This was a relatively quiet week for news, due in part to the holiday on Monday. June arrived on Wednesday, along with tornadoes here in Massachusetts. An ominous sign? Perhaps so, especially when you consider the unemployment numbers released this morning (back up to 9.1 percent) and the other economy-related news items below.
- Descartes Reports Fiscal 2012 First Quarter Financial Results
- March 2011 Surface Trade with Canada and Mexico Topped $80 Billion for First Time on Record
- Ariba Teams with D&B to Drive Smarter Commerce
- Unemployment Rises as Hiring Slows (from Wall Street Journal)
- Brent oil, below $115, set for worst month in a year (from Yahoo News)
- Recovery fears mount after slow jobs, factory data (from Reuters)
- High gas prices weigh on retailers’ May sales (from Reuters)
First, the positive news. Descartes reported impressive financial results for Q1FY12 this week. Total revenues were up 27 percent in the quarter compared to the same period last year, reaching $27.1 million. Services revenues were up 28 percent to $25.9 million and gross margin increased two points to 67 percent. Services revenues accounted for 96 percent of total revenues, while license fees accounted for the remaining 4 percent. In terms of geographic split, the US accounted for 42 percent of revenues, followed by EMEA (excluding Belgium) at 20 percent, Belgium at 19 percent, Canada at 14 percent, Asia at 4 percent, and the Americas at 1 percent.
US surface trade with Mexico and Canada reached $80.8 billion in March 2011, a 15.6 percent increase over March 2010. According to the Bureau of Transportation Statistics (BTS), “March 2011 was the highest month since collection of data began in 1994, beating the previous record set in April 2008 by 8.8 percent, not adjusted for inflation.”
Source: Bureau of Transportation Statistics (click to enlarge)
What is fueling this increased activity? Certainly, the improved health of the automotive industry is a contributing factor. And I’m sure the “near-sourcing” trend that started a few years ago, driven by rising oil prices and labor costs in China, is also playing a role. Or you can just say this is what happens when you remove trade barriers and set up a free trade agreement.
Speaking of trade agreements, if you’re holding your breath waiting for US trade pacts with South Korea, Colombia and Panama to get approved, you’ll likely pass out before it happens. As reported in a Wall Street Journal article last week, “The centerpiece of the American trade agenda—a trio of international trade pacts worth $13 billion in new U.S. exports—is in peril as Democrats and Republicans battle over a program that provides aid to U.S. workers. The dispute over the future of the 50-year-old Trade Adjustment Assistance program, which provides benefits to American workers displaced by foreign competition, is putting pending free-trade pacts with South Korea, Colombia and Panama in jeopardy by pulling them into the contentious debate over federal spending.”
In past weeks, I’ve commented on how many software vendors and logistics service providers have cast caution to the wind as they reaffirm (or even increase) their forecasts for 2011. Whereas they were “cautiously optimistic” in 2010, today they are just simply optimistic. I’m generally a “glass is half full” person, but as I read the tea leaves, I don’t get the same warm and fuzzy feeling about the strength of the economy. In general, most economic indicators were trending in the right direction in the first quarter, then they started heading in the wrong direction this quarter. If this is a recovery, then it’s a choppy one.
What does this mean for supply chain and logistics professionals? This will be one of the many questions we’ll discuss June 15th in Washington, DC when The Council of Supply Chain Management Professionals (CSCMP) releases the 22nd Annual “State of Logistics Report®.” I am honored to be moderating this year’s panel, which includes:
- Rosalyn Wilson, Senior Business Analyst at Delcan and author of the report;
- John D. Porcari, Deputy Secretary of Transportation;
- Jeffrey Pilof, Vice President of Transportation at Macy’s;
- Joe Gallick, Senior VP of Sales at Penske Logistics;
- John P. Lanigan, Executive VP and CMO at BNSF;
- John White, President at Fortna;
- Rick Blasgen, President and CEO at CSCMP.
I’ll be writing my key takeaways from the report and the panel session after the event, so stay tuned. In the meantime, have a fun and relaxing weekend.
(Note: Descartes is an ARC client)
