Oct 02 2014
Outlook for freight and logistics for rest of 2014 and beyond looks promising
While the economy has seen more than its fair share of ups and downs in recent years, 2014 is different in that it could be the best year from an economic output perspective in the last several years.
That outlook was offered up by Rosalyn Wilson, senior business analyst at Parsons, and author of the Council of Supply Chain Management Professionals (CSCMP) Annual State of Logistics (SOL) Report at last week’s CSCMP Annual Conference in San Antonio. The SOL report is sponsored by Penske Logistics.
Wilson said that when she presented the SOL report earlier this year that she thought 2014 would be a banner year for freight, with the over all freight-related numbers for the first half of 2014 and the third quarter to date all looking very strong, while cautioning there is a possibility of a fourth quarter dip, as has been the case in previous years.
With what she termed as dismal GDP growth in the fourth quarter of 2013 and the first quarter of 2014, things have picked up since then with GDP at a cumulative 2.8 for the first half of 2014, with third quarter GDP prospects looking strong.
“If you look at the components of GDP and then line freight or logistics up with it, you will find that there are a lot of things that are bad for GDP but are actually good for freight or logistics,” she explained.
One example of this, she said, was increasing imports, which has been intact for most of 2014––and bad for GDP. Rising exports, which is not the current case, is good for GDP growth, she said. And inventory building––or inventory investment––is also good for GDP, but had the converse effect when those numbers started trending down in recent months.
“You cannot just look at what GDP is doing and think that is exactly how our industry is doing,” said Wilson.
Looking at unemployment rates, Wilson said that they have fallen dramatically, which is good, but added that several things have occurred in tandem with that. One being that the number of jobs that have been created each month has been declining in 2014 and not as strong as the rate in 2013. Another factor is that a large portion of these jobs are not “quality jobs,” instead, they are part-time jobs without benefits or security. This has resulted in the problem of the economy not creating enough good jobs, she noted.
And the labor participation rate, which is the number of adult Americans that are able and could be looking for work that have stopped looking for jobs, has not been as low as it currently is since early 1970s and is continuing to fall.
In terms of freight expenditures, Wilson pointed to the monthly Cass Freight Index report, that she contributes analysis to, she said expenditures represent freight spend, as opposed to rates. Over the last four or five years, she said that since coming out of the recession, more money is being spent on freight expenditures, while the number of shipments has not risen in tandem with the amount of money spent.
“That is not because rates are going up,” she said. “It is because volume per shipment has increased dramatically. We are starting to fill our trucks more. When you look at the American Trucking Association’s monthly truck tonnage volume data, you will see it is not exactly following the same curve as Cass is in terms of the number of shipments, and that is because there are heavier volumes.” Read more
Source: LOGISTICS MANAGEMENT