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.
The nation's first quarter gross domestic product contracted by 0.7 percent. But the downturn was explained away by such anomalies as bad weather, slowdowns at West Coast ports, the impact of declining oil prices on the industry's capital spending patterns, and a strong U.S. dollar that weighed on exports.
Winter has turned to late spring, and the backlogs caused by the labor-management disturbance at 29 West Coast ports have largely been cleared. However, the economic picture, at least as painted by the recent spate of transport data, remains distinctly clouded. For the first time in several years, pundits skilled at finding silver linings in any cloud are leavening their analyses with sobering comments about the near-term outlook.
The American Trucking Associations' (ATA) monthly truck tonnage index, a closely watched measure of shipping and economic activity, declined 3 percent in April on a sequential, seasonally adjusted basis, following a 0.4-percent upward revision in the March data over February. Compared to April 2014, the index rose 1 percent on a seasonal basis, down from a 4.2 percent gain in March. The April numbers represent the smallest year-on-year gain in more than two years. Through April, tonnage is off 5.3 percent from its January high, the group said.
The data led Bob Costello, ATA's normally upbeat chief economist, to wax almost negative about the current quarter. Noting that truck shipping is a harbinger of broad economic activity, Costello said that unless tonnage recovers in May and June, GDP growth "will likely be suppressed in the second quarter." He also cautioned that any "significant jump from the first quarter is looking more doubtful." May data will be released around mid-June.
The segments of the trucking business that rely on strong freight traffic to drive demand for their products are also seeing a taper. Orders in May for medium- to heavy-duty trucks fell 8 percent from May 2014 levels, according to ACT Research. Net orders—orders minus cancellations—for Class 8 rigs hit their lowest levels since September 2013, according to the group.
Truck-trailer net orders in April declined 19 percent from March and 30 percent year over year, according to FTR, a consultancy. Orders for dry-van trailers, the most common type, were down 32 percent from March levels, with new builds down 6 percent sequentially due to a shrinking number of new-build slots available, FTR said. The firm said the numbers, on balance, were "disappointing" and said they reflect a reluctance by fleet managers to commit to equipment deliveries amid a slowing economy and a moderating freight market.
Over on the rails, the situation is spotty. Intermodal trailer and container traffic through April was up 3 percent year over year, according to the Intermodal Association of North America (IANA). International container volume led the way with a 4.2-percent gain, part of it due to a snapback from suppressed first-quarter volumes, which were due to the labor issues at West Coast ports. For the week ending May 23, intermodal traffic was up 4.3 percent from the year-earlier period, according to the Association of American Railroads (AAR). But carload volume, which is separate from intermodal, fell 9.1 percent in the May period, and is down 7.6 percent year over year, AAR data show.
Larry Gross, a senior analyst at FTR, said a new normal of sorts may be emerging in intermodal, with long-term growth settling at between 4 and 5 percent. Gross said he was most worried about the weak carload numbers because they extend beyond coal demand—which has its unique problems due to stiff competition from natural gas and tough federal environmental regulations on mining activity—to other commodities. "The declines are very widespread, with only autos showing a small increase," Gross said in an e-mail.
At the Port of Los Angeles, the nation's busiest seaport, containerized volumes, measured by 20-foot equivalent units (TEU), in April dropped 6.1 percent from the same period in 2014. Loaded container traffic dropped 11.8 percent year over year, while empty equipment, which accounts for a much smaller component of the overall total, increased by 12 percent, the port said.
Perhaps more tellingly from the standpoint of macroeconomic activity, there was surprisingly little problem clearing out the backlogs that built up during a nine-month impasse between dockworkers and ship management. The docks were swept at a much faster pace than originally expected, a reflection that dockworkers and management weren't overly burdened by fresh traffic simultaneously hitting the 29 West Coast gateways.
"I had expected to see more impact on the volume when the western ports cleared out, but if you blinked you missed it," said Rosalyn Wilson, an economist and author of the annual "State of Logistics Report," which will be released June 23. "The system was definitely not at capacity and it absorbed the extra load easily and quietly and without high rates."
GLASS HALF FULL?
At this time, folks are willing to give economic conditions the benefit of the doubt. The Federal Reserve today reported that economic activity in its 12 reporting districts expanded from early April to late May. Various economists expect the benefits of lower fuel prices to finally filter through the economy in the form of increased consumer spending, taking the pressure off an industrial sector that has carried much of the economic ball in the past couple of years but may now be out of gas. Truckload and less-than-truckload (LTL) rates are expected to continue rising, though the upward moves may have as much, if not more, to do with constrained supply than with percolating demand.
Wilson said she stands by her forecast from a year ago that the momentum which began in the second quarter of 2014 would carry forward through the balance of this year. The 2015 recovery is "taking time to build up steam," due to the dual effects of the strong dollar, which makes U.S. exports less competitive in world markets, and a still-stuttering global economy, Wilson said. But she sees the domestic economic picture brightening, with imports on the rise and consumers boosting their spending. "I see a couple of things that might trip us up, but generally I am still quite positive," she said.
Transport experts emphasize that the current numbers should be taken with a grain of salt. Second-quarter 2015 data will face tough comparisons, because the industry snapped back so strongly starting in the same period in 2014 following a brutal winter, they said. "The traditional summer slump arrived early this year," said Don Ake, FTR's vice president of commercial vehicles, commenting on the subpar truck-trailer data for April. "This is not surprising, considering the huge amount of orders placed late last year and the big backlogs." About 340,000 trailer units have been ordered in the past 12 months, creating a "still-healthy backlog," albeit 10 percent below the peak hit in January, Ake said.
As for truck orders, Jonathan Starks, the firm's director of transportation analysis, said that after a surge in the second half of 2014, activity is moderating to traditional levels. "So far it is following the typical ordering trend of slowing as we move into the summer months," Starks said. "If orders slow a lot further, say (by) low teens or (high) single digits, that would start to tell us something."
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”