Vaccines are on the way
A second wave of Pfizer Covid-19 vaccine shipments have shipped as the initial distribution round winds down. Delivery of the first group of doses was scheduled to be completed on Wednesday, and inoculations were underway across the country with only a few disruptions in the supply chain.
Some doses destined for Alabama and California became too cold and weren’t delivered. The doses were returned to Pfizer, replacements were shipped and federal officials were working with the drug maker to determine whether vaccines that arrive colder than intended are still safe to use. The glitches highlighted the fragile nature of the vaccine, and the complicated logistics as medical personnel unpack the boxes and prepare doses.
Moderna’s vaccine is expected to be approved any day and AstraZeneca plus Johnson & Johnson expecting approval in January, there should be plenty to go around in the first quarter.
Small business worries
While we wait for herd immunity, one-quarter of small-business owners say they will have to close their doors if the economy does not improve in the next six months, according to a National Federation of Independent Business survey of its members. The forecast comes as entrepreneurs in many cities are dealing not only with renewed Covid restrictions, but also snowy and colder weather that limits their use of outdoor spaces.
Small businesses are the backbone of our country employing millions of people and contributing to our national GDP. The government must continue to do what it can to support these companies which are hobbled through no fault of their own.
COVID-19 Relief coupled with Transportation Aid
A new round of COVID-19 relief that includes transportation aid is on the congressional radar as the U.S. House and Senate prepare to adjourn for the year. We do not know what the final legislation will look like, but it will be coupled with a fiscal 2021 funding measure meant to avert a federal government shutdown.
A bipartisan COVID-19 aid framework unveiled last week is proposing $45 billion for transportation systems.
Logistics hiring spiked
Logistics hiring skyrocketed in November as transport and distribution companies staffed up on expectations for an unprecedented holiday-season rush.
Delivery, warehousing and trucking operators added a combined 131,400 jobs last month, according to seasonally adjusted preliminary employment figures released Friday by the U.S. Bureau of Labor Statistics, as businesses restocked inventories and ramped up e-commerce capabilities to meet surging online demand.
Those fields gained nearly three times as many jobs last month as in October and accounted for more than half of the increase in payrolls reported across all employment sectors for November.
Messenger and courier companies led November job gains in logistics with 81,900 new positions, as parcel carriers that deliver packages to homes and businesses added capacity to meet a pandemic-driven flood of online orders. It was the largest monthly increase for package delivery companies since September 1997, pushing their overall payrolls to more than 1 million for the first time.
Warehouses get more expensive
With office and retail space in the dumper over Covid, investors have poured money into industrial properties in 2020, spending more on U.S. warehouses than office buildings for the first time as social distancing pushes even more consumers to e-commerce.
Warehouses are seen as more resilient in the coronavirus economy, particularly as hotels and retail properties are walloped by the pandemic and offices face pressure from remote work.
The surge of investment is driving up prices, with industrial properties jumping 8.5 percent in the 12 months through October. E-commerce activity, which has climbed to record levels over the course of the ongoing pandemic due to increasing demand levels, has accounted for more than 71.3 million square feet year to date and headed up by 45.1 million square feet going back to 2019.
Retail sales step back in November
U.S. retail sales, a measure of purchases at stores, restaurants and online, dropped a seasonally adjusted 1.1 percent in November from the prior month, the Commerce Department said Wednesday. October sales were revised to a decline of 0.1 percent from an earlier estimate of a 0.3 percent increase. Sales were up by 4.1 percent in November when compared with the same month a year ago.
Restaurants, department stores and vehicle dealerships all reported sharp sales declines in November, with clothing and furniture purchases falling. Purchases of groceries and building materials increased, along with online sales.
The November and October drops marked the end of several months of growth in retail spending after sharp declines earlier this year when the coronavirus pandemic triggered widespread business closures.
The retail sales report and other readings on the U.S. economy suggest the recovery is slowing after a burst of growth over the summer.
Manufacturing recovers slowly
A seventh straight month of manufacturing gains helped drive a November rise in U.S. industrial production as the nation’s auto and parts plants increased output.
Industrial production, a measure of factory, mining and utility activity, increased a seasonally adjusted 0.4 percent in November from the prior month, the Federal Reserve said Tuesday, as both manufacturing and mining posted gains.
Manufacturing, the biggest component of industrial production, increased 0.8 percent in November, the Fed said. Production of motor vehicles and parts rose 5.3 percent.
The November rise in output followed a revised 0.9 percent increase in October, compared with a 1.1 percent initial estimate.
Capacity utilization, which reflects how much industries are producing compared with what they could potentially produce, rose to 73.3 percent in November from a revised 73.0 percent in October. Economists expected a 73.0 percent reading for November.
Current freight market
FreightWaves reports that national average dry van truckload spot rates fell 5.5 percent from last week’s year-to-date high of $3.07/mile, while contract and spot volumes softened across the board in major markets, though spot volume trends were considerably stronger on a market wide basis.
Relative capacity, as measured by an Outbound Tender Reject Index (OTRI) of 24.82 percent, is at roughly the same level as last week, which indicates that the softness in tenders (-5.7 percent w/w) is related to falling volumes and not capacity loosening substantially on a w/w basis. Nonetheless, capacity did ease again by 31 bps w/w and most major markets now have tender rejection levels equivalent to mid-August, the early stages of the trucking rally and well before the peak. Rejections are likely to see a bump over the next week as drivers opt for freight that gets them home.
However, on a brighter note, the most recent card spending data from Bank of America continues to signal that the consumer-driven trucking rally of the past several months appears to be in good shape. Overall spending last week was tracking 5.4 percent higher y/y while cumulative holiday season spending from Nov. 1 to Dec. 5 is running 19 percent above last year’s levels. This suggests that the final week or two of peak season should not see a sharp drop-off.
FreightWaves also says dry van and reefer outbound tender rejection rates have picked back up slightly to 25.15 percent and 40.90 percent, respectively, over the past few days, but freight volumes have remained flat. Reviewing the week-over-week (w/w) changes in outbound tender rejection rates, multiple markets across the nation have seen slight increases in outbound tender rejection rates, which could be a signal that rates are starting to pick back up as we approach the Christmas holiday.
The current SONAR estimated dry van truckload rate per mile in the lane is $2.98, which is 13 percent higher than the door-to-door rail intermodal spot rate in the lane, indicating that the market dynamic between truckload and intermodal is in line with historical norms
DAT Solutions reports that in the week ending December 14th, truck posts outpaced load posts last week, a signal that capacity on the truckload spot market has loosened. That's taken pressure of freight rates, with national average rates largely flat for vans and flatbeds, and down for reefers. The most recent DAT graphic is below.
Rail Intermodal picks up speed
U.S. freight railroads reported traffic rose 4.9 percent to 546,209 carloads and intermodal units for the week ending Dec. 12 compared with the same week last year, according to Association of American Railroads (AAR).
Railroads hauled 238,193 carloads for the week, down 2.2 percent, and 308,016 containers and trailers, up 11.1 percent, AAR officials said in a press release.
At Wagner Logistics
In my final blog of 2020, I reflect on a tough but good year at Wagner Logistics. We managed through the craziness of Covid thanks to Wagner’s leaders, Human Resources, and Safety groups.
A special thank you goes out to all our employees who continued to come to work and be safe while caring for our clients and their customers.
If there is a transportation RFP or distribution project on your horizon for 2021 please let me know. We have an extensive history of 74 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 20 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!