While the economic recovery will be slow, shippers should keep their eyes open for early signs of rate hike activity in the first half of the year.
Nobody is predicting any dramatic post-recession bounce as the national economy slowly emerges from its fitful and uneasy hibernation. On the freight transportation front, carriers in most sectors are still plagued with overcapacity, hoping that consumers will shake off their credit concerns and begin to register the kind of demands for goods that translate into shipping volume growth.
But most observers agree that while the economy may have bottomed out in mid-2009, it will be running along the bottom for some time—and there will be no “hockey stick upturn” in demand for goods and services. Forecasts are that the second half of 2009 saw a GDP advance of 3 percent, but that will probably settle at closer to 2 percent for the entire year.
And although by all accounts a recognizable rebound will be slow in coming, shippers should nevertheless be on the lookout for the first indications of rate hike activity in the first half of 2010. This will reflect a subtle increase in demand, but nothing substantial enough to tip the rate scale in the carrier’s favor.
“Shipping volume will pick up slowly through this year, but there will not be the big boom that usually occurs at the beginning of an economic recovery,” observes Jim Haughey, director of economics for RBI-US, Logistics Management’s parent company. “Keep in mind that although there is still a credit shortage, it is not apparent because there is little borrowing going on. But as the economy improves, many small carriers and shippers won’t be able to obtain financing readily.”
According to Haughey, shippers should expect small rate increases that will probably happen slowly and could be progressive. “Although this upward pressure on rates will not be excessive,” he says, “the direction of rates has begun to turn. Depending on the transportation mode, this would generally be a good time to lock into prices.” With that subtle warning in mind, here is how the various sectors are shaping up as we move into 2010. ~ John Quinn, Logistics Management
Wednesday, January 27, 2010
Tuesday, December 29, 2009
Supply Chain 2010: Building on the lessons learned
The recession may be coming to a close-at least officially. But the effects of that painful period linger on. Supply chain managers need to learn from the lessons of the past as they rebuild the foundation for a brighter future.
With the recession in full swing, 2009 was a wild ride for some companies-and their supply chain managers. In a survey of more than 500 CFOs conducted by Basware in cooperation with Indiana University's Kelley School of Business and the University of Navarra's IESE Business School in Spain, 64 percent cited "reducing direct costs" as their top priority. It was, for many companies and their supply chain managers, the year to stay alive.
Fortunately, while many who are out of work would dispute word that the economy is improving, statistics from monthly reports from the Institute for Supply Management (ISM) have pointed to growth in the non-manufacturing sector, and even stronger growth in manufacturing. Findings like these have prompted many analysts to declare that the economy has not only finally ended its downward slide, but is on the way to recovering.
Recovery or not, one thing remains clear: The corporate world, and by definition the supply chain, has been changed forever. In this article, we discuss key trends that will impact the professional lives of the supply chain manager in 2010. These trends are grouped into four categories: education and professional development; technology; risk management, and global strategies. In each of these areas, the recession's lingering presence is plain-and supply chain managers would do well to heed its lessons. ~ Source: Logistics Management
With the recession in full swing, 2009 was a wild ride for some companies-and their supply chain managers. In a survey of more than 500 CFOs conducted by Basware in cooperation with Indiana University's Kelley School of Business and the University of Navarra's IESE Business School in Spain, 64 percent cited "reducing direct costs" as their top priority. It was, for many companies and their supply chain managers, the year to stay alive.
Fortunately, while many who are out of work would dispute word that the economy is improving, statistics from monthly reports from the Institute for Supply Management (ISM) have pointed to growth in the non-manufacturing sector, and even stronger growth in manufacturing. Findings like these have prompted many analysts to declare that the economy has not only finally ended its downward slide, but is on the way to recovering.
Recovery or not, one thing remains clear: The corporate world, and by definition the supply chain, has been changed forever. In this article, we discuss key trends that will impact the professional lives of the supply chain manager in 2010. These trends are grouped into four categories: education and professional development; technology; risk management, and global strategies. In each of these areas, the recession's lingering presence is plain-and supply chain managers would do well to heed its lessons. ~ Source: Logistics Management
Tuesday, November 24, 2009
Port Jersey Warehouse
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Monday, October 26, 2009
Global logistics: Freight Forwarding in transition
In an otherwise troubled economy, some U.S. shippers are heartened by the fact that the weak dollar has meant more revenue return on exports. Domestic freight forwarders should be happy, too, but in the global arena the fight for middleman “market share” is key.
