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Durable goods orders are up in January, but supply chain concerns linger

By Jeff Berman, Group News Editor
February 25, 2011

In a sign that the economic recovery is showing some more positive signals, the Department of Commerce reported this week that new orders for manufactured durable goods in January went up $5.3 billion—or 2.7 percent—to $200.5 billion.

Commerce said this increase follows three straight monthly declines, with December down 0.4 percent being the most recent one. And excluding transportation, new orders in January were down 3.6 percent, with transportation equipment saw the largest monthly increase after three months of declines, with January coming in at $10.9 billion—or 27.6 percent—to $50.5 billion.

And shipments of manufactured goods, which have been up in four of the last five months, rose $0.6 billion—or 0.3 percent—to $202.9 billion. Durable goods inventories, which have been up for 13 straight months, were up $2.2 billion—or 0.7 percent—to $324.8 billion.

This data follows a release from the American Trucking Associations earlier this week, with the ATA stating that its For-Hire Truck Tonnage Index was up 8 percent annually in January.

Other positive signs, as previously reported by LM, include sustained manufacturing growth as reported by the Institute for Supply Management, increasing retail sales for the last seven months, and growing consumer confidence levels.

“The recovering is picking up steam,” said FTR Associates Managing Director and Senior Consultant Noel Perry. “It is on a pace to surprise most economists, assuming there is no major oil shock.”

But whether or not an oil shock occurs, diesel and oil prices are continuing a steady upward march, which has the potential to wreak havoc on shippers’ supply chain budgets

And while shippers and carriers remain both cautious and confident about the economy, they also point out that challenges and obstacles remain in their path.

Among the reasons cited for this are increasing commodity prices, coupled with the US deflating its currency to try and encourage exports, although the strategy is having the opposite effect as imports cost more, according to Vin Gulisano, CEO of ParcelPort, a New Haven, Connecticut-based 3PL.

“The economy, while better still can’t handle major inflation so companies are doing everything possible to not raise prices,” said Gulisano.  “Fragile is the word when talking about the U.S. economy. As a result it’s getting very nasty in the Supply Chain.  The customers at the top of the food chain finally see sales moving up and customers spending again, and they think that price increases could derail this.  I’m not sure how all of this is going to end up. If history is any indicator, prices will go up but slowly.  It’s just great to be talking about growth again.”

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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).

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