Q1 GDP revised, slightly

The Bureau of Economic Analysis reported that the real, or inflation adjusted, first quarter gross domestic product (GDP) increased 3.1 percent, revised downward from the previous estimate of 3.2 percent. Still, much of this gain was due a spike in local and state government spending, as well as, a build in inventories. Expect these effects to weaken in the second quarter.

The fourth quarter of 2018 estimate for gross domestic income (GDI), a measure to gauge economic activity based on income, was revised downward from 1.7 percent to 0.5 percent.

Manufacturing continues to slow

The Institute for Supply Management said that its index of factory activity slipped to its lowest level since October 2016, falling to 52.1 in May from 52.8 in April. Anything over 50 signifies expansion while under 50 is contraction.

The manufacturing index is partly driven by sentiment, so it doesn’t always accurately reflect what is really happening. Declines in the stock market, for example, can push it lower even as the economy chugs along.

Consumer confidence is still strong

The Conference Board said its index of U.S. consumer confidence rose to 134.1 in May from 129.2 in April. The measure is now close to the 18-year high it recorded last fall.

The report means that consumers are unfazed by the prospect of a prolonged trade dispute with China, at least so far. Coupled with the hot labor market and growing economy, suggests a possible rebound in consumer spending in the weeks and months ahead.  

Retail Earnings Season

The last two weeks were the peak period for retail earnings reports and it was ‘the best of times, it was the worst of times”.  Walmart, Home Depot and Target were big winners.  Lowe’s, Kohl’s, Canada Goose and Abercrombie and Fitch were big losers.  Additionally, ASCENA announced that they are closing all of their 650 Dress Barn stores.

The general trend is that companies who are embracing the ‘New Retail’ – the integration of online, offline logistics and technology will thrive and then there is everyone else.  This is not the retail apocalypse that some are calling it, rather it’s a time of ‘retail renaissance’ where disruption is thinning the herd of store counts.

Home price growth slows

Home price growth sputtered in March, the latest sign that lower mortgage rates and a booming economy are doing little to boost prices during the spring selling season.

The S&P CoreLogic Case-Shiller National Home Price Index measures average home prices in major metropolitan areas across the nation. The index rose 3.7 percent in the year ending in March, down from 3.9 percent the prior month.

After years in which housing costs grew much faster than incomes, home prices are now growing closer in line with wages, but affordability remains a challenge for many buyers.

Current freight market

Spring shipping season in full swing, but freight prices continue to lag. Demand for moving consumer products, industrial parts and other goods have been pulling back.

Truckers are seeing low rates at a time when their costs for equipment and drivers continues to climb. This is putting many carriers in a vice as they must keep their equipment moving.

Just ahead of the peak shipping season between July and September, spot pricing (freight not moved under contract rates) was down 16 percent in April compared with the prior year, according to online freight marketplace DAT Solutions.

The Cass Freight Index for shipments dropped 3.2 percent in April, the fifth straight month in negative territory. Cass Information Systems Inc., which handles freight payments for companies and produces the monthly index, says the weakening numbers could signal a possible broader economic contraction.

I remind you that last year’s extreme freight market set an unrealistic high bar for 2019 don’t for one minute think we are in a freight recession. Compared to 2017 we are doing okay.

In May, the national average hit $1.80 per mile, which is 1¢ lower than the April average according to DAT Solutions.

Most recently the dry van load-to-truck ratio jumped during the holiday week ending June 2nd moving up 45.4 percent and spot rates moved up 3.2 percent.

Railroading slow

Railroad volumes declined in each full month from February to April, according to the Association of American Railroads. So far this year, only petroleum and petroleum products among railroads’ major commodities have increased from a year ago.

U.S. rail volumes tumbled 6.7 percent for the week ending May 25 as slumping intermodal volumes dragged total volumes lower.

U.S rail operations originated 427,966 carloads and intermodal units that week, according to the Association of American Railroads. Of that, U.S. carloads totaled 259,953, a 5 percent drop from the same week in 2018, while intermodal containers and trailers fell 8.3 percent to 268,103 units.

Meanwhile, year-to-date declines were more tempered. Total U.S. volumes fell 2.3 percent to 10.9 million carloads and intermodal units. Of that, U.S. carloads were down 2.3 percent to 5.3 million carloads, while intermodal units were 2.2 percent lower, at 5.6 million containers and trailers.

At Wagner Logistics

At Wagner, we continue our growth as we on-board new business. New lift trucks, racking and systems have become the norm. Our solutions group continues to evaluate new technology to make the picking process more efficient to drive productivity and quality.

We are making good use of our business intelligence tool and pulling together useful information for customer and internal use.

Our freight business remains strong and more customers are adopting Wagner’s parcel system and competitive pricing.

What can Wagner Logistics do for you?

If you are considering new distribution centers or a freight RFP I hope you will give Wagner an opportunity to serve you.  We have an extensive history of 73 years of service to our customers and would love the opportunity to collaborate with you.

As we say every day, Bring it!

Have a great day,

John Wagner Jr. 

About Wagner Logistics

Wagner Logistics was founded in 1946 on the principle that every customer is a big deal and that continues to pervade our mentality, producing a superior customer experience. The company began in trucking and remains dynamic offering top-notch transportation, dedicated warehousing and robust fulfillment services. We strive to produce innovative solutions, in addition to our superior onboarding process which makes transitions seamless, and have been honored 18 years in a row by Inbound Logistics as a Top 100 3PL. Our customers drive our entry into new geographic markets, technological advances and ever-changing distribution challenges. Where do you want to be? Wagner says, Bring It!