According to a recent report compiled by Transport Intelligence Ltd. (Ti) – Global Freight Forwarding 2009 – this dynamic sector “is in the eye of a recessionary storm.” Industry analysts examining 2008 and the first half of 2009 market growth rates, note that since the middle of last year there has been a massive reduction in demand for all forwarding services.
“Indeed such has been the magnitude of the fall that it suggests the sector is undergoing a systemic change,” said Ti analyst John Manners-Bell.
Furthermore, notes Manners-Bell, the market environment for freight forwarders is changing quickly, not only in terms of geography and type of business but also the competitive position of industry players.
“There is no doubt that the big forwarders are gradually gaining a greater market share, but in addition to this, the relative competitive position between the forwarders is also being adjusted,” he says.
Which is not an entirely bad thing, if you are among the leaders, said G. Edmond Clark, president & CEO, FedEx Trade Networks.
“Global trade trends continue to point toward a demand for both air and ocean freight forwarding services,” says G. Edmond Clark, president & CEO, FedEx Trade Networks. “Expanding the footprint of FedEx Trade Networks in critical growth markets will enable us to deliver a full-service transportation solution and better serve the global supply chain needs of our customers.”Ranked among the top ten by both Ti and the U.S. consultancy of Armstrong & Associates, Inc., FedEx Trade Networks is a forwarder to watch. Having recently expanded its operations in Beijing, Guangzhou and Shenzhen, China, FedEx Trade Networks is poised to support company’s growing international air freight forwarding operations and provide comprehensive coverage in key Asia-Pacific trade lanes.And this is “forward” thinking according to Manners-Bell, who noted that while the fall in volumes to and from China has been steep, the freight forwarding sector has been restructuring for a rebound.
“There has been an appreciable shift to lower value goods being moved by container ship, while higher value goods make-up a larger proportion of cargo moved by air,” observed Manners-Bell. “It seems that many shippers have taken the view that inventory velocity is not as important as lower transport costs – a situation influenced no doubt by low interest rates.”
Read the rest of the logisticsmgmt.com article here.
According to a recent report compiled by Transport Intelligence Ltd. (Ti) – Global Freight Forwarding 2009 – this dynamic sector “is in the eye of a recessionary storm.” Industry analysts examining 2008 and the first half of 2009 market growth rates, note that since the middle of last year there has been a massive reduction in demand for all forwarding services.
“Indeed such has been the magnitude of the fall that it suggests the sector is undergoing a systemic change,” said Ti analyst John Manners-Bell.
Furthermore, notes Manners-Bell, the market environment for freight forwarders is changing quickly, not only in terms of geography and type of business but also the competitive position of industry players.
“There is no doubt that the big forwarders are gradually gaining a greater market share, but in addition to this, the relative competitive position between the forwarders is also being adjusted,” he says.
Which is not an entirely bad thing, if you are among the leaders, said G. Edmond Clark, president & CEO, FedEx Trade Networks.
“Global trade trends continue to point toward a demand for both air and ocean freight forwarding services,” says G. Edmond Clark, president & CEO, FedEx Trade Networks. “Expanding the footprint of FedEx Trade Networks in critical growth markets will enable us to deliver a full-service transportation solution and better serve the global supply chain needs of our customers.”Ranked among the top ten by both Ti and the U.S. consultancy of Armstrong & Associates, Inc., FedEx Trade Networks is a forwarder to watch. Having recently expanded its operations in Beijing, Guangzhou and Shenzhen, China, FedEx Trade Networks is poised to support company’s growing international air freight forwarding operations and provide comprehensive coverage in key Asia-Pacific trade lanes.And this is “forward” thinking according to Manners-Bell, who noted that while the fall in volumes to and from China has been steep, the freight forwarding sector has been restructuring for a rebound.
