Last week, we had tornadoes here in MA, and this week we had a mini heat wave ending in thunderstorms. And last night the Red Sox swept the Yankees in New York for the second time this season, the first time that has happened since 1913. I’m not sure if there’s a correlation between these things, but you never know.

On to the news…

Freight shipments fell 1 percent in April compared to March. During the same period last year, the index increased 0.1 percent. Taking a slightly longer perspective, the first four months of 2011 have been a seesaw, with alternating positive and negative months, resulting in a 0.6 percent increase overall. In contrast, the first four months of 2010 all posted positive growth.

Source: Bureau of Transportation Statistics (click to enlarge)

Intermodal traffic, however, continues to grow. According to the Association of American Railroads press release:

May saw the 18th straight month of intermodal gains, and this month’s weekly average of 233,239 is the second highest May average on record. The gains in intermodal can be attributed to several factors including growing international trade, better service, large investments in infrastructure and equipment by railroad companies, fuel costs, highway congestion and truck driver shortages, and the conversion of boxcar traffic. Looking further at the import and export commodities, “big box” retailers dominate intermodal container imports while recycled paper, scrap materials, and chemicals dominate container exports.

What does this all mean? In a nutshell, things are “choppy” out there when it comes to freight shipments, and shippers are certainly taking a look at their mode strategies. This will certainly be a topic of discussion at next week’s “State of Logistics” press conference in Washington, DC. Stay tuned for my key takeaways following the event.

Ryder made another acquisition this week, this time in Europe. The company acquired Hill Hire, “a UK market leader in commercial truck leasing, rental and maintenance, with a solid base of contractual customers,” for approximately $252 million in stock. Here are some key excerpts from the press release:

The acquisition is expected to add approximately £90 million (approximately $147 million) in annual revenue to Ryder’s Global Fleet Management Solutions (FMS) business segment, and be accretive to Ryder’s earnings in 2011.

 

The acquisition adds approximately 4,000 heavy duty vehicles, split evenly between contract hire (full service lease) and commercial rental; ancillary equipment including a large trailer fleet for contractual lease and rental; and the company’s workforce of 300 employees including maintenance technicians. The acquisition also encompasses all of Hill Hire’s 13 well-equipped vehicle maintenance facilities located throughout the UK.

In its Q1 2011 financial results, Ryder reported that “commercial rental revenue increased 34% [compared to Q1 2010] reflecting improving global market demand and higher pricing.” I’m sure this growth in global demand played a role in justifying this acquisition. Why is demand growing? For many of the reasons I highlighted recently in “Business is Growing at 3PLs, But Why–And Is It All Good?”.

Finally, SAP announced this week the SAP® Trade Promotion Optimization application. According to the press release:

The software will deploy advanced modeling and predictive analytic capabilities to enable marketing and sales teams to systematically predict and optimize promotion outcomes, including revenue and profit, for both manufacturers and retailers.

 

SAP Trade Promotion Optimization will facilitate promotion planning by allowing users to perform what-if simulations based on order history and other internal data, retail point-of-sale, syndicated retail measurement data and market research data in order to obtain reliable recommendations for promotional activity – from individual events to annual promotion plans. Users will be able to assess and define best promotion opportunities for a given product such as discounts, rebates or premiums, taking into consideration effects such as seasonality, holidays, product availability, store closures, cannibalization of products and price changes. In addition, the software will encourage collaboration between consumer goods manufacturers and their retail and other channel partners.

Oh, the complexity of promotions! Wouldn’t it be easier to just adopt an “every day low pricing” strategy? A much debated question, which we don’t have the time or space for today, but maybe we’ll tackle it in a future posting. Or maybe you can get the conversation started by posting your perspective.

Enjoy the weekend!

(Note: Ryder and SAP are ARC clients)

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