Practical "meat and potatoes" information is on the menu at the Transportation & Logistics Council's 2010 Annual Conference, slated for April 19–21 in San Diego. The event promises to provide attendees with the kind of real-world information found in the group's practical handbooks, which include Shipping and Receiving in Plain English, Transportation Insurance in Plain English, and Freight Claims in Plain English.
The conference agenda includes expert-led sessions on such topics as importing and exporting, risk management and insurance, and protecting pharmaceutical shipments as well as workshops on law, insurance, contracts, and claims. Two discussion panels featuring well-known transportation attorneys will highlight recent cases and upcoming legislation affecting shippers, carriers, and third parties. Optional day-long workshops on transportation and logistics law, contracts, and freight claims will also be offered.
After a dismal 2023, the U.S. economy finished 2024 in pretty good shape—inflation was in retreat, transportation fuel costs had fallen, and consumer spending remained strong. As we begin the new year, there’s a lot about the economy to like, says acclaimed economist Jason Schenker. But that’s not to suggest he views the future with unbridled optimism. As the year unfolds, he says he’ll be keeping a wary eye on several geopolitical and supply chain risks that have the potential to spoil the party.
Schenker, who serves as president of Prestige Economics and chairman of The Futurist Institute, is considered one of the best economic minds in the business. Bloomberg News has ranked him the #1 forecaster in the world in 27 categories since 2011. LinkedIn named him an official “Top Voice” in 2024, and almost 1.3 million students have taken his LinkedIn Learning courses on economics, finance, risk management, and leadership.
Schenker is also the author of more than 30 books, including 15 bestsellers on supply chain, finance, energy, and the economy. He has been interviewed several times by this magazine, including a Q&A on the 2024 economic outlook last February, and has been a guest on DCV’s “Logistics Matters” podcast. In addition, he has provided economic and material handling forecasts for the trade association MHI since 2014.
Last month, Schenker spoke with DC Velocity Group Editorial Director David Maloney on the 2025 outlook for the economy in general and the supply chain and material handling sectors in particular.
Q: Jason, you joined us last year at about this time to share your outlook for 2024. And I have to say that your projections were pretty much spot on.
A: That’s very kind of you to say. I had expected we would see payrolls slow but still be positive, and that the unemployment rate would rise. We actually saw all of those things. We also predicted positive GDP [gross domestic product] growth, a slow easing of inflation rates, and a move toward interest rate cuts. And you know, we’ve seen all of those things, too.
2024 was a year that was, in the end, a pretty good year for the economy. GDP looks solid. Jobs gains are still continuing, although they’ve slowed. The unemployment rate has gone up, but it’s still low. So it was still a really positive year.
And, of course, our biggest concerns going into 2024 were around the political and geopolitical risks, making the swift and decisive end to the U.S. presidential election really important for reducing economic uncertainty and the risk of political violence. But that still leaves geopolitical risks, which are likely to hang over our heads in 2025.
Q: As you said, the U.S. economy is in fairly good shape. But as we begin 2025, what’s your outlook for the new year?
A: I think we’re probably going to see GDP grow at a modest pace, although the pace could slow a bit from what we saw in the past year in the U.S. I think we’re going to see interest rates go down. Inflation will probably ease, although I think we could see the inflation rate pop up briefly in the near term. Still, by some time in the second quarter, the year-on-year inflation rates are likely to be quite a bit lower. We also see interest rates easing. So it’s not a horrible outlook, because as interest rates go down, we’re also likely to see more business investment, manufacturing activity, and material handling spending.
Q: Of course, the gorilla in the room—as we speak in December—is the president-elect’s proposed tariffs and their potential impact on supply chains. We’ve heard China, Mexico, and Canada mentioned as possible targets for tariffs. Is this just a negotiating tactic, or are those really serious proposals by the incoming administration?
A: I think there are a couple of things to consider. One of the graduate degrees I did was in negotiation and conflict resolution. In terms of negotiation tactics, president-elect Trump is trying to position himself as a “distributive negotiator,” which means there’s going to be a push for a winner-takes-all kind of outcome.
Now, in reality, that’s not what’s likely to happen, right? But strong posturing may be enough to spur some of the change he’s looking for. In other words, what he actually wants probably isn’t blanket tariffs on all Canadian and Mexican goods. I think his real focus is on halting the trans-shipment of goods from China through Mexico in order to circumvent U.S. tariffs. I believe that’s a top priority for him—along with addressing things like the border crisis and fentanyl imports.
