Supply Chain Blog

Change

Dear Friends,

The American electorate shocked the country and the world with the election of Donald Trump this week. How will this affect the logistics industry? 

We must wait to see how the rhetoric matches up with legislation but in areas such as international trade, we can assume that there will be a review of NAFTA and TPP trade agreements for fairness. 

I hope advisors will remind him that international trade is an important piece of our nations GDP and to lose this income has far-reaching negative consequences. Port authorities and steamship lines will be watching closely along with international freight forwarders. 

Truckers, railroads and airlines will be watching infrastructure bills that will surely pass through Congress. 

All businesses will be watching the striking down of many regulations affecting their respective Human Resources departments in the areas of pay and benefits. A more business friendly NLRB will be welcome. 

Of course, Trump will have to find a way to pay for all of this so we will be watching the long promised tax reform plan, which, with control of the both houses in Congress should be easier to pass. 

These are uncertain times and I for one am praying that our new President gets it right. 

Last and certainly not least, I thank all of our nation’s veterans for their service, commitment to our county, and the sacrifices that they and their families have made. You are what is best about the United States of America. 

Now, let us look at what is happening in the economy and the world of logistics. 

Third quarter ends on a high note 

Regardless of politics, consumer spent in September as incomes grew creating a little momentum going into the fourth quarter. The Commerce Department said consumer’s purchases rose 0.5 percent for the month after a 0.1 percent drop in August. Consumer spending drives 70 percent of our economy. 

As incomes slowly rise, inflation is beginning to occur which strengthens the Federal Reserve’s case for a small rise in the short-term bank lending rate. 

The third quarter ended on a stronger note as the GDP rose to an annualized 2.9 percent growth rate. Household purchases grew 2.1 percent.  

Manufacturing growth 

The Institute for Supply Management’s (ISM) monthly Manufacturing Report shows that manufacturing activity grew for the sixth time in the previous seven months. The Purchasing Managers Index rose to a 51.9 reading. A reading above 50 signifies growth. 

New orders were positive at 52.1 as well as production 54.6, and employment 52.9. Inventories fell 2 percent to 4.6 as manufacturers work down their stock. 

Productivity rises - finally 

U.S. worker productivity grew at the best rate in two years during the third quarter, turning the tide on what has been a bad decade long trend. Non-farm business productivity increased at a 3.1 percent seasonally adjusted annual rate in the quarter. 

The Labor Department said the change reflected a strong increase in output while hours worked showed slight growth. 

Weak business investment has been blamed on restrictive government regulations, uncertainty about future taxes, and high benefit costs. With a new administration in place, perhaps certainty will help give companies the confidence to invest along with increased productivity. Productivity gains are a critical ingredient in determining the rate of growth for worker pay, consumer prices and the economy as a whole. 

Consumer spending rises 

The Commerce Department reports that accounting for price changes, real spending rose 0.3 percent in September while personal income increased 0.3 percent, up from 0.2 percent in August and consumer spending in total grew 2.1 percent. 

The gain in spending was led by a 1.3 percent jump on durable goods (items designed to last at least three years). Spending on non-durable goods rose 0.6 percent but that was largely caused by an increase in September gas prices. Services spending rose 0.3 percent for a second consecutive month in September despite a weather-related 4 percent drop in spending on household utilities. 

Truckload rates rising  

In the week ending, November 5th the average van rate jumped five cents per mile according to DAT Solutions. At $1.70 per mile, the average van rate was just one cent below year-ago levels. For reefers, rates jumped seven cents from the previous week to an average of $1.97 per mile. Flatbeds held steady at $1.91 per mile, close to where it been the past month. 

Available spot market freight increased 4.8 percent and the average cost of diesel fuel declined one cent to $2.47 per gallon. 

Dry van load posts rose 7 percent and truck posts dropped 2 percent for the week setting up the higher pricing.

Railroads downward trend continues

U.S. railroads logged a 3.2 percent decrease in carload and intermodal traffic last month, compared with October 2015, according to the Association of American Railroads (AAR). 

Carload traffic for the month fell 5.1 percent, while intermodal traffic dropped 1.2 percent compared with a year ago. Combined U.S. carload and intermodal traffic fell 3.2 percent to 2,142,814 carloads and intermodal units from October 2015. 

A strong grain harvest drove that carload category up 6 percent. Coal loads fell 7.6 percent and chemicals dropped 3.1 for the month. 

At Wagner Logistics 

At Wagner we are gearing up for a strong Black Friday and Cyber Monday order surge as the thousands of retail displays we assembled are on their way to retailers. 

Our three new distribution centers opened over the last 120 days are functioning well and we have others in planning. Systems upgrades are ongoing as is EDI implementation. 

The Wagner transportation group has been adding clients as we roll out new features in our TMS. 

These are exciting times at Wagner and we hope to work with you on any upcoming distribution warehousing projects or transportation RFPs. With 70 years of business experience behind us, we say “Bring It” every day!

Have a great day, 

John Wagner Jr. 

 

About Wagner Logistics

Wagner Logistics has been honored 15 years in a row by Inbound Logistics as a Top 100 3PL provider, we offer dedicated warehousing, transportation management, packaging and assembly operations across the United States with over 4,500,000 sq. ft. Current offices include Jacksonville FL, Cleveland OH, Pine Bluff AR, Dallas, TX, Omaha, NE, Clinton, IA, Kalamazoo, MI, Charlotte, NC, Memphis, TN, Edgerton, KS, and Kansas City MO and KS. We provide genuine customer service to our customers and our superior onboarding process will make your customer’s transition seamless. We work tirelessly to find innovative solutions to reduce supply chain costs while increasing your speed-to-market with our award winning technology. 

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