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John’s Blog 11-28-11
Dear Friends,
There’s plenty of good news about our economic recovery, despite
the failure of the “super committee” on debt and the continuing Eurozone woes.
The Conference Board reported that its consumer confidence index jumped 15 points to 56 in November.
It would make sense then that consumers would pull out their
collective wallets and buy.
And buy they did, as a record 226 million shoppers hit the malls and
websites for a long weekend of splurging on everything from electronics to
apparel. The National Retail Federation said that the average holiday shopper spent $398.62, up from $365.54 in 2010.
Cyber Monday was just as hot, with online sales up 33% over
2010’s $1.03 billion. The average online order value was $198.26, up from last
years $193.24. Notable was the expanded use of mobile
devices, as orders placed via iPads and smart phones accounted for 6.6% of
all web orders on Monday, up from 2.3% for Cyber Monday 2010.
In a “normal” economy, the consumer confidence level is at
90. With this kind of activity at a confidence level of 56, it makes one wonder
what the holiday sales numbers would be like under normal conditions.
All of this good activity should translate to better GDP
numbers. Earlier, the third quarter gross domestic product annual growth rate
was revised down to 2.0. From what I am seeing it is possible that the fourth
quarter may grow at 3.0.
The employment picture is already looking brighter, as the unemployment rate fell to a
2-1/2-year low of 8.6% in November.
The Commerce Department said that new orders for
manufactured goods fell 0.7% in October and
shipments were up 1.3% while inventories were up 0.5%. Manufacturing continues
to find its balance in this slow-growth situation, and is helped by the weak
dollar driving export growth.
Still, the Federal Reserve Bank said that by their measure,
industrial production increased by 0.7% in
October, with manufacturers’ capacity utilization rising to 77.8%, the highest level since July
2008.
Manufacturing is 1/8th of the U.S. economy and
consumer spending is 70%+, so these trends are encouraging. When coupled with the consumer price index
falling 0.1% in October calming inflation fears, the economy continues its slow
climb forward.
The American Trucking Associations said that its October seasonally
adjusted For-Hire Tonnage index increased
0.5% and was up 5.7% for the year. The question is, will retailers reorder and
keep their shelves stocked? Or will they play it safe and tell customers, “When
it’s gone, it’s gone”? These restocking decisions will drive the trucking
numbers in December and in the gift card shopping season in January. Welcome to the new normal of lean
inventories.
Railroads continue to see good volume and intermodal
shipments are gaining as motor carriers have a hard time finding drivers. The
biggest threat facing the railroads, and the national economy, had been the threat
of a nationwide strike. Two of the last three unions still wrangling with the
railroads reached an agreement Dec. 2, and the third agreed to extend talks
through Feb. 8, averting a holiday-season rail strike that could have cost the
U.S. economy an estimated $2 billion a day.
UPS released its published rates for 2012 and they include a
4.9% net increase for UPS Ground and UPS Air Services. U.S. originated
shipments for international destinations are included as well.
UPS Next Day and 2nd Day Air Freight rates on
shipments between the U.S., Canada and Puerto Rico will increase 5.9%. UPS 3-Day
rates are unchanged.
At Wagner we have signed a letter of agreement with Mercury
Gate and will be implementing this powerful transportation management system in
the coming month. We are excited about adding this great tool as we seek
best-in-class technology for all Wagner service products.
As you consider your distribution planning for 2012, feel
free to reach out to Wagner with your supply chain challenges. As our motto says, Bring it!
Have a great day!
John Wagner Jr.
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John's Blog 
