Remember to move your clocks forward one hour before going to bed on Saturday night (except for you contrarians in Arizona). As I look outside at the three foot deep snow pack, I wonder to myself, what ever happened to “Spring forward?” When I was a child, we moved the clocks forward at the end of April. The weather was nice outside, the grass was visible on the ground, and the extra daylight after school was welcome time to play outside. Then we moved it to early April. Ok, at least it was still done in Spring. Now the change to daylight savings time is at best a sign that Spring will soon arrive. Remember when ‘Spring forward” actually occurred in the Spring? I liked it better that way. I think today’s policy is too much of a good thing.
Now on to this week’s logistics news…
- Ports Gridlock Reshapes the Supply Chain
- Economy Continues to Expand, But Truck Drivers Remain Scarce, Fed Says
- Too Many Cars and Not Enough Trains Prompts Buffett to Expand Rail Unit
- ISM manufacturing slows in February for fourth month
- Distribution demands drive investment in logistics properties
The Wall Street Journal (WSJ) published an article on how the recent West Coast ports delays are prompting shippers and carriers to reduce their reliance on West Coast ports. They touch on many of the same points I addressed last week. In particular, I mentioned that, although the West Coast Ports stand united, in aggregate they also compete against the Gulf and Atlantic Ports. The WSJ article references a recent survey of 138 shippers by the Journal of Commerce that showed 65% of respondents stated they planned to ship less cargo through the West Coast Ports, and a similar amount planned to permanently reroute some cargo. Hasbro is mentioned as an example of a company that has diverted shipment through the Panama canal. Bloomberg ran an article on the topic with a more positive perspective on the future of the West Coast Ports. There is the following quote from a Long Beach Port executive, “We’re seeing an enormous turnout of labor. There’s no bad news other than having to rebuild relationships.” Yes, relationships… and reputation for reliability. But they do have geographic proximity and cost-advantages on their side.
An article in Transportation Topics references the recent release of the Federal Reserve Beige Book. The Cleveland, Richmond, and Kansas City districts noted increased wage pressure due to truck driver shortages. Atlanta reported trucking freight volume increases and district ports reported increased container traffic, likely due to West Coast port congestion (see article above). Other notable changes include decreased volume in Dallas and higher volumes in Philadelphia.
A Bloomberg article references Autodata Corp stating that Americans bought 7.2 millions trucks and SUVs last year, representing an 11 percent increase over the prior year and the most in a decade. Automotive manufacturers are experiencing transportation delays of the vehicles coming off their lines due to insufficient rail capacity. In response, BNSF railways is planning to purchase almost 1,900 double-decker rail cars to increase its automotive hauling capacity. CSX Corp also plans to expand its fleet of auto rail cars by about 6 percent this year.
The Institute for Supply Management Manufacturing Report on Business fell to a reading of 52.9 percent in February. A reading over 50 indicates expansion, but the decline in the absolute number represents a deceleration in growth. Of course, the West Coast Ports were mentioned as a factor. The MarketWatch Article stated, “One element that many purchasing managers brought up in anonymous comments to the organization was the now-completed West Coast port disruption, which one executive said was ‘seriously impacting the supply chain logistics.’” Therefore a return to normal activity on the West Coast may provide a boost to growth in March. However, a substantial decrease in exports was also mentioned as a factor inhibiting growth. Also, three of the eight quotes at the top of the Non-Manufacturing ISM Report press release mentioned the West Coast Port congestion. This report reflected strong increases in Transportation & Warehousing, as this category showed the highest growth in Business Activity and the highest growth in New Orders. Again, this is likely due to the increased activity at the West Coast Ports (I know, it’s getting overly repetitive).
And lastly, a Financial Times article on the logistics market across the pond. E-commerce is fueling a robust increase in logistics property investment in Europe. The article states that investment into properties including warehouses and distribution hubs amounted to €19.8 billion in 2014. This represents a 34 percent increase over the previous year. The UK experienced the highest growth rate, showing a 65 percent increase, to €7.9 billion.
Have a great weekend! This week’s video is a home video of a Lion opening a tourist’s car door during a safari. Remember to lock your doors!