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John's Blog 08-16-10 Print E-mail

John’s Blog

8-16-10

Dear Friends,

Last week gave us mixed reviews on the direction of the economy although transportation companies continue to shake off the poor results from 2009 with better activity. There remain many reasons to be cautious.

Retail sales were up modestly in July but were mostly driven by car sales and gas stations while retailers showed mixed results with an economy just dragging along. The Commerce Department reported that retail sales increased 0.4% which is what was expected after a June decline of 0.2%.

The role of the consumer cannot be overestimated as they drive 70% of the economy. Consumer spending weakened in the second quarter and this was followed by a slower economy. Here is the break out:

  • Dealers of autos and car parts sales increased 1.6%

  • Gas station sales increased 2.3%

  • Garden supply and building materials sales were down 0.3%

  • Apparel sales were down 0.7%

  • General merchandise sales fell 0.2%

  • Sporting goods, hobby, and music sales slid 0.1%

  • Food and beverage store sales were down 0.3%

  • Restaurant and Bar sales were up 0.2% (Americans are continuing to drink)

  • Furniture receipts were down 0.3%

  • Electronics and appliances were down 0.1%

  • Internet sales rose 0.2%

The Labor Department said that the consumer price index increased in July 0.3% from June. Core consumer prices increased by only 0.1% and the Federal Reserve is increasingly concerned that the recovery is slowing.

Wholesale inventories increased 0.1% in June according to the Commerce Department.

The Transportation Services Index (TSI) increased in June by 0.2% from May to 100.8. The TSI was up 4.1% year over year for the month.

Transcore reports that the spot market for truckload freight was up 122% in July on a year over year basis. The July volume was 14% less than June.

At Wagner, we have promoted Brian Smith to the position of Chief Operating Officer and Brian has taken responsibility for all Wagner Operations. Shawn Closser has been promoted to Vice President Logistics and is responsible for all Wagner transportation reporting to Brian. Justin Eck is now Director Operations and responsible for Wagner’s shared distribution center network reporting to Brian.

The list of experience, MBA education and other attributes are too lengthy to go into in this space but suffice it to say that the entire Wagner team stands ready to work with you on any distribution center, fulfillment, or transportation projects.

Have a great week!

John Wagner Jr

 
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John's Blog 08-09-10 Print E-mail

John’s Blog

8-9-10

Dear Friends,

Wow what a busy week for news. The Commerce Department reported that US factory orders dropped 1.2% in June which was greater than the anticipated decrease of 0.5%.

Durable goods orders fell 1.2% as factories had lower demand. With June and May reporting a slight pullback after nine straight months of increases it looks like manufacturing is slowing down and controlling inventories.

The Commerce Department also reported that personal spending stayed the same in June.

The Institute of Supply Management released their manufacturing index showing the sector grew slightly in July, the 12th straight month of growth. The ISM report said the manufacturing index is at the middle of their growth range at 55.5 in July. ISM also reports that manufacturers are planning on adding staff.

Housing continues to drag at the bottom of all measures with the National Association of Realtors saying that contracts to sell existing homes fell 2.6% in June. Sales are down 19% from 2009 levels.

Unemployment stayed at 9.5% with the US Department of Labor reporting that a net loss of jobs (131,000) occurred in July. The good news is that the private sector added 71,000 jobs continuing a positive trend.

Retailers had mixed results with same store sales growth of 2.9%. Analysts had been looking for a 3.1% increase. In June 2009 sales had dropped 5.1% so the trend is slowly getting better although some retailers were hammered. This is widely viewed as a lack of consumer confidence and many are worried about the back to school season.

In freight the Cass Freight Index (which looks at industrial shipments) decreased 8.6% in July which was the first drop in 6 months. Shipping spending fell July over June by 4.5%.

The AAR said that intermodal rail shipments increased 20.2% the week ending July 31st creating a new high point. Compared to 2008, volume the week was 0.9% higher. Containers jumped by 21.9% with 197,999 units handled.

At Wagner we are very busy in some locations while others have slowed down. On balance we believe business conditions are improving very slowly.

Should you have a project to discuss don’t hesitate to give me a call. Wagner has a lot of operational strength in distribution center operations, fulfillment, and transportation.

 

Have a great week!

John Wagner Jr


 
John's Blog 08-02-10 Print E-mail

John’s Blog

8-2-10

Dear Friends,

Last week was an active for news with the Commerce Department reporting that the GDP increased at a 2.4% annual rate in the second quarter. First quarter was 3.7% so a slowdown has occurred. Consumer spending rose 1.6% in the second quarter after a 1.9% increase in the first quarter.

This mild decrease in consumer spending is mirrored by the new lower consumer confidence numbers released last week. The Conference Board Consumer Confidence Index is down to 50.4 in July from 54.3 in June. Consumers are not feeling good due to continued unemployment, economic fears and stagnant wages.

When the back to school sales starts we will see how real this really is.

In transportation, driver pay is on the rise as the CSA regulations are rolled out. These new aggressive regulations are flushing out drivers with a dubious past shrinking the pool of people available to drive. As the year progresses watch as carriers get very aggressive at attracting and keeping drivers with increased pay and generous sign on bonuses. As carrier profitability is demonstrated as sustainable, higher pay will follow.

Taking a break in the rise of freight, for-hire tonnage dropped 1.4% in June according to the ATA. The American Trucking Association reported that year over year freight tonnage was up 7.6% from June 2009.

With the reduction in fleet size capacity remains tight even as shipments show a slight slow down.

The AAR reports that rail shipments increased 19.2% year over year in the week ending July 24th. Containers were up 21.1% and trailers were up 9.3%. Other rail traffic excluding intermodal increased 4.7%.

Something to watch is the Federal Motor Carrier Safety Administration Hours of Service proposal which was sent to the White House. A series of hearings will be held and if hours are reduced the result will be further los of carrier driving capacity.

At Wagner we are continuing to work on driving efficiencies in our distribution warehousing and fulfillment operations. We are also busy in transportation and working with companies having problems in finding carrier capacity.

Please let us know if we may be of service in working on any supply chain issues for you.

Have a great week!

John Wagner Jr

 
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