So if you start off a bit blustery and people are unsure of how things are going to go, they may be more willing to collaborate to get to a deal. And I think what we’re really seeing from the incoming administration is posturing that’s designed to spur quick action. But I also think that while politicians say many things, what they actually end up doing is often very different from what they pledged or promised or threatened. What we do know is that with President Trump’s first administration, that kind of posturing and threat-making got results.
Q: So how should supply chain professionals prepare for these proposed tariffs? We know that many companies stepped up their imports in the final months of 2024 to get ahead of new tariffs. Should companies rethink their supply chains and the amount of inventory they carry overall?
A: Well, there are a couple of things I’d say to this point. The first is, if we look at the MHI BAI [the Material Handling Industry Business Activity Index by Prestige Economics], which is a monthly economic indicator Prestige Economics produces in conjunction with MHI, it shows that inventories have actually fallen a lot in the last couple of years. So even though we see the values of inventories going up, especially in some of the government data, what we actually see in the survey data—which is based on responses from leading material handling and supply chain executives—is that they’ve been running down their WIP (work-in-progress) inventory. They are also running down their backlog to get shipments out the door.
So in terms of how the industry should be thinking about inventory, I think there are some important factors to keep in mind. One is that the U.S. and China very much seem to be on a collision course. For all the huffing and puffing and bluster around tariffs being imposed on a whole host of countries—whether it’s Canada, Mexico, or any of our global allies and key trade partners in Europe and Asia—the situation with China is very different. I think that’s where the hammer is most likely to come down.
I would contend that being exposed to China in your supply chain is going to be risky business going forward, because of a high potential for a kinetic conflict with China over Taiwan at some point in the near to medium term.
Q: The post-election polls revealed that a lot of Americans voted with their wallets. They felt prices were too high, and that led them to vote the way they did. Do you think prices will drop under the new administration, as many hope?
A: Nope.
So here’s the thing, there’s price and there’s inflation. If you’re expecting prices to go down, that’s deflation, and that almost never happens. By the way, no one wants that—deflation is actually worse than inflation.
So let me lay it out. In the Q3 2024 U.S. GDP report, consumption—people buying stuff—accounted for a full 68.9% of U.S. GDP. Well, that’s really good news—jobs are plentiful, wages are at record highs, and the stock market and home prices are at record highs. So everybody’s out there spending, which is great. With inflation, the dollars you have today will be worth less in the future, which means you’re actually a bit incentivized to spend them now.
However, you don’t want rampant inflation, because that makes it very difficult for businesses to plan, and there are also massive social impacts. That’s what happened in 2024 when grocery prices went through the roof, right? But a little inflation is OK, because it incentivizes you to spend now and not hoard your money.
But now let’s flip it on its head. Let’s say prices all go down. Well, if you know that you’re going to be able to buy more stuff with your dollars in the future—because your dollars will be worth more tomorrow than they are today—you will want to hoard your money and not spend now. But that’s really bad if 68.9% of your GDP is from people buying stuff. You could then get a massive contraction in GDP.
Now, do I think inflation rates are going to go down? Yeah. And so, here’s the rub. This is where the American public had some real challenges with communications going into the election. Because while prices are still going up, they’re rising at a slower pace than before. You’re telling the American public that inflation’s going down—but wait a minute, my grocery bill is still really high, and it keeps going up. And because prices aren’t going down, they feel they’re being lied to.
This has a lot to do with the fact that math is hard, and half of Americans read at or below the eighth-grade level. And now you need to explain calculus to them for them to understand the difference between prices and inflation?
So are prices going to drop? I don’t think so. We just want the prices to stop going up at a crazy pace. And I think that is going to happen.
Q: Let’s talk a bit about the material handling and supply chain sectors. What’s your outlook for these markets in 2025?
A: I think the outlook for 2025 is pretty good for material handling and supply chain—and for material handling equipment manufacturers. If interest rates go down, that’s going to incentivize people to spend. Plus, it seems very likely that we’ll see corporate tax cuts again. Low sustained corporate tax rates, falling interest rates, record-high equity markets, and record-high home prices—all that stuff’s really good for spending.
I think material handling equipment manufacturers have been burning off a backlog for the last two years, as have almost all manufacturers—something that’s reflected in the ISM [Institute for Supply Management] Manufacturing Index. But now as interest rates go down, I think there’s a chance you’re going to see a pop in new orders. And then with a low tax rate, you’ve got all the incentive in the world to spend, right? All those things are really positive for growth. So I think we probably have a good year ahead of us. I am optimistic about 2025 and also 2026.
Q: Well, that would be welcome. I know that people have held onto their cash and taken a wait-and-see attitude for the last couple of years. So, hopefully, we’re beyond that, and people are ready to spend.
