Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
The rate of growth in a number of logistics measures dropped significantly last month, surprising business experts who say the fourth quarter has historically been a time of rising business activity driven by the holiday peak shopping season.
While the logistics industry is still expanding, that trend slowed down in November to an index value of 66.66 from its October level of 69.01 and its September level of 70.22, according to the most version of the "Logistics Manager's Index" (LMI), released Dec. 5.
The LMI is a monthly measure of economic activity across eight variables in the sectors of inventory, warehousing, and transportation. It measures data generated by a monthly survey of leading logistics professionals, then analyzes the results through a diffusion index that is above 50 if a sector is growing, and below that threshold if it is shrinking.
Launched in 2016, the report is issued by researchers at Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, and in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
The November edition of the LMI revealed that growth continued across the logistics sector in November 2018, but at a considerably decreased rate, according to the survey's authors. Specifically, the numbers show a significant drop in the rates of growth for the metrics of transportation prices (down 8.2 points), transportation utilization (down 6.6 points), and inventory costs (down 7.9 points). Together, that evidence suggests that the logistics industry is expanding, but at a much slower rate than it has been over 2018, the report found.
"While most of the logistics components are still growing, the rate of growth substantially slowed down this past month," Dale Rogers, a business professor at Arizona State University and co-founder of the LMI, said in a release. "This slowdown marks an interesting change. We do not know if this is a one-time occurrence, or if it is the beginning of a downward trend."
Measuring logistics activity is an effective way of predicting future moves in the greater economy because it shows exactly how much inventory businesses are moving and storing, in anticipation of imminent sales, Rogers said in an interview. That makes the LMI a "leading indicator," in comparison to other economic measures like gross domestic product (GDP), which is classified as a "lagging indicator" because it measures productivity that has already occurred, he said.
"The fact we saw a leveling off of growth during the fourth quarter when you wouldn't expect to see that was significant because November is typically a month with a lot of shipping inventory, when warehouses are near capacity. So to see the big changes was quite surprising," said Rogers. "Changes in transportation, warehousing, and inventory are predictive of something happening, especially when they move together," he said. "It feels like we're heading toward an inflection point."
The results mirror several other cloudy economic forecasts that have been released in recent weeks, including an economist who tracks material handling equipment manufacturing (MHEM) data for industry group MHI, the quarterly "Global Trade Barometer" released by German transport and logistics giant Deutsche Post DHL Group, and the monthly "Global Port Tracker" report produced by the National Retail Federation (NRF).
Likewise, the sample of North American logistics executives captured in the LMI index warn of the potential for economic conditions to retreat from their unsustainably high values through much of 2018, and possibly even to decline.
"It's not that we're going into a recession necessarily, but the rate of growth has significantly slowed," said Zachary Rogers, an assistant professor of Supply Chain Management at Colorado State University and another study author. "We don't know yet if it will just flatten out or continue to drop, but this does look like what it's like before a recession. Put another way, we don't know that it's going to rain, but it is looking cloudy."
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
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.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.