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Supply Chain by the Numbers

- Oct. 19, 2023


Supply Chain by the Numbers for October 19, 2023


New Warehouse Construction to Drop Sharply in 2024; California Truckers Sue over Rules on eTruck Adoption; US Manufacturing Flat again in September; e2Open Stock Tanks, may be Taken Private



That is the forecast decline in new US warehouse construction in 2024, according to a new report from warehouse developer Prologis. That even as demand for warehouse space remains relatively strong, as companies continue to pull back from just-in-time inventory strategies and ecommerce growth is expected to continue. With reduced supply, it is likely that market vacancies will move still further below historical norms in late 2024 and into 2025 – not good news for shippers. Rising cost to build new DCs is a key factor, driven by inflation, higher financing costs and competition for labor and materials from the infrastructure, manufacturing and housing sectors. Construction loans are now expensive and difficult to secure. With most banks tightening lending standards and interest rates doubling during the past 18 months, the era of ample, low-cost financing ended abruptly in 2022, Prologis says in the report.



That is the percent of freight trucks operating in California that the state wants be zero emission vehicles as early as 2025, depending on truck type. That goal from the California Air Resources Board’s Advanced Clean Fleets regulation adopted in April that would require motor carriers operating in the state to transition their trucks to zero-emission vehicles beginning as soon as next year. The regulations were newsworthy again this week with news that last Friday the California Trucking Association has filed a federal lawsuit seeking to block enforcement of the rules, asking the federal court to grant a preliminary and permanent injunction barring CARB from implementing or enforcing the regulation “in any way.” CTA CEO Eric Sauer said the lawsuit is aimed at federal law violations, including conflicts with the Federal Clean Air Act and the Federal Aviation Administration Authorization Act of 1994, the latter of which gives Federal regulations of trucking pre-emptpry power over most state and local rules. Otherwise, carriers could face a patchwork of rules by state across the nation. The lawsuit said the adoption of the Advanced Clean Fleets regulation represents a direct regulation of the trucking industry with acute impacts on “prices, routes and services in direct conflict with congressional policy.” The impact regardless of which side wins will be massive.





That was the level of the US manufacturing output index for September, as released this week as usual by the Federal Reserve bank. That was slightly higher than the index level of 99.4 seen in August, and about the same as scores hovering around the 99 level since February, with no real growth, but not recessionary with declines either. The September score, however, was down 0.8% from the same period in 2022. At an index level of 99.8, it means US manufacturing is still below output in the baseline year of 2017 (index = 100) now almost seven years later. It is also well below the all-time high of about 108, reached in late 2007.




That how low the stock price of supply chain software company e2Open got last week, down from about $6.88 in February and $13.00 in mid-2021. The stock since then bounced to a little over $3.00 a share, on news that Elliott Investment Management is considering making a proposal to take e2Open private, according to Bloomberg’s Liana Baker. It turns out Elliott reported it had taken a nearly 14% stake in e2Open, and moving its position to active from passive. It also said e2open is undervalued and that it will seek to engage with the company’s board and management about strategic opportunities to maximize shareholder value. According to people familiar with the matter, Elliott is currently evaluating its next steps. e2Open has made a number of acquisitions in recent years, including Amber Road, Cloud Logistics, and BluJay Solutions.

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