Logistics Market Snapshot Sept 2011


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Logistics Market Snapshot Sept 2011

  1. 1. SEPTEMBER 2011 LOGISTICS MARKET SNAPSHOT Fueling Logistics Competiveness Prepared: September 15, 2011MULTIMODAL:Dow Jones Transportation Index Dow Jones Transportation index remained flat during the month of August. th th (Stock performance of twenty large, well-known U.S. companies in the transportation industry, average of August 10 thru September 10 )NASDAQ Transportation Index NASDAQ Transportation Index was up 2.5% in August. th th (Averaged share weights of NASDAQ-listed companies classified as transportation companies, average of August 10 thru September 10 ) The USDOTs freight transportation services index remained the same in July 2011 from the previous month.DOT Freight Transportation Index The index’s reading of 108.3 matched its second-highest reading since August 2008, topped only by March of this year. The index is up 3.8% year-over-year. The August shipments index rose 1.9% from the previous month and increased 4.4% year over year. TheCass Freight Index August expenditures index was down 3.8% for the month, but increased 15.8% year over year. (Based upon transportation dollars and shipments of Cass clients comprised of over 400 shipping companies) In July, the U.S. imported about $222.8 billion of cargo. July U.S. imports have decreased 0.2% in terms ofImport Volumes value over the previous month and grew 13.6% year-over-year. (Source: US Census) In July, the U.S. exported more than $178 billion of cargo (the highest on record). July U.S. exports haveExport Volumes increased 3.6% in terms of value over the previous month and grew 15.1% year-over-year. (Source: US Census) U.S. import prices decreased 0.4% in August, led by a 1.8% drop in fuel prices. The price index for U.S.Import & Export Price Index exports rose 0.5% in August after declining 0.4% the previous month. U.S. businesses posted 3.2 million job openings in July, a 13.3% year-over-year increase and the highestMultimodal Business News: number of job openings posted since August 2008. The trade, transportation, and utilities industries accounted for the largest gains of 551,000 job openings, a 33% increase from a year ago. The U.S. House of Representatives voted this week to temporarily extend spending authorization for the nation’s road and aviation systems, avoiding a shutdown like the one last month that halted airport projects. Under the bipartisan measure, the surface transportation system would receive a temporary extension through March 31 and the Federal Aviation System is extended through January 31. July U.S. manufacturing technology orders totaled nearly $507 million, up 7.3% from the previous month and 92.7% higher year-over-year. The year-to-date total for 2011 of almost $3 billion is up 102.9% over the same period of time in 2010. (Source: AMTDA & AMT)RAIL: Railroad bulk carload freight in August 2011 remained flat since July 2011. Freight traffic in AugustU.S. Freight Rail Traffic decreased 0.3% since August 2010, and was up 5.8% over August 2009. (Source: AAR) (Report includes rail car-loadings by 19 different major commodity categories as well as intermodal units) Intermodal rail traffic in August 2011 was 0.4% higher than August 2010, and 0.3% higher than July 2011U.S. Intermodal Rail Traffic totals. Intermodal loadings have experienced year-over-year gains for 21 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 July was 624.5, up 0.64% from the previous month and 46%Railroad Fuel Price Index higher than 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 decreased to 271,404 (17.8% of the fleet) on September 1, downFreight Cars in Storage 5,539 cars from a month earlier. The number of railcars in storage is now at its lowest level since the 2008- 2009 recession and was the strongest monthly drawdown of parked railcars since April. (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 down 424 employees to 158,593 employees in July 2011, the first decline sinceClass 1 Railroad Employment January 2011. (Source: U.S. STB, AAR) In August 2011, short line railroads across North America saw shipments rise 7.2% over the same month lastShort Line Rail Traffic year. A sampling of approximately 380 small railroads in the U.S. and Canada loaded 477,074 railcars and intermodal units during the month of August. (Source: RMI) Large U.S. rail lines hauled 4.9% more loads of industrial products in August than a year earlier. TheseRailroad Business News: increases in industrial loadings reflect demand for factory inputs and output of manufactured products. Hurricane Irene cost CSX about $10 million to $15 million in damages and lost business. Additionally, Tropical Storm Lee caused flooding throughout the mid-Atlantic region and the Northeast, disrupting freight rail operations in several states. CSX, Norfolk Southern, Canadian National, and Canadian Pacific Railways were all affected by the flooding in the past month. 1
