Retail up in May

The May spending pickup was broad-based, with increases seen at electronics stores, restaurants, sporting-goods shops, gasoline stations and online.

The Commerce Department reported that May retail sales, at $519.0 billion, were up 0.5 percent compared to April and up 3.2 percent annually, with total retail sales from March through May up 3.6 percent annually.

Non-store retailers, which is largely comprised of e-commerce activity, saw an 11.4 percent annual jump. Sporting goods, hobby, musical instrument, and books store sales of 4.2 percent annually.

The National Retail Federation (NRF) reported that May retail sales were up 0.5 percent in May on a seasonally-adjusted basis compared to April, and up 3.2 percent annually on an unadjusted basis. NRF’s retail sales figures do not include automotive dealers, gasoline stations and restaurants.

Home building declines 

Housing starts fell 0.9 percent in May from the prior month to a seasonally adjusted annual rate of 1.269 million according to the Commerce Department. That was a steeper decline than the 0.4 percent decrease economists had expected.

The report follows a drop in U.S. home-builder confidence in June, as builders reported concerns over rising construction costs and trade issues. The National Association of Home Builders housing market index fell to 64 this month from 66 in May, the trade group said Monday.

The bright spot was that residential building permits, which can signal how much construction is in the pipeline, rose 0.3 percent from April to an annual pace of 1.294 million. That was the strongest monthly rate of growth since December. The pace of starts in April was also revised higher, another positive sign.

Manufacturing rises slowly 

The Federal Reserve reports that U.S. manufacturing output rose 0.2 percent in May but is still down for the first five months of the year. Similarly, industrial production overall (the total output of factories, utilities and mining) increased 0.4 percent in May, but is down so far this year.

The Institute for Supply management (ISM) published their Purchasing Manager’s Index for May with the index coming in at 52, down from 52.8 in April. Any reading over 50 represents a growing factory sector; however, this is the lowest reading since October 2016.

Inflation is still tame

Inflation pressures in the U.S. economy appear to be mild, with falling gasoline and food prices mostly offsetting increased costs for consumer services.

The producer-price index, which measures the prices businesses receive for their goods and services, advanced a seasonally adjusted 0.1 percent in May from a month earlier according to the Labor Department. When excluding the volatile food and energy categories, business prices were somewhat stronger, up 0.2 percent from the prior month.

Declining prices for energy, including gasoline, food, and trade services kept broader inflation in check. Trade services measures changes in margins received by wholesalers and retailers.

Boxed in

In eCommerce, most products arrive in boxes. In terms of revenue, the global heavy-duty corrugated packaging market is projected to expand at an approximate compound annual growth rate of 5 percent during the forecast period according to a report on the “Heavy Duty Corrugated Packaging Market 2019-2029” by Future Market Insights.

The global heavy-duty corrugated packaging market size in 2019 is estimated to be over US $17 Billion.

Among board type, double wall board is estimated to be prominent in the market throughout the forecast period with market share of more than half in the heavy-duty corrugated packaging market. Features such as durability and extra padding offered by double wall boards ensure safety of heavy goods during transit.

Trucking sees a late spring lift after a disappointing May

The American Trucking Associations (ATA) said that decreased freight activity in recent months remained a key theme for May truck tonnage volumes. The ATA’s advanced seasonally-adjusted (SA) For-Hire Truck Tonnage Index for May, is at 114 (2015=100) fell 6.1 percent compared to April’s 121.8, which was up 7 percent over March.

Compared to May 2018, SA tonnage eked out a 0.9 percent gain, which ATA said marks its smallest annual SA tonnage gain going back to April 2017.

Cass Freight Index said May shipments is at 1.128, slipped 6 percent annually and were down 2.8 percent compared to April. This marks the sixth consecutive month that annual shipments were down. Freight expenditures in May, at 2.845, were down 1.08 percent annually and down 2.2 percent compared to April.

DAT Solutions reports that May spot truckload freight volumes fell far short of typical seasonal trends, according to the most recent edition of the DAT Truckload Freight Volume Index.

Looking at different segments, DAT reported the following readings, including:

  • 12 percent decline in full-truckload van loads moved on the spot market from April to May
  • 10 percent annual decline in van load counts, which account for 70 percent of all truckload freight
  • 8.3 percent decline in refrigerated (reefer) volumes compared to April and a 12 percent annual decline
  • 9.3 percent sequential decline in flatbed load volume, including heavy machinery and construction material, and a 3.1 percent annual decrease
  • The national average spot van rate, including a fuel surcharge, was flat at $1.80 per mile sequentially and down $0.35 annually
  • The average reefer rate, at $2.15 per mile, was up $0.01 compared to April and down $0.38 annually
  • The average flatbed rate, at $2.27 per mile, was down $0.05 compared to April and up $0.45 annually

DAT believes that June is shaping up to be a pivotal month for trucking.

This may well be the beginning of an upswing in volume as the number of truck posts on the spot truckload freight market jumped 14 percent during the week ending June 16. The increase is in line with expectations following CVSA International Roadcheck, the annual enforcement initiative, which tends to have a dampening effect on available capacity.

The national average spot rate for dry vans through June 16th was $1.90 per mile, 11 cents higher than the May average.

Rail volumes are still lackluster

The trend of declining U.S. rail traffic in 2019 continued in week 24. Railroads posted 527,989 carloads and intermodal units for the week ending June 15, a 5.4 percent decrease compared with the same week in 2018, according to Association of American Railroads (AAR) data.

Total U.S. carloads for the week were 257,385 units, down 4.6 percent, while intermodal volume was 270,604 containers and trailers were down 6.2 percent.

Only two of the 10 carload commodity groups that AAR tracks on a weekly basis posted increases during the week: Petroleum and petroleum products were up 1,528 carloads to 12,747; and chemicals were up 701 carloads to 32,431.

For the first 24 weeks of 2019 compared with the same period in 2018 U.S. railroads reported total combined traffic of 12,418,199 carloads and intermodal units, down 2.8 percent. 

At Wagner Logistics

There has been no slow down at Wagner as we continue our growth. We are presently relocating to a larger facility from Grand Prairie to Fort Worth in Texas almost doubling our size in that market.

In Kansas City we are onboarding significant business while focused on improving processes. Jacksonville remains a focus as we deal with a growing customer base.

The transportation team continues to serve clients well and in our dedicated segment, we continue to add equipment and drivers.

What can Wagner Logistics do for you?

If you are in need of a 3PL that will execute, please consider Wagner for any new distribution centers or a freight RFP. 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!