Subscribe to our free, weekly email newsletter!



Solving the economic puzzle takes more than a few pieces

By Jeff Berman, Group News Editor
April 15, 2013

As much as any time as ever during the depths of the recession and subsequent recovery, there continues to be a plethora of mixed signals regarding the state of the economy.

For example, gas prices are declining, which is good, and so are retail sales, which is bad. But the most recent edition of the Cass Freight Index report showed gains in volumes and freight expenditures, which showed gains over previous months. And while manufacturing is doing OK, New Orders, which are commonly referred to as the engine that drives manufacturing, have declined more than a cumulative ten percent in the last two months.

If that last trend, especially were to continue, that would not be good for the overall economy or the freight economy, as “Slower growth in manufacturing equals less freight in various stages of the supply chain,” noted Rosalyn Wilson, senior business analyst with Delcan Corporation and author of the annual CSCMP State of Logistics report, in her analysis of Cass report.

We hear—and see—that things are moving along in the freight world as they typically and traditionally would in terms of seasonality. But we have heard this tune before, if I am not mistaken.

That tune goes along the lines of “things are shaping up pretty well so far here in the first half of the year, looking at volumes and inventory levels.” Then, as things have been the case in recent years, things are no longer as good, with drop-offs in demand and a somewhat general flat-lining of subsequent economic activity. It is too soon if the tune will be the same in 2013, but the case can already be made, given the relatively sluggish pace of retail sales and the uneven employment outlook, which changes quickly depending on a few tenths of a percentage point in the monthly jobs report we see every month.

When I first started covering this industry, I was continually told that how the freight transportation market goes is how the overall economy goes. In some instances, this sentiment still holds some weight, but in others it is not nearly as prescient, it seems.

Looking at it through this lens can lead—in equal parts—to both confusion and clarity, depending on what you are looking at and, more importantly, how the story behind the data is being told, too.

For example, in its most recent earnings announcement, FedEx said it is reducing air capacity into and out of Asia, due to reduced demand in that region, coupled with shippers trading down in modes for more affordable freight rates.

And looking at rail and intermodal data, one can tell that modal trade down—in this case to intermodal—is alive and well, given how the annual increases we are seeing year-to-date on that front. Of course, we need to remember part of the intermodal story is due to increased movements via containers and less in trailers.

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

Lyon, France-based Norbert Dentressangle, a $5.5 billion global third-party logistics (3PL) services provider focused on global logistics, transport, ocean, and air services, said today it has acquired Des Moines, Iowa-based Jacobson Companies, a value-added warehousing (VAW) company, for $750 million from private equity firm Oak Hill Capital Partners.

Download the newly released research report, "Transportation Management Systems" conducted by Peerless Research Group (PRG) on behalf of Supply Chain Management Review and Logistics Management magazines. Learn what logistic experts are saying about their current supply chain technology infrastructures, how they tackle the transportation component, and revealed the gaps that still need to be filled in order to attain end to-end visibility of a streamlined supply chain.

From cost center to growth center. Get insightful opinions on changes in the marketplace from this independent survey of warehouse personnel. Motorola Solutions examined the current warehousing marketplace in our 2013 Warehouse Vision Report, conducted April-May of 2013.

Even though not all publicly-traded less-than-truckload carriers (LTL) have posted second quarter earnings yet, the early consensus for those that have issued results is looking very good.

The advance estimate for second quarter GDP at 4.0 percent could serve as a sign of a steadier and improving economy.

Article Topics

Blogs · 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