Trucking news: ATA reports For-Hire Truck Tonnage Index down 2.4 percent in June

On a year-over-year basis, June 2008 tonnage sank 13.6 percent

After a 3.2 percent up tick in May, the American Trucking Associations (ATA) advanced seasonally adjusted For-Hire Truck Tonnage Index dropped 2.4 percent in June.

This is the third time in the last four months this index has dropped, with April and March down 2.2 percent and 4.5 percent, respectively. At the beginning of the year, the index had a promising start, with a 4.5 percent cumulative gain in January and February. The decline in the advanced seasonally adjusted For-Hire Truck Tonnage Index to 99.8 (2000=100) was not significant enough to completely offset May’s performance, according to the ATA.

Meanwhile, the not seasonally adjusted (NSA) index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, was 107.3 in June. This represents a 5.2 percent improvement from May, and if this trend were to continue it could mean that tonnage is slowly rebounding. Year-over-year NSA index data was not made available by the ATA. The NSA has shown gains the last three months.

As defined by the ATA, the not seasonally-adjusted index is assembled by adding up all the monthly tonnage data reported by the survey respondents (ATA member carriers) for the latest two months. Then a monthly percent change is calculated and then applied to the index number for the first month. Some industry analysts maintain that the not seasonally-adjusted index is more useful, because it is comprised of what truckers actually haul.

Even through the NSA showed a sequential gain, it appears there will be a long way to go before tonnage truly comes back to pre-recession levels. On a year-over-year basis, June 2008 tonnage sank 13.6 percent, which represents the biggest annual decline in this current cycle. May’s year-over-year decline was 11 percent, and April’s was 13.2 percent.

Bob Costello, ATA Chief Economist, said in a statement that it is likely tonnage levels will remain at current levels for the foreseeable future.

Read the rest of the logisticsmgmt.com here.

Logistics News: U.S. Logistics Costs Drop for First Time in Six Years, Benchmark Report Says

If American transportation and logistics experts got the feeling the past year that the overall U.S. business logistics pie was shrinking, they were correct.

For the first time in six years, total spending on U.S. logistics dropped to $1.3 trillion last year, a decrease of $49 billion from 2007. That’s the gist of the 20th Annual “State of Logistics Report” released by the Council of Supply Chain Management Professionals (CSCMP) on Wednesday.

The annual respected benchmark report revealed the financial damage done to the sector by the ongoing recession. After rising by more than 50 percent the previous five years, business logistics costs fell to 9.4 percent of U.S. Gross Domestic Product last year. That is down from 10.1 percent in 2007. By way of comparison, that figure was 12.3 percent of GDP in 1985.

Transportation costs rose 2 percent, but that was not enough to offset the 13.2 percent decline in inventory carrying costs, primarily due to record-low interest rates last year. Transportation ($872 billion) now accounts for 6.1 percent of nominal GDP while inventory carrying costs ($420 billion) account for 2.9 percent of GDP.

Trucking, which accounts for 78 percent of transport by revenue and half of all business logistics cost, was particularly hard hit, rising just 1.3 percent compared with 4.4 percent for the other modes (rail, barge, air cargo, oil pipelines and forwarders).

For shippers, this has resulted in bargain transport rates, especially in trucking and ocean transport, according to Rosalyn Wilson, the long-time author of the SoL report.

“Abundant capacity, particularly in trucking and ocean shipping, push rates down (last year), often below costs,” Wilson said. “Many companies have not survived the prolonged downturn. Many more will not survive the upcoming months as we continue to ride out the recession.”

As a result of the shakeout—more than 3,000 motor carriers ceased operations last year, taking out approximately 7 percent of truck capacity—supply chains are being redefined and processes changing, Wilson said.

“The industry will emerge more efficient and resilient,” Wilson predicted.

Nevertheless, Wilson added, recovery will be a “longer and more difficult journey” for the logistics industry as it awaits meaningful economic recovery, which, Wilson said, will not come quickly.

“It is becoming more apparent that we will see an end to the decline by the end of this year but not a quick recovery,” she said.

One indicator of that is the sharp, record rise in inventory-to-sales ratios, which Wilson called an “unwelcome sign” of a slow recovery. Even with historic inventory reduction rates, the inventory-to-sales ratio skyrocketed from a low last June of 1.25 to 1.46 by December. That is the swiftest rise in that benchmark since 1982. And Wilson said it occurred across the entire distribution chain—wholesale, manufacturing, and retail.

Read the rest of the Supply Chain Management Review article here.

Third-party logistics/global logistics: A lackluster year for 3PLs, says new Armstrong survey

STOUGHTON, WI—A leading industry analyst said today that 2009 will be the first recorded negative year in 3PL gross revenue growth since he began tracking it in 1996.

Dick Armstrong, chairman and CEO of Armstrong & Associates, Inc.--a supply chain market research and consulting firm specializing in 3PL market research--said his most recent survey paints a complex picture.

“After 11 modest months in 2008, third-party logistics revenues dove in December and have remained depressed in 2009,” he said in a statement. “While a few third-party logistics providers (3PLs) could drown, most are treading water and some are swimming strongly.”

Armstrong’s analysis shows gross revenue (turnover) for 3PLs down by 8.8 percent for 2009.  Net revenues (gross margins) were less impacted for many non-asset transportation managers and leading value-added warehousing 3PLs.

Expeditors, C.H. Robinson, Kuehne + Nagel and other major transportation managers report net revenues decreased 3 percent to 10 percent. Earnings before interest, tax, depreciation and amortization (EBITDAs) and earnings before interest and tax (EBITs) fell proportionately. Additionally, net revenues are expected to be down another 5 percent this year for the transportation management group.

Read the rest of the article from logisticsmgmt.com here. 

Global logistics/supply chain management: Down economy poses fresh challenges for high-tech sourcing

- Interesting article from logisticsmngmt.com

SAN FRANCISCO—Risk management takes on new meaning for supply chain managers doing business overseas during a global recession, said key industry analysts.

Sourcing from low-wage countries like China seemed like such a logical idea before the world’s economy went south, said C.J. Wehlage, research director, AMR Research. But with demand continuing to slacken, logistics decision-makers are now more concerned about maintaining the integrity of their pipeline.

“The failure of some suppliers in China has become an issue,” he said. “And having the low-wage option is not such an advantage if quality and reliability suffer.”

Wehlage was among the featured speakers at this week’s “High-Tech Forecasting & Planning Summit,” organized by the London-based IE Group. His presentation mirrored a study done by AMR Research last year, finding that volatile fuel, energy, and commodity prices rank highest in areas of global risk.

China is the region that contributes the most risk to global supply chains, that study concluded.

“And for high-tech companies requiring more solutions in a down economy, the complexity of reliable sourcing is even more intense,” he said. 

The future of forecasting and that of sales and operations planning (S&OP), was also being addressed at this summit. Wehlage noted that in some ways shippers could benefit by one aspect of the recession.

Find the rest of the article here.

What is a Bonded Warehouse?

A Bonded warehouse is a warehouse in which goods on which the duties are unpaid are stored under bond and in the joint custody of the importer, or his agent, and the customs officers.

F.T.Z. + Customs Bonding At Port Jersey Logistics, our Foreign Trade Zone and Customs Bonded Warehouses can help you minimize customs duties and gain greater control of your cash flow — even though the FTZ is located in a U.S. Customs Port of Entry.

Whether you simply store or exhibit imported goods in the FTZ or assemble imported and domestic materials there, duties are not assessed until after goods leave the Zone for distribution — allowing you to defer, reduce or even eliminate duties.