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JUNE 2011 LOGISTICS MARKET SNAPSHOT Prepared: June 15, 2011 Fueling Logistics CompetivenessMULTIMODAL:Dow Jones Transportation Index Dow Jones Transportation index was down 8.2% during May. th th (Stock performance of twenty large, well-known U.S. companies within the transportation industry, average of May 10 thru June 10 )NASDAQ Transportation Index NASDAQ Transportation Index was down 8.9% in May. th th (Averaged share weights of NASDAQ-listed companies classified as transportation companies, average of May 10 thru June 10 ) The USDOTs freight transportation services index decreased 1.0% in April 2011 from the previous monthDOT Freight Transportation Index but is up 3.7% from a year earlier. The shipments index remained fairly steady in May, dipping 0.2%, but was up 9.6% year over year. The MayCass Freight Index expenditures index was up 1.7% for the month and up 29.9% year over year. (Based upon transportation dollars and shipments of Cass clients comprised of over 400 shipping companies) • The U.S. Department of Agriculture is forecasting $135.5 billion in agriculture exports this year due toMultimodal Business News: increased demand in the global marketplace. This year’s forecast is 17% higher than in 2010, and nearly doubles the value of agriculture exports in the past five years. • U.S. steel mill imports grew 2.9% in April over March, and were up 21.9% in the first four months of the year over the same period a year ago. Steel imports for the year to date through April totaled nearly 9 million tons, potentially a signal of greater demand in the U.S. manufacturing sector. • Japan recorded a trade deficit of $5.54 billion in April, the first April deficit in 31 years. Japanese exports of automobiles and parts plunged 67% from the same month a year ago as suppliers struggled to repair damaged supply chains.TRUCKING: Over-the-Road Trucked Shipments fell 0.9% in May. Overall trucked shipments remained flat on a year-over-Over-the-Road Trucked Shipments year basis. (From the Ceridian-UCLA Pulse of Commerce Index which is based on real-time fuel consumption data for over the road trucking)Trucking Volume The ATA’s seasonally adjusted cargo index fell 0.7% in April after increasing 1.9% in March. The spot market for truckload freight in May fell 10% from the previous month, but was 10% higher year-Truckload Freight over-year. (Source: TransCore Freight Index) The freight rate index cost-per-mile decreased to $2.48 in June 2011, down from $2.50 in May 2011.Freight Rate Index (This Cost Per Mile (CPM) indicator is comprised of 8 main and 65 total cost and cost influencing components, it considers completely, every cost related to freight transport by land) U.S. average diesel prices fell for the fifth consecutive week last week, to $3.94 per gallon. Last week’sDiesel Prices average diesel price was about 1¢ lower than the previous week, and was 99¢ higher than the same week last year. Average diesel price in lower Atlantic states was $3.891 per gallon. (Source: U.S. DOE) (Reflects the costs and profits of the entire production and distribution chain.) Orders for heavy-duty Class 8 trucks in North America totaled 24,063 units in May 2011, a 37% decreaseTruck Orders from the record high of 37,922 units reported in April. However, May truck orders were still 85% higher year-over-year. (Source: FTR Associates) Surface transport-related trade between the U.S. and its NAFTA partners, Canada and Mexico, was up 15.6% in March compared to the same month in 2010, reaching $80.8 billion. NAFTA freight value in March wasNAFTA Trade the highest on record since data collection began in 1994, beating the previous record set in April 2008 by th 8.8%. March was also the 16 consecutive month of year-over-year increases. (Source: US DOT) The trucking industry added 100 jobs in May following an increase of 4,500 jobs in April. The truckingTrucking Employment workforce increased for the eighth consecutive month in May. (Source: U.S. DOL) • The Federal Motor Carrier Safety Administration will delay the release of its controversial new truck driver thTrucking Business News: hours-of-service rules until October. The hours-of-service rules will be released on or before October 28 while the FMCSA reviews comments on four driver fatigue studies. • U.S. freight tonnage is expected to grow 24% by 2022, with trucking hauling 70% of all freight by that year. Intermodal rail transportation is predicted to be the fastest growing mode, increasing 6.6% per year through 2016, and increasing 5.5% per year through 2022. Intermodal revenue will nearly triple, rising to $30.7 billion in 2022. (Source: American Trucking Association) 1
