Many of the nation's transportation and logistics business elite have gathered in Palm Beach, Fla., for
investment firm Stifel, Nicolaus & Co.'s annual two-day conference, which starts today. For those seeking
to divine what 2014 holds for those who ship and move stuff, it is hoped the commentary will be as warm as
the near 80-degree weather in the tony South Florida locale.
So far—and even the optimists concede that it's still early—the narrative from top executives indicates
that 2014 is shaping up to be a decent year, though hardly a memorable one. Investment firm Morgan Stanley & Co.
recently sifted through press releases and transcripts of conference calls between management and analysts over the
past two years to compare 2014 outlooks with the prior year. The takeaway, according to lead transport analyst William
Greene, is that freight executives "feel better about the 2014 outlook" compared with their mood when surveying the
2013 landscape at the start of last year.
In a Feb. 3 research note, Greene extracted comments made so far this year by top executives of many leading
publicly held companies as they discussed 2013 fourth quarter and full-year results. Executives of Omaha, Neb.-based
truckload carrier Werner Transport Inc. said that, "freight trends thus far in 2014 have been better than the same
period in 2013." Leaders at Norfolk, Va.-based rail giant Norfolk Southern Corp. said that while "we were less sure
about the economy" during the first half of 2013, "we felt better about a lot of our business segments" as the year
progressed. Fort Smith, Ark.-based less-than-truckload carrier (LTL) ABF Freight System Inc. said the company had
"better conversations" with its customers over business conditions as it finalized contracts during December.
Executives at Atlanta-based UPS Inc. cited economists' projections of stronger U.S. gross domestic product (GDP) growth,
modest 1- to 2-percent growth in the Eurozone after a flat 2013, and China's economy expanding in line with 2013 results at
around 7.5 percent. "More importantly, global exports are projected to slightly outpace global GDP," said UPS, whose fortunes,
more than most U.S.-based transportation firms, are tied to the global economy.
On rates, most executives said they were seeing a firming not visible for some time. Jacksonville, Fla.-based Landstar
System Inc., a trucking firm that operates through a network of agents, said revenue per load in December rose 3.1 percent
over December 2012. That was the first month all year where that critical metric came in higher than in a comparable month
of 2012, Landstar said. Kansas City-based rail holding company Kansas City Southern said that the pricing environment is
"still positive" and that its rates will rise faster than the projected overall inflation rate, which was reported by the
government at 1.5 percent for 2013.
LTL carrier Saia Inc., based in Johns Creek, Ga., said the rate environment remains "pretty good," though it saw stronger
years for rate increases in 2012 and 2011. Oak Brook, Ill.-based Hub Group Inc., the nation's largest intermodal marketing
firm, was one of the few firms that reported a tough pricing environment; efforts in general to hike intermodal rates have
been muted by increases in capacity to meet growing demand for the service.
Not everyone is that upbeat about the outlook. John G. Larkin, Baltimore-based Stifel's lead transportation analyst, said
freight growth will be suppressed by increases in supply chain efficiencies that better calibrate supply and demand and minimize
the risk of over-production. An aging U.S. population that will spend more on services than on goods will depress economic and
freight growth, as will a dearth of investment in freight-related infrastructure, according to Larkin.
The positive trends will be found mostly in international markets, Larkin said. Cross-border volumes in the U.S.-Mexican
trades will continue to increase, he said. In addition, U.S. exports will come close to balance with U.S. imports due to the
emergence of middle classes in developing countries and the rising global competitiveness of U.S. manufacturing, Larkin said.
The analyst expects industry consolidation to continue as asset-based providers increasingly take share from nonasset-based
rivals.
Roslyn Wilson, who authors the influential "State of Logistics Report," which is published annually, said she is cautiously
optimistic about 2014. Wilson said early data points paint a mixed picture of economic and freight activity. The Institute for
Supply Management's index of new orders for January was off more than 13 percent over December, hardly a positive sign although
the numbers may have been skewed by bad weather and a pull-forward of orders into December. Inventory levels have been elevated
for some time, also not a positive sign as companies will want to work off existing supply before placing new orders, Wilson said.
On the positive side, growth in personal consumption and in residential and nonresidential fixed investment bode well for freight
volumes, she said.
Wilson, who is now gathering data for the report to be released in June, said, "the things we look for that translate into more
supply chain business are not sparking yet." However, perhaps mindful of her generally pessimistic stance on the economy and the
industry since the 2009 recession, she added that, "I am more positive than negative for 2014."
Online merchants should consider seven key factors about American consumers in order to optimize their sales and operations this holiday season, according to a report from DHL eCommerce.
First, many of the most powerful sales platforms are marketplaces. With nearly universal appeal, 99% of U.S. shoppers buy from marketplaces, ranked in popularity from Amazon (92%) to Walmart (68%), eBay (47%), Temu (32%), Etsy (28%), and Shein (21%).
Second, they use them often, with 61% of American shoppers buying online at least once a week. Among the most popular items are online clothing and footwear (63%), followed by consumer electronics (33%) and health supplements (30%).
Third, delivery is a crucial aspect of making the sale. Fully 94% of U.S. shoppers say delivery options influence where they shop online, and 45% of consumers abandon their baskets if their preferred delivery option is not offered.
That finding meshes with another report released this week, as a white paper from FedEx Corp. and Morning Consult said that 75% of consumers prioritize free shipping over fast shipping. Over half of those surveyed (57%) prioritize free shipping when making an online purchase, even more than finding the best prices (54%). In fact, 81% of shoppers are willing to increase their spending to meet a retailer’s free shipping threshold, FedEx said.
