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Supply
Chain by the Numbers |
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- Nov. 18, 2021
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US Truckload Rates still Heading Higher; US Manufacturing Output Jumped in October; Ocean Rates will Take Long Time to Return to Normal; Target, Walmart to Eat some of the Inflation Costs |
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12.2% |
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| That was the year-over-year rise in the Cass Line Haul Index in October, according to the monthly report from Cass Information Systems released this week. The index tracks US per mile US truckload rates before any fuel surcharge or other accessorials. The month-over-month rise was a much lower 0.3%, but indicates rates are still heading higher. “Freight demand is clearly still strong and persistent supply constraints are keeping upward pressure on rates,” the report notes. “The gradual easing of supply constraints for critical components of trucking capacity – drivers and equipment – will continue to be key to the longer-term outlook. This should change the trajectory of the Cass Truckload Linehaul Index over the next year, but not quite yet.” |
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| That was the level of US manufacturing output in October, as is calculated each month by the Federal Reserve Bank. That was up nicely (1.2 percentage points) versus September. The number was also up 4.5% versus somewhat weak October 2020 levels. The October number is still well below the 105 level reached in February of 2020 just before the start of the recession. It also means that current manufacturing levels are still just below the baseline year of 2012 (index = 100) now almost a decade later. And the index remains well off its all-time peak of 110 set in late 2007. |
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30 |
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That’s an estimate this week from the maritime analysts at Sea Intelligence about when ocean container shipping rates will return to something like “normal,” after having soared in 2021. Sea Intelligence came up with that estimate after studying a number of previous rate spikes in the sector going back to 1998. Container shipping rates have now seen a 17-month period of sustained rate increases, with the China Containerized Freight Index, an average pf rates out of China to many global destinations, has risen nearly 300% in 2021, adding huge costs to global shippers and importers. |
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That’s how much Target store’s stock price fell Wednesday despite beating Wall Street estimates for revenue and profits in the company’s fiscal third quarter. Why? Because Target CEO Brian Cornell said Target would keep prices low in this period of inflation - even if it means a hit to profits. “We are protecting prices,” he said on a call with reporters. “It’s as important to our guests this year as safety has been throughout the pandemic.” Walmart CEO Doug McMillon said it was adopting a similar strategy. “We save people money and help them live a better life,” he said, adding “Those are the words that came out of [Walmart founder] Sam Walton’s mouth. He loved to fight inflation. So do we.” Walmart’ share price also fell 2.5% Tuesday despite beating earnings estimates. “It’s all about market share, market share, market share,” one stock analyst said, adding "Typically when you’re focused on market share that can come at the expense of profitability.”
