Net orders for heavy-duty trucks plunged in November to their lowest level in more than three years and to the lowest level for November—normally a strong month for truck orders—since recession-plagued 2009, consultancy FTR reported today.
Net orders, defined as orders minus cancellations, dropped in November to 16,475 units, a 59-percent decline from last-year's levels, FTR said. The November numbers represented the weakest order activity of the year and came in well below expectations, according to the consultancy.
FTR, which usually finds a streak of sunlight in even the cloudiest forecasts, couldn't sugarcoat the November data, calling it a major disappointment, especially after order activity had held up reasonably well through the summer months.
"The November orders are very concerning," said Don Ake, FTR's vice president of commercial vehicles, in a statement. Ake said that truck inventories remain high, adding "the industry would appear to have enough trucks for now." Order activity should stabilize at some point, but not in the immediate future, Ake said. Current inventories will have to be worked off before production can resume in earnest, he added.
The poor truck-order data mirrors, to some degree, the subpar November numbers reported by the nation's purchasing managers in the monthly report published Tuesday by the Institute of Supply Management (ISM). According to ISM, economic activity contracted last month for the first time in three years, with the closely watched "Purchasing Managers Index," an amalgamation of various manufacturing metrics, falling to 48.6, a level that indicates economic contraction. This marked the first time since November 2012 that the level had fallen below 50, the dividing line between economic expansion and contraction.
There was little good news in the ISM report. New orders dropped 4 percentage points from October's readings, while the report's production index dropped 3.7 percentage points from the prior month. An index of prices dropped 3.5 percent from October, an indication of a continued contraction in raw-materials prices. Supplier inventories shrank, while customer inventories remained uncomfortably elevated, according to the report. Of the 18 industries surveyed, 10 reported contraction, ISM said.
The only pocket of good news was a sequential increase in employment, ISM said.
Each ISM manufacturing report is sprinkled with anonymous quotes from purchasing managers in various industries. Most of the quotes selected to accompany the November report were downbeat, with executives concerned about weaker demand and deflationary pricing trends. A few exceptions came from an executive in the transportation-equipment sector, who said that "business was still good," and from managers in the medical-device and fabricated-metal-products segments, with the latter reporting that demand in the automotive industry remained strong.
Separately, Old Dominion Freight Line Inc., considered by many the best-run less-than-truckload (LTL) carrier, reported on Tuesday fair but not robust October and November results for daily tonnage and weight per shipment. Daily LTL tonnage rose 4.4 and 3.1 percent in October and November, respectively, over the same periods in 2014. LTL weight per shipment declined 4.8 percent and 5.2 percent in October and November compared to the same periods in 2014, Thomasville, N.C.-based Old Dominion said.
Old Dominion's LTL revenue per hundred pounds shipped—known in the industry as "hundredweight—decreased 1.5 and 0.6 percent in October and November, compared to the same periods in 2014. The carrier said the downturns were due to the declines in fuel surcharges during the period. Excluding fuel surcharges, revenue per hundredweight increased 5.3 percent in October and 6.1 percent in November 2015 compared to the same periods in 2014, Old Dominion said.
On Monday, Old Dominion introduced a tariff under which noncontract customers will not pay a fuel surcharge if the federal government's average price of on-highway diesel fuel is less than $3 a gallon. As of Monday, the average national price of a gallon of diesel stood at $2.42.
"Old Dominion continued to produce solid year-over-year growth in shipments while also improving our yields, net of fuel surcharges, for the first two months of the fourth quarter of 2015," David S. Congdon, the company's vice chairman and CEO, said in a statement. "The domestic economy continues to show some weakness, however, which is reflected in our volume and weight-per-shipment trends."
Weaker manufacturing adversely impacts less-than-truckload carriers, whose traffic flows heavily tilt toward industry. However, because Old Dominion reported high-single-digit year-over-year gains in daily shipments during October and November, the carrier's issue appears to be more a stronger bias toward lighter-weighted shipments than an overall decline in demand for its services.
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.