out even less hope for overall U.S. economic growth. Almost half (49 percent) said they believed that growth would be weak, and 38 percent said they thought it would be flat. A paltry 10 percent predicted strong growth, and 4 percent said they had no idea.
As for the respondents themselves, the largest share worked for distributors, at 33 percent, followed by manufacturers, with 31 percent. The remainder worked for logistics service providers (18 percent), retailers (10 percent), or other types of businesses (8 percent).
*Note: Survey respondents were allowed to select more than one response.
Budget creep
Respondents seemed a little more definite when it came to their transportation spending plans. More than half (55 percent) said they expected to spend more for transportation services in 2012 than they had in 2011. Another 33 percent predicted their spending on transportation would remain the same, 6 percent anticipated a decrease, and 6 percent said they weren't sure. Of those who plan to spend more, 52 percent forecast an increase of 3 to 5 percent over what they spent in 2011. One-fourth anticipate spending just 1 to 2 percent more, and 15 percent expect an increase in the neighborhood of 5 to 9 percent. Only 8 percent foresaw an increase of 10 percent or more.
The projected increase in transportation spending is most likely related to respondents' views on where oil prices are headed. The vast majority—89 percent—said they were concerned that oil prices would rise in 2012, which would presumably result in higher freight rates.
Even so, only 40 percent of survey takers said their overall spending on logistics and related products and services (including material handling equipment, information technology, and freight transportation) would increase in 2012. Another 44 percent said their overall logistics expenditures would remain the same as in 2011, and 11 percent forecast a decline. The remaining 5 percent were unsure.
Among those respondents who expect to boost their overall logistics spending, the biggest share—43 percent—said their budget would rise by 3 to 5 percent compared with 2011. About one-fifth (21 percent) expected an increase of just 1 to 2 percent. But others forecast a bigger jump: 16 percent said they expect to spend 5 to 9 percent more than last year, and a full 20 percent said their budgets would increase by more than 10 percent.
As was the case in the 2010 and 2011 surveys, less-than-truckload (LTL) services topped the readers' list of planned transportation purchases. Seventy-six percent of survey takers said they planned to buy LTL services in 2012. About 65 percent said they would buy small-package shipping services, while 60 percent said they planned to use truckload carriers. (See Exhibit 1 for the full breakdown by mode.)
Investments on tap
Transportation, of course, isn't the only service readers purchase. Some 40 percent of the survey participants also buy contract logistics services. Of those respondents who use third-party logistics service providers (3PLs), 26 percent said they planned to increase their use of contract services in 2012. Sixty-one percent said their use of 3PLs would stay the same, while 13 percent expected to cut back on outsourcing. Readers have some flexibility when it comes to changing their outsourcing plans: Of those who use 3PLs, 88 percent said the average length of their contracts is three years or less.
Readers are planning to continue investing in warehousing and material handling products and services in the coming year. The top choices: racks and shelving (51 percent), lift trucks (45 percent), batteries and battery handling products (37 percent), safety products (36 percent), and dock products (34 percent).
They also intend to invest in technology. At the top of their shopping list were warehouse management systems (WMS), with 27 percent, and transportation management systems (TMS), with 24 percent. But it appears readers won't just be buying supply chain execution software this year. Twenty-one percent of survey takers said they planned to purchase business intelligence applications, software designed to help users analyze and improve their end-to-end supply chains. Inventory optimization software (19 percent), planning and forecasting software (18 percent), and demand planning apps (14 percent) were also popular choices.
Reining in costs
Although there was no real consensus among survey respondents about the economic outlook, readers aren't just sitting back and waiting to see what happens. Given the events of the past year—earthquakes, floods, civil unrest in the Middle East, and unpredictable oil prices—it's no surprise they're taking steps to rein in costs in 2012.
Readers appear to be sticking with tried-and-true methods to keep their logistics spending under control. Forty-one percent said they would consolidate more shipments into truckloads, and the same number said they expected to renegotiate with carriers. Nearly as many—36 percent—said they planned to cut back on express shipments. Another popular approach to controlling costs is a supply chain network redesign, cited by 26 percent of survey takers. Other favored tactics included shipping orders less frequently to customers, using fewer carriers, and switching more shipments from truck to rail. (See Exhibit 2.)
And finally, there's one glimmer of good news in all this cost-cutting: Just 7 percent said they planned to cut costs by laying off workers.
States across the Southeast woke up today to find that the immediate weather impacts from Hurricane Helene are done, but the impacts to people, businesses, and the supply chain continue to be a major headache, according to Everstream Analytics.
The primary problem is the collection of massive power outages caused by the storm’s punishing winds and rainfall, now affecting some 2 million customers across the Southeast region of the U.S.
One organization working to rush help to affected regions since the storm hit Florida’s western coast on Thursday night is the American Logistics Aid Network (ALAN). As it does after most serious storms, the group continues to marshal donated resources from supply chain service providers in order to store, stage, and deliver help where it’s needed.
Support for recovery efforts is coming from a massive injection of federal aid, since the White House declared states of emergency last week for Alabama, Florida, Georgia, North Carolina, and South Carolina. Affected states are also supporting the rush of materials to needed zones by suspending transportation requirement such as certain licensing agreements, fuel taxes, weight restrictions, and hours of service caps, ALAN said.
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
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.
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.