Logistics business: Commerce Department reports increases in durable goods new orders and shipments

In another sign that the United States economy is gradually recovering, the Commerce Department reported last week new orders for manufactured durable goods in April were up 2.9 percent from March to $193.9 billion and were up 16.8 percent year-over-year. This marks the fourth time in the last five months new orders were up.

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In another sign that the United States economy is gradually recovering, the Commerce Department reported last week new orders for manufactured durable goods in April were up 2.9 percent from March to $193.9 billion and were up 16.8 percent year-over-year. This marks the fourth time in the last five months new orders were up.

Commerce also reported that durable goods shipments were up for the second straight month with a $2.7 billion—or 1.4 percent—gain to $196 billion, following a 2.1 percent March increase and were up 6.2 percent year-over-year.

These sequential and annual increases are in line—to a large extent—with the rebounds currently occurring for other general economic- and freight transportation-related indices released in recent weeks, including:
-April retail sales, which include non-general merchandise like automobiles, gasoline, and restaurants, at $366.4 billion were up 0.4 percent from March, which was up 1.6 percent from February, and were up 8.8 year-over-year, according to the Department of Commerce. And total retail sales were up 9.6 percent year-over-year;
-the National Retail Federation reported that April retail sales (which exclude automobiles, gas stations, and restaurants) increased 0.5 percent seasonally adjusted over March and 4.6 percent unadjusted year-over-year;
-the Institute for Supply Manufacturing reported that its manufacturing index—also known as the PMI—came in at 60.4 percent, representing the ninth consecutive month that the PMI has eclipsed 50 (any reading 50 or over indicates growth), while adding that the overall economy has been on a growth track for 12 straight months. On an annual basis, it is significantly higher than the 40.4 percent PMI from April 2009;
-the March Cass Information Systems Freight Index, which measures the number of shipments and expenditures that are processed through Cass’s account payable systems, indicated that March shipments at .974 was 4.5 percent better than February’s .930. And on a year-over-year basis, March shipments were up 7.1 percent compared to March 2010?s .905. March shipment expenditures at 1.663 are up 6.9 percent from February’s 1.549, and it is up 11.3 percent year-over-year;
- IANA reported that first quarter total intermodal loadings at 3,019,310 were up 8.4 percent year-over-year, topping the fourth and third quarters of 2009, which were down 6.4 percent and 16.4 percent, respectively, year-over-year; and
-the American Trucking Associations, Association of American Railroads have been consistently reporting volume increases year-over-year going back the last several weeks.

“Even though the stock market is [down], all the indicators that talk to the economy say we are going to have a normal, cyclical recovery,” said Noel Perry, partner at FTR Associates, a freight transportation forecasting firm, and principal of Transport Fundamentals LLC. “When you get such an under buy in the economy as we have the last few years, it is normal for the economy to be strong for a while to make up for it.”

Perry added that on an anecdotal basis it is clear that the general message from carriers and shippers is: things are looking up. But an exception, which he said is not surprising, is that base load prices have been slow to respond. Part of the reason for this is that some big truckload carriers that work with retail shippers are sometimes shy about rate increases.

“What I think this means is that prices are lagging capacity,” said Perry. “Capacity is definitely firming up based on all measures we look at.”

And with capacity firming, demand for freight transportation services is also growing.

“It is clear demand is returning, and it has been for a while,” a shipper told LM at last the National Strategic Shippers Transportation Council (NASSTRAC) Annual Conference. “The key to determining its prolonged success will be the second half of this year.”


About the Author

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. Contact Jeff Berman

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