Written by Wagner Logistics' Chief Customer Officer John Wagner Jr.

Dear Friends,

 

The Labor Day holiday upon us, kids are back in school, vacations are over, and businesses are focus on a strong finish in the third quarter.

Worries about China, tariffs, politics, hurricane Dorian, a volatile stock market and the economy abound. Fortunately, despite these worries, consumers still have confidence in this economy.

A survey of consumer confidence index fell slightly to 135.1 in August from a revised 135.8 in July, according to the Conference Board. The index remains close to a 19-year high. The post 2008 recession peak was 137.9, set last October.

There is little chance of a recession with consumers spending (July retail up 0.7 percent in July) and confidence. It bodes well for the freight markets as we head into the holiday season.

Dear Friends,

 

While manufacturing slows and Wall Street frets over the inversion of bond prices, shoppers continue to boost the American economy.

The labor market remains our economy’s main source of strength. Employers have continued to add jobs, unemployment was 3.7 percent in July and wages are growing. All bode well for continued spending by American consumers.

The Labor Department says, that the cost of labor has continued to rise, a plus for workers’ paychecks. Unit labor costs grew at a 2.4 percent rate in the second quarter.

Meanwhile, truckers’ costs are rising, putting stress on carriers potentially leading to bankruptcy as freight pricing remains low.

Let’s look at the numbers.

Dear Friends,

July is in the rear-view mirror and the economy seems to be flowing as consumers spend and manufacturing treads water. The freight market also seems to be perking up.

A combination of lost capacity due to carrier bankruptcies and higher tender volume from shippers, I would expect to see spot rates begin to creep up over the next few months.

Despite what the public is hearing from the 25 candidates for President, the economy still enjoys low employment, rising wages and GDP growth. Let’s look at the numbers.

Dear Friends,

The U.S. consumer is keeping the economy moving forward as retail purchases rose 0.4 percent in June. Production at manufacturers also rose 0.4 percent beating expectations.

While consumer spending represents about 80 percent of our nations GDP, business spending and manufacturing remain the soft spot due to tepid global demand and trade policy concerns.

On the freight side of the economy the future remains cloudy as ACT Research showed two quarters of negative growth and DAT reports a 50 percent decline in spot freight moving through their marketplace. This economic contraction in the freight market is across all modes. Smaller motor carriers are starting to drop out of the market which should ease some of the overcapacity challenges.

Let’s look at the numbers.

Dear Friends,

As I write this, Independence Day is tomorrow. The day for us to relax with family, friends and be thankful for the many freedoms we enjoy as a nation. I wish you all a happy and safe holiday weekend!

The economy seems to be slowing down a bit as manufacturing, housing, and exports are trending lower. While manufacturing is still in positive expansion territory it isn’t growing. I suspect the trade war is the culprit as uncertainty drives investment decisions the wrong way. Additionally, there are more than twenty candidates for president speaking about how bad the economy is at a time when the numbers contradict these claims.

In my view, this has a negative effect on consumer psyche. So far this year its been consumer spending that has kept our economy moving forward. Let’s hope that this doesn’t change.

The truth is that while the economy is good, it is not as good as 2018. Let’s look at some numbers.

Dear Friends,

Despite recession fears, the U.S. is doing just fine. Yes, the trade war and weather has created hardship, it should be noted that the Atlanta Fed’s GDPNow model is tracking the second quarter GDP growth at 2 percent. Consumer spending is keeping the economy chugging along into the longest economic expansion in history.

Looking back, 2018 wasn’t a good year for the budgets of shippers according to the latest State of Logistics Report from the Council of Supply Chain Management Professionals. Transportation and inventory-carrying costs jumped 11.4 percent last year, and logistics-spending is 8 percent share of total economic output matched the highest level reported in the past decade..

Let’s take a look at the current numbers as we reach the end of the second quarter.

Dear Friends,

Between the rain, tornados, flooding and threats of additional tariffs, there are plenty of headwinds in getting products to market. Add to this the annual Roadcheck this past week and you have an additional hurdle to pass.

Last year during Roadcheck, inspectors pulled over 67,603 trucks over the three-day period. This last week inspectors at 1,500 locations focused on steering and suspension while checking other systems. Many owner operators decide to take the week off, reducing capacity this past week. 

Let’s take a look at the economic and logistics numbers.

Dear Friends,

As Memorial Day approaches I want to extend a sincere wish that you and your family have a safe holiday weekend.  It’s a special time of year that offers not only the beginning of summer, but a time of reflection and gratitude.  Traditionally, this holiday represents a tribute to our military heroes who have given their lives defending freedom.  It’s also a time to remember those who have left a lasting memory in each of our lives.

Let’s take a look at the economy and freight trends.

Dear Friends,

While the circus in Washington continues and the U.S. battles China in trade negotiations, the economy surprised everyone in Q1. The U.S. economy roared back in the first quarter, growing at a rapid pace which suggests the current expansion has more room to run amid its 10th year.

Gross domestic product, adjusted for inflation, rose at a 3.2 percent annual rate from January through March, the strongest rate of growth in the first quarter in four years.

Net exports (exports minus imports) added 1.03 percentage points to the quarter’s GDP growth rate. That was the category’s largest boost to growth since the second quarter of last year.

Consumer spending, however, which makes up two-thirds of economic activity, rose at a mere 1.2 percent rate in the first quarter, down from a strong 2.5 percent in the fourth quarter of 2018. Consumers reined in purchases of big-ticket items like vehicles and their spending on services.

The first quarter is traditionally the weakest of the year. The Fed left interest rates unchanged and reiterated its pledge “to be patient” on adjusting rates in the future.

Let’s look at the current numbers.

Dear Friends,

Mixed economic numbers are coming as the freight market remains soft. Of course, after a historically robust 2018 the market was bound to weaken. There is plenty of freight moving but capacity is up. It appears the smaller carriers added capacity while the larger carriers held the line on fleet expansion.

It appears capacity will continue to rise; class 8 truck orders remain high and truck prices continue to rise for three year old preowned equipment. The question is, will freight volumes rise to meet these added trucks for the remainder of the year?

GDP is projected to be at 2.5 percent in 2019, freight should start flowing back in earnest this spring and summer. Let’s look at the numbers.