While economists fret that the U.S. economy may be sliding into a bit of a trough or worse, they do see one bright point in the rise in exports, created in large part by the weakness of the dollar.
Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.
While economists fret that the U.S. economy may be sliding into a bit of a trough or worse, they do see one bright point in the rise in exports, created in large part by the weakness of the dollar.
As a non-economist, I see that trend as ironic. Our exports are up because the dollar is weak, and the dollar is weak, in part, because we import so much. Oh, I know that it's more complicated than that, with the federal deficit and the broader current-account balance involved.
I've been thinking a lot about international economics lately. (I know, I know. That's not the sort of thing that makes people flock to your corner at holiday parties.) And whatever thinking I've done has not gotten me very far toward understanding the complexities of an economy that many experts consider at serious risk.
The outlook may not be entirely bleak, but it is hardly bullish. Global Insight's chief economist, Nariman Behravesh, does not expect the United States to slip into recession, but he concedes that it's far from impossible. (See our story on the 2008 economic outlook.)
A couple of factors make it crucial, I believe, for anyone in business to think about these big economic issues. While these factors seem far removed from our everyday lives and are certainly far removed from any levers most of us are able to pull, what happens on a global scale affects everyone's paycheck, job security, savings account, and overall financial well-being.
Take this whole issue of the current-account deficit, of which the trade imbalance is a part. It has gotten plenty of ink lately. It is also incredibly complex. From everything I've read or heard from economists, it also could cause great damage to the U.S. economy. The current account, as briefly defined by the U.S. Bureau of Economic Analysis, is "the broadest measure of U.S. international trade in goods and services, receipts and payments of income, and net unilateral current transfers." According to the bureau, that deficit in 2006 was $856.7 billion. That's 6.5 percent of gross domestic product (GDP), according to a policy brief published last March by the Washington-based Peterson Institute for International Economics.
The deficit for 2007 will be smaller when we see final numbers in March, largely as a result of the growth in exports. But it will still be sizable. And most economists argue that such large deficits cannot continue indefinitely. They tell us that as U.S. foreign liabilities continue to grow, foreign investors will demand a greater return on the assets they hold.
In its policy brief last March, the Peterson Institute warned against relying on market forces alone to address the issue."Market sentiment can change abruptly and the risk of a market-led adjustment is that it might involve global recession, abrupt and excessive changes in key exchange rates and asset prices, and as a consequence, aggravated trade frictions. To reduce the risk of such an outcome, policy-makers need to initiate a policy-induced adjustment in the near future," the authors wrote. The market is always at work, of course, as the weakness of the dollar testifies, so delays by policy-makers essentially amount to betting against the clock.
It's hard to make out what the presidential candidates think about the topic. Their natural caution and the partisan spin they place on economic data make them unreliable prognosticators. Current-account deficits don't make for good sound bites or engrossing debate topics. But the issue will demand significant leadership and perhaps political courage from whoever occupies the White House next year.
So I guess I'll keep thinking about economics for a while. As depressing as that can be.
The number of container ships waiting outside U.S. East and Gulf Coast ports has swelled from just three vessels on Sunday to 54 on Thursday as a dockworker strike has swiftly halted bustling container traffic at some of the nation’s business facilities, according to analysis by Everstream Analytics.
As of Thursday morning, the two ports with the biggest traffic jams are Savannah (15 ships) and New York (14), followed by single-digit numbers at Mobile, Charleston, Houston, Philadelphia, Norfolk, Baltimore, and Miami, Everstream said.
The impact of that clogged flow of goods will depend on how long the strike lasts, analysts with Moody’s said. The firm’s Moody’s Analytics division estimates the strike will cause a daily hit to the U.S. economy of at least $500 million in the coming days. But that impact will jump to $2 billion per day if the strike persists for several weeks.
The immediate cost of the strike can be seen in rising surcharges and rerouting delays, which can be absorbed by most enterprise-scale companies but hit small and medium-sized businesses particularly hard, a report from Container xChange says.
“The timing of this strike is especially challenging as we are in our traditional peak season. While many pulled forward shipments earlier this year to mitigate risks, stockpiled inventories will only cushion businesses for so long. If the strike continues for an extended period, we could see significant strain on container availability and shipping schedules,” Christian Roeloffs, cofounder and CEO of Container xChange, said in a release.
“For small and medium-sized container traders, this could result in skyrocketing logistics costs and delays, making it harder to secure containers. The longer the disruption lasts, the more difficult it will be for these businesses to keep pace with market demands,” Roeloffs said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.