Ok, it appears that US transportation activity is back on track. I noted in previous blog posts that the unusually inclement weather this winter had negatively impacted indicators such as the ATA Truck Tonnage Index and DOT Freight Transportation Index, and even prompted regulators to temporarily relax hours of service mandates. Well, it appears that these downturns were in fact a result of the weather, as indicators for February and March depict a strengthening logistics sector. Good News!
- Freight Shipments Rose 1.2% in February from January
- Cass Freight Index Improves in March
- Uber Experiments With A Courier Service In New York City
- Jerry Yang, Box, Workday Founders Invest In Disruptive Supply Chain SaaS Elementum
- Don’t Have a Cow Man!
The DOT Freight Transportation Index increased in February, after two consecutive months of decline. In addition, the January and December index readings were revised up. So things are looking up. The rebound was driven by strength in trucking and rail intermodal. The DOT press releases are primarily quantitative and don’t provide much analysis into the underlying factors. However, the release did state, “The unusually severe weather that hampered freight shipments in January continued in February but the demand for goods to ship increased despite the weather.”
As further support for a strengthening transportation sector, the Cass Freight Index reported an increase for the month of March. The index increased slightly from March of last year and extensively from February of this year. The ttnews.com article stated:
“Shipment volume and total freight payments continued to climb in March, ending the first quarter on a high note,” the report said. “Bad weather continued to plague many parts of the country, but transportation seemed to be less affected than January or February.”
In January, Steve Banker discussed his supply chain predictions for 2014. The rise of Omni-channel courier companies was one such prediction for this year. Well, in line with that prediction, Uber launched a courier service in New York City earlier this week. Although the new service, branded UberRUSH, appears to be geared toward transporting packages for consumer shippers, I can see this service evolving to support last mile logistics for omnichannel retailers with a presence in Manhattan that wish to promise deliveries within a two hour timeframe.
It is effective marketing. That’s what I realized from my own personal reaction to the press release stating that Yahoo, Workday, and Box founders invested in a new up-and-coming supply chain software software vendor, Elementum. If these guys invested in the firm, it must really offer market disruptive technology, right? Well, maybe – maybe not. Clearly these individuals understand the power of the internet and the strength of the SaaS model. Elementum does offers supply chain applications through the software as a service model. And, as I have stated in my post Where SaaS Makes Sense, I do believe that SaaS solutions offer the greatest value when they support transactions and processes between trading partners. However, many other companies offer similar solutions and have more well established networks. Much of the value offered by these solutions is related to the size of the network and the ability to create demand side increasing returns. This begs the question, what network/s will win out, and is Elementum’s offering strong enough to overcome its late entry into this market?
Finally, from the Fun File, a 747 flying over the Irish Sea was forced to make an emergency landing due to a fire warning from the sensors in the plane. When the crew checked the plane’s cargo area, which was holding its cargo of 390 cows, there was no sign of smoke or fire. It turns out that cows maintain a higher body temperature than humans, and well, there may have been a high level of methane gas in the cow filled cabin as well. Good thing none of the cows were smokers.
Have a great weekend!