These 9 headlines culled from Transport Topics over the first three weeks of 2016, coupled with the emerging economic slowdown should give pause to all shippers. A trusted leading indicator and bellwether for the macro-economy, transportation presages the fates of the broader economy; and it seems the outlook is very negative for transportation in 2016 across all modes. There is still time and budget for shipping organizations to implement new TMS solutions or upgrade existing ones – yielding benefits like automation, efficiency improvements, expanded visibility and scalability – if they’re to be well-protected against what appears to be a looming downturn.
Over the Road Trucking
- Headline: US Manufacturing Contracts at Fastest Pace in Six Years
- Headline: Truck Stocks Plunge in 2015
- Headline: Daimler Trucks to Cut its Workforce at Cleveland, NC Factory by 30%
- Headline: Class 8 Orders Slump in December, Down 36% From Same Period in 2014
- Headline: Prices of Used Class 8s Dip in November; Mileage Declines
Analysis: When manufacturers look at their orders for the upcoming year and determine sales will be down significantly, they cancel orders for more and newer equipment to transport their goods. With manufacturing falling at the fastest rate since 2009, it’s no surprise to see truck stocks plunging, and truck builders cutting back on staff. Even the used Class 8 tractors aren’t selling, even at reduced price!
Rail and Multimodal
- Headline: Intermodal Cargo Falls in 4Q for First Time Since 2009
- Headline: US Rail Stocks Seen Rising 20% This Year Despite Six-Year Low for Cargo in 2015
- Headline: Greenbrier Earnings Double in First Quarter; Says Future Railcar Deliveries May Be Lower
Analysis: Intermodal cargo falls in the end of 2015 for the first time since the Great Recession and the economic strength that has been propelling the rise in rail stocks and earnings has seemingly halted in the face of six-year lows for cargo – again a sign of sloughing manufacturing production. As noted, manufacturing is shrinking at a fast pace.
Adding the cherry to this sundae of woe:
- Headline: Bloated Inventories May Slow Port Activity
Analysis: Weak holiday season sales and a stronger dollar have left retailers with excess inventories and the resulting depressive effect on imports from abroad.
Conclusion: Now, several weeks’ worth of negative headlines doesn’t necessarily add up to a full blown economic slowdown. Yet, these leading indicators strongly suggest weakness is on the horizon. Now is the time to invest in technology to help improve supply chain efficiency and transportation cost-efficacy. Have the foresight to put your program together today so that your organization will be best situated to overcome the looming lean times.