Today I would like to take the opportunity to briefly discuss a financial economics concept and its effects on the real economy, including the logistics market. This concept is called the J Curve. In particular, I am referring to the recent loose monetary policies of the Euro Zone and Japan. They have caused a depreciation in those currencies with respect to the dollar. Initially, the volume of US exports will remain fairly constant, but the price (in Euros or Yen) will increase. This will (or is currently) make US produced goods more costly to Europe and Japan, leading them to reduce the volume of goods they purchase from US companies. These changes, both exchange rate movements, followed by trade volumes, can have notable effects on trade and logistics. It is also makes our job as analysts forecasting market growth that much more difficult.
Now on to this week’s news:
- China’s logistics revenue surges in 2014
- Manufacturing Struggles With U.S. Dollar Rising, Oil Falling
- Cass Freight Index Shows Decline in March Shipping Activity
- INTTRA Expands e-Shipping on Africa Routes With NileDutch Agreement
- Vuzix Acquires Two New Patents in Wearable Display Space
- Fulfillment software vendor raises $50 million
China’s logistics sector increased its revenue in 2014 by 6.9 percent. Meanwhile, the total value of goods transported by the sector rose 7.9 percent. The increase in logistics revenue was attributed to the e-commerce boom. China’s online sales of consumer goods increased 49.7 percent from the prior year. Now that’s a growth rate worth mentioning.
The Federal Reserve reported that US manufacturing output increased 0.1 percent in March. Business equipment was the only major market group to post a gain, and this was primarily due to transit equipment. The Bloomberg article noted that the strong US dollar is hindering growth of the manufacturing sector (see my intro paragraph above). Also worth noting, oil and gas well drilling decreased 17.7 percent last quarter. Ouch!
Cass Freight Index (both shipments and expenditures) for March increased from February, but declined from March 2014. There was mention of the West Coast ports and the effects that issue on freight volumes. It’s that same old lingering port story, so I’ll spare you the details and link to the Cass Report if you desire the specifics.
INTTRA, the online ocean shipping electronic marketplace, announced that the ocean carrier NileDutch is being added to its platform. NileDutch services shipping lanes between West Africa and Europe, South Africa, South America, and Asia. ARC’s research on the global trade management market shows that INTTRA, a consortium of the world’s largest ocean carriers, is the largest ocean booking platform in operation.
Vuzix, a provider of smart glasses that my colleague Bob Gill referenced just yesterday in his article Picking With Vision about DHL’s augmented reality picking project, announced this week that it acquired two patents that complement its existing technology. One patent covers gesture controls of 3D virtual objects, and the other relates to ambient light management in see through wearable displays. Initially I was skeptical of augmented reality glasses and their use for warehouse tasks, but it appears that their usability is improving and may become a reality in the warehouse in the near future.
An Austrailian fulfillment software vendor named Temando recently raised $50 million of investment funding. I had never heard of the vendor prior to reading the related press release. However, the vendor’s focus is interesting and timely. The software helps increase cost efficiencies of e-commerce fulfillment. This is a large part of the topic I will be discussing at HighJump’s Elevate conference next week. The research that my colleague Chris Cunnane conducted on omni-channel fulfillment noted that retailers were practicing omni-channel primarily to increase revenues, with fulfillment cost and margins playing a secondary role. This software by Temando addresses margins and cost efficiencies. Here’s a quote from the press release:
(The software) lets an online retailer offer consumers options for delivery while taking into account the cost of each fulfillment option. For example, the retailer can decide whether it’s most cost-effective to deliver from an e-commerce distribution center, a store or to have a supplier ship the item directly to the consumer… The software takes into account how fast the consumer wants a product and the reliability of the shipper.
Have a great weekend. This week’s video is Centerfield by John Fogarty