JUNE 2011 LOGISTICS MARKET SNAPSHOT Fueling Logistics Competiveness Prepared: June 15, 2011RAIL: Railroad bulk carload freight in May 2011 remained steady since April 2011. May’s freight traffic increasedU.S. Freight Rail Traffic 0.5% over May 2010, and was up 16.4% over May 2009. (Source: AAR) (Report includes rail car-loadings by 19 different major commodity categories as well as intermodal units) Intermodal rail traffic in May 2011 was 7.5% higher than May 2010 and 0.8% higher than April 2011 totals.U.S. Intermodal Rail Traffic Intermodal loadings have experienced year-over-year gains for 18 straight months. (Source: AAR) (Report includes rail car-loadings by 19 different major commodity categories as well as intermodal units) The index of average railroad fuel prices in April was 658.9, up 5.6% over the previous month, and up 42%Railroad Fuel Price Index over the previous year. (Source: AAR) (Average monthly price for gallons purchased by freight railroads; Includes federal excise taxes, transportation, and handling expenses) The number of freight cars in storage has increased to 279,083 (18.4% of the fleet) on June 1, up 2,855 carsFreight Cars in Storage from a month earlier. (Source: AAR) (A freight car is "in storage" if it has had a loaded revenue move since 2005, but not in the past 60 days. Decrease here = more demand) Railroad employment was up 935 employees to 156,777 employees in April 2011 from the previous month.Class 1 Railroad Employment (Source: U.S. STB, AAR) • Eastern U.S. railroads CSX Transportation and Norfolk Southern each began working on separate intermodal construction projects earlier this month. CSX is reinvesting more than $100 million to expandRailroad Business News: the existing intermodal terminal in Worcester, Massachusetts. Meanwhile, Norfolk Southern is spending nearly $200 million to construct intermodal hubs near Birmingham, Alabama and Memphis, Tennessee. • The CSXT HDF/mileage based fuel surcharge of $0.52 per mile, which became effective June 1, 2011, will remain unchanged at $0.52 per mile for shipments having a bill of lading dated on or after July 1, 2011.AIR FREIGHT: Global air freight in April up 5.4% from one year ago and was up 1.4% over the previous month. NorthAir Cargo Traffic American air freight increased 7.9% in April year-over-year. (Source: IATA) (Global air freight covers international scheduled air traffic; domestic traffic is not included. North American traffic includes only domestic freight traffic.) In March, Hartsfield-Jackson Atlanta International Airport transported 56,222 metric tons of cargo, an 8.7%Atlanta Air Cargo Traffic increase over February and a 0.3% increase year-over-year. (Source: HJIA) In April, average international air cargo prices rose 5.7% from March, the highest point in six months.Air Freight Price Index Average air freight rates were down 16% year-over-year, the sixth straight year-over-year decline. (Source: JOC) (The Drewry Air Freight Price Index is based on the average of rates ($US per kg) for cargoes of 100+kg to 1,000+kg cargoes from Shanghai to London, Moscow, Prague, New York, and Los Angeles.)Jet Fuel Prices As of June 3, 2011, the global average jet fuel price was $131.3 per barrel; down 5.2% from the previous month, and 49.9% higher year-over-year. (Source: IATA) (The weekly index and price data shows the global average price paid at the refinery for aviation jet fuel) • The International Air Transport Association downgraded its 2011 airline profit forecast to $4 billion. The revised estimate is 54% less compared with the $8.6 billion profit forecast in March and a 78% dropAir Freight Business News: compared with the $18 billion net profit recorded in 2010. The 2011 industry fuel bill is expected to rise by $10 billion to $176 billion. Fuel alone is now estimated to comprise 30% of airline costs, more than double the 13% of 2001. • UPS boosted its cargo capacity 50% on flights to Central and South America last week, saying it is responding to solid growth in Latin American demand. (Source: JOC) Archives of these monthly snapshots are posted to: snapshot.georgialogistics.org For more information about the Logistics Market Snapshot or the many other resources and activities of the Georgia Center of Innovation for Logistics please contact: Page Siplon, Executive Director – email@example.com – 912.966.7867 2
