Retail sales fell in February

Ahead of the pandemic the U.S. was in relatively strong standing with positive consumer sentiment.

The Census Bureau reports that retail sales decreased 0.5 percent in February from January but added 4.3 percent over February 2019. Much of the loss was in autos and gasoline stations, which fell 0.9 percent and 2.8 percent from January, respectively. Core retail sales, which excludes autos and gas, dropped 0.2 percent in February, but increased 4.4 percent from a year earlier.

The retail world’s response is rapidly transforming the sector’s supply chains. U.S. clothing and mall retailers from J. Crew Group Inc. to Nike Inc. are closing thousands of stores across the country for two weeks in unprecedented moves to stem the growth of the pandemic. Grocery stores and other sellers of consumer staples are under growing strains from panic buying and shortages of some goods.

The outright closure of clothing retailers and other stores may echo more broadly across transportation and distribution networks as companies redirect or suspend logistics operations. Many stores say they are directing consumers to their websites, where their capacity to fulfill orders is now being tested.  E-Commerce sales are unlikely to fill the void in any case, as many retailers get 75 percent of their revenue from their stores.

Manufacturing up slightly in February

The Federal Reserve reported that manufacturing output edged up 0.1 percent in February, nearly offsetting January’s 0.2 percent decline. February’s index was above the average for 2019 but was off 0.2 percent from a year earlier and marked the 8th consecutive year–over-year decrease.

Disruptions at Boeing Co. continued to hold down overall factory output.

Home sales and new home construction surging

The Census Bureau reports that new home construction jumped 39.2 percent in February compared with a year ago, assisted by low mortgage rates. Single family starts and multi-family starts added 35.4 percent and 47.6 percent over February 2019, respectively. One would expect this growth to moderate as consumers’ fear of COVID-19 limit construction activity. 

Sales of previously owned homes hit the highest monthly pace in 13 years in February, but it’s expected sales will plunge in coming months as the coronavirus pandemic roils the economy.

Mortgage rates have been hovering at their lowest levels on record. Cheap borrowing costs have started luring more home buyers in recent months, after a long stretch when a shortage of affordable homes kept many on the sidelines despite low unemployment and a strong economy.

Jobless numbers explode

A record 3.28 million workers applied for unemployment benefits last week as the outbreak hit the U.S. economy, marking an abrupt end to the nation’s historic run of job growth. Prior to the pandemic hitting the U.S., jobless claims were hitting between 211,000 and 280,000 per week.

The second quarter could see the unemployment rate move from 3.5 percent to 30 percent. This is a historic “black swan” event and there really isn’t a play book for it. While the President would like to restart the economy by Easter it could last through mid-May.

Workers wanted

Amid this crisis some companies are continuing to hire and paying something akin to hazard pay. Walmart is raising pay in its e-commerce warehouses with a temporary raise boosting starting wages for those workers to $15 to $19 an hour.

Walmart said it aims to hire 150,000 additional workers, mostly in its warehouses. Amazon.com said it planned to hire an additional 100,000 people in the U.S. and raise pay by $2 an hour through April. Target Corp. temporarily raised hourly wages by $2.

Trucking market improves

Trucking bankruptcies continue as the latest victim is family-owned Beaver Express Services of Woodward, Oklahoma. The 77-year LTL company called it quits blaming the coronavirus outbreak, soaring insurance costs and oil prices plunging to around $32 per barrel in March creating the “perfect storm” that forced the company to shutter operations.

The pandemic is whipsawing the trucking industry, as retailers clamor for delivery of food and household staples while lockdowns aimed at curbing contagion shut other businesses, leaving rigs empty on the return trip.

Drivers as well are facing new difficulties, including closed roadside eateries, customers wary of letting them in and a general lack of sanitizer and hand wipes.

Trucking shipments to grocery and discount stores are soaring, growing more than 50 percent last week from the same week last year as retailers rush to restock depleted shelves. Truckload carriers are charging more to drive into regions of the United States with high coronavirus infection rates and embargoing others.

Weekly average wait times across the United States are at 159 minutes, a record level.

Some markets are struggling with congestion more than others: wait times in Atlanta have reached 277 minutes; Oklahoma City is at 297 minutes; and trucks in Philadelphia are waiting an astonishing 322 minutes to be loaded and unloaded.

DAT Solutions reports that in the week ending March 22nd those urgent orders of retail goods drove spot rates up for van and reefer equipment.

With supply chains strained by the impact of the COVID-19 coronavirus, spot truckload rates rose for all three equipment types.

  • Van: $1.85 per mile, up 3 cents from last week and 6 cents higher than the February average
  • Refrigerated: $2.16 per mile, up 5 cents from last week and 7 cents higher than February
  • Flatbed: $2.20 per mile, unchanged from last week, and up 5 cents compared to February

Railroad traffic woes continue

U.S. freight-rail traffic tumbled 8.6 percent during the week ending March 21 compared with the same week in 2019, according to Association of American Railroads (AAR) data.

The impact of the coronavirus pandemic may be influencing rail traffic patterns, as railroads logged 224,048 carloads, down 5.4 percent, and 235,918 intermodal containers and trailers, down 11.4 percent during the week.

For the first 12 weeks of 2020 compared with the same period in 2019:

  • U.S. railroads logged 639,556 carloads and intermodal units, down 7.7 percent;
  • Canadian railroads posted 1,698,008 carloads and intermodal units, down 2 percent; and
  • Mexican railroads reported 443,956 carloads and intermodal units, up 3.5 percent.

At Wagner Logistics

We are focused on meeting health and operating challenges while continuing to serve our customers through navigating one of the most unique challenges of our lifetime. Like a lot of companies, many of our home office staff is working from home conferencing via video. Wagner Logistics is fully operational.

Our transportation group is extremely busy moving loads as this surge of traffic and remains responsive to those needing to move freight.

If the Wagner team may assist you during these difficult times, please ask. We are a phone call away.

What may Wagner Logistics do for 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!