A: Well, that’s right. A lot of businesses respond to these types of incentives, right? This is why the Fed raises interest rates—to cool demand. Demand had been so hot with folks out there spending like crazy. And when demand exceeds supply, prices rise.
Raising interest rates dampens demand, and when you dampen demand, the prices ease off. This is how the Fed manages inflation with interest rates. But now, hopefully, as inflation eases and interest rates fall, you’re going to get more activity on the business investment side. So that’s pretty exciting.
Q: Let’s talk about supply chain investments. Do you see any particular areas where companies will be looking to spend money this year?
A: I think there are a number of different areas. E-commerce is probably going to hit record levels in 2025—and we may even see e-commerce’s share of total retail sales hit an all-time high. During the Covid lockdowns, in the second quarter of 2020, e-commerce’s share of all retail sales spiked to 16.4%. I think that in one of the quarters this year, we may surpass that and hit a new record percentage. That would be good news for material handling and supply chain.
I also see the labor market remaining bifurcated, with very different outlooks for knowledge workers versus laborers. Knowledge workers may still struggle to find jobs, whereas employers looking to fill physically demanding, in-person jobs will struggle to find workers. That includes jobs in warehousing, transportation, wholesale, and manufacturing, which means we’ll also likely see record levels of demand for automated equipment throughout supply chain, material handling, and warehousing. All of those things will probably mean pretty good opportunities for material handling equipment manufacturers in the year ahead.
The one caveat I do want to leave readers with is to be wary of those geopolitical and supply chain risks that extend globally because, in my mind, that’s really the only thing that could spoil what would otherwise be a pretty big party in 2025.
It’s probably safe to say that no one chooses a career in logistics for the glory. But even those accustomed to toiling in obscurity appreciate a little recognition now and then—particularly when it comes from the people they love best: their kids.
That familial love was on full display at the 2024 International Foodservice Distributor Association’s (IFDA) National Championship, which brings together foodservice distribution professionals to demonstrate their expertise in driving, warehouse operations, safety, and operational efficiency. For the eighth year, the event included a Kids Essay Contest, where children of participants were encouraged to share why they are proud of their parents or guardians and the work they do.
Prizes were handed out in three categories: 3rd–5th grade, 6th–8th grade, and 9th–12th grade. This year’s winners included Elijah Oliver (4th grade, whose parent Justin Oliver drives for Cheney Brothers) and Andrew Aylas (8th grade, whose parent Steve Aylas drives for Performance Food Group).
Top honors in the high-school category went to McKenzie Harden (12th grade, whose parent Marvin Harden drives for Performance Food Group), who wrote: “My dad has not only taught me life skills of not only, ‘what the boys can do,’ but life skills of morals, compassion, respect, and, last but not least, ‘wearing your heart on your sleeve.’”
Congestion on U.S. highways is costing the trucking industry big, according to research from the American Transportation Research Institute (ATRI), released today.
The group found that traffic congestion on U.S. highways added $108.8 billion in costs to the trucking industry in 2022, a record high. The information comes from ATRI’s Cost of Congestion study, which is part of the organization’s ongoing highway performance measurement research.
Total hours of congestion fell slightly compared to 2021 due to softening freight market conditions, but the cost of operating a truck increased at a much higher rate, according to the research. As a result, the overall cost of congestion increased by 15% year-over-year—a level equivalent to more than 430,000 commercial truck drivers sitting idle for one work year and an average cost of $7,588 for every registered combination truck.
The analysis also identified metropolitan delays and related impacts, showing that the top 10 most-congested states each experienced added costs of more than $8 billion. That list was led by Texas, at $9.17 billion in added costs; California, at $8.77 billion; and Florida, $8.44 billion. Rounding out the top 10 list were New York, Georgia, New Jersey, Illinois, Pennsylvania, Louisiana, and Tennessee. Combined, the top 10 states account for more than half of the trucking industry’s congestion costs nationwide—52%, according to the research.
The metro areas with the highest congestion costs include New York City, $6.68 billion; Miami, $3.2 billion; and Chicago, $3.14 billion.
ATRI’s analysis also found that the trucking industry wasted more than 6.4 billion gallons of diesel fuel in 2022 due to congestion, resulting in additional fuel costs of $32.1 billion.
ATRI used a combination of data sources, including its truck GPS database and Operational Costs study benchmarks, to calculate the impacts of trucking delays on major U.S. roadways.
There’s a photo from 1971 that John Kent, professor of supply chain management at the University of Arkansas, likes to show. It’s of a shaggy-haired 18-year-old named Glenn Cowan grinning at three-time world table tennis champion Zhuang Zedong, while holding a silk tapestry Zhuang had just given him. Cowan was a member of the U.S. table tennis team who participated in the 1971 World Table Tennis Championships in Nagoya, Japan. Story has it that one morning, he overslept and missed his bus to the tournament and had to hitch a ride with the Chinese national team and met and connected with Zhuang.
