Archive for January, 2015

Cass Report Says 2014 was Best Year in the Last Seven Years

Friday, January 30th, 2015

 

Freight transportation increase

By Jeff Berman, Group News Editor – Logistics Management
January 15, 2015

Even with nearly matching declines in freight shipments and expenditures in December, the most recent edition of the Cass Freight Index report from Cass Information Systems indicated that 2014 ended up as the best year in freight transportation and logistics over the last seven years.

Many freight transportation and logistics executives and analysts consider the Cass Freight Index to be the most accurate barometer of freight volumes and market conditions, with many analysts noting that the Cass Freight Index sometimes leads the American Trucking Associations (ATA) tonnage index at turning points, which lends to the value of the Cass Freight Index.

Cass said that with both shipments and expenditures at their highest end of year levels since the beginning of the recession in 2007, 2014 saw a change in the timing of the traditional Peak Season, which usually spans from July to September, with retailers building up inventories ahead of time due in part to labor-related issues at United States-based West Coast ports. The situation at those ports has since significantly deteriorated, with myriad issues slowing port throughput and resulting in delays and off-loading of cargo to East and Gulf Coast ports, delayed deliveries of three weeks or longer out of West Coast ports, labor issues, chassis shortages and inefficient chassis distribution, larger TEU ships, and rail capacity issues, among other challenges, and the involved parties––the Pacific Maritime Association and the International Longshore & Warehouse Union meeting with a federal mediator to come to a resolution.

December freight shipments—at 1.078—were up 4.0 percent annually and down 6.3 percent compared to November. Shipments remained above the 1.0 mark for the 52nd consecutive month.

The slight sequential decline in December retail sales was a factor on the monthly shipment decline, although fourth quarter freight shipment volume hit its highest level since the onset of the recession in 2007, as railroads and motor carriers volumes posted solid annual gains. And with the port labor-related issues firmly intact in the fourth quarter, Cass said that led to an uptick in air cargo volumes in December.

Expenditures––at 2.473 in December––were up 3.6 percent annually and down 6.7 percent from November, which Cass said represents a mix of the decrease in shipment volumes and weaker spot prices along with declining diesel prices that spurred lower freight costs. And the volume decline eased capacity pressure, which was prevalent earlier in 2014, subsequently driving down spot market truck demand and spot prices.

Rosalyn Wilson, senior business analyst with Parsons, and author of the annual CSCMP State of Logistics report and contributor to the Cass report, wrote in the report that 2014 was the best year for logistics in seven years, with sustained growth in freight volumes and revenues, which was in line with projections she made at the CSCMP Annual Conference in San Antonio last October.

“The underlying economy started weak, with real GDP falling 2.1 percent in the first quarter, but strengthened through the year with a 5 percent growth rate in the third quarter,” wrote Wilson. “The freight industry did the opposite––starting strong and weakening somewhat towards the end of the year. This is an expected pattern, however¬¬––not an indicator of a downward turn. In fact, the industry’s performance in 2014 was markedly better than that of the previous two years. Freight rates have only recently begun to spike upward, especially spot market rates. Despite the gains in 2014, freight volume overall has not yet returned to pre-recession levels; however, costs to move the freight are substantially higher than 2006.”

Wilson expects market conditions to improve further in 2015, based on the improving economy and coming off of a strong 2014, and she expects freight volumes and carrier revenues to see steady growth, which stands as good news for carrier with thin margins, but not as good for carriers and shippers, whom will see higher rates in the form of increased goods costs. But she said there are also challenges, too, including increased shortages, costs and unionization of labor, a changing fuel market, credit availability, and global economic forces, among others.

Supply chain stakeholders, like Wilson, are largely optimistic about prospects for 2015, provided the current market dynamics remain in place.

A retail shipper whom declined to be identified told LM that if the West Coast port labor situation comes to an amicable conclusion, and the winter weather does not rear its ugly head as it did a year ago, it could set the stage for another solid year.

Category Transportation


Happy New Year!

Thursday, January 15th, 2015

 

Happy New Year

A big happy New Year to all our customers and stakeholders!!!

We are excited about increasing profits for our partners and assure them that their shipments will safely reach their customers.

To new opportunities and challenges in 2015!!

What are some of your new commitments and goals this year?

#americanwhse #distributingassurance #warehousing #distribution

Category Business