JUNE 2011 LOGISTICS MARKET SNAPSHOT Fueling Logistics Competiveness Prepared: June 15, 2011OCEAN FREIGHT: In April, U.S. ports imported more than $219 billion of cargo. April U.S. imports have decreased 0.4% inImport Volumes terms of value over the previous month and grew 15.9% year-over-year. (Source: US Census) In April, U.S. ports exported more than $175.5 billion of cargo, the highest on record. April U.S. exports haveExport Volumes increased 1.3% in terms of value over the previous month and grew 18.8% year-over-year. (Source: US Census) U.S. import prices rose 0.2% in May, following increases of 2.1% in April and 3% in March. The price indexImport & Export Price Index for U.S. exports rose 0.2% in May after rising 0.9% the previous month. The National Retail Federation is projecting an increase of 4% for containerized shipments in April. March, thRetail Freight Volumes the latest month for which data is available, saw a 0.3% increase in retail traffic and was the 16 consecutive month of improvement. The June 6, 2011 average spot market rate was $1,775 per FEU. The latest container spot market rate is $157 lower than the previous week, and $418 (19.1%) lower than the rate for the same week last year.Container Rates (Source: JOC & Drewry Inc.) (Based on Drewry Shipping Consultants research and derived from shipping rates from Hong Kong to Los Angeles. The rate is based on a full 40-foot container load or FEU, excluding terminal-handling charges in Hong Kong.) rd The June 3 SCFI rate was $1,054.60 per FEU; down 1.5% from the week before, and 29.8% lower year-Shanghai Containerized over-year. The spot rate for shipments to the U.S. East Coast was $3122 per FEU, down 1.4% from theFreight Index previous week. (Source: JOC) (The Shanghai Containerized Freight Index is a weekly reported average export spot rate from Shanghai for 15 different trade lanes.) The Baltic Dry Index increased 14.71% in May, ending with a cost of $1,480. The BDI has decreased 4.8% forOcean Bulk Freight Rates the first half of June. (Source: The Baltic Exchange) (The Baltic Dry Index is an index that tracks and averages worldwide international shipping prices of various dry bulk cargoes.) Average bunker fuel price was down 4.9% or $42/MT to $817.18/MT in May 2011. By mid-June, bunker fuelBunker Fuel Prices prices were up 2.9% to $840.89/MT. (Source: Bunker Index) (The Bunker Index is the average global bunker fuel price from individual ports; measure in $US per MT or megaton) In April 2011, container traffic was up 10% over the previous month and up 9.2% year-over-year, totalingPort of Savannah 261,734 TEUs. (Source: GPA) In March 2011, the Port of Brunswick posted its best month ever for automobile and machinery units,Port of Brunswick moving 42,740 units. Brunswick’s Ro/Ro volume in March was 36% higher year-over-year. (Source: GPA) • Wal-Mart remained the top importer of containerized ocean cargo, increasing its imports 1.8% in 2010. thOcean Freight Business News: The world’s largest retailer imported 696,000 TEUs last year. The company ranked 39 on the list of top exporters in 2010, shipping out 28,000 TEUs. (Source: Journal of Commerce) • Trans-Pacific rates for containerized ocean shipping exports are plunging due to an increase in vessel capacity and a steady demand for U.S. goods. Vessel capacity (up 19.3% for the year) is growing faster than the demand for U.S. westbound exports (up a forecasted 11.3% this year), causing carriers to lower rates drastically to stay competitive. • The Mediterranean Shipping Company is ranked as the top U.S. container line with an 11.5% market share, ahead of Maersk (9.4% market share) by a 143,971-TEU margin. MSC grew at more than double the pace of the overall market in the first quarter, with a 24.7% year-over-year increase in container traffic. • The Volkswagen Group of America has selected the Port of Savannah’s Garden City Terminal to handle containerized shipments of auto parts for its new plant in Chattanooga, Tennessee. The Port of Savannah was chosen for its close proximity to two major interstates and direct rail access. The GPA’s Port of Brunswick already handles import Volkswagens that are distributed throughout the Southeast. • Container lessors spent $4 billion during 2010 to renew the box fleet and are expected to further increase spending for the next two years according to a new report from the Institute of International Container Lessors. Container purchases last year totaled 1.6 million TEU’s, and an estimated 3.5 million TUE’s will be built in 2011 and available for sale. The global leasing fleet currently totals an estimated 11 million TEU’s. th • Containerboard supplier America Chung Nam was named the top U.S. exporter in 2010 for the 10 year in a row. The company shipped 300,800 TEUs from the U.S. in 2010, 16% more than it exported the previous year. Experts see the wastepaper exports as a measure of confidence in the U.S. retail economy since much of the material is turned into packaging for consumer goods. 3