Cowan and Zhuang’s interaction led to an invitation for the U.S. team to visit China. At the time, the two countries were just beginning to emerge from a 20-year period of decidedly frosty relations, strict travel bans, and trade restrictions. The highly publicized trip signaled a willingness on both sides to renew relations and launched the term “pingpong diplomacy.”
Kent, who is a senior fellow at the George H. W. Bush Foundation for U.S.-China Relations, believes the photograph is a good reminder that some 50-odd years ago, the economies of the United States and China were not as tightly interwoven as they are today. At the time, the Nixon administration was looking to form closer political and economic ties between the two countries in hopes of reducing chances of future conflict (and to weaken alliances among Communist countries).
The signals coming out of Washington and Beijing are now, of course, much different than they were in the early 1970s. Instead of advocating for better relations, political rhetoric focuses on the need for the U.S. to “decouple” from China. Both Republicans and Democrats have warned that the U.S. economy is too dependent on goods manufactured in China. They see this dependency as a threat to economic strength, American jobs, supply chain resiliency, and national security.
Supply chain professionals, however, know that extricating ourselves from our reliance on Chinese manufacturing is easier said than done. Many pundits push for a “China + 1” strategy, where companies diversify their manufacturing and sourcing options beyond China. But in reality, that “plus one” is often a Chinese company operating in a different country or a non-Chinese manufacturer that is still heavily dependent on material or subcomponents made in China.
This is the problem when supply chain decisions are made on a global scale without input from supply chain professionals. In an article in the Arkansas Democrat-Gazette, Kent argues that, “The discussions on supply chains mainly take place between government officials who typically bring many other competing issues and agendas to the table. Corporate entities—the individuals and companies directly impacted by supply chains—tend to be under-represented in the conversation.”
Kent is a proponent of what he calls “supply chain diplomacy,” where experts from academia and industry from the U.S. and China work collaboratively to create better, more efficient global supply chains. Take, for example, the “Peace Beans” project that Kent is involved with. This project, jointly formed by Zhejiang University and the Bush China Foundation, proposes balancing supply chains by exporting soybeans from Arkansas to tofu producers in China’s Yunnan province, and, in return, importing coffee beans grown in Yunnan to coffee roasters in Arkansas. Kent believes the operation could even use the same transportation equipment.
The benefits of working collaboratively—instead of continuing to build friction in the supply chain through tariffs and adversarial relationships—are numerous, according to Kent and his colleagues. They believe it would be much better if the two major world economies worked together on issues like global inflation, climate change, and artificial intelligence.
And such relations could play a significant role in strengthening world peace, particularly in light of ongoing tensions over Taiwan. Because, as Kent writes, “The 19th-century idea that ‘When goods don’t cross borders, soldiers will’ is as true today as ever. Perhaps more so.”
Hyster-Yale Materials Handling today announced its plans to fulfill the domestic manufacturing requirements of the Build America, Buy America (BABA) Act for certain portions of its lineup of forklift trucks and container handling equipment.
That means the Greenville, North Carolina-based company now plans to expand its existing American manufacturing with a targeted set of high-capacity models, including electric options, that align with the needs of infrastructure projects subject to BABA requirements. The company’s plans include determining the optimal production location in the United States, strategically expanding sourcing agreements to meet local material requirements, and further developing electric power options for high-capacity equipment.
As a part of the 2021 Infrastructure Investment and Jobs Act, the BABA Act aims to increase the use of American-made materials in federally funded infrastructure projects across the U.S., Hyster-Yale says. It was enacted as part of a broader effort to boost domestic manufacturing and economic growth, and mandates that federal dollars allocated to infrastructure – such as roads, bridges, ports and public transit systems – must prioritize materials produced in the USA, including critical items like steel, iron and various construction materials.
Hyster-Yale’s footprint in the U.S. is spread across 10 locations, including three manufacturing facilities.
“Our leadership is fully invested in meeting the needs of businesses that require BABA-compliant material handling solutions,” Tony Salgado, Hyster-Yale’s chief operating officer, said in a release. “We are working to partner with our key domestic suppliers, as well as identifying how best to leverage our own American manufacturing footprint to deliver a competitive solution for our customers and stakeholders. But beyond mere compliance, and in line with the many areas of our business where we are evolving to better support our customers, our commitment remains steadfast. We are dedicated to delivering industry-leading standards in design, durability and performance — qualities that have become synonymous with our brands worldwide and that our customers have come to rely on and expect.”