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Supply Chain by the Numbers

- April 21, 2016 -

  Supply Chain by the Numbers for Week of April 21, 2016

Major Downward Revision of Recent US Manufacturing Output; Highway Congestion Costing Truckers and Shippers Big Time; Is the New Force in eCommerce? Truckload Rate Changes Go Negative



That is now the estimated growth in US manufacturing output all the way since 2012, under a major data revision by the Federal Reserve. The Fed of course tracks manufacting production as a subset of overall industrial output, which also includes mining and utilities. Before the data revision, monthly US manufacturing output was tracking at an index level of about 106 for six or more months, meaning each month's production was about 6% above the average month in the baseline year of 2012 (index = 100). But after that revision just a couple of weeks ago, the levels have been revised down to about an index level of 103, a number around which the index has hovered for almost a year. That means that US manufacturing growth since 2012 is now about half of what the data said it was until the first week of April revision, and wratchets down annual growth from roughly a lukewarm 2% since 2012 to about a very weak 1%. Only SCDigest seems to be reporting on this major news. See Recent Data Revisions from the Federal Reserve Cut US Manufacturing Growth Since 2012 in Half



$49.6 Billion

That is how much traffic congesting on the National Highway System cost the US trucking industry in 2014, according to fresh data released this week from the American Transportation Research Institute (ATRI), which does this analysis regularly. ATRI calculated there were delays totaling more than 728 million hours of lost productivity, which equates to 264,500 commercial truck drivers sitting idle for a working year. The impact of congestion costs on a per-truck basis averaged $26,625 for trucks that travel 150,000 miles annually. Traffic congestion of course was most severe in urban areas, with 88% of the congestion costs concentrated on only 18% of the network mileage, and 95% of the total congestion cost occurring in metropolitan areas. "Unfortunately we've come to expect traffic congestion as a part of our daily lives but ATRI's latest analysis illustrates what a significant productivity drain that congestion is on our industry and the economy at large," said David Congdon, CEO of Old Dominion Freight Line.


That is change year over year in March in the Cass Linehaul Index, which measures US truckload carrier rates per mile before other charges such as fuel and accessorials. Cass conducts its analysis based on data from the $25 billion or so in freight bills it processes annually for its customers. This March number is significant, as it represents the first negative price change in the market since May 2010. Rates have been decelerating for more than a year. After rising 5-7% early in 2015 rates then slowed to about a 3% increase through September, falling to nearly flat in early 2016 and now the negative number. What's happening? Cass says there is just too much carrier capacity for the amount of freight. Meanwhile, the industry analysts Avondale Partners, who assist Cass on the Index, now forecasts full year 2016 truckload rate changes of -1% to 2% - and say that range is more likely to go lower than higher. Good news for shippers, even if indicative of a slowing economy.


$1 Billion

That's how much in on-line sales that will have passed the on-line ecommerce the end of May, according to company executives at an industry conference in Las Vegas this week. That pales in comparison to the more than $100 billion in revenue generated by in 2015 - but only opened its site in July of last year. Who is SCDigest must confess we had never heard of the company until this news hit the wires this week. Jet - like China's giant Alibaba - is simply an on-line marketplace, meaning an electronic platform other etailers can use to sell merchandise. That means, unlike Amazon, it doesn't actually hold inventory or fulfill orders, but rather takes a 8-15% cut of those sales that are generated on its plaform. (Amazon also has a marketplace service.) These marketplaces are very much the on-line equivalent of the traditional shopping mall, but rather than collecting rents, they charge a commission for providing the technology and becoming a place where consumers go to shop across etailers.

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