Supply Chain Blog
Hi Friends,
The voting is over and while we wait for the run-off election in Georgia to determine control of the Senate, it appears the Democrats will control the House and Executive branches of government.
As I’ve said before, the U.S. economy is proving to be surprisingly resilient despite the pandemic that is picking up steam prior to the vaccine roll-out. Retail sales continue in the positive column while industrial production rises slightly. The service sector continues to suffer due to continued restrictions on restaurants and other establishments.
Despite the pandemic, the Biden administration will inherit the basis of a robust economy poised to rebound once Covid gets under control in 2021.
Capacity constraints continue to be a headwind for shippers as freight rates remain elevated. Industrial real estate (distribution center properties) continue to ask expensive lease rates and people are reluctant to go to work due to the virus and school shutdowns.
While all of this is happening the nation approaches Thanksgiving. A time when we traditionally gather with our families and friends to give thanks for our blessings. No doubt the virus will spread accordingly if people are not cautious.
Let’s look at the numbers.
Hi Friends,
As I write this installment of my blog, we have no clear winner in the race for President although it looks like the Republicans will hold on to the Senate and pick up seats in the House. Record turnout by voters in a pandemic make this a historical election regardless who comes out on top at the White House.
Whomever wins the Presidency, they will have a pretty good economic foundation in 2021 as a vaccine should help return the country to some semblance of normalcy. If the Senate moves R, I expect a smaller stimulus package post-election.
In the meantime, the logistics marketplace is going nuts as truckload capacity remains tight with scarcity driving up freight rates. Warehouse costs continue to rise with record absorption of new facilities coming online.
Labor costs remain high and workers hard to find. It strikes me as odd that with a high unemployment rate, staffing challenges remain. I can only attribute this to fear, generous unemployment benefits, or virtual schooling creating childcare issues. Regardless, with all retailers and parcel carriers looking to add hundreds of thousands seasonal workers, it’s going to be an immense challenge to attract and keep the volume of people that are needed.
Let’s look at the numbers.
Hi Friends,
As we inch closer to the election, I’m seeing pandemic fatigue, fighting in Congress over further relief, and a World Series being played on a neutral field for the first time in history. A bizarre year indeed.
Meanwhile consumers are spending while freight volumes have returned to 2019 levels. Carrier capacity remains tight and parcel carriers are warning of delays. Manufacturing took a step back in September after growing in the prior month.
Half of the people who lost their jobs in the government led shutdown have been rehired leaving millions still unemployed. A slow employment recovery is underway.
Apparently, holiday shopping has started as Amazon Prime members spent. Digital Commerce 360 estimates that Amazon Prime Day 2020 sales hit $10.4 billion, an increase from $7.16 billion (+45.2 percent) over Prime Day 2019.
Let’s look at the numbers.
Hi Friends,
As we kick off the fourth quarter jobs are slowly returning. The Bureau of Labor Statistics reported that the economy created 661,000 jobs in September. Over the last five months businesses have added 11.4 million people to payrolls, a record for such a short period of time. However, we have only recouped about half of the jobs lost in March and April.
For-hire trucking employment, including both truckload and LTL fleets, rose by 4,600 in September after increasing by 10,000 in August. Over the last five months, industry employment has increased by 23,800. So how does this match with the current tight capacity situation? Because the industry shed nearly 97,000 jobs in March and April. As a result, employment levels were off nearly 5 percent from September 2019.
While this DOL report doesn’t give industry employment by occupation, the majority of jobs in the industry are truck drivers. Industry employment is still off 81,000 since the peak in July 2019. Fleets are in dire need of drivers.
The short story here is that the transportation capacity challenge is real, and pricing continues to climb accordingly. Without further stimulus to business and individuals there is the real possibility of this economy stalling.
Hi Friends,
The number of applications for unemployment benefits has held steady in September at just under 900,000 a week, as employer uncertainty about the economic recovery six months into the coronavirus pandemic continued to restrain hiring gains.
Jobless claims increased slightly to 870,000 last week from 866,000 a week earlier, according to Thursday’s Labor Department report. The totals remain well above pre-pandemic peaks but are down significantly from nearly seven million in March.
While employment holds steady, the freight market continues to sizzle. Retail is holding its own and manufacturing is finding its legs. The total business inventory-to-sales ratio, which includes manufacturing, wholesale, and retail, fell to the lowest level in July (data is lagged one month) since November 2014, meaning inventories are lean, which is helping truck freight volumes.
Let’s look at the numbers.