John’s Blog

2-22-10

Dear Friends,

I attended a meeting in Kansas City last Wednesday where Transportation Secretary Ray LaHood announced about $50 million in TIGER grant money in the Kansas City region. This is a portion of the $1.5 billion the Obama administration is spending, most of which is being directed at rail projects to promote high speed passenger rail service.

The Transportation Investment Generating Economic Recovery program is an outgrowth of the American Recovery and Reinvestment Act which had its one year anniversary last Wednesday.

The Department of Labor announced that consumer prices increased 0.2 percent in January which was better news than expected. Prices excluding food and energy decreased 0.1 percent for the first decline since December of 1982. Because of this the Fed should be less concerned with inflation keeping rates low.

The Conference Board said the index of leading economic indicators rose 0.3% for the tenth straight month. The Leading Economic Indicator number is important for those of us in the transportation logistics business as it gives us a hint of what business activity may be doing over the next six months.

Perhaps is not coincidence that Transcore (owner of the DAT load board system) said that spot truckload demand rose 54% in January. This followed a strong December number which indicates a trend for more truck capacity demand.

This demand follows what we are seeing at Wagner as carriers are finding more freight and capacity begins to tighten up. The question is when will pricing follow?

My best guess is truckload pricing will start creeping up in the third quarter and LTL pricing will remain depressed. Especially now that it appears YRC has dodged the bullet and will be around for a while longer. The excess capacity in the LTL sector is too great for pricing traction to happen.

At Wagner we are working our project plan for our newest distribution center which will be opening for a client in Cleveland Ohio.

If you have a distribution center or transportation project coming up please let me take a look at it to see if we believe we may drive value into the relationship. Our RedPrairie technology is a real winner for our clients.

Have a great week!

John