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Supply
Chain by the Numbers |
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- May 3, 2019 -
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US 3PL Revenues Soared in 2018; Will Extreme Infratructure Spending Plan Really Happen? US Manufacturing Growth Wobbly in March; IKEA Downsizing Stores Down Under Dramatically |
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11.8% |
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Though it is still waiting on numbers from some 3PLs,that is the estimate for growth in net US 3PL revenue (gross revenue less purchased transportation) in 2018, according to recent analysis from Armstrong & Associates. With a US economy growing less than 3% for the full year, that level of growth if correct is indeed rather amazing. The two main drivers of growth were an extraordinary inventory buildup, as shippers imported products to beat the implementation of President Donald Trump's import tariffs, and solid domestic economic expansion, Armstrong says. It also estimates total US 3PL net revenues for last year at $86.2 billion. The last time the U.S. saw this level of 3PL gross revenue growth was in 2010, when the 3PL market grew 19% as it bounced back from its 16% decline in 2009 during the Great Recession. Examples of strong growth abound, such as the 16.9% net revenue rise at giant freight broker C.H. Robinson. J.B. Hunt Dedicated Contract Services saw its 2018 net revenues rise an impressive 25.9%. |
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That's the average size in square meters of a new "mini-store" concept being rolled out by iconic furniture retailer IKEA in Sydney, Australia. That compares to stores that average 37,000 square meters for one of its traditional "warehouse" style outlets. With this new concept, shoppers can step inside a much smaller space to choose their furniture using digital computers and select exactly what date they want the products delivered to their door. "Shopping behaviors are changing quite dramatically within the retail space and are majorly driven by new technology," said IKEA Australia's CEO Jan Gardberg, adding that "We wanted to build something that was between a totally on-line store and our giant shops." Also with the new concept, the stores can quickly be opened across Sydney, rather than shoppers having to travel perhaps many miles to get to a traditional IKEA store. A planning session can be booked for $99 – but consumers get that money back if they buy furniture. The retail world continues to dramatically transform before our eyes.
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52.8 |
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That was the April reading for the US Purchasing Managers Index from the Institute for Supply Management released on Thursday. That is above the 50 mark that separates US manufacturing from expansion from contraction, but was 2.5 percentage points down from the March reading of 55.3, and represented the lowest reading since October 2016. The New Orders Index registered just 51.7, barely over 50. The drop obviously has many worried the US economy is slowing. "We're coming down faster that I would really like," said Timothy Fiore, chairman of the ISM's Manufacturing Business Survey Committee. "There's no doubt we're not expanding as we were." But US manufacturers could see an uptick in activity in the coming months as the global economy recovers, said Michael Pearce, senior US economist at research firm Capital Economics. Economies in both Europe and China got off to a slow start earlier this year but appear to have stabilized.
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That is the rather startling level of "infrastructure" spending over some unclear period of time has apparently been agree upon by President Trump and Democratic leaders in Congress. In fact, the Democrats say they initially came in with a lower number, but Trump rounded it up to a cool $2 trillion. The gigundous spending plan is meant to address lots of things besides roads and bridges, with talk of green energy, broadband for all, upgrading the power grid (that's a good one) and more. How will the spending spree be paid for? No one knows, other than some reference to increasing federal fuel taxes, but likely that would be only to levels that would fund a small fraction of the total planned spend. So will it happen? It did not go unnoticed that no Republican lawmakers sat in on this White House meeting - perhaps indicating such a bill's fate in the Republican controlled Senate is dubious.