  2. 2. SEPTEMBER 2011 LOGISTICS MARKET SNAPSHOT Fueling Logistics Competiveness Prepared: September 15, 2011TRUCKING: Over-the-Road Trucked Shipments fell 1.4% in August following a 0.2% decline in July. Overall truckedOver-the-Road Trucked Shipments shipments increased 0.4% on a year-over-year basis. The PCI has grown on a year-over-year basis every month since January 2010 except for May 2011. (From the Ceridian-UCLA Pulse of Commerce Index which is based on real-time fuel consumption data for over the road trucking) The ATA’s seasonally adjusted cargo index fell 1.3% in July after rising a revised 2.6% in June. The for-hireTrucking Volume truck tonnage index rose 3.9% year-over-year in July, following a 6.5% increase in June. The spot market for truckload freight in August rose 2.2% from the previous month, and was 15% higherTruckload Freight year-over-year. (Source: TransCore Freight Index) The freight rate index cost-per-mile decreased to $2.43 in September 2011, down from $2.45 in August.Freight Rate Index (This Cost Per Mile (CPM) indicator is comprised of 8 main and 65 total cost and cost influencing components, it considers co mpletely, every cost related to freight transport by land) U.S. average diesel prices fell last week, to $3.86 per gallon. Last week’s average diesel price was 0.6¢ lowerDiesel Prices than the previous week, and was 92¢ higher than the same week last year. Average diesel prices in the lower Atlantic states were $3.825 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 are expected to total 20,513 units in August 2011, anTruck Orders 11% increase from the previous month, and 66.3% higher year-over-year. (Source: FTR Associates) Surface transport-related trade between the U.S. and its NAFTA partners, Canada and Mexico, was up 11%NAFTA Trade in June compared to the same month in 2010, reaching $77.5 billion. June was the 19th consecutive month of year-over-year increases. (Source: US DOT) Trucking employment fell slightly in August after ten consecutive months of employment gains. The truckingTrucking Employment industry shed 1,300 jobs in August. Trucking employment has remained relatively flat since June 2011, but is about 2.7% larger year-over-year. (Source: U.S. DOL) Regional truckload carrier Brown Trucking is investing in trailer-tracking technology to better manage itsTrucking Business News: fleet and effectively increase capacity. The Georgia-based company will install an additional 1,500 mobile terminals from SkyBitz to bring its entire trailer fleet into an electronic tracking network. Swift Transportation has won a dedicated carriage contract from Wal-Mart Stores that will generate between $60 million and $80 million in additional revenue. The three-year deal adds four distribution centers to the operation, bringing the total number to Wal-Mart DCs managed by Swift to nine. Wal-Mart currently accounts for about 10-12% of Swift’s $2.6 billion in revenue, and that percentage will probably rise to 12-13%.AIR FREIGHT: Global air freight in July fell 0.4% from one year ago and was up 0.5% over the previous month. NorthAir Cargo Traffic American air freight increased 2% in July year-over-year. (Source: IATA) (Global air freight covers international scheduled air traffic; domestic traffic is not included. North American traffic incl udes only domestic freight traffic.) In June, Hartsfield-Jackson Atlanta International Airport transported 56,586 metric tons of cargo, a 3.3%Atlanta Air Cargo Traffic increase over May and a 0.04% increase year-over-year. (Source: HJIA) In July, average international air cargo prices fell 9.3% from the previous month. Average air freight ratesAir Freight Price Index were down 9% year-over-year, the ninth consecutive month of decline. (Source: JOC) (The Drewry Air Freight Price Index is based on the average of rates ($US per kg) for cargoes of 100+kg to 1,000+kg cargoes f rom Shanghai to London, Moscow, Prague, New York, and Los Angeles.)Jet Fuel Prices As of September 2, 2011, the global average jet fuel price was $128.8 per barrel; down 1% from the previous month, and 46.9% 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) Hartsfield-Jackson International Airport announced that weekly cargo flights have increased 40% this yearAir Freight Business News: compared to 2010. The increased cargo business will bring an estimated $60 to $72 million per year to Atlanta and the Southeast. DHL Express will expand its fleet to 11 freighters in an agreement with Southern Air to operate three Boeing 777 all-cargo aircraft, allowing the German carrier to speed transit time on growing major routes. 2
  3. 3. SEPTEMBER 2011 LOGISTICS MARKET SNAPSHOT Fueling Logistics Competiveness Prepared: September 15, 2011OCEAN FREIGHT: Import shipment volume, in TEUs, at U.S. ports increased 8.21% in August over the previous month, butImport Volumes decreased 2.79% from the previous year. The total number of shipments in August also increased nearly 10% from July while showing a decrease of 0.65% from August 2010. (Source: Zepol) Container rates for the week of September 12th remained stable at $1,653 per FEU. The benchmark container rate was still 35% lower than the $2,546 per FEU rate in the same week last year, and 22% belowContainer Rates the $2,119 per FEU high for 2011 in early January. (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.) th The composite index of spot container freight rates fell 1.9% during the week of September 8 to $1653.42World Container Index (Source: Drewry & Cleartrade Exchange) (The WCI reports individual market prices for 11 major East-West container shipping routes between Asia, North America, and Europe.) The September 9th SCFI rate was $1,041.26 per FEU; down 1.5% from the previous week, and 26% lowerShanghai Containerized year-over-year. The spot rate for shipments to the U.S. East Coast was $3,285 per FEU, down 1% 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 33.9% in August, ending at 1,682. The BDI has increased 15% for the first halfOcean Bulk Freight Rates of September and is currently at its highest point in 2011, up 85% from its February low. (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 1.7% or $15/MT to $830/MT in August 2011. By mid-September,Bunker Fuel Prices bunker fuel prices were down 1.4% to $818.47/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 July 2011, the port’s container traffic was up 6.9% over the previous month and increased 4.6% over thePort of Savannah previous year, totaling 262,590 TEUs . (Source: GPA) In FY2011, the Port of Brunswick moved a total of 465,342 automobile and machinery units, an increase ofPort of Brunswick 40.1%. Breakbulk tonnage totaled 170,309 tons, a 34.6% increase over FY2010. (Source: GPA) Ocean container traffic is expected to grow by about 10% this year as shippers take advantage of fallingOcean Freight Business News: ocean freight rates. The air freight industry is losing market share to container shipping since air cargo rates have increased, while container rates are down 20%. (Source: IATA) Security conditions at Libya’s ports of Tripoli and Benghazi have stabilized, allowing international trade to resume. Tripoli began receiving cargo ships last week after rebel forces took control of the city from Muammar Gaddafi’s regime. Libya plans to import 500,000 metric tons of wheat and 400,000 metric tons of flour over the next two to three months. Record purchases of refrigerated containers are expected this year. During the first half of 2011, about 100,000 containers were ordered, a level equal to all of 2010. Orders of 150,000 refrigerated containers are expected by the end of the year.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 – psiplon@georgia.org – 912.966.7867 3
  4. 4. SEPTEMBER 2011 LOGISTICS MARKET SNAPSHOT Fueling Logistics Competiveness Prepared: September 15, 2011WAREHOUSING & DISTRIBUTION: The U.S. average industrial vacancy rate was 10.33% during Q2 2011, down from 10.56% in the previousIndustrial Vacancy quarter. Overall vacancy was 14.1% in Atlanta and 15.22% in Savannah during the second quarter. (Source: Colliers International) In Q2 2011, warehouse and distribution rental rates in the US averaged $4.63 per square foot. Rental ratesWarehouse Rent Rates for warehouse space averaged $3.21/square foot in Atlanta and $3.95/square foot in Savannah. (Source: Colliers International) Net absorption in the US during Q2 2011 totaled +35.2 million square feet. Absorption in the southIndustrial Absorption accounted for nearly 10.7 million square feet of absorption for the quarter. (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 0.3 points to 50.6 in August 2011. The August PMI was the lowest since July 2009, but has indicated expansion in the manufacturing sector for the 25th consecutive month. New ordersPurchasing Managers Index increased 0.4 points to 49.6 and production decreased 3.7 points to 48.6. (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 rose 7.4 points to 58.1 in August after experiencing four straight months of decline. NewPurchasing Managers Index orders in Georgia were up 1.9 points to 51.9 and production was up 11.3 points to 63.0.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.) Lowe’s recently broke ground on a new $125 million distribution center in Rome, Georgia. The 1.4 million- square-foot facility will be located on 140 acres, and will bring 600 jobs to the region within three years.W&D Business News: The new distribution center joins three other warehouse facilities in Georgia, in Valdosta, Palmetto, and Savannah. The logistics services firm HK Logistics has begun construction on a new 160,000 square foot distribution center in Griffin, Georgia. The $30 million investment is expected to create about 70 jobs.U.S. MARKET: The U.S. GDP increased 1% in the second quarter 2011 according to the second preliminary estimateGross Domestic Product released by the BEA. (Source: US BEA) The U.S. trade deficit decreased by 13.1% in July to $44.8 billion, as exports increased 3.6% to $178 billionU.S. Trade Deficit and imports decreased 0.2% to $222.8 billion. The decrease in July’s deficit was the largest drop since February 2009. (Source: US DOC & Census Bureau) Decreased to 44.5% in August 2011 from 59.5% in July 2011, an expected result following S&P’s recentConsumer Confidence downgrade of the U.S. credit rating and the stock market upheaval it helped spawn. (Source: The Conference Board) (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 remained flat at 9.1% in August 2011. In total, zero net new jobs wereUnemployment Rate created for the month as 17,000 newly created private sector jobs were cancelled out by 17,000 fewer government jobs. (Source: US DOL) The Leading Economic Index for the U.S. increased 0.5% in July to 115.8 (2004=100), following a 0.3% increaseLeading Economic Index in June and a 0.7% increase in May. (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 rose in August to $389.5 Billion, virtually unchanged from the previous month,Retail Sales and up 7.5% from August 2010. Non-store retailer sales were up 10.4% from last year. (Source: US Census) Total combined sales and manufacturing shipments totaled nearly $1.197 Trillion in July 2011, up 0.7% fromManufacturing & Trade Sales June and up 12% from the previous year. (Source: US Census) Total value of inventory on hand is estimated at $1.526 Trillion in July 2011, up 0.4% from June and upManufacturing & Trade Inventory 10.6% from July 2010. (Source: US Census) In July, housing starts decreased 1.5% to an annual rate of 604,000 units. Building permits (an indicator ofHousing Starts future housing starts) decreased 3.2% to an annual rate of 597,000. 4