Viewpoint: A global ripple effect

In what’s become an lm tradition, we kick off the New Year with our annual Rate Outlook cover story and subsequent Webcast. For the past 11 years, we’ve rounded up the top economists and freight transportation analysts in each mode—trucking, air, ocean, rail, intermodal—to offer this comprehensive snapshot on what shippers can expect in terms of freight rates and capacity in the coming year. 

Executive Editor Patrick Burnson has been the master of ceremonies for this event over the past six years, and has again neatly summarized our panel’s forecasts in print (page 26) and will moderate a discussion with these leading minds in our 2016 Rate Outlook Webcast on Jan. 28. This is by far our best-attended Webcast of the publishing year.

To offer shippers a broader view of what may be coming down the pike for U.S. shippers, Burnson starts this year’s outlook with a global perspective and then works his way back closer to home, explaining how the current volatility in international markets could have a ripple effect not only on the rates we’re paying on a daily basis, but also on our overall supply chain strategy.

“Over the last six months of 2015, there’s been a build up of anxiety among international shippers based on mounting negative macroeconomic trends, especially the news out of China,” says Burnson. “According to our sources, Chinese retail sales were up 11 percent in 2015, but exports dropped by 6.9 percent and imports declined by a surprising 18.8 percent—numbers that will cause many shippers to rethink their global volume patterns and costs over the coming year.”

In terms of oil and fuel prices, Burnson says that this vital area will continue to be haunted by the specter of global volatility. “A 33 percent decline in fuel prices has allowed logistics managers to shift their focus to address other operating costs,” says Burnson. “However, our oil and fuel columnist Derik Andreoli warns readers against becoming complacent, as prices can rise just as quickly as they fell.”

According to Andreoli, while domestic production increased by around 1.4 million barrels per day between January 2014 and December 2014, domestic production was lower in September 2015 than January 2015. And according to EIA’s monthly drilling report, shale oil production will be lower in December 2015 than December 2014.

And as we roll into 2016, domestic demand for fuel will continue to increase while domestic production will likely continue to fall. “This means that any additional supply that we’ll need will have to come from OPEC in the coming year,” says Burnson. “In turn, oil and fuel markets will be subject to extreme supply uncertainty, with any acute unrest in the region curtailing production at any moment.”

Despite the drop in fuel prices and the relatively decent economic news domestically, “volatility” and “uncertainly” will continue to be themes as shippers tweak their logistic and transportation planning for 2016. In order to help you prepare for what’s ahead, join Burnson and his insightful panel of freight transportation experts for our 2016 Rate Outlook Webcast.

With all that’s at stake this year, you simply can’t afford to miss it.