Signs of a strengthening US economic was evident throughout the
first quarter of 2012 – including declines in unemployment, rising US consumer
confidence and increasing manufacturing activity. As the US continues to
improve, the rest of the world, in particular Asia and Europe are displaying
worrisome economic trends. Although Asia’s manufacturing has recently picked
up, it is still weak and is evident the region is undergoing an economic
slowdown. Meanwhile, Europe may have succumbed to a mild recession as weak manufacturing
reports indicate a second straight quarter of economic contraction. As a result
of these global trends, many are now wondering if the US is emerging as a main
engine for global growth. This may be the case but it’s still a bit premature
as factors such as rising oil prices may hamper current and future economic
improvements.
Even still, US manufacturing activity continues to increase. A bit
concerning though is the recent March report, while still expanding, new orders
and exports declined 0.4% and 5.5% respectively. This may be a result of global
economic difficulties.
US port activity for the quarter was mixed. While imports continue
to decline, exports increased during the quarter. The Port of Los Angeles
continued to report record exports with February exports increasing 9.5%.
Airfreight, however, continues to be a concern. High oil prices
appear to have resulted in shifts to less expensive modes of transportation for
many shippers. Even though the Miami International Airport appears to be the
exception, reporting positive tonnage for the first two months of the year,
airports such as Chicago, Los Angeles have reported declines in tonnage for
January.
Road transport continued to make good gains. Trucking and rail
transport continue to note increases for the first two months of the year.
After reporting a slight decline in activity for January, the American Trucking
Association noted a 0.5% increase for February. The association cited
improvements in manufacturing and the housing market as indicators for the
improvement.
Although US rail carloads are
down 2.2% for the first twelve weeks of 2012, rail intermodal was up 2.4%.
Canadian rail carloads were up almost 6% for the same period while rail
intermodal was up 6.5%. Mexican rail carloads and intermodal were down 6% and
up 3.6% respectively. Increasing shifts from air and trucking are benefiting
intermodal as is the increasing use by the likes of UPS and FedEx.The increase in oil prices will remain a concern for both shippers and transportation/logistics providers as fuel surcharges continue to rise and erode profits. Still, consumer confidence continues to improve and unemployment continues to decline. Retail sales appear to be improving, particularly for ecommerce. This has resulted in an increase in demand for warehousing/distribution center space for this particular retail segment. This will bode well in particular for small parcel providers such as FedEx, UPS and regional small parcel providers.