In additional findings from DHL, the Weston, Florida-based company found:
43% of Americans have an online shopping subscription, with pet food subscriptions being particularly popular (44% compared to 25% globally). Social Media Influence:
61% of shoppers use social media for shopping inspiration, and 26% have made a purchase directly on a social platform.
37% of Americans buy from online retailers in other countries, with 70% doing so at least once a month. Of the 49% of Americans who buy from abroad, most shop from China (64%), followed by the U.K. (29%), France (23%), Canada (15%), and Germany (13%).
While 58% of shoppers say sustainability is important, they are not necessarily willing to pay more for sustainable delivery options.
Schneider says its FreightPower platform now offers owner-operators significantly more access to Schneider’s range of freight options. That can help drivers to generate revenue and strengthen their business through: increased access to freight, high drop and hook rates of over 95% of loads, and a trip planning feature that calculates road miles.
“Collaborating with owner-operators is an important component in the success of our business and the reliable service we can provide customers, which is why the network has grown tremendously in the last 25 years,” Schneider Senior Vice President and General Manager of Truckload and Mexico John Bozec said in a release. "We want to invest in tools that support owner-operators in running and growing their businesses. With Schneider FreightPower, they gain access to better load management, increasing their productivity and revenue potential.”
Economic activity in the logistics industry continued its expansion streak in October, growing for the 11th straight month and reaching its highest level in two years, according to the most recent Logistics Managers’ Index report (LMI), released this week.
The LMI registered 58.9, up from 58.6 in September, and continued a run of moderate growth that began late in 2023. The LMI is a monthly measure of business activity across warehousing and transportation markets. A reading above 50 indicates expansion, and a reading below 50 indicates contraction.
October’s reading showed the fastest rate of expansion in the overall index since September of 2022, when the index hit 61.4. The results show that the industry is continuing its steady recovery from the volatility and sluggish freight market conditions that plagued the sector just after the Covid-19 pandemic, according to the LMI researchers.
“The big takeaway is that we’re continuing the slow, steady recovery,” said LMI researcher Zac Rogers, associate professor of supply chain management at Colorado State University. “I think, ultimately, it’s better to have the slow and steady recovery because it is more sustainable.”
All eight of the LMI’s indices grew during the month, with the Transportation Prices index showing the most growth, at nearly 6 points higher than September, reflecting increased activity across transportation markets. Transportation capacity expanded slightly during the month, remaining just above the 50-point threshold. Rogers said more capacity will enter the market if prices continue to rise, citing idle capacity across the market due to overbuilding during the pandemic years.
“Normally we don’t have this much slack in the market,” he said. “We overbuilt in 2021, so there’s more slack available to soak up this additional demand.”
The LMI is a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
The port worker strike that began yesterday on Canada’s west coast could cost that country $765 million a day in lost trade, according to the ALPS Marine analysis by Russell Group, a British data and analytics company.
Specifically, the labor strike at the ports of Vancouver, Prince Rupert, and Fraser-Surrey will hurt the commodities of furniture, metal products, meat products, aluminum, and clothing. But since the strike action is focused on stopping containers and general cargo, it will not slow operations in grain vessels or cruise ships, the firm said.
“The Canadian port strike is a microcosm of many of the issues that are impacting Western economies today; protection against automation, better work-life balance, and a cost-of-living crisis,” Russell Group Managing Director Suki Basi said in a release. “Taken together, these pressures are creating a cocktail of connected risk for countries, business, individuals and entire sectors such as marine insurance, which help to mitigate cargo exposures.”
The strike is also sending ripples through neighboring U.S. ports, which are hustling to absorb the diverted cargo, according to David Kamran, assistant vice president for Moody’s Ratings.
“The recurrence of strikes at Canadian seaports is positive for U.S. ports that may gain cargo throughput, depending on the strike duration,” Kamran said in a statement. “The current dispute at Vancouver is another example of the resistance of port unions to automation and the social risk involved with implementing these technologies. Persistent disruption in Canadian port access would strengthen the competitive position of US West Coast ports over the medium-term, as shippers seek to diversify cargo away from unreliable gateways.”
The strike is also affected rail movements, according to ocean cargo carrier Maersk. CN has stopped all international intermodal shipments bound for the west coast ports of Prince Rupert, Robbank, Centerm, Vanterm, and Fraser Surrey Docks. And CPKC has stopped acceptance of all export loads and pre-billed empties destined for Vancouver ports.
Connected with the turmoil, Maersk has suspended its import and export carrier demurrage and detention clock for most affected operations. The ultimate duration of the strike is unknown, but the situation is “rapidly evolving” as talks continue between the Longshore Workers Union (ILWU 514) and the British Columbia Maritime Employers Association (BCMEA), Maersk said.
Terms of the acquisition were not disclosed, but Mode Global said it will now assume Jillamy's comprehensive logistics and freight management solutions, while Jillamy's warehousing, packaging and fulfillment services remain unchanged. Under the agreement, Mode Global will gain more than 200 employees and add facilities in Pennsylvania, Arizona, Florida, Texas, Illinois, South Carolina, Maryland, and Ontario to its existing national footprint.
Chalfont, Pennsylvania-based Jillamy calls itself a 3PL provider with expertise in international freight, intermodal, less than truckload (LTL), consolidation, over the road truckload, partials, expedited, and air freight.
"We are excited to welcome the Jillamy freight team into the Mode Global family," Lance Malesh, Mode’s president and CEO, said in a release. "This acquisition represents a significant step forward in our growth strategy and aligns perfectly with Mode's strategic vision to expand our footprint, ensuring we remain at the forefront of the logistics industry. Joining forces with Jillamy enhances our service portfolio and provides our clients with more comprehensive and efficient logistics solutions."