The U.S. economy will see solid growth starting in the second half of 2013, and for all of 2014, as long as Congress and the Obama Administration don't conspire against it, a leading U.S. economist said today.
Dr. Donald Ratajczak, emeritus professor at Georgia State University's J. Mack Robinson College of Business, forecast full-year GDP growth between three and 3.25 percent, followed by similar expansion in 2014. Most of this year's growth will be back-loaded, with momentum building in the summer and carrying through next year, Ratajczak told the SMC3 annual winter meeting in Atlanta.
The U.S. will experience muted growth in the first half of 2013 as fiscal concerns and ongoing political squabbles affect consumer and business confidence, and the economy works off a temporary condition of elevated auto inventories, he said.
Ratajczak said the uncertainty over fiscal issues and the polarizing climate in Washington remains a concern. However, he predicted that the White House and Congress will ultimately reach compromises on key issues impacting the economy because no one wants to take the political fall for derailing the progress that has been made.
The economist said the "underlying foundation of growth has improved, and will continue to improve" as the year progresses. He said industrial production activity is gaining strength, household wealth is approaching levels last seen prior to the 2007-09 financial crisis and recession, and energy prices have peaked for the year. Inventory levels are in balance, and in the case of building materials, are actually tight, Ratajzak said.
As the housing market recovers after five mostly miserable years, lean inventories of construction materials will spur increased ordering and overall economic growth, he added.
The U.S. will emerge as a major energy producer and exporter as shale oil and gas discoveries in the Dakotas, Montana and Pennsylvania make it an export powerhouse, Ratajczak said. He cited data showing that the U.S. exports the equivalent of $11 billion of petroleum products each month, and is poised to become the world's second-largest producer of liquefied energy materials in two years, overtaking Russia and trailing only Saudi Arabia.
The rock-bottom price of natural gas will be a tremendous tailwind for the U.S. economy in general and the supply chain in particular, according to Ratajczak.
Historically, the market price of crude oil has been about 12 times the market price for natural gas. However, recent mild winter weather, a sluggish economy, and newly abundant resources of natural gas have widened the ratio to about 30 to 1. Ratajzcak predicted that the oil to natural gas ratio will not drop below 25 to 1 for the rest of the decade.
"You will not go back to the historical levels of 12 to 1," he told the audience.
Borrowing costs will remain at historic lows for the next two years as the Federal Reserve maintains a near-zero interest-rate policy, Ratajczak said. He encouraged asset-based truckers and third party logistics providers to leverage the capital markets either to offset higher equipment costs, or to expand their fleets to meet increased demand for freight services.
Ratajczak said inflation will be well contained, with the possible exception of food prices, which have risen in the past year as droughts in farming regions have kept inventories low and have pushed up costs.
"We can't afford another drought," Ratajczak said.
He expressed hope that the recent snowfalls blanketing the Midwest and the Great Plains will provide the winter moisture needed for abundant crop yields.
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 U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills said.
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.