The unemployment rate edged down slightly in February 2015, to 5.5%. While the unemployment rate for teenagers decreased 1.7% to 17.1%, the rate for adult men (5.2%) and women (4.9%) remained relatively unchanged. This is a good sign for the US economy, as jobs continue to grow. There is one area, in particular, that has a very promising forecast: supply chain leaders. The US Bureau of Labor Statistics estimates that jobs in logistics will increase 26% between 2010 and 2020. The problem? Today’s leaders are nearing retirement age and there is a shortage of available talent to fill these positions. While there are many great college programs out there to help guide the next generation of supply chain leaders, there is not enough interest to fill the demand. This could have disastrous effects on the overall state of logistics in the future. Without enough qualified leaders, will the logistical processes we take for granted today (same or next day shipping, worldwide availability of produce during all seasons, etc.) become a thing of the past? Probably not. But without the right people in place, the processes can only hold up for so long. And when the processes begin to break down, logistics costs will rise. And that is when things will get interesting. So for any readers out there in college, or with kids in or nearing college, a helpful “push” towards a career in supply chain might not be a bad idea. In fact, it just might be a very lucrative one.
And now, on to the news.
- Imports rising as West Coast ports work on backlog
- 2014 cargo theft report
- Teamsters hit FMCSA with lawsuit
- U.S. high court orders new review in Amtrak vs. freight trains dispute
- Amazon wants to reduce inventory with 3D printers
- Rates for Vans, Reefers gain momentum
Now that the contract talks are over, operations can resume at West Coast ports to work through the backlog. As a result, import cargo volume at the nation’s major retail container ports is expected to rise an unusually high 16.9% this month over the same time last year. The March number is high both because of the backlog of ships at anchor waiting to be unloaded and because the annual Lunar New Year shutdown of Chinese factories was later this year, delaying some February cargo into March. Imports are expected to remain up year-over-year for each of the next 4 months. This is good news for retailers, as they rush to ensure spring merchandise is on the shelves and ready to be sold.
The 2014 cargo theft report points to an elevated threat and more sophisticated thieves. For the second straight year, the number of thefts reported has dropped, but the average value of the theft has risen. The number of thefts dropped 12% from 2013, while the average value of each theft rose 36% to $232,924. This indicates that thieves are more aware of what is on trucks are specifically targeting high value merchandise. Food and beverages were the most stolen items at 19% of all thefts, followed by electronics at 16%. The number of electronics thefts valued over $1 million tripled from 2013. The report indicates that lack of secured parking accounted for 87% of thefts, and nearly all of the cargo thefts in 2014 occurred in just five states: Florida, California, Texas, Georgia and New Jersey.
The Teamsters Union announced this week it has filed a lawsuit against the Federal Motor Carrier Safety Administration’s (FMCSA) recent move to expand its cross-border trucking program with Mexico. The FMSCA announced it was opening the U.S. operating authority application process to all Mexican carriers as part of compliance provisions in the North American Free Trade Agreement (NAFTA). The Teamsters lawsuit alleges the decision “is arbitrary and capricious in light of the admitted lack of significant data” gleaned during the agency’s three-year cross-border pilot program.” The Teamster’s big issue with the announcement is over the validity of data from a pilot program that deems Mexican carriers just as safe as US carriers. The Teamsters have vowed to continue to fight this ruling to ensure the safety of US roads.
Speaking of court cases, the US Supreme Court has temporarily revived a federal law credited with improving Amtrak’s on-time performance. The 2008 law stipulates that Amtrak trains have the right of way over freight trains on shared tracks. The freight railroad industry fought the law and argued that Amtrak is a private organization that could not regulate competitor’s actions. Initially, an appeals court sided with the freight railroad industry, ruling that Congress unconstitutionally gave regulatory power to a private company. The Supreme Court disagreed, citing the fact that Congress created Amtrak in 1970 as a for-profit company, meaning that even though Amtrak is subject to government oversight, it is like a government entity. The case will be decided by the appeals court after a full review.
Amazon has recently filed a patent application which indicates that 3D printing may be a way to reduce inventory by replacing the traditional warehouse model. The patent suggests that once a consumer orders the item, printing instructions are sent to the closest available 3D-printing truck and device combination, before delivering the freshly made device when it’s finished. The main driver here would be to reduce inventory carrying costs. This is obviously not a guarantee that Amazon will move forward with the mobile 3D print shop, but it is an interesting idea. While it is not immediately practical for most goods, it could be applicable to Amazon’s 3D print shop, which currently sells with jewelry, home décor, tech accessories, among others things. Although the print time is just too long for this to happen today. Either way, it’s always fun to see what ideas Jeff Bezos has floating through his head.
And finally, rates on the spot freight market generally turned higher over the past week as freight availability continued it seasonal rebound. The largest increase was in the van segment, which increased 3.2%, up to an average of $1.94 per mile. The reefer rate was up to $2.16 per mile, which is an increase of 2.4%. The flatbed rate fell to $2.12 per mile, or 0.5%. Load-to-truck ratios improved in all three segments as well, with vans up 16%, reefer ratio up 15%, and flatbed ratio up 12%.
That’s all for this week. Enjoy the weekend and the song of the week, The Clash’s I Fought the Law.