Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
For the first half of 2010, the transportation industry has been partying like it's well 2005.
As the following examples show, activity has been strong across all modes. Consider:
Maritime. The Baltic Dry Index (BDI), a leading economic indicator that tracks prices charged by dry-bulk ocean carriers to move raw materials, rose in early June to 4,041, its highest level of the year. The index's recent move upward has been due to a surge of iron ore imports to China, experts said. The rise dispelled concerns that arose in April when the closely watched BDI hovered around 3,000, leading some to believe the global recovery had stalled. With ships busy and ports increasingly congested, experts look for the BDI to continue rising in the months ahead.
Air freight. After suffering unprecedented declines from late 2008 to early 2009, airfreight volumes have snapped back in impressive fashion. International air tonnage grew at a 26-percent annualized pace in the first quarter of 2010, despite service disruptions from the Iceland volcanic ash plume, according to data from the International Air Transport Association (IATA). Airfreight exports from the key Hong Kong market set records in April, up 54 percent from April 2009 levels. Cargo yields, or revenue per pound, rose 15 percent in the first quarter, with cargo load factors regaining pre-9/11 levels, IATA said. The outlook for air cargo "looks better than it has for the past two years," said Brian Pearce, IATA's chief economist.
Rail and intermodal. U.S. rail volumes of non-intermodal shipments rose in the first week of June by 27 percent over the same period in 2009. Intermodal traffic soared 33 percent over the same period in 2009 and rose eight percent over June 2008, before the financial crisis hit. Intermodal volumes are growing on the backs of improving imports and tightening truckload capacity, which is forcing shippers onto trains almost by default and is leading to significant intermodal rate increases.
Trucking. Demand for trucking continued to be strong through May, according to a key monthly index published by Cass Information Systems, a leading U.S. freight audit and payment firm. An index of shipments grew by 11.1 percent year-over-year, while a measure of transportation expenditures climbed nearly 25 percent over the same period. Both barometers of trucking activity have been steadily rising throughout 2010.
As shipments and expenditures have risen, so have truck rates. This is especially true for non-contractual rates quoted on the spot market. Truck giant J.B. Hunt Transport Services, for example, said in mid-May that its spot market rates are increasing at a faster pace than in the 2003-2005 period, the last sustained up-cycle for U.S. trucking. While contract rate increases have lagged the spot market, they are expected to accelerate in the second half of the year as shippers accept higher rates in contract renewals.
Noel Perry, a partner in the U.S. consultancy FTR Associates, said the freight recession that has gripped truckers since the end of 2006 is, at least for now, history. "I am not at all worried about the next 12 to 18 months," he said.
In fact, the trucking industry's biggest problem through the end of 2011, says Perry, will be hiring and training enough qualified rig and trailer buyers to meet the increasing demand.
Lastly, an index of domestic rail and truck demand published by investment firm Robert W. Baird & Co. rose 6.2 percent in April compared to the same period in 2009. April's figures represented the strongest year-over-year growth rate for any month over the past 20 years, according to Baird analysts. Growth continues to be supported by "sales activity improvement, lean inventory replenishment, and more normal inventory ordering cycles," the analysts wrote.
So where does transport go from here? Some have predicted that the U.S. economy—and by extension ordering and shipping activity—will slow in the second half of 2010 as previously lean inventory levels reach a more normal level and the U.S. government's stimulus spending begins to wane.
One logistics executive at a leading U.S. technology company (who asked not to be identified) said the current strong shipping data reflect business conditions at the "tail-end" of the supply chain. At the front-end of the supply chain, raw material purchases are currently showing "great softness." As raw material purchases are a better indicator of where the economy is heading, the executive expects the U.S. economy to slow significantly in the second half.
Similarly Dr. Donald Ratajczak, the former head of the economic forecasting unit at Georgia State University and now an independent economist, in January offered a sober outlook for U.S. growth in the second half of the year. At the time, Ratajczak said that the winding down of the government stimulus and inventory replenishment efforts that should begin to affect the economy in June or July.
