John’s Blog

1-3-11

Dear Friends,

I hope that everyone is getting back to normal after the holidays. 2010 ended with momentum going into the New Year.

The Institute for Supply Management reported that manufacturing activity increased to a 57 factory reading in December. This was up from 56.6 in November meaning that manufacturing continues its seven month fast pace. The ISM factory index showed production jumping to a 60.7 reading and new orders increased to 60.9. Any reading over 50 indicates growth.

Other positive news came from ADP who said that employers added 297,000 jobs in the private sector. This December reading means that the labor market is on track for improvement as analysts had expected 100,000 new jobs.

The Commerce Department says that construction spending rose 0.4% in November after a 0.7% gain in October. Much of this is helped by Federal spending of a record $35.3 billion. Private construction was up by only 0.3%

The Department of Energy reported that diesel fuel finished 2010 at a two year high price of $3.294 per gallon.

The American Trucking Association’s tonnage index increased in November up 3.9% year over year. The ATA said that 5.9% more freight was handled in the eleven months even with a seasonal fall off in volume in November. With a base of 100, the tonnage index was 109.7 in November.

The Association of American Railroads said that intermodal traffic was up 25.1% in the week leading to Christmas in a year over year comparison. Showing how depressed 2009 traffic was, the car loadings were up 29.3% in the same week year over year comparison.

At Wagner, we are starting the year with enthusiasm and high expectations. Should you need a resource for distribution management, fulfillment, transportation, or packaging I hope you will give me a call. Wagner has a great team of people who can add value to your supply chain.

Have a great week!

John Wagner Jr

John’s Blog

12-27-10

Dear Friends,

I hope that everyone is enjoying a great holiday season. With the high level of retail sales this Christmas it appears that there were a lot of presents under the tree.

While there are glimmers of hope in home sales, durable goods, consumer spending and the jobless numbers, I prefer to hold off on my weekly reporting of economic and transportation related statistics and issues. Rather I would like to look forward to 2011 and talk about some of the issues that bear review as we plan for the future.

Let’s start with the economy as everything revolves around it. While it looks like the GDP for 2010 will end at about 2.7% growth I believe that we could hit 3%growth in 2011. This should make a small dent in the unemployment numbers and continue the long, slow trend of adding jobs.

While manufacturing led us out of the recession in 2010 this sector of the economy will keep humming in 2011 but not at the same degree now that inventories have been rebuilt. I believe that the consumer is now back in the game and because consumer spending is 70% of the economy this will be good news for logistics services and transportation modes.

Even with this improved view of the coming year there are some issues to watch.

• Fuel Cost – An improving economy will require fuel to run it. I would not be surprised to see a return to $100 per barrel oil and higher diesel prices. The DOE is projecting diesel at $3.23 a gallon in 2011.

• CSA 2010 Regulations – Depending on who one listens to these more rigid driver safety rules will take out between 75,000 and 100,000 truck drivers currently working. Drivers are going to be hard to find.

• Hours of Service – If drive time is cut to 10 hours this will further curtail capacity and coupled with rising trucking rates, companies may need to take a look at their distribution network.

• Capacity – As freight volumes follow the current trend of modest improvement, there will be fewer trucks and drivers to move it. As it looks today YRC Worldwide is going to survive and the trucking industry will have a great year due to reduced capacity. With the current credit markets, entry into the trucking industry will be difficult so don’t expect a lot of new companies to help with capacity.

• Intermodal – The railroads will continue to see their business increase as shippers divert truckload business to intermodal. The question is there enough equipment to handle the increase? Containers are already tight.

• Parcel – There are just a handful of companies handling the bulk of the parcel business. Watch for base rates and surcharges (DIM charges) continue to increase.

• Security – Life continues to get more complicated as package bombs (real and decoys) require vigilance. None of the protections will be cheap as parcels & air cargo is particularly impacted.

At Wagner we are feeling bullish about 2011 and believe there will be many opportunities for growth. With industrial real estate prices at a low point Wagner will be able to add value for companies who are seeking sites for new distribution center operations. When we combine the right facility with our world class technology and experienced staff of professionals we can provide true competitive advantage for our clients.

Our great group of transportation people can likewise manage to balance service with price and provide meaningful solutions.

Let us know how we may help you in 2011.

Have a great week!

John Wagner Jr