I love the start of a new month because (among other things) I get to turn the page on my wall calendar, the one my wife makes for me every year, and see what family picture she selected for the month. June is my wife’s birthday and our anniversary, so not surprising, this month’s picture is of the two of us, embraced and smiling in our dining room, taken sometime last year on a day I can’t remember, except that it was a day worth smiling about, just like today.
This week’s news…
- Descartes Reports Fiscal 2013 First Quarter Financial Results
- FedEx To Acquire Brazilian Transportation and Logistics Company, Rapidão Cometa
- One Network Enterprises Announces Global Launch of ONE Parcel
- March 2012 Surface Trade with Canada and Mexico Highest on Record Exceeding $85 Billion for First Time
- The Conference Board Consumer Confidence Index® Declines Again
- China’s official PMI retreats more than expected in May (Reuters)
- Diesel prices fall nearly 6 cents (Logistics Management)
- EU and U.S. to Cooperate on Air-Cargo Screening (Wall Street Journal)
Descartes reported strong Q1FY13 results, with revenues up 10 percent and net income up 18 percent from the same period last year. The company also announced several customer deals for its routing and mobile solutions, including Brink’s Incorporated, Leen Bakker, and John Lewis Partnership. One of my takeaways: the investments Descartes (an ARC client) has made in recent years to enhance and extend its route planning solutions with mobile and telematics capabilities are paying off.
Both FedEx and UPS are investing heavily to expand their international operations, which present strong growth opportunities for both companies. Earlier this month, FedEx announced that it was acquiring TATEX, a French express transportation company, and this week the company announced that it was acquiring Rapidão Cometa Logística e Transportes S.A., a Brazilian transportation and logistics company. Rapidão Cometa has been one of FedEx’s authorized representatives in Brazil for the past 11 years, and according to the press release:
Rapidão Cometa has the capacity to reach more than 5,300 locations and serves all states of Brazil…[and the company] currently has more than 17,000 clients, who are served by approximately 770 vehicles and trailers and approximately 9,000 team members nationwide and handles more than 12 million deliveries per year, through its strategic network made up of 45 branches and approximately 145 distribution points across Brazil.
Surface trade between the United States and its NAFTA partners, Canada and Mexico, exceeded $85 billion in March 2012, a new record.
U.S.-Canada trade reached $50.1 billion, a 2.9 percent increase from March 2011, and U.S.-Mexico trade reached $35.7 billion, an 11.2 percent increase from a year ago. The top commodity category transported between the US and Canada by surface modes of transportation in March was vehicles (other than railway), valued at $9.6 billion, while the top commodity category transported between the US and Mexico was electrical machinery, equipment and parts valued at $7.6 billion. Compared to March 2002, imports in March 2012 were up 76.1 percent, while exports were up 104.5 percent.
Looking at the chart above, it’s clear that as the economy goes, so goes the health of the automotive and electrical machinery/parts industries, and so goes the health of NAFTA trade.
There’s a lot of chatter going on about the state of China’s economy and manufacturing sector. According to a Reuters report, “China’s official purchasing managers’ index fell more than expected to 50.4 in May, the weakest reading this year and down from April’s 13-month high, in the latest sign that output in the world’s second-biggest economy is cooling.” Here’s a quote from the article by Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong:
“What’s really worrying is new orders have started to shrink and inventories have started to build up at an unusually fast pace. The output index also fell sharply, it is still positive but only mildly positive, so it means that the current activity is very weak. And it will get even weaker because people have already built up inventories so they don’t need to produce to meet orders – and those orders are shrinking anyway.”
And last week, Matthew O’Brien wrote an interesting article in The Atlantic titled, “5 Reasons China Might Already Be in a Recession.” Here is an excerpt:
You heard me right: China might be in a recession today. We can’t trust the country’s GDP numbers. Just ask possibly-future premier Le Keqiang. In a 2007 cable made public by Wikileaks, Le dismissed China’s GDP figures as “man-made.” Le explained that he only looked at three statistics to gauge the health of the economy: (1) Bank lending, (2) Electricity consumption, and (3) Rail cargo volume. And these measures say China’s economy is screeching to a halt.
China is just one piece of the world economy puzzle, but when you add the pieces from Greece, Spain, and the rest of Europe, I’m not sure how to put them together, or what the complete picture looks like.
Last week, the Transportation Security Administration (TSA) announced that starting December 3, 2012, air carriers must screen all cargo loaded on passenger flights bound for the United States. According to a Wall Street Journal article published yesterday, “The U.S. and the European Union expect to announce as soon as [June 1] a deal on mutual recognition of standards for air-cargo security screening that would save time and money for shippers.” The article goes on to say:
Under the new agreement, which is set to take effect Friday, each side will accept screenings certified by the other.
Security measures can cost up to 4% of a European shipper’s revenue, and duplicated security measures can account for one-fifth of that cost, according to Mr. Kallas’s office. The new measures should save the equivalent of several tens of millions of dollars annually for European shippers alone, the office said.
Finally, on a musical note, I’ve been compiling a list of songs to buy for my summer mix. I added a new song this week: “The King and All of His Men” by Wolf Gang. The song has an 80s sound to it and the lead singer reminds me of the actor Ewan McGregor, with a hint of Michael Hutchence thrown in. Enjoy.