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John's Blog 1-18-12
Dear Friends,
With the New Year comes tempered optimism about the U.S.
economy and its effect on the supply chain industry. Modest growth in economic
indicators continues, and consumer confidence is surging. The tempering
influence comes from a series of major “unknowns.” No one can accurately
predict what will happen in Europe as they continue to struggle with their
deficits. Additional major questions hang in the air regarding trends in manufacturing
and exports in China, and the November elections here at home.
Barring any Black Swan events I
believe that we will continue to see slow growth in the U.S. economy, at 2+%
GDP. Consumers clearly are tired of the gloom and doom and are gaining optimism
– more optimism, it seems, than the modest growth in key indicators would
suggest. The evidence is in the retail sales numbers reflecting what consumers spent
or ordered through e-commerce sites in December. The result is the biggest
retail sales year in history last year, and
the National Retail Federation is predicting another record, with sales growth
of 3.4% in 2012.
Employment is improving – slowly – with ADP reporting that nonfarm private business jobs
increased by 325,000 from November to
December on a seasonally adjusted basis. ADP says further that the increase in
December was the largest monthly gain since December 2010.
Manufacturing expanded, with industrial
production up 0.4% in December according to the Federal Reserve. The metric used to
describe plant capacity utilization was also
up in December, moving to 78.1 from 77.8 in the previous month.
The Institute for Supply
Management released their PM Index, which supports the notion that
manufacturing continues to grow. A December
reading of 53.9 is the second straight month of improvement. Any reading
over 50 on that index indicates expansion and December marked the 29th
straight month on the growth side of 50.
With the robust retail sales one should expect manufacturing
to continue to improve as restocking takes place.
In transportation, expect truckers and railroads to continue
to do well, as drivers demand more money and the railroads settle their union contracts.
In the end, expect continued upward pricing pressure as capacity remains tight.
Ocean and air cargo will continue to suffer financially as
ocean freight fights over-capacity and lack of volume in air cargo.
With federal regulators keeping the 11-hour driving limit
for truckers, expect a fight over the restart rule. Currently drivers must rest
for 34 hours after a workweek. As now ruled, starting in July 2013, the 34 hours
must include two rest periods from 1 a.m. to
5 a.m. In a move that will further impact truckload carrier capacity, the new
provisions have the effect of limiting drivers to 70
hours of work within a seven-day period. The previous limit was 82 hours,
so this is a real loss of productivity.
At Wagner we are excited about the New Year. We have a great
team providing high-tech/high-touch service to a roster of first-rate clients,
and several exciting projects in our pipeline.
We are now 100% enabled with RedPrairie warehouse management
technology across our entire distribution center network. To support our
growing transportation business, we are now implementing our new Mercury Gate transportation management
technology. The system automates multiple touch points within a transportation
transaction, boosting accuracy and timeliness.
As you think about your supply chain in 2012 feel free to
reach out to me with your challenges. As
we say at Wagner, Bring it!
Have a great day!
John Wagner Jr
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John's Blog 
