Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
The plunge in freight markets due to the global recession and Covid-19 pandemic may have now stabilized as regions consider an economic “restart,” but a full recovery is unlikely to arrive until 2022 or later, industry groups say.
In the trucking sector, 2021 is being forecast as a “transition year” for the North American commercial vehicle market, as global economies move from Covid-19’s negative impacts into a meaningfully better situation in 2022, according to market analysis firm ACT Research Co.
“Without clear forward visibility on the Covid-19 endgame, the crystal ball is particularly opaque, as the economy begins to reemerge from its medically-induced coma,” Kenny Vieth, ACT’s president and senior analyst, said in the firm’s latest release of its North American Commercial Vehicle Outlook. “History shows that even from the lowest lows, the manufacturers can’t snap their collective fingers and bring production up immediately. Returning to normalized production levels is a process that is hard to rush.”
ACT’s report analyzes information covering forecasts and current market conditions for medium and heavy-duty trucks/tractors, and trailers, the macroeconomies of the US, Canada, and Mexico, publicly-traded carrier information, oil and fuel price impacts, freight and intermodal considerations, and regulatory environment impacts.
One key to the long-term recovery may come from a surprising source, as ACT said that the oft-maligned millennial generation—those born between 1981 and 1996—could be the spark that ignites a return to full consumer spending, and ultimately a rebound in trucking demand. “Coupling an otherwise structurally sound pre-Covid economy, with strong governmental support and rising pent-up demand, there is a case for the economy to rebound into 2021. We believe maturing millennials will be the key to pushing the economy forward as they resume their transition to marriages, kids, and mortgages,” Vieth said.
“We don’t expect 2019 levels to be exceeded until 2023,” IATA said, using a model assuming a “baseline scenario” where domestic markets re-open in the third quarter, followed by a much slower phased opening of international markets. Passenger air travel makes a significant impact on global freight trends because many airlines store freight in the belly hold of passenger jets. IATA has already warned of an air cargo capacity crunch—particularly for postal services—due to the spate of widely canceled passenger flights.
The air freight recovery could be even slower if lockdowns extend into the third quarter of the year, possibly due to a second wave of coronavirus infection. “Major stimulus from governments combined with liquidity injections by central banks will boost the economic recovery once the pandemic is under control. But rebuilding passenger confidence will take longer,” Alexandre de Juniac, IATA’s director general and CEO, said in the release. “And even then, individual and corporate travelers are likely to carefully manage travel spend and stay closer to home.”
Nielsen studied consumer behavior threshold levels that have provided early signals of spending patterns during the first three months of the coronavirus emergency. Based on that framework, the firm proposed three possible timelines for economic recovery:
rebound: an early return to normal living conditions (schools, workplaces, stores, restaurants, etc. re-open) at some point in the third quarter of 2020.
reboot: a medium-term scenario that is positioned in the fourth quarter of the year.
reinvent: a longer-term view that places the world in a general return to normal living conditions at some point in the first half of 2021.
“Much has been made of comparisons to the 2008 global financial crisis, but this situation doesn’t make for accurate comparisons. The circumstances back then were fundamentally different,” Scott McKenzie, Nielsen’s global intelligence leader, said in a release. “Thousands weren’t dying each day, millions weren’t locked in their homes indefinitely, businesses weren’t ordered to close their doors, kids were still in school. The impact of this will be profound and more far reaching than anything we’ve seen in our lifetimes. The pace of change is also extraordinary.”
According to Nielsen’s analysis, two sets of consumers will emerge as lockdowns continue—those with insulated levels of spending (often those who have maintained employment and remain shielded from day-to-day economic impact) and those who will be restrained in their spending habits due to unemployment, furloughing, or other Covid-19-related challenges.
That polarization of spending is expected to drive new considerations for retailers and brands as they urgently examine the range of products being offered and the pricing dynamics within. “The world is fundamentally recalibrating right now,” McKenzie said. “Consumer habits are changing at pace and understanding those changes, in the context of these scenarios, will be critical as businesses prioritize how they too recalibrate to meet the changed circumstances driven by Covid-19.”
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.