Subscribe to our free, weekly email newsletter!



An economic holding pattern

By Jeff Berman, Group News Editor
April 29, 2011

Not surprisingly, there are some mainstream media reports popping up lately about how high fuel costs are impacting freight transportation and logistics and spurring intermodal usage, too.

These stories are, as expected, being paired with a slew of recent reports based on government data telling us that GDP growth projections are being scaled down and that while consumer spending has the semblance of being on the rise, it is a byproduct of higher fuel prices forcing you and I to spend more at the pump for gas and more at the supermarket for food.

It all makes sense how theses things are connected. That is not surprising. What is somewhat surprising is how many people are still telling themselves how good things are despite the obvious warning signs and factors that are in play at the moment.

This was made clear in first quarter earnings announcements by many companies you read about on this Web site and in the pages of LM. While many companies reported very strong earnings performance based on strong demand and pricing, they were also quick to point out that higher fuel prices are definitely increasing the costs of doing business.

It only makes sense that this is the case, but it makes me—and all of us, really—wonder where exactly does the bottom drop out? It is not my intention to be full of doom and gloom about this stuff, but the growth we saw and were feeling good about a year ago has dissipated to a degree for sure.

That makes sense when we consider the significant inventory re-build that was occurring at that point. But now that inventories are replenished and being carefully monitored by shippers, things are certainly back to or closer to normal (whatever “normal” is these days).

Take the fuel situation and add still-high unemployment, stagnant wage increases and flat consumer confidence, it adds up to another round of belt-tightening that could impact freight trends going forward.

On a more positive note, manufacturing is going strong and freight transportation and logistics service providers have certainly benefited from that. Thinking about how things would look without this occurring is what is really grim.

Even though things appear to be in a bit of a holding pattern, there is optimism in the market place when it comes to gauging future growth. On the earnings calls, many executives pointed to the still-positive, yet gradual, trends occurring on a macro-economic level.

Here’s to hoping their optimism is pointing to continued growth, however slow it may be.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

While the economy has seen more than its fair share of ups and downs in recent years, 2014 is different in that it could be the best year from an economic output perspective in the last several years. That outlook was offered up by Rosalyn Wilson, senior business analyst at Parsons, and author of the Council of Supply Chain Management Professionals (CSCMP) Annual State of Logistics Report at last week’s CSCMP Annual Conference in San Antonio.

Matching last week, the average price per gallon of diesel gasoline dropped 2.3 cents, bringing the average price per gallon to $3.755 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

A number of key topics impacting the freight transportation and logistics marketplace were front and center at a panel at the Council of Supply Chain Management Annual Conference in San Antonio last week.

The relationships between third-party logistics (3PL) service providers and shippers are seeing ongoing developments due in large part to the continuing emergence and sophistication of omni-channel retailing. That was one of the key findings of The 19th Annual Third-Party Logistics Study, which was released by consultancy Capgemini Group, Penn State University, and Korn/Ferry International, a global talent advisory firm.

Optimism in the form of increasing profits was a key takeaway in the Annual Survey of Third-Party Logistics (3PL) CEOs, released earlier this week at the Council of Supply Chain Management Professionals (CSCMP) Annual Conference in San Antonio.

Article Topics

Blogs · Supply Chain · Logistics · Economy · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA