Another logistics year in the books
December 29, 2010
A theme we heard often when talking with shippers, carriers, and analysts throughout 2010 was “well, at least things are not as bad as they were last year.”
Fair enough. 2009 was, in many cases and instances, one to file and forget. If only it were that easy though.
And as we are on the last legs of 2010, it is as good as a time as any to take a look at some of the things that occurred on the way to here. So, in no particular order, the list below is comprised of some of the more notable events of what we saw, remembered, and reported in 2010.
-The return of high energy prices: Don’t look now, but high diesel prices are on the way back, with prices over the $3 per gallon mark and setting yearly records throughout late November and into December. This is worth keeping an eye on as you firm up your 2011 transportation spend;
-Air Cargo security: Thwarted attempts by terrorists to send explosives originating from Yemen to the United States on cargo and passenger planes brought about a renewed focus on air cargo security—and supply chain security. Clearly, these issues are already top of mind for industry stakeholders, but it was a sharp reminder of what could happen if things fall through the cracks.
-Railroad re-regulation stuck on the tracks: Legislation vowing to revamp the Surface Transportation Board (STB) and address various issues affecting railroad carriers and shippers focused largely on railroads’ interactions with captive shippers stalled out. But it appears that this legislation, spearheaded by Senator Jay Rockefeller, is likely to make a run at getting signed into law again in 2011.
-Impressive year for intermodal: With truck capacity still tight and the specter of CSA in the air throughout 2010, intermodal was the big winner in terms of increased market share. At various industry events throughout the year, it was clear that more shippers are turning to intermodal as a cost-efficient and green alternative to other the road transport, when and where applicable.
-Let’s make a deal….again: While the Great Recession took the wind out of the sails in many deal-making circles, there were signs of a renewed level of deal making brewing in the second half of the year, with companies large and small making deals to expand their presence in a certain region or add a specific strength or niche through a tuck in acquisition.
-BNSF, Berkshire Hathaway complete deal: Following a November 2009 announcement in which billionaire investor Warren Buffett and his investment group Berkshire Hathaway announced their intention to acquire Class I railroad carrier Burlington Northern Santa Fe, BNSF Chairman, President, and CEO Matt Rose said in February that the transaction is a done deal.
-FMSCA proposes new hours of service rules: In late December, the FMCSA’s new proposal for HOS rules was issued, and the result was, well….it is still too early to tell. But with one hour per day of driving time possibly being part of the proposal, it is entirely likely that if this eventually becomes law, it will rankle shippers and carriers equally, given that they will have less time to move freight a day. This proposal is in a 60-day review period at the moment, and LM will have more on this topic in the coming weeks.
-YRCW tops ABFS in court: A federal judge in the U.S. District Court ruled against ABF Freight Systems in its case against the International Brotherhood of Teamsters, various subsidiaries of YRC Worldwide and other entities following a ratified labor agreement by YRCW Teamsters members. When it first signaled its intent to take legal action, ABF said that it was on the grounds that these organizations were in violation of the National Master Freight Agreement (NMFA), which serves as the collective bargaining agreement for the majority of U.S.-based trucking employees. ABFS officials said the December hearing was dismissed, due to a lack of subject matter jurisdiction.
-2010 ocean cargo volumes expected to see nice gain: Import cargo volumes at U.S.-based retail container ports are expected to see gains on an annual basis in December and for all of 2010, according to the most recent Port Tracker report by the National Retail Federation (NRF) and Hackett Associates. The report said that the first half of 2010 came in at 6.9 million TEU for a 17 percent year-over-year gain, with the full year expected to hit 14.6 million TEU for a 15 percent improvement from 2009’s 12.7 million TEU, the slowest year since 2003’s 12.5 million TEU. 2008 hit 15.2 million TEU, and the peak in 2007 was 16.5 million TEU.
-Retail sales on a growth path. In what may be viewed as good news for retailers, carriers, 3PLs and other industry stakeholders, U.S. retail sales were up for five straight months through November. While they were going up against a dismal 2009, the upward trend is still somewhat encouraging if, in fact, the economy is truly on a growth path. While the consumer may not be fully back, it is clear that some buying activity is occurring, which should give supply chain stakeholders cause for some optimism.
-The Great Inventory Restocking: The first half of 2010 saw promising freight trends across various modes, due to retailers and manufacturers ramping up inventory levels. This activity brought positive vibes to a sector which badly needed them at the time, but it was not meant to be lasting, as inventory levels flattened out for the rest of the year heading into the Holiday Season. What happens with inventory build-ups during the first half of 2011 will certainly be worth keeping an eye on.
Well, I could probably do this for hours, but I am capping it for now. I hope you had a good 2010 and wish you a great 2011. As always, thanks for reading Newsroom Notes and see you next year! -JB
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