Subscribe to our free, weekly email newsletter!


Logistics managers will still face global sourcing challenges this year

A “synchronized deceleration in the global economy will have larger implications for the supply chain, said IHS Global Insight.
By Patrick Burnson, Executive Editor
July 24, 2012

A “synchronized deceleration in the global economy will have larger implications for the supply chain, said IHS Global Insight.

In today’s “world flash” update, analysts said that all the key economies of the world have slowed down, almost simultaneously.

“With few exceptions, consumer and business pessimism has become more pervasive and more pronounced. Central bank concerns about the economic outlook have also increased considerably—and many are easing policies further,” said IHS analysts.

As reported in Supply Chain Management Review—a sister publication—IHS made significant downward revisions to the outlook in June. This month’s changes are “minor,” said analysts.

The distribution of growth remains largely the same: recession in much of Europe, lackluster growth in the United States and Japan, and slower growth in much of the emerging world, albeit still faster than in the developed world.

“Even the in the Asia Pacific, supply chains – which are closely tied to China – will feel the impact,” said IHS Global Insight Economist Sara Johnson.

Real GDP in China grew only 7.6 percent year-on-year in the second quarter, its slowest pace in three years. While the current slowdown in China is not nearly as severe as in 2008–09, in many ways China is more vulnerable now, said Johnson.

“Credit markets are overstretched, house prices are still unsustainably high, commercial banks are weak, and local government debt is high,” she said. “All this suggests that growth this year and next will only be in the 7.5–8.0 percent range. On the other hand, given the recent aggressive policy response by the central bank and government, the odds of a hard landing are no more than 25 percent.”

The good news for U.S. supply chain managers is that most readings on the American economy are well above recession levels, and there are some bright spots. Construction activity (both residential and private nonresidential) is improving. Consumer purchasing power is helped by lower gasoline prices.

“But there is no question that output and employment growth remains extremely modest, and the big June drop in retail sales is worrisome,” said analysts.

IHS now expects real GDP of just 1.2 percent (annual rate) in the second-quarter growth, with a slight improvement to 2.0 percent in the second half of this year and 2013.

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(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

FTR says both spot rates and contract rates are heading up in a full capacity environment and with the fall shipping season rapidly approaching, it explained conditions for shippers could further deteriorate.

Read how others are using Business Process Management to achieve ERP success with Microsoft Dynamics AX. Download the free white paper now.

Now that Congress has issued another highway funding Band-Aid – a $10.9 billion highway bill through next May that former Transportation Secretary Ray LaHood blasted as “totally inadequate” – what can we expect as the infamously do-nothing 113th Congress winds down in the next month before taking yet another recess to prep for the mid-term elections?

Seasonally-adjusted (SA) for-hire truck tonnage in July headed up 1.3 percent on the heels of a 0.8 percent increase in June. The ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment, was 133.3 in July, which outpaced June’s 132.3 by 0.8 percent, and was up 2.8 percent annually.

Volumes for the month of July at the Port of Long Beach (POLB) and the Port of Los Angeles (POLA) were mixed, according to data recently issued by the ports. Unlike May and June, which saw higher than usual seasonal volumes, due to the West Coast port labor situation, July was down as retailers had completed filling inventories for back-to-school shopping.

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