“There has been an appreciable shift to lower value goods being moved by container ship, while higher value goods make-up a larger proportion of cargo moved by air,” observed Manners-Bell. “It seems that many shippers have taken the view that inventory velocity is not as important as lower transport costs – a situation influenced no doubt by low interest rates.”
Read the rest of the logisticsmgmt.com article here.
Wednesday, September 23, 2009
New Study Highlights Role of Third-Party Logistics Providers in Helping Shippers Adapt to Economic Challenges
The fourteenth Annual Third Party Logistics (3PL) Study examining the current global market for logistics outsourcing was recently released. The study surveyed shippers and logistics service providers in North America, Europe, Asia Pacific and Latin America. Key findings included:
* The economic downturn has created significant challenges for both shippers and third-party logistics providers (3PLs) – 82% of shippers are employing cost-cutting tactics and 60% are rethinking their supply chains and relationships with 3PLs
* 88% of shippers feel that IT-based logistics services are important, but only 42% are satisfied with the capabilities of their provider – as a result of this IT capability gap, shipper respondents reported a lack of the key performance indicators, alerts and visibility required for an adaptive supply chain and 3PLs reported similar difficulties in getting the data and commitment they need from shippers
* There are significant differences between how 3PLs evaluate their role in the supply chain and how they are viewed by shippers – 59% of shippers feel their use of 3PLs has a positive effect on customer service compared to 88% of 3PL respondents
* Shipper respondents devote an average of between 47% (in North America) and 66% (in Europe) of their total logistics expenditures to outsourcing and this is expected to increase in the next five years.
“Shipper-3PL relationships are being impacted significantly by the prevailing uncertainty and economic volatility in global markets,” said Dr. C. John Langley Jr., Professor of Supply Chain Management, Georgia Institute of Technology. “It is very important for 3PLs to mitigate or reduce any financial risk or service level impact that this may cause.”
Economic uncertainty and the use of 3PLs
Economic volatility has challenged shippers and 3PLs alike to contend with factors such as unpredictable demand, instability in fuel costs and currency valuation, and excess inventory. In response, not only are shippers attempting to cut costs, 77% are also seeking to improve forecasting and inventory management.
Cost reduction and improved reliability in services are the main factors likely to increase shipper respondents’ use of 3PLs. This includes converting fixed to variable costs (59%), expanding to new markets or offering new products (56%), and restructuring the supply chain network to improve financial performance (48%).
Read the rest of the mhia.org article here.
* The economic downturn has created significant challenges for both shippers and third-party logistics providers (3PLs) – 82% of shippers are employing cost-cutting tactics and 60% are rethinking their supply chains and relationships with 3PLs
* 88% of shippers feel that IT-based logistics services are important, but only 42% are satisfied with the capabilities of their provider – as a result of this IT capability gap, shipper respondents reported a lack of the key performance indicators, alerts and visibility required for an adaptive supply chain and 3PLs reported similar difficulties in getting the data and commitment they need from shippers
* There are significant differences between how 3PLs evaluate their role in the supply chain and how they are viewed by shippers – 59% of shippers feel their use of 3PLs has a positive effect on customer service compared to 88% of 3PL respondents
* Shipper respondents devote an average of between 47% (in North America) and 66% (in Europe) of their total logistics expenditures to outsourcing and this is expected to increase in the next five years.
“Shipper-3PL relationships are being impacted significantly by the prevailing uncertainty and economic volatility in global markets,” said Dr. C. John Langley Jr., Professor of Supply Chain Management, Georgia Institute of Technology. “It is very important for 3PLs to mitigate or reduce any financial risk or service level impact that this may cause.”
Economic uncertainty and the use of 3PLs
Economic volatility has challenged shippers and 3PLs alike to contend with factors such as unpredictable demand, instability in fuel costs and currency valuation, and excess inventory. In response, not only are shippers attempting to cut costs, 77% are also seeking to improve forecasting and inventory management.
Cost reduction and improved reliability in services are the main factors likely to increase shipper respondents’ use of 3PLs. This includes converting fixed to variable costs (59%), expanding to new markets or offering new products (56%), and restructuring the supply chain network to improve financial performance (48%).
Read the rest of the mhia.org article here.
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