Supply Chain Blog

Retail sales improve while the economy inches upwards

 

Dear Friends,

It’s been a productive couple of weeks since I last wrote. I have traveled to Washington, D.C. for the IWLA Government Affairs Fly In and attended the Tompkins Supply Chain Leadership Forum in Durham, NC. 

In Washington members of the International Warehouse Logistics Association (IWLA) lobbied congress on a number of matters. We encouraged them to ask the administration to fill the vacancies on the NLRB, we supported 33’ pups for LTL carriers and spoke with the staff of the Senate Transportation Committee about rail demurrage. Several other issues were discussed it, was a successful yet crazy time in Washington with the health care vote going on. 

At the Tompkins Forum, it was a mind expanding series of speakers on supply chain innovation, trends, leadership and expanding technologies. Digital disruption is a threat. 

Looking at the current news it appears the economy is continuing its slow progress. 

Retail bounces back 

After taking a 0.1 percent dip in March, retail sales moved into positive territory in April rising 0.4 percent according to the Commerce Department. Year-over-year, retail sales improved 4.5 percent. 

Sales of gasoline jumped 12.3 percent and non-store retailers saw an 11.9 percent gain in sales. Non-store retailers, which make up roughly one-tenth of overall retail sales, have registered double-digit percentage growth on a year-over-year basis in each of the past 12 months. 

Online retailers had a strong sequential bump in sales from March to April of 1.4 percent. The traditional retailers experienced a 0.2 percent drop in sales for April versus the previous month. 

Inflation returns 

The Commerce Department also pointed out that inflation has returned at both the retail and wholesale levels. The Consumer Price Index (CPI) increased 0.2 percent in April and is up to 2.2 percent in the trailing twelve months. 

Core prices were up 0.1 percent in April when one excludes the food and energy sectors. 

The Producer Price Index (PPI) gained  0.5 percent in April followed a 0.1 percent decline in March. Energy prices gained 0.8 percent in April following a March drop while prices for food rose by 0.9 percent for the second consecutive month. Prices for services moved higher by 0.4 percent. 

New Factory orders rise   

U.S. factory orders increased in March while shipments declined but orders for core capital goods were revised higher. 

New orders for manufactured goods increased 0.2 percent from February for the eighth increase in the past nine months and followed an upwardly revised 1.2 percent February gain. Shipments fell 0.1 percent in March from February, the first decline following seven consecutive monthly increases. 

Commerce said orders for non-defense capital goods excluding aircraft increased 0.5 percent and shipments of these goods increased an upwardly revised 0.5 percent. 

Inventory ratio is stable 

The total supply chain inventory-to-sales ratio, which includes retail, wholesale, and manufacturing, remained steady at 1.35 in March. It is noted that this data lags by a month.   

March’s level has been consistent since December 2016 and is considered stable.  The supply chain is making slow progress on clearing out inventories and the more this measure corrects the better for transportation companies. 

Employment grows 

The Department of Labor reported that total U.S. payrolls grew a net 211,000 jobs in April after a modest 79,000 increase in March. Over the first four months of the year, payrolls have increased an average of 184,500. The unemployment rate fell to 4.4 percent in April, the lowest level since May 2007. 

Total transportation and warehouse employment increased by 3,500 in April with the for-hire trucking employment accounting for nearly 30 percent of total transportation and warehouse employment. Compared to April 2016, for-hire trucking payrolls were up 1.7 percent or 24,500 positions. 

Positive trend for trucking 

The Truckstop.com Market Demand Index remains up 91.9 percent year-over-year while DAT Solutions load-to-truck (LTT) ratios were mixed last week. Year-over-year these numbers still remain strong. The dry van LTT decreased from 3.4 to 3.3 loads per truck (up 83 percent y/y) as load posts decreased 3 percent and truck posts stayed flat.

On the pricing side, DAT spot rates grew week-over-week and were positive year-over-year. In the week ending May 6th the national average dry-van spot rate was $1.70 per mile, up 3 cents from $1.67 the week before. This represents a rise of 8 percent versus the same week in 2016. 

The less-than-truckload carrier Old Dominion Freight Line reported 9.1 percent increased net income on $65.6 million of first quarter revenue. Clearly the leader in the LTL segment. 

UPS hit a home run reporting net income of $1.158 billion across its three business segments. Total revenue increased 6.2 percent to $15.3 billion. UPS credits a 22 percent increase its supply chain and freight segment operating profit, strong performance in the international segment and solid results in the domestic segment, plus the favorable tax impact of adopting a new stock compensation accounting standard. 

Rail slowly improves 

Overall total unit volume on a quarter-to-date basis was up 0.5 percent in comparing the second quarter to first quarter.  On the low end was CSX, down 1.2 percent while the strongest performer, CN was up 13.8 percent. 

This quarter, intermodal carloads increased 1.7 percent with low truckload rates competing with intermodal.   

Commodity carloads were down 0.5 percent this quarter compared to the previous quarter. On a year-over-year basis, the second quarter is up 9.1 percent. The largest increases were in metallic ores (up 31.6 percent), crushed stone, sand, and gravel (up 27.8 percent), and coal (up 23.9 percent). The largest decreases were petroleum products (down 9.8%) and primary forest products (down 8.0 percent). 

At Wagner Logistics 

Congratulations to our transportation brokerage team as they continue to grow with new business and expanded opportunities from our current customers. 

On the distribution center side of our business, the team is working hard on process improvements and training initiatives. Systems improvements are continual as the IT team works through a progressive task list.  

Are you considering a change in your distribution network? Looking for trucking help in a lane? Interested in securing dedicated truck capacity for closed loop runs? If so please give me a call. Wagner has been in business for 71 years and we want to hear about your challenges. As we say everyday, Bring It!

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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