Happy Vernal Equinox to all! After effects from late winter storms are still imposing their presence on many of us on this first day of spring (fall to our Aussie friends). The most expansive storm of the week is undoubtedly the solar storm that hit earth on Tuesday. The storm was triggered by the impact of a coronal mass ejection (CME) hitting the Earth’s magnetosphere. According to Discovery.com, “CMEs consist of huge bubbles of energized gas from the sun’s superheated corona (the solar atmosphere). “ I must admit, I did not know that CMEs consisted of gases. That’s one powerful belch. These types of storms are known for their disruptive impacts on satellite communications and power grids. NOAA stated that global positioning system (GPS) glitches were possible from this latest event. Hopefully none of you missed that left turn at Alberquerque.
And now, on to the news:
- US-NAFTA Freight Trade increased 4.5 percent in 2014
- Transport sector set to give big lift to oil demand: Kemp
- Prime Now Expands: One-Hour Delivery on Tens of Thousands of Daily Essentials Now Available to Prime Members in Baltimore and Miami
- Weak U.S. factory data suggest softer economic growth
- Containers on rail: China’s Next Big Opportunity in Supply-Chain Logistics
On the lighter side…
- Italian customs officers seize rare giant egg
- Bill sent out in 1969 returned to Maine water district
US-NAFTA freight trade value increased 4.5 percent in 2014, with trucks carrying 59.9 percent of freight during the year. Freight’s share of share of trade remained stable from 2013 but the longer term trend from 2004 shows a 3.7 percent decline in share. This decline in share is a result of increased trade movements by pipeline and vessel. The most notable 2013-2014 model shares changes were a 1.1 percent increase in pipeline imports from Canada, a 3.3 percent decrease in truck exports to Canada, and a 1.9 percent increase in truck imports from Mexico. Let’s hope that 2015 NAFTA trade remains resilient in the face of weakening economies overseas.
John Kemp penned a nice piece appearing on bakken.com. He lays out the premise that the transportation sector accounts for a larger percentage of overall oil demand than in the past. As a result, its use has a strong effect on overall demand. The article notes the market pressures and trade-offs that affect oil consumption levels. Lower oil prices are decreasing the relative importance of vessel fuel savings, while increasing the value of reduced journey times. Logistics firms are now more willing to make fast deliveries with lower consideration to fuel costs. And discretionary travel is also increasing. I agree with John’s premise about the role of transportation and oil, and the effects of its price on transportation activities. – He certainly cited the facts to support it. However, for this to remain true, overall economic demand must remain high. Put differently, the low oil prices must not be a reflection of lower demand. If so, supply must remain high enough to keep prices low for an extended period.
Amazon, the leading cause of America’s growing instant gratification disorder, has expanded its Prime Now service Baltimore and Miami. The residents of these cities will join New York City as potential customers for two-hour free delivery and one-hour delivery for $7.99.
US Manufacturing output fell in February. This was the third straight month of declines. Total industrial production was 3.5 percent below its level a year earlier. As I stated above in response to John Kemp’s article, lower oil prices provide benefits to the consumer and will have stimulating effects on demand, all else equal. I’m just concerned that all else may not be equal. Hopefully the decline in manufacturing is a short-term trend resulting from weather, a transiently strong dollar, or some other transient factor.
The World Bank released a research paper titled “Customer Driven Rail Intermodal Logistics…” The paper discusses the benefits that container shipping by rail could have on the Chinese economy if they adopt similar reforms to those in the US that have propelled the development of the US rail network. These changes could be provide particularly positive logistical impacts due to the strong growth of freight container traffic in China.
Lastly, be sure to check out this week’s global trade customs and compliance article. Italian customs officers seized a giant egg from an extinct elephant bird that used to live on the island of Madagascar. The declared value was $550, but reportedly the its real value is about $100,000. The customs officers proceeded to use the egg to make an omelet the fed the entire customs staff (just kidding).
This Week’s Video, Today’s Solar Eclipse