John’s Blog

3-11-11

Dear Friends,

I am sorry about the tardiness of this weeks report as I attended the International Warehouse Logistics Association’s annual conference. Now it is catch up time!

Diesel and gas pricing continues to surge as the Middle East boils driving oil speculation. The jump in diesel process was the largest in two years when it moved up fourteen cents to $3.716 per gallon last week.

Just as increased costs of gas, food, and apparel weigh heavy on the US consumer, motor carriers are feeling a similar squeeze. With everything from fuel to tires and equipment replacement costs, the motor carrier industry is suffering from rising cost pressure. Layer onto this the reduction in the driver pool caused by the CSA safety regulations and driver pay is sure to rise as carriers compete for talent.

It looks like the manufacturing segment will continue to grow adding to the volume of shipments for carriers of all kinds. The Institute for Supply Management’s factory index for February came in at a 61.4 reading. This was up from 60.8 in January for the highest level in 7 years and the 6^th straight monthly improvement.

With employment picking up manufacturers are encouraged but the rising cost of materials is tempering optimism.

The Labor Department said that US worker productivity was up 2.6% in the last quarter of 2010 matching the estimate. This follows a 2.3% rise in the 3^rd quarter. For the year of 2010, productivity, measuring the output or production of an employee in an hour of work, came in at 3.9%. This is the largest increase since 2002.

Why focus on productivity? It is a contributor to inflation if productivity slows and labor costs increase. So far we are seeing gains in production while the labor costs are moderate so workers are doing a little more work at a little less cost holding labor inflation in check.

The Federal Reserve Bank said the US economy is expanding at a moderate pace so far this year and that transportation services are in demand in the banking districts of Atlanta, Cleveland, and Kansas City. The “beige book” report also expressed concern over the rising cost of fuel and its effect on the economy.

At Wagner we agree with these assessments as we see carrier capacity tighten and rates on the rise. Between all of the rising cost factors described earlier, we could see some truckload rates increase between 5-10% this year. If YRC fails to make it expect LTL rates to jump as well.

Meanwhile we continue to see good volume and shipment activity across the Wagner facility network which will result in a strong first quarter. Please let me know if we may help in any of your weak spots in distribution, packaging or transportation.

Have a great week!

John Wagner Jr

John’s Blog

2-28-11

Dear Friends,

The good news is that consumer confidence continues to be positive from reports by both the Conference Board and the Thomson Reuters/University of Michigan indexes. The Conference Board reported a 70.4 February index reading and Thomson Reuters reported a 77.5 reading. Both were up from the improved January numbers. In that consumer spending represents 70% of the economy the path for the recovery is still heading in the right direction.

Sales of existing homes were up 2.7% in January according to the National Association of Realtors. It continues to be a buyers market as the median price of existing homes fell 3.7% year over year. The talking heads are saying that home prices should begin to recover later this year.

US retailers are seeing cautious buyers as apparel costs increase due to higher cotton prices. Walmart reported that it had experienced its seventh straight quarterly same store sales decline. Shoppers have found their wallets but are spending within their means.

In transportation the American Trucking Association said that truck tonnage was up 8% in January year over year for its highest level in three years. The January seasonally adjusted truck tonnage index increased 3.8% from December levels. In 2009 the index fell 8.7% and increased 5.7% in 2010 with apparent momentum coming into 2011.

If you are having a hard time finding transportation capacity don’t hesitate to call Wagner. We have a great team of people in our Logistics Group who move a lot of freight every day at competitive pricing.

Wagner volume in the first quarter remains strong and we excited about finishing the quarter with better than budgeted numbers. Don’t hesitate to reach out should you have any logistical challenges requiring help in transportation, distribution, fulfillment or packaging. We would love to see if Wagner can add value to a relationship.

Have a great week!

John Wagner Jr