However, in a June 1 report, Ratajczak said the increase in backlogs in the first quarter will trigger continued gains in production and shipping at least for the next two months.
As a result, Ratajczak said he has raised his projections for business inventories and sales. Because sales forecasts have revised higher than inventories, further production increases are likely needed to bring inventory levels in line with sales, he said.
The economist forecasts a 3.6-percent increase in second-quarter U.S. Gross Domestic Product (GDP), followed by a two percent GDP gain in the third quarter due to weakness in the U.S. housing market, and a three percent GDP increase in the fourth quarter.
Among transportation providers themselves the outlook for the second half remains mixed. For example, demand for airfreight services is expected to level off as the replenishment cycle runs its course sometime in the year's second half, said Pearce of IATA. Air freight is viewed as an early cycle indicator because it is sensitive to inventory levels and near-term restocking needs. Still, Pearce said shippers remain confident, and the capital investment outlook, especially among air-reliant technology firms, remains "surprisingly strong."
In the maritime sector, Mike Zampa, chief spokesman for shipping giant APL, said shipper demand "remains strong" at mid-year, and APL, along with other steamship lines, is reporting high vessel utilization. "The unknown is whether the economic recovery is sustainable" into the latter half of the year, Zampa said.
States across the Southeast woke up today to find that the immediate weather impacts from Hurricane Helene are done, but the impacts to people, businesses, and the supply chain continue to be a major headache, according to Everstream Analytics.
The primary problem is the collection of massive power outages caused by the storm’s punishing winds and rainfall, now affecting some 2 million customers across the Southeast region of the U.S.
One organization working to rush help to affected regions since the storm hit Florida’s western coast on Thursday night is the American Logistics Aid Network (ALAN). As it does after most serious storms, the group continues to marshal donated resources from supply chain service providers in order to store, stage, and deliver help where it’s needed.
Support for recovery efforts is coming from a massive injection of federal aid, since the White House declared states of emergency last week for Alabama, Florida, Georgia, North Carolina, and South Carolina. Affected states are also supporting the rush of materials to needed zones by suspending transportation requirement such as certain licensing agreements, fuel taxes, weight restrictions, and hours of service caps, ALAN said.
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
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.
Two European companies are among the most recent firms to put autonomous last-mile delivery to the test with a project in Bern, Switzerland, that debuted this month.
Swiss transportation and logistics company Planzer has teamed up with fellow Swiss firm Loxo, which develops autonomous driving software solutions, for a two-year pilot project in which a Loxo-equipped, Planzer parcel delivery van will handle last-mile logistics in Bern’s city center.
The project coincides with Swiss regulations on autonomous driving that are expected to take effect next spring.
Referred to as “Planzer–Dynamic Micro-Hub w LOXO,” the project aims to address both sustainability issues and traffic congestion in urban areas.
The delivery vehicle, a Volkswagen ID. Buzz battery-electric minivan, will feature Loxo’s Level 4 Digital Driver navigation software, a highly automated solution that allows driverless operation. The van was retrofitted to include space for two swap boxes for parcel storage.
During the two-year pilot phase, Loxo’s Digital Driver will navigate a commercial vehicle several times a day from Planzer’s railway center to various logistics points in Bern's city center. There, the parcels will be reloaded onto small electric vehicles and delivered to end customers by Planzer’s parcel delivery staff.
Following the completion of the pilot phase, Planzer and Loxo will build on the program for rollout in other Swiss cities, the companies said.
The partners said the project addresses the increasing requirements of urban supply chains and aims to ensure the “scalability of their disruptive solution.” With largely emission-free delivery, it contributes to greater levels of sustainability for the city as a living space, they also said.
“The uniqueness of this project lies in the fact that it will have a direct impact on society,” Planzer’s CEO and Chairman Nils Planzer said in a statement announcing the project. “We didn't just want to integrate automated technology into existing systems, we wanted to develop a completely new concept and a new business model.”
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.