Supply Chain Blog
With all the trouble in our nation, the economy is trying to recover.
The Bureau of Economic Analysis tells us that real disposable personal incomes jumped 13.4 percent in April after falling 1.8 percent in March. Wages and salaries for employees contracted 8 percent on top of March’s 3.5 percent drop. The money came from two government sources: stimulus checks and unemployment insurance. The latter jumped by more than 500 percent in one month while the former increased by 491 percent.
Despite these shocking numbers, they will eventually support the economy through spending even if it didn’t happen during the month the money was doled out.
As for the protests that have erupted over the past week, I stand on the side of Dr. King and peaceful displays of protest as we strive for equality. For me, I’m keeping the faith that our great nation will overcome these challenges.
As for the economy, let’s get into some numbers.
It is easy to slip into utter despair at this point but remember that this remains an artificial recession as the government hit the “off switch”, it was not caused by an economic bubble burst. This one will end to some degree when the business community can restart. There will be a recovery, but the real question is how much of the damage will be considered permanent.
For us at Wagner Logistics, we are a resilient group that has weathered a lot over our 74 years in business. 100 percent of our focus is keeping our employees safe, our customers operational, and our financial health rock solid. We adapt.
Keeping positive in the face of an unattractive future isn’t easy as we see the economic destruction, bankruptcies soar and American consumers, the lifeblood of economic vitality in America, psychologically scarred from the impact of the pathogen that has infected more than 3.7 million people (1.2 million in the U.S. alone).
Freight volume has tanked for truckers and railroads with spot pricing fell off the cliff. Expect smaller motor carriers to leave the market as the rates fall below the cost of operating. Many companies can hang on due to the Paycheck Protection Program money received from Uncle Sam.
Let’s look at the numbers. The reporting is longer than usual but there’s a lot of info available.
The global economy is in a meltdown, we find ourselves in the worst black swan event ever experienced in modern times. The U.S. flipped the off switch on the economy, and we have gone from historic low unemployment to a new high, almost 20+ percent by the time all the numbers come in.
As motivation to retain employees, Congress has added $470 billion in aid with $310 billion of that to go to the Paycheck Protection Program (PPP) which was created by the CARES Act stimulus law and offers guarantees for forgivable loans to small businesses if a majority of the money is used to retain employees.
Despite these efforts, plants have shuttered, retailers without strong eCommerce operations are failing, and every segment of the travel and hospitality/service industry is shattered. Likewise, the freight market is in free fall and oil prices are negative.
At Wagner Logistics, we are fully operational and blessed to have strong customer business allowing us to persevere through this economic disaster. Hard work and perseverance will allow Wagner to survive and thrive as we have over the last 74 years.
Let’s look at the numbers.
First, I sincerely hope that everyone reading this blog is healthy and safe.
Federal and local governments have pushed the economic pause button in the U.S. as the COVID-19 outbreak impacts U.S. businesses as well as the entire global economy.
At Wagner Logistics, we are continuing to operate safely doing our part to keep the national supply chains fluid under the "essential business" exemption as a transportation and logistics service provider to our customers.
I am seeing replenishment efforts surging. DAT reports that the demand for trucks is rising as the national average van load-to-truck ratio last week was 3.5, up from 3.2 the previous week. That’s the eighth straight week of rising ratios. More dramatically, the average ratio has more than doubled (up 150 percent) since the same week in 2019.
Clearly, the trucking industry is being tested during these difficult times. From lack of facility access for drivers to wash their hands, lack of parking, wait times stretched for loading/unloading, to the unbalancing of lanes due to emergency one-way runs, truckers are making it happen under dire circumstances.
Most economic data were collected before the full brunt of the outbreak hit in early March, so a rearview exercise is almost meaningless. Most of the nation is in lock down mode, I’m expecting a recession followed by a strong recovery in Q3 & Q4. The enormous two trillion dollars the government is injecting will be a significant help.
Let’s look at the numbers.
The world is on edge due to the coronavirus pandemic. I’m trying to be prepared and realistic but also optimistic. I’m allowing myself a degree of excitement about things I’ve been looking forward to, even if they are delayed a few months.
Regardless, people have been clearing store shelves in parts of the country as if they were preparing for a hurricane. Whether or not one believes the virus is significant threat to national health or not, the reaction is real.
This mass purchasing has spiked trucking volumes in the U.S. as the national Outbound Tender Volume Index increased 9.3 percent last week to hit a level normally only seen around a holiday period in the summer or winter according to FreightWaves.
Stay healthy as we look at the current landscape.