JUNE 2011 LOGISTICS MARKET SNAPSHOT Fueling Logistics Competiveness Prepared: June 15, 2011WAREHOUSING & DISTRIBUTION: The U.S. average industrial vacancy rate was 10.47% during Q1 2011. Overall vacancy was 13.9% in AtlantaIndustrial Vacancy and 16.44% in Savannah during the first quarter. (Source: Colliers International) In Q1 2011, warehouse and distribution rental rates in the US averaged $4.76 per square foot. Rental ratesWarehouse Rent Rates for warehouse space averaged $3.26/square foot in Atlanta and $3.95/square foot in Savannah. (Source: Colliers International) Net absorption in the US during Q1 2011 totaled +26 million square feet. Absorption in Atlanta totaled more than 2.6 million square feet, while Savannah absorbed about 926,000 square feet. AtlantaIndustrial Absorption experienced its strongest quarter of absorption in four years and led the region in absorption rates. (Source: Colliers International) (Absorption is the net change in occupied space between two points in time. Positive absorption means that previously unoccupied space is being occupied.) The National PMI decreased 6.9 points to 53.5 in May 2011, but indicates expansion in the manufacturing ndPurchasing Managers Index sector for the 22 consecutive month. New orders decreased 10.7 points to 51.0 and production decreased 9.8 points to 54.0. (Source: ISM) (The PMI combines data on new orders, inventory, production, supplier deliveries, and employment. A reading above 50 indicates that the manufacturing economy is generally expanding.) Georgia’s PMI decreased 2.8 points to 64.6 in May, but was still 9.1 points higher than the national PMI.Purchasing Managers Index New orders in Georgia were down 6.2 points to 67.9 and production was also down 6.2 points to 67.9.in Georgia (Source: Kennesaw State University) (The PMI combines data on new orders, inventory, production, supplier deliveries, and employment. A reading above 50 indicates that the manufacturing economy is generally expanding.) • The industrial space utilization index climbed to 55.4, the highest reading of the index since April 2008.W&D Business News: The index has been above 50 for 10 out of the last 11 months. • The U.S. third-party logistics market is set to grow 10.9% this year over 2010 to a record $141.2 billion. The 3PL industry is expected to slow down slightly following last year’s 18.9% growth following 2009, the first annual decline recorded since tracking began in 1995. (Source: Armstrong & Associates)U.S. MARKET: The U.S. GDP increased 1.8% in the first quarter 2011 according to the second estimate released by the BEA.Gross Domestic Product (Source: US BEA) The U.S. trade deficit decreased by 6.7% in April to $43.7 billion, as exports increased 1.3% to $175.5 billionU.S. Trade Deficit and imports decreased 0.4% to $219.2 billion. (Source: US DOC & Census Bureau) Decreased to 60.8% in May 2011 from 66.0% in April 2011. (Source: The Conference Board)Consumer Confidence (The consumer confidence index is based on a monthly survey of 5,000 U.S. households. It is designed to gauge the financial health, spending power, and confidence of the average U.S. consumer.) The unemployment rate in America rose to 9.1% in May 2011, the second monthly increase in a row.Unemployment Rate Approximately 54,000 jobs were created in May after averaging 222,000 new jobs in each of the previous three months. (Source: US DOL) The Leading Economic Index for the U.S. decreased 0.3% in April to 114.0 (2004=100), following a 0.7%Leading Economic Index increase in March and a 0.9% increase in February. (Source: Conference Board) (The LEI is a composite of 10 economic indicators that together create an analytic system designed to signal peaks and troughs in the business cycle. The LEI reveals patterns in economic data in a clearer and more convincing manner than any individual component alone.) Retail and food service sales fell for the first time in 10 months in May to $387.1 Billion, down 0.2% from theRetail Sales previous month, but up 7.7% from May 2010. Non-store retailer sales were up 15.9% from May 2010. (Source: US Census) Total combined sales and manufacturing shipments totaled $1.185 Trillion in April 2011, up 0.1% fromManufacturing & Trade Sales March and up 11% from the previous year. (Source: US Census) Total value of inventory on hand is estimated at $1.497 Trillion in March 2011, up 0.8% from March and upManufacturing & Trade Inventory 10.6% from April 2010. (Source: US Census) In April, housing starts decreased 10.6% to an annual rate of 523,000 units. Building permits (an indicator ofHousing Starts future housing starts) decreased 4% to an annual rate